Monaco Coach Corporation Reports Second Quarter 2003 Results
COBURG, Ore., July 24 -- Monaco Coach Corporation today reported revenue and earnings for its second quarter ended June 28, 2003. Second quarter earnings per share were 2 cents, on second quarter revenue of $268.4 million. Net income for the second quarter was $582 thousand. Operating income for the second quarter was $1.5 million. Second quarter unit sales of Monaco Coach Corporation products were 2,260 units. Second quarter motorhome sales totaled 1,708 units and second quarter towable recreational vehicles totaled 552 units.
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For the six months ended June 28, 2003, earnings per share were 17 cents on revenue of $541.9 million. Net income for the six months ended June 28, 2003 was $4.9 million. Operating income for the six months ended June 28, 2003 was $9.5 million. Unit sales of Monaco Coach Corporation products for the six months ended June 28, 2003 totaled 4,566 units. Six-month motorhome sales totaled 3,345 units and six-month towable recreational vehicles totaled 1,221 units.
According to Monaco Coach Corporation Chairman and Chief Executive Officer Kay Toolson, "We met several key goals for the second quarter. Foremost was the approximate $20 million reduction in our finished goods inventory. However, in order to realize this inventory reduction, we offered wholesale and retail sales incentives that pressured our margins and earnings. Weighed against the business considerations and financial cost associated with carrying a high finished goods inventory, second quarter earnings pressure was expected as we focus on improving our balance sheet."
Monaco Coach Corporation President John Nepute added, "Our 2004 models have been very well accepted by dealers and consumers. It has not been necessary to offer sales promotions on 2004 models. However, we are continuing to offer some retail sales incentives on 2003 models that remain on dealers' lots. The successful introduction of our 2004 models, along with gradually strengthening retail sales, have contributed to steady improvement to our order backlog."
Monaco Coach Corporation Vice President and Chief Financial Officer Marty Daley stated, "We continue to balance demand with production rates and finished goods inventory, and we expect third quarter revenue to be similar to the second quarter. Based on our current production rates, we should be able to further reduce finished goods inventory in the third quarter. As a result of lower run rates and continuing retail promotions, we expect third quarter gross margins in the 10.5% to 11% range, and third quarter sales, general, and administrative expenses in the 8.75% to 9.25% range."
Headquartered in Coburg, Oregon, with additional manufacturing facilities in Indiana, Monaco Coach Corporation is one of the nation's leading manufacturers of recreational vehicles. The company offers customers luxury recreational vehicle models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie and Royale Coach brand names.
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited: dollars in thousands)
December 28, June 28,
2002 2003
ASSETS
Current assets:
Trade receivables, net $116,647 $104,790
Inventories 175,609 161,176
Resort lot inventory 26,883 22,622
Prepaid expenses 3,612 3,527
Deferred income taxes 33,379 32,468
Total current assets 356,130 324,583
Property, plant and equipment, net 135,350 143,052
Debt issuance costs net of accumulated
amortization of $389, and $566, respectively 683 806
Goodwill, net of accumulated amortization
of $5,320 and $5,320, respectively 55,254 55,254
Total assets $547,417 $523,695
LIABILITIES
Current liabilities:
Book overdraft $3,518 $9,486
Line of credit 51,413 41,785
Current portion of long-term note payable 21,667 21,667
Accounts payable 78,055 67,396
Product liability reserve 21,322 21,491
Product warranty reserve 31,745 29,329
Income taxes payable 4,536 0
Accrued expenses and other liabilities 29,633 28,545
Total current liabilities 241,889 219,699
Long-term note payable 30,333 21,667
Deferred income taxes 14,568 15,815
286,790 257,181
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par, 1,934,783 shares
authorized, no shares outstanding
Common stock, $.01 par value; 50,000,000
shares authorized, 28,871,144 and 29,051,281
issued and outstanding, respectively 289 291
Additional paid-in capital 51,501 52,478
Retained earnings 208,837 213,745
Total stockholders' equity 260,627 266,514
Total liabilities and stockholders'
equity $547,417 $523,695
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited: dollars in thousands, except share and per share data)
Quarter Ended Six-Months Ended
June 29, June 28, June 29, June 28,
2002 2003 2002 2003
Net sales $313,742 $268,361 $607,342 $541,935
Cost of sales 272,513 241,108 528,368 481,076
Gross profit 41,229 27,253 78,974 60,859
Selling, general and
administrative expenses 22,505 25,744 43,671 51,393
Operating income 18,724 1,509 35,303 9,466
Other income, net 2 232 43 438
Interest expense (669) (779) (1,367) (1,791)
Income before
income taxes 18,057 962 33,979 8,113
Provision for
income taxes 7,087 380 13,336 3,205
Net income $10,970 $582 $20,643 $4,908
Earnings per common share:
Basic $.38 $.02 $.72 $.17
Diluted $.37 $.02 $.70 $.17
Weighted average
common shares
outstanding:
Basic 28,807,792 29,027,603 28,760,396 28,992,255
Diluted 29,660,847 29,469,777 29,642,792 29,405,286
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited: dollars in thousands)
Six-Months Ended
June 29, June 28,
2002 2003
Increase (Decrease) in Cash:
Cash flows from operating activities:
Net income $20,643 $4,908
Adjustments to reconcile net income to
net cash provided (used) by
operating activities:
Loss on sale of assets 0 287
Depreciation and amortization 4,010 4,677
Deferred income taxes 4,030 2,158
Changes in working capital accounts:
Trade receivables, net (39,301) 11,857
Inventories (24,105) 14,433
Resort lot inventory 4,261
Prepaid expenses (2,992) 80
Accounts payable 21,198 (10,659)
Product liability reserve 568 169
Product warranty reserve 2,081 (2,416)
Income taxes payable 6,317 (4,536)
Accrued expenses and other liabilities 6,304 (1,088)
Net cash provided (used ) by
operating activities (1,247) 24,131
Cash flows from investing activities:
Additions to property, plant and equipment (6,797) (14,272)
Proceeds from sale of assets 13 1,789
Issuance of notes receivable (13) 0
Net cash used in investing activities (6,797) (12,483)
Cash flows from financing activities:
Book overdraft 10,869 5,968
(Payments) borrowings on lines of
credit, net 1,000 (9,628)
Payments on long-term notes payable (5,000) (8,666)
Debt issuance costs (301)
Issuance of common stock 1,175 979
Net cash provided (used) by
financing activities 8,044 (11,648)
Net change in cash 0 0
Cash at beginning of period 0 0
Cash at end of period $0 $0