National R.V. Holdings Reports First Quarter 2003 Results
PERRIS, Calif., April 22 -- For the first quarter ended March 31, 2003, National R.V. Holdings, Inc. today reported a net loss of $4.1 million, or $0.42 per share. This result compares to a net loss of $3.3 million, or $0.34 per share, for the first quarter of 2002. The manufacturer of Class A motorhomes and travel trailers said net sales decreased 2% to $78.1 million in the 2003 first quarter from sales of $79.3 million in the same period in 2002.
"Our results for the quarter were largely in line with our expectations," stated Mr. Albrechtsen, the Company's CEO. "Margins remained under pressure due to price incentives used to reduce inventories of older products, the sale of inventory built in the 4th quarter that carried excess overhead, and the introduction of our new Tropi-Cal, Sea Breeze and Inspire products to the production floor. In addition to these internal challenges, our industry is dealing with several large manufacturers that have announced excess inventories resulting in discounting and production slowdowns. While we will have to react to this industry pressure on pricing," Albrechtsen continued, "the groundwork has been laid for improvement over the next several quarters. Our own discounting has begun to decrease and production changes made in the first quarter are beginning to take hold. We have been able to consolidate production lines to reduce supervision needs and have reduced direct labor as the result of decreasing work-in-process inventory. We are pleased that we were able to reduce total inventory by over $7 million during the first quarter and expect to see further reductions in the second quarter."
Acceptance by the dealer body of the Company's new products has been good. The beginning of the quarter saw strong shipments of the re-introduced National RV brand Sea Breeze gas product while the first production units of the Tropi-Cal diesel started to deliver to dealer lots in mid-March. The new Country Coach brand Inspire diesel prototype was well received at the recent Family Motor Coach Association (FMCA) trade show and will start shipping to dealers in early May. Production of these new brands will help profitability, which has been hampered due to the underutilization of production facilities.
Revenue of the Company's Country Coach brand "highline" motorhomes declined 4% in the 2003 first quarter compared to the first quarter of 2002. Revenues of the National RV brand motorhomes increased 5% while the National RV brand towable product segment declined 8% during the first quarter compared to the first quarter 2002. Wholesale unit shipments of the Company's motorhomes built on diesel chassis decreased 27% to 237 units for the first quarter 2003, compared to 325 units for the first quarter of the prior year. Shipments of the Company's gas motorhome products increased 69% to 332 units in the first quarter from 197 units in last year's first quarter. With an adequate inventory of the National RV brand Tradewinds diesel product and engineering not ready until late in the quarter for the new Tropi-Cal diesel, production was focused on gas units during the first quarter of 2003. National RV Class A unit shipments of combined diesel and gas units rose 14% over the first quarter of 2002, but only 5% in revenues due to this shift in mix. Unit sales of the Company's towable products increased 7% to 390 units in the first quarter 2003 from 364 units in the same period in 2002. The towables revenue decline reflects the continued movement toward more low-priced, high volume units.
The Company reported that cash was unchanged during the first quarter, due primarily to a $19.4 million increase in accounts receivable and a net loss of $4.1 million, offset by a $10.8 million increase in accounts payable, a $7.3 million decrease in inventory and a $3.6 million increase in the line-of-credit.
As mentioned above, new discounting programs in the first quarter along with approximately $1.8 million in costs associated with units built during periods of poor overhead utilization adversely affected the Company's gross profit margin during the first quarter of 2003. Though the production was heavily weighted towards gas units in the current quarter compared to the first quarter of 2002, product mix did not have a significant impact on gross profit margins. The Company stated that it continues to see improvement in warranty costs due to a heavy focus in this area.
Selling, general and administrative expenses totaled $5.3 million or 6.7% of sales for the quarter, consistent with the same quarter last year.
"Total inventory dropped by $7.3 million during the quarter, coming mainly from reductions in finished goods and work-in-process. We expect to see continued reductions in the second quarter of 2003 in the $2 million to $4 million range even after a run up due to show activity in late June," said Chief Financial Officer Mark Andersen. "We also expect our liquidity to improve with the collection of accounts receivable related to the FMCA show in March. We have already reduced accounts receivable by over $7 million since the quarter end."
The Company said liquidity will also be improved in the second quarter of 2003 by the collection of a $7.3 million tax refund; however this improvement may be tempered by the expiration of a $5 million temporary increase in the credit facility. The Company is currently in negotiations for a $10 million permanent increase in the credit facility that expires August 2005.
National R.V. Holdings will host a live webcast to review first quarter results today, April 22, 2003, at 2 p.m. EDT. 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)
(Unaudited)
Three Months
Ended March 31,
2003 2002
Net sales $78,101 $79,320
Cost of goods sold 79,181 79,574
Gross loss (1,080) (254)
Selling expenses 3,130 3,429
General and administrative expenses 2,120 1,908
Operating loss (6,330) (5,591)
Interest and other expense, net 165 (305)
Loss before income taxes (6,495) (5,286)
Benefit for income taxes (2,406) (1,970)
Net loss $(4,089) $(3,316)
Earnings per common share:
Basic $(0.42) $(0.34)
Diluted $(0.42) $(0.34)
Weighted average number of shares
Basic 9,832 9,719
Diluted 9,832 9,719
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
March 31, December 31,
2003 2002
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $10 $14
Trade receivables, less allowance
for doubtful accounts
($276 and $276, respectively) 29,261 9,829
Inventories 65,275 72,532
Deferred income taxes 9,477 9,477
Income taxes receivable 9,464 7,015
Prepaid expenses 1,393 2,134
Total current assets 114,880 101,001
Property, plant and equipment, net 42,726 43,230
Other 672 1,013
$158,278 $145,244
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $8,521 $4,943
Book overdraft 3,923 943
Current portion of long-term debt 22 22
Accounts payable 24,258 13,483
Accrued expenses 28,360 28,564
Total current liabilities 65,084 47,955
Deferred income taxes 3,105 3,105
Long-term debt 13 19
Total liabilities 68,202 51,079
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 9,832,161 issued
and outstanding, respectively 98 98
Additional paid-in capital 34,302 34,302
Retained earnings 55,676 59,765
Total stockholders' equity 90,076 94,165
$158,278 $145,244
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months
Ended March 31,
2003 2002
Cash flows from operating activities:
Net loss $(4,089) $(3,316)
Adjustments to reconcile net loss to
net cash (used in) provided
by operating activities:
Depreciation 982 978
Gain on asset disposal -- (348)
Changes in assets and liabilities:
Increase in trade receivables (19,432) (7,636)
Decrease in inventories 7,257 18,063
Increase in income taxes receivable (2,449) (1,138)
Decrease in prepaid expenses 741 341
Increase (decrease) in book overdraft 2,980 (608)
Increase (decrease) in accounts payable 10,775 (4,843)
Decrease in accrued expenses (204) (722)
Net cash (used in) provided by
operating activities (3,439) 771
Cash flows from investing activities:
Decrease in other assets 341 58
Proceeds from sale of assets -- 2,424
Purchases of property, plant and equipment (479) (1,438)
Net cash (used in) provided by
investing activities (138) 1,044
Cash flows from financing activities:
Net advance on line of credit 3,578 --
Principal payments on long-term debt (5) (5)
Proceeds from issuance of common stock -- 18
Net cash provided by financing activities 3,573 13
Net increase in cash (4) 1,828
Cash, beginning of period 14 22
Cash, end of period $10 $1,850