National R.V. Holdings Reports Fourth Quarter and Year End Results
PERRIS, Calif., March 11 -- For the fourth quarter ended December 31, 2002, National R.V. Holdings, Inc. today reported a net loss of $6.9 million, or $0.70 per share. This result compares to a net loss of $3.6 million, or $0.37 per share, for the fourth quarter of 2001. The manufacturer of Class A motorhomes and travel trailers said net sales decreased 12% to $61.0 million in the 2002 fourth quarter from sales of $69.7 million in the same period in 2001. For the year ended December 31, 2002, the Company reported a net loss of $21.4 million or $2.19 per share on sales of $300.3 million, which includes a charge of $6.1 million, or $0.63 per share, for the complete impairment of the Company's goodwill. This compares to a net loss of $11.5 million or $1.18 per share on sales of $280.0 million for the year ended December 31, 2001.
The Company recognized the complete impairment of its goodwill, in conformity with FASB 142, as a result of the decline in the price of the Company's common stock during the third quarter. This impairment of $6.1 million, or $0.63 per share, relating to the purchase of the Company's Country Coach, Inc. division, provides no tax benefit.
"Coming into the fourth quarter, we knew we would be challenged with pricing issues on our National RV brand products. Additionally, slow retail turn rates on Country Coach's older-style Allure and Intrigue products were using up dealer flooring needed to allow the wholesale shipment of the new First Avenue editions of these products. Through a series of rebate and discount programs, we have cleared out most of the older Country Coach products from the dealer channel and made the National RV products more price competitive," said Brad Albrechtsen, National R.V. Holding's President and CEO. "While these steps were costly to our fourth quarter performance, with discounts and rebates equaling 7.5% of sales in the quarter, they were necessary to help our products be competitive going forward. The re-pricing of the National RV brand products was introduced to the dealer body during the fourth quarter and will take some time before retail buyers become fully aware of the products' added value. In the meantime, demand remained low on these products through much of the fourth quarter, causing us to reduce production and further erode profitability."
The Company is pleased with the dealer body's reception to the National RV brand triple-slide gas and diesel floorplans, including the introduction of the Tropi-Cal (a new entry-level diesel motorhome). The backlog of orders was strong for these products coming out of the manufacturer's trade show in Louisville. Under the Country Coach brand, the new Inspire diesel units will start shipping to dealers during the second quarter of 2003. This product is a lower-priced diesel coach that will compete in a higher volume segment of the market than the traditional Country Coach products.
"First quarter production at National has been focused on the new triple-slide floorplan products as well as the reintroduced, entry-level Sea Breeze gas product," said Albrechtsen. "Reduction of National RV brand finished goods inventory continues to be a high priority. Though incentives are available to help move this product, competitors have announced their own incentive programs, making it more difficult to create demand using these techniques. The fourth quarter is not traditionally a strong period for consumer demand, making the first quarter 2003 show season a better opportunity to deliver these excess products."
Revenue in the Company's Country Coach brand "highline" motorhomes grew 8% in the 2002 fourth quarter compared to the fourth quarter of 2001. Revenues of the National RV brand motorhomes declined 12% while the National RV brand towable product segment declined 18% during the fourth quarter compared to the fourth quarter 2001. Year-to-date revenues improved over the same period last year by 4% for the Country Coach brand motorhomes, 17% for the National RV brand motorhomes and 4% for the National RV brand towable products. Wholesale unit shipments of the Company's motorhomes built on diesel chassis decreased 2% to 209 units for the fourth quarter 2002, compared to 214 units for the fourth quarter of the prior year. Shipments of the Company's gas motorhome products decreased 34% to 193 units in the fourth quarter from 294 units in last year's fourth quarter. Unit sales of the Company's towable products decreased 16% to 343 units in the fourth quarter 2002 from 410 units in the same period in 2001.
The Company reported that cash decreased by approximately $1.9 million during the fourth quarter, due primarily to a combined $9.2 million decrease in accounts payable and book overdraft as well as a net loss of $6.9 million, offset by a $4.0 million decrease in accounts receivable, a $4.8 million decrease in inventory and a $4.0 million increase in accrued expenses.
As mentioned above, discounting and poor overhead utilization hurt the Company's gross profit margin during the fourth quarter. Additionally, increases in the workers' compensation reserves, which have been increasing through out the year, led to significant costs in this period. The Company stated that the trend in improving warranty costs continued in the fourth quarter.
Selling, general and administrative expenses totaled $5.5 million for the quarter, a decrease of $0.3 million over the same quarter last year. This decrease is primarily due to reduced sales.
"Total inventory dropped by $4.8 million during the quarter, but grew by $2.4 million in finished goods. Due to low production rates at our Perris facility during the quarter, the value of overhead per unit in year-end finished goods and WIP is unusually high. Not only did this limit our reduction of the value of inventory during the fourth quarter, but the impact on cost of goods sold, once this inventory is delivered to the dealers in 2003, will be approximately $1.8 million. We expect to see continued reduction of finished goods as a result of reduced pricing initiated in late fourth quarter 2002 on National RV products," said Chief Financial Officer Mark Andersen. "Through additional advances on our credit facility and due to reduced receipts of raw materials at the end of December we were able to greatly reduce our accounts payable. In anticipation of an increase in first quarter 2003 accounts receivable, due to late quarter show activity, we have secured a $5 million temporary increase in the credit facility."
National R.V. Holdings will host a live webcast to review fourth quarter results today, March 11, 2003, at 2 p.m. EST. A link to the conference call can be found on the Company's website at www.nrvh.com and will be archived and available for 90 days.
National R.V. Holdings, Inc. is a leading manufacturer of Class A motorhomes and travel trailers. From its Junction City facility, the Company designs, manufactures and markets Country Coach high-end (Highline) Class A diesel motorhomes under brand names including Inspire, Allure, Intrigue, Magna, Affinity and Lexa, and bus conversions under the Country Coach Prevost brand. From its Perris, California facility, the Company designs, manufactures and markets National RV Class A gas and diesel motorhomes under brand names including Sea Breeze, Dolphin, Tropi-Cal, Tradewinds and Islander, and travel trailers under brand names including Surf Side Lite, Splash, Rage'n, Blaze'n, Sea Breeze and Palisades.
This release and other statements by the Company contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain. Actual performance and results may differ materially from that projected or suggested herein due to certain risks and uncertainties including, without limitation, the cyclical nature of the recreational vehicle industry; seasonality and potential fluctuations in the Company's operating results; the Company's dependence on chassis suppliers; potential liabilities under repurchase agreements; competition; government regulation; warranty claims; product liability; and dependence on certain dealers and concentration of dealers in certain regions. Certain risks and uncertainties that could cause actual results to differ materially from that projected or suggested are set forth in the Company's filings with the Securities and Exchange Commission (SEC) and the Company's public announcements, copies of which are available from the SEC or from the Company upon request.
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Twelve Months
Ended December 31, Ended December 31,
2002 2001 2002 2001
Net sales $61,047 $69,713 $300,251 $280,015
Cost of goods sold 66,844 69,593 302,483 275,648
Gross (loss) profit (5,797) 120 (2,232) 4,367
Selling expenses 3,539 3,806 14,492 14,068
General
and administrative expenses 1,934 1,891 8,176 8,765
Amortization of intangibles -- 103 -- 413
Impairment of goodwill -- -- 6,126 --
Operating loss (11,270) (5,680) (31,026) (18,879)
Interest income
and other expense, net 187 (30) (115) (491)
Loss before income taxes (11,457) (5,650) (30,911) (18,388)
Benefit for income taxes (4,558) (2,061) (9,489) (6,927)
Net loss $(6,899) $(3,589) $(21,422) $(11,461)
Loss per common share:
Basic $ (0.70) $ (0.37) $ (2.19) $ (1.18)
Diluted $ (0.70) $ (0.37) $ (2.19) $ (1.18)
Weighted average number of shares
Basic 9,832 9,718 9,788 9,683
Diluted 9,832 9,718 9,788 9,683
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31, December 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $14 $22
Trade receivables, less allowance
for doubtful accounts
($276 and $224, respectively) 9,829 16,378
Inventories 72,532 85,385
Deferred income taxes 9,477 7,267
Income taxes receivable 7,015 6,688
Prepaid expenses 2,134 1,647
Total current assets 101,001 117,387
Goodwill, net -- 6,126
Property, plant and equipment, net 43,230 45,257
Other 1,013 1,012
$ 145,244 $169,782
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Book overdraft $943 $608
Line of credit 4,943 --
Current portion of long-term debt 22 20
Accounts payable 13,483 29,480
Accrued expenses 28,564 21,750
Total current liabilities 47,955 51,858
Deferred income taxes 3,105 3,469
Long-term debt 19 43
Total liabilities 51,079 55,370
Commitments and contingencies
Stockholders' equity:
Preferred stock - $.01 par value;
5,000 shares authorized,
4,000 issued and outstanding -- --
Common stock - $.01 par value;
25,000,000 shares authorized,
9,832,161 and 9,718,025 issued
and outstanding, respectively 98 97
Additional paid-in capital 34,301 33,128
Retained earnings 59,766 81,187
Total stockholders' equity 94,165 114,412
$ 145,244 $169,782
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Twelve Months
Ended December 31,
2002 2001
Cash flows from operating activities:
Net loss $ (21,422) $(11,461)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 3,936 3,889
Amortization of intangibles -- 413
Impairment of goodwill 6,126 --
Gain on asset disposal (355) (71)
Tax benefit related to exercise of stock options 105 73
Changes in assets and liabilities:
Decrease (increase) in trade receivables 6,549 (1,269)
Decrease (increase) in inventories 12,853 (21,746)
Increase in income taxes receivable (327) (4,724)
(Increase) decrease in prepaid expenses (487) 453
Increase in book overdraft 335 608
(Decrease) increase in accounts payable (15,997) 16,930
Increase in accrued expenses 6,814 4,839
Increase in net deferred income taxes (2,574) (564)
Net cash used in operating activities (4,444) (12,630)
Cash flows from investing activities:
(Increase) Decrease in other assets (1) 84
Proceeds from sale of assets 2,859 --
Purchases of property, plant and equipment (4,413) (4,615)
Net cash used in investing activities (1,555) (4,531)
Cash flows from financing activities:
Net advances under line of credit 4,943 --
Principal payments on long-term debt (21) (21)
Proceeds from issuance of common stock 1,069 508
Net cash provided by financing activities 5,991 487
Net decrease in cash (8) (16,674)
Cash, beginning of period 22 16,696
Cash, end of period $14 $22
Please direct questions to investors@nrvh.com.