National R.V. Holdings Reports Second Quarter 2003 Results
PERRIS, Calif., July 22 -- For the second quarter ended June 30, 2003, National R.V. Holdings, Inc. today reported a net loss of $2.7 million, or $0.28 per share. This result compares to a net loss of $1.4 million, or $0.14 per share, for the second quarter of 2002. The manufacturer of Class A motorhomes and travel trailers said net sales decreased 16% to $73.5 million in the 2003 second quarter from sales of $87.5 million in the same period in 2002.
"Our results for the quarter were mixed," stated Brad Albrechtsen, the Company's CEO. "As expected, margins remained under pressure in the "highline" segment due to industry-wide excess inventories. We were not able to reduce discounts as much as anticipated, though discounts did come down nearly 1% of sales compared to first quarter 2003. Production efficiencies at our Perris, California facility added to our margin improvement even though the worker's compensation costs at this facility continue to increase, reducing our gross profit percentage by 1.5% for the quarter," Albrechtsen continued, "Our Junction City, Oregon facility struggled during the quarter with the continued ramp up of the Inspire production line and the introduction of the 2004 models. We believe the production problems at Country Coach are temporary and that much of the inventory build up will be reduced by mid-third quarter. Discounting on highline products should decrease as the industry works through its excess stock. We also expect improved profitability on National RV brand products due to a planned production increase to meet improving retail demand."
The Company's new products, including the re-introduced National RV brand Sea Breeze gas product, the new National RV brand Tropi-Cal diesel product, and the new Country Coach brand Inspire diesel product, which started shipping to dealers at the end of May, are being well received. The success of these new products has improved our average wholesale Class A market share by 5% for the first five months of 2003 versus the first five months of 2002 and by 35% compared to the second half of 2002. In addition, during 2003, the Company's overall product turn rate has improved.
Revenue of the Company's Country Coach brand "highline" motorhomes declined 33% during the second quarter 2003 while the National RV brand motorhome revenue decreased 6% compared to the prior year's second quarter. This revenue reduction for the Country Coach subsidiary reflects a significant sale of the Company's Prevost Conversion brand product upon re-entry to the market in the second quarter 2002. Decreased demand for the Company's higher line diesel products further contributed to the decline in income. Revenue of the National RV brand towable product segment increased 3% during the second quarter 2003 compared to the second quarter 2002. Wholesale unit shipments of the Company's motorhomes built on diesel chassis decreased 5% to 218 units for the second quarter 2003, compared to 229 units for the second quarter of the prior year. Shipments of the Company's gas motorhome products decreased 9% to 293 units in the second quarter from 323 units in last year's second quarter. National RV Class A unit shipments of combined diesel and gas units declined 4% over the second quarter of 2002. Unit sales of the Company's towable products decreased 8% to 475 units in the second quarter 2003 from 519 units in the same period in 2002.
The Company reported that cash increased by $3.6 million during the second quarter, due primarily to an $18.2 million decrease in accounts receivable and a $9.5 million reduction in taxes receivable, offset by a net loss of $2.7 million, an $8.9 million decrease in accounts payable, $3.7 million increase in deferred income taxes and an $8.5 million decrease in the line-of-credit.
Selling, general and administrative expenses totaled $4.9 million or 6.7% of sales for the second quarter 2003 compared to $6.1 million or 6.9% of sales for the same quarter last year. The second quarter 2002 reflected the impact of an employment related legal settlement reached in that quarter.
"Total inventory dropped by $0.1 million during the quarter, coming mainly from reductions in finished goods and chassis, offset by increases in raw materials and work-in-process. We saw good improvement at our National RV division in most categories of inventory, but those gains were offset by inventory buildups at the Country Coach division due to the 2004 model year change over, the continued ramp up of production of the new Inspire product and June production held back for the Family Motor Coaching Association trade show in July," said Chief Financial Officer Mark Andersen. "We expect to see improved reductions in inventory in the third quarter of 2003 in the $4 million to $5 million range."
The Company said liquidity improved significantly in the second quarter of 2003 with the collection of a $7.3 million tax refund. Although a $5 million temporary increase in the credit facility expired in June, no impact was felt as the Company had no outstanding advances at June 30, 2003 against the remaining $15 million facility. Where as $5.3 million of the $15 million line has been restricted due to depository requirements with the State of California related to the National RV division's self-insurance program, that deposit requirement has been modified, once again, allowing the Company to draw on the $5.3 million if needed. Based on this improved availability, the Company no longer has the short-term need to increase the line and has, accordingly, ceased 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 second quarter results today, July 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 Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
Net sales $73,471 $87,466 $151,572 $166,787
Cost of goods sold 72,805 83,603 151,985 163,177
Gross profit (loss) 666 3,863 (413) 3,610
Selling expenses 2,952 3,398 6,085 6,827
General and
administrative expenses 1,958 2,662 4,077 4,570
Operating loss (4,244) (2,197) (10,575) (7,787)
Interest expense and
other income, net 55 (4) 219 (309)
Loss before
income taxes (4,299) (2,193) (10,794) (7,478)
Benefit for
income taxes (1,592) (797) (3,998) (2,767)
Net loss $(2,707) $(1,396) $(6,796) $(4,711)
Loss per common share:
Basic $(0.28) $(0.14) $(0.69) $(0.48)
Diluted $(0.28) $(0.14) $(0.69) $(0.48)
Weighted average number
of shares
Basic 9,832 9,776 9,832 9,747
Diluted 9,832 9,776 9,832 9,747
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
June 30, December 31,
2003 2002
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $3,623 $14
Trade receivables, less allowance
for doubtful accounts ($238 and $276,
respectively) 11,023 9,829
Inventories 65,185 72,532
Deferred income taxes 9,904 6,175
Income taxes receivable -- 7,015
Prepaid expenses 1,565 2,134
Total current assets 91,300 97,699
Property, plant and equipment, net 41,985 43,230
Long-term deferred income taxes 208 197
Other 673 1,013
$134,166 $142,139
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $-- $4,943
Book overdraft -- 943
Current portion of long-term debt 22 22
Accounts payable 19,252 13,483
Accrued expenses 21,028 22,291
Total current liabilities 40,302 41,682
Long-term accrued expenses 6,487 6,273
Long-term debt 8 19
Total liabilities 46,797 47,974
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 52,969 59,765
Total stockholders' equity 87,369 94,165
$134,166 $142,139
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months
Ended June 30,
2003 2002
Cash flows from operating activities:
Net loss $(6,796) $(4,711)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,974 1,908
Gain on asset disposal -- (348)
Changes in assets and liabilities:
Increase in trade receivables (1,194) (8,800)
Decrease in inventories 7,347 17,000
Decrease in income taxes receivable 7,015 4,162
Decrease in prepaid expenses 569 766
Decrease in book overdraft (943) (608)
Increase (decrease) in accounts payable 5,769 (7,009)
(Decrease) increase in accrued expenses (1,049) 498
Increase in deferred income taxes (3,740) (459)
Net cash provided by operating activities 8,952 2,399
Cash flows from investing activities:
Decrease in other assets 340 66
Proceeds from sale of assets -- 2,424
Purchases of property, plant and equipment (729) (2,595)
Net cash used in investing activities (389) (105)
Cash flows from financing activities:
Net payments on line of credit (4,943) --
Principal payments on long-term debt (11) (11)
Proceeds from issuance of common stock -- 1,074
Net cash (used in) provided by financing
activities (4,954) 1,063
Net increase in cash 3,609 3,357
Cash, beginning of period 14 22
Cash, end of period $3,623 $3,379