Monaco Coach Corporation Reports Record Revenues and Unit Sales for 2004

Total RV Unit Sales Rose 33%, Towable Unit Sales Jumped 78% In 2004 Despite Q4 Slowdown

COBURG, Ore., Feb. 1 -- Monaco Coach Corporation today reported revenue and earnings for the fourth quarter and fiscal year ended January 1, 2005.

For the fiscal year ended January 1, 2005 revenue increased 19.6% to a record $1.4 billion compared to $1.2 billion for the prior fiscal year. Operating income for the year increased 56.7% to $59.9 million versus $38.2 million for 2003. Net income for the year was $36.7 million, a 65.3% increase over $22.2 million earned in 2003. Earnings per share increased by 64.0% to $1.23 per share in 2004, compared to $0.75 per share for 2003.

Fourth quarter 2004 revenue increased 1% to $325.6 million, versus $322.9 million for the fourth quarter of 2003. Operating income for the fourth quarter decreased to $8.9 million compared to $17.4 million for the fourth quarter of 2003. Net income for the fourth quarter was $5.4 million versus $11.0 million for the fourth quarter of 2003. Earnings per share for the quarter were 18 cents versus 37 cents for the same period last year.

Unit sales of Monaco Coach Corporation products for the fiscal year ended January 1, 2005 totaled 12,820 units, up 32.9% from 9,644 units for the prior year. Fiscal-year motorhome sales totaled 8,199 units up 16.3% and fiscal year towable recreational vehicles totaled 4,621 up 78.2% compared to 2003.

For the fourth quarter 2004, unit sales of Monaco Coach Corporation products increased by 15.2% to 2,973 units, up from 2,581 units for the same period a year ago. Fourth quarter motorhome sales totaled 1,822 units and fourth quarter towable recreational vehicles totaled 1,151 units.

"We are very proud of what our team accomplished in 2004," stated Monaco Coach Chairman and Chief Executive Officer Kay Toolson. "Despite the slowdown of the markets in the second half of the year due to the hurricanes in the Southeast and the hesitation by consumers leading up to the election, 2004's record revenues and unit sales confirm the broadening acceptance of the full range of Monaco Coach products by the retail customer and our dealer partners. While many markets remain very competitive, we are currently focused more than ever on developing, engineering, and manufacturing the best products in the recreational vehicle industry, including entry level fifth wheels and travel trailers, mid-range gasoline powered models and our legacy class-A diesel products."

According to Monaco Coach President John Nepute, "We were pleased that our overall 2004 margins improved as compared to 2003. Competition in the mid to low priced class-A motorhome market and the end of the year retail softness created pricing that remained very competitive. This has led to pressure on our gross profit margin. We reduced production in the fourth quarter in an attempt to match retail demand and make sure dealer inventories remained normal. We responded to the competitive pricing to ensure that we were not left with a finished goods inventory buildup and to maintain an appropriate level of shelf-space with our dealer partners."

Nepute went on to say, "We expect the retail market to improve as our dealer partners participate at the various RV shows and rallies which are just beginning across the country. The anticipated reduction of inventory should help to improve the pricing environment."

Monaco Coach Corporation Vice President and Chief Financial Officer Marty Daley said, "The company remains very focused on making further improvements in the selling, general and administrative expenses area. We reduced these expenses by over $3 million in the fourth quarter, compared to the third quarter of 2004.

"The Recreational Vehicle Industry Association's RV market expert, Dr. Richard Curtin, is expecting a modest 3.3% decline for the entire market in 2005. However, we believe that Monaco should be able grow at a faster rate than the overall market, and we expect to see flat to slightly improving unit sales in 2005. We presently anticipate gross margin and selling, general and administrative expenses in 2005 to average 12.1% and 7.8% respectively, reflecting a continuation of moderate discounting and sales promotions through the first half of the year. The resulting earnings per share for the year would be approximately $1.20.

"Accounting for the challenging retail environment we have reduced production days in first quarter from 65 to 57. We expect this level of production will result in first quarter revenues of approximately $325 million to $335 million. For the first quarter of 2005 we expect our gross margin and selling and general and administrative expenses to be approximately 11.4% and 8.2%, generating operating margins in the 3.0% to 3.2% range and earnings per share of 20 cents to 22 cents."

Headquartered in Coburg, Oregon, with additional manufacturing facilities in Central Oregon and Indiana, Monaco Coach Corporation employs more than 6000 people and is one of the nation's leading manufacturers of recreational vehicles. The company offers entry-level priced towable RVs up to custom made luxury recreational vehicle models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie and Royale Coach brand names. For additional information about Monaco Coach Corporation please visit www.monaco-online.com.