Monaco Coach Corporation Reports Second Quarter Profits on Record Revenues and Record Unit Sales
Unit Sales Up 40% Over the First Six Months of 2003; First Six-Month Revenue Up 31%
COBURG, Ore., July 28 -- Monaco Coach Corporation today reported earnings per share of 40 cents, on record revenue of $357.8 million for its second quarter ended July 3, 2004. This compares to earnings per share of 2 cents on revenue of $268.5 million for the second quarter of 2003. Net income for the second quarter of 2004 was $11.9 million. Operating income for the second quarter of 2004 was $18.9 million. Second quarter 2004 motorhome sales totaled 2,125 units and second quarter towable recreational vehicles totaled 1,222 units for a total of 3,347 units sold during the quarter, also a company record.
For the six months ended July 3, 2004, earnings per share were 80 cents on revenue of $712.8 million. This compares to earnings per share of 17 cents on revenue of $542.2 million for the six months ended June 28, 2003. Net income for the six months ended July 3, 2004 was $23.9 million, compared to net income of $4.9 million for the six months ended June 28, 2003. Operating income for the six months ending July 3, 2004 was $38.6 million, compared to operating income of $9.7 million for the six months ended June 28, 2003. Unit sales of Monaco Coach Corporation products for the six months ended July 3, 2004 totaled 6,483 units, compared to 4,627 units for the first six months of 2003. Six-month 2004 motorhome sales totaled 4,267 units and six-month towable recreational vehicles totaled 2,216 units.
"We are very pleased to report record revenue and unit sales for the second straight quarter," stated Monaco Coach Corporation Chairman and Chief Executive Officer Kay Toolson. "We were encouraged by a very successful dealer meeting, which resulted in record ordering for our new models. The meeting also strengthened the relationships we have with our dealer partners. This positive response to our line-up of products has led to a backlog which stands in excess of $300 million."
Monaco Coach Corporation President John Nepute added, "Our modest price increases in the second quarter tempered the higher costs of commodity materials used to manufacture our products which had increased during the first quarter. However, these improvements in our gross margins were offset by higher sales incentives that were used to move 2004 model year product. Since we were successful in moving virtually all of our 2004 products, we expect to reduce the amount of incentives offered, and as a result, improve gross margins."
Monaco Coach Corporation Vice President and Chief Financial Officer Marty Daley stated, "We expect continuing demand for Monaco products to maintain our third quarter revenues at approximately $350 - $360 million. This sales level, given our current production mix, and considering some competitive pressures in certain market segments, should allow for third quarter gross margins to increase to between 12.8% and 13.2%, with sales, general, and administrative expenses expected in the 7.4% to 7.6% 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, except share and per share data)
January 3, July 3,
2004 2004
ASSETS
Current assets:
Cash $13,398 $11,985
Trade receivables, net 89,170 115,012
Inventories 127,746 158,631
Resort lot inventory 13,978 8,136
Prepaid expenses 3,029 6,877
Deferred income taxes 33,836 33,555
Total current assets 281,157 334,196
Property, plant, and equipment, net 141,662 140,459
Debt issuance costs net of
accumulated amortization of $815,
and $1,073, respectively 596 338
Goodwill 55,254 55,254
Total assets $478,669 $530,247
LIABILITIES
Current liabilities:
Current portion of long-term
note payable $15,000 $15,000
Accounts payable 64,792 92,763
Product liability reserve 20,723 20,806
Product warranty reserve 29,643 33,225
Income taxes payable 3,395 3,369
Accrued expenses and
other liabilities 26,373 31,495
Total current liabilities 159,926 196,658
Long-term note payable 15,000 7,500
Deferred income taxes 17,495 17,488
192,421 221,646
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par,
1,934,783 shares authorized,
no shares outstanding
Common stock, $.01 par value;
50,000,000 shares authorized,
29,246,143 and 29,388,432 issued
and outstanding, respectively 292 294
Additional paid-in capital 54,919 56,333
Retained earnings 231,037 251,974
Total stockholders' equity 286,248 308,601
Total liabilities and
stockholders' equity $478,669 $530,247
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited: dollars in thousands, except share and per share data)
Quarter Ended Six-Months Ended
June 28, July 3, June 28, July 3,
2003 2004 2003 2004
Net sales $268,456 $357,774 $542,217 $712,750
Cost of sales 241,108 312,125 481,076 622,618
Gross profit 27,348 45,649 61,141 90,132
Selling, general,
and administrative
expenses 25,744 26,721 51,393 51,521
Operating
income 1,604 18,928 9,748 38,611
Other income, net 137 127 156 213
Interest expense (779) (372) (1,791) (777)
Income before
income taxes 962 18,683 8,113 38,047
Provision for
income taxes 380 6,735 3,205 14,176
Net income $582 $11,948 $4,908 $23,871
Earnings per
common share:
Basic $.02 $.41 $.17 $.81
Diluted $.02 $.40 $.17 $.80
Weighted average
common shares
outstanding:
Basic 29,027,603 29,357,514 28,992,255 29,326,855
Diluted 29,469,777 30,013,014 29,405,286 29,990,241
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited: dollars in thousands)
Six-Months Ended
June 28, July 3,
2003 2004
Increase (Decrease) in Cash:
Cash flows from operating activities:
Net income $4,908 $23,871
Adjustments to reconcile net income
to net cash (used) provided by
operating activities:
Loss on sale of assets 287 43
Depreciation and amortization 4,677 5,388
Deferred income taxes 2,158 274
Changes in working capital accounts:
Trade receivables, net 11,857 (25,842)
Inventories 14,433 (30,885)
Resort lot inventory 4,261 5,842
Prepaid expenses 80 (3,853)
Accounts payable (10,659) 27,971
Product liability reserve 169 83
Product warranty reserve (2,416) 3,582
Income taxes payable (4,536) (26)
Accrued expenses and other liabilities (1,088) 5,122
Net cash provided by
operating activities 24,131 11,570
Cash flows from investing activities:
Additions to property, plant,
and equipment (14,272) (4,110)
Proceeds from sale of assets 1,789 145
Net cash used in investing
activities (12,483) (3,965)
Cash flows from financing activities:
Book overdraft 5,968 0
Payments on lines of credit, net (9,628) 0
Payments on long-term notes payable (8,666) (7,500)
Debt issuance costs (301) 0
Dividends paid 0 (2,934)
Issuance of common stock 979 1,416
Net cash used by financing
activities (11,648) (9,018)
Net change in cash 0 (1,413)
Cash at beginning of period 0 13,398
Cash at end of period $0 $11,985