National RV Holdings Announces Fourth Quarter and Year End 2004 Financial Results
PERRIS, Calif., March 1 -- National RV Holdings, Inc. today announced that financial results from continuing operations for the fourth quarter of 2004 was a net loss of $1.0 million, or a loss of $0.09 per diluted share, as compared to net income from continuing operations of $1.2 million, or $0.11 per diluted share, for the same quarter in 2003. Financial results for the fourth quarter of 2003, including discontinued operations, was net income of $0.5 million, or $0.05 per diluted share. Net income from continuing operations for the twelve months ended December 31, 2004 was $3.7 million or $0.35 per diluted share compared to a loss in the same period of 2003 of $6.9 million or a loss of $0.70 per diluted share. Financial results including discontinued operations for the twelve months ended December 31, 2004, was net income of $2.5 million, or $0.24 per diluted share as compared to a net loss of $8.3 million, or a loss of $0.84 in the same period in 2003. In September 2004, the Company sold its travel trailer business, which has been designated as a discontinued operation.
Net sales from continuing operations for the three months ended December 31, 2004 increased 9% to $101.3 million as compared to $93.3 million for the three months ended December 31, 2003. Gross margins were 6.7% in the fourth quarter of 2004 as compared to 7.2% in the fourth quarter of 2003. Net sales from continuing operations for the year were $442.3 million as compared to $314.3 million in 2003, an increase of 41%. Gross margins were 7.5% for the 2004 year as compared to 2.5% in 2003.
Commenting on the results, National's president and chief executive officer, Brad Albrechtsen said, "Despite a small fourth quarter loss triggered by industry-wide weakness in the Class A gas business, we are very pleased to report our first profitable year since 2000 and we believe we have turned the corner. Both divisions experienced strong year-over-year sales growth with particular strength in our highline diesel business. The 41% growth in sales was instrumental in turning an 84-cent loss in 2003 into a 24-cent profit in 2004."
"We are particularly pleased with results at our Country Coach division," stated Albrechtsen, "where sales increased 66% in 2004 compared to 2003, fueled by retooled products, the introduction of the Inspire product, and strong industry demand for diesel-powered motorhomes. At our National RV division, where in 2004 nearly three-quarters of our motorhome unit sales came from gas-powered units, we have bolstered our diesel offerings by recently reintroducing the Tradewinds and Islander brands. These were well received at the annual trade show in Louisville and carry strong backlogs. We believe the financial impact of these products, which begin hitting dealer lots in numbers in mid March will start to be felt in the 2nd quarter of 2005."
Country Coach's quarterly sales were $65.3 million, reflecting an increase of $22.4 million, or 52%, over results for the fourth quarter of 2003. National RV's quarterly sales were $36.0 million, reflecting a decrease of $14.4 million, or 29%, over results for the fourth quarter of 2003. Country Coach's year-to-date sales were $225.0 million, reflecting an increase of $89.6 million, or 66%, over results for the year-to-date sales in 2003. National RV's year-to-date sales were $217.3 million, reflecting an increase of $38.4 million, or 21%, over results for the same period in 2003.
Selling, general and administrative expenses during the fourth quarter of 2004 increased 66% to $8.1 million compared to $4.9 million in the same period a year earlier, driven primarily by increased personnel expenses and approximately $1.2 million related to Sarbanes-Oxley ("SOX") compliance, which excludes internally incurred SOX expenses. This SOX compliance expense equates to $0.07 per share on a diluted basis for the fourth quarter of 2004. Management believes that a substantial amount of the SOX expense is nonrecurring and related to the design and implementation of internal control procedures. As a percentage of sales, SG&A expenses increased to 8.0% of sales in the fourth quarter of 2004 from 5.2% in the fourth quarter of 2003.
As required by Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX 404"), the Company has been working to assess effectiveness of the its internal controls over financial reporting as of the end of the December 31, 2004 fiscal year. SOX 404 requires disclosure of any material weaknesses in the Company's internal control over financial reporting that have been identified by management. Our assessment of compliance with SOX 404 is ongoing and is therefore incomplete. We expect to complete the remaining steps in our assessment of internal controls in time to file our Form 10-K for the year ending December 31, 2004 prior to the SEC reporting deadline. However, at the current stage of our assessment process, both management and our independent auditors have identified two areas where we believe there will be internal control deficiencies that will constitute material weaknesses in internal controls, both at a single division. The first is a material weakness in the physical inventory process at year-end. The second is a material weakness in the financial close process. Neither of these weaknesses resulted in material errors in our December 31, 2004 financial results as reported in this release, nor is it our belief that such weaknesses will result in changes to these results. Further, in each case where we have identified internal control deficiencies, management has taken and is taking steps to remediate the deficiencies. As required by applicable SEC rules, because of these material weaknesses, neither the Company nor its independent auditors will be able to conclude in the upcoming 10-K filing that the Company's internal control over financial reporting was effective as of 2004 year-end.
National R.V. Holdings will host a live webcast to review fourth quarter results today, March 1, 2005, at 11 a.m. Eastern Time. 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., through its two wholly owned subsidiaries, National RV, Inc. (NRV) and Country Coach, Inc. (CCI), is one of the nation's leading producers of motorized recreation vehicles. NRV is located in Perris, California where it produces Class A gas and diesel motor homes under model names Dolphin, Islander, Sea Breeze, Tradewinds and Tropi-Cal. CCI is located in Junction City, Oregon where it produces high-end Class A diesel motor homes under the model names Affinity, Allure, Inspire, Intrigue, Lexa and Magna, and bus conversions under the Country Coach Prevost brand.
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Twelve Months
Ended December 31, Ended December 31,
2004 2003 2004 2003
Net sales $101,300 $93,307 $442,277 $314,286
Cost of goods sold 94,498 86,544 408,901 306,293
Gross profit 6,802 6,763 33,376 7,993
Selling expenses 3,840 2,951 13,738 11,236
General and
administrative expenses 4,230 1,907 12,873 7,314
Other expense 258 -- 632 --
Operating (loss)
income (1,526) 1,905 6,133 (10,557)
Interest expense 197 90 327 399
Other income (35) (1) (107) (7)
(Loss) income from
continuing operations
before income taxes (1,688) 1,816 5,913 (10,949)
(Benefit) provision for
income taxes (722) 666 2,263 (4,057)
(Loss) income from
continuing operations (966) 1,150 3,650 (6,892)
Loss from discontinued
operations -- 1,074 2,155 2,301
Loss (gain) from sale
of discontinued operations 105 -- (231) --
Benefit for income taxes (42) (399) (756) (853)
Net loss from
discontinued
operations (63) (675) (1,168) (1,448)
Net (loss) income $(1,029) $475 $2,482 $(8,340)
Basic (loss) earnings
per common share:
Continuing operations $(0.09) $0.11 $0.36 $(0.70)
Discontinued operations $(0.01) $(0.06) $(0.12) $(0.14)
Total $(0.10) $0.05 $0.24 $(0.84)
Diluted (loss) earnings
per common share:
Continuing operations $(0.09) $0.11 $0.35 $(0.70)
Discontinued operations $(0.01) $(0.06) $(0.11) $(0.14)
Total $(0.10) $0.05 $0.24 $(0.84)
Weighted average number
of shares
Basic 10,251 10,095 10,217 9,900
Diluted 10,251 10,201 10,383 9,900
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31, December 31,
2004 2003
ASSETS
Current assets:
Cash and cash equivalents $11 $2,059
Restricted cash 251 250
Trade receivables, less allowance
for doubtful accounts ($137 and
$132, respectively) 23,641 20,978
Inventories 71,584 51,659
Deferred income taxes 5,639 7,955
Note receivable 1,880 --
Prepaid expenses 2,924 1,658
Total current assets 105,930 84,559
Property, plant and equipment, net 37,723 40,833
Long-term deferred income taxes 5,137 3,805
Other 1,338 1,252
$150,128 $130,449
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit 12,690 --
Book overdraft 803 --
Current portion of long-term debt -- 19
Current portion of capital leases 51 --
Accounts payable 16,612 14,101
Accrued expenses 21,285 20,770
Total current liabilities 51,441 34,890
Long-term accrued expenses 7,069 7,569
Long-term portion of capital leases 185 -
Total liabilities 58,695 42,459
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,
10,302,109 and 10,190,230 issued
and outstanding, respectively 103 102
Additional paid-in capital 37,423 36,463
Retained earnings 53,907 51,425
Total stockholders' equity 91,433 87,990
$150,128 $130,449
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
December 31,
2004 2003
Cash flows from operating activities:
Net income (loss) $2,482 $(8,340)
Adjustments to reconcile net income
(loss) to net cash (used in)
provided by operating activities:
Depreciation 3,840 3,952
Loss (gain) on asset disposal 441 (1)
Tax benefit related to exercise
of stock options 254 550
Changes in assets and liabilities,
net of discontinued operations:
Increase in restricted cash (1) (250)
Increase in trade receivables, net (2,353) (11,149)
(Increase) decrease in inventories (22,757) 20,873
Decrease in income taxes receivable -- 7,015
(Increase) decrease in prepaid
expenses (1,266) 476
Increase in accounts payable 2,511 618
Decrease in accrued expenses 15 (225)
Decrease (increase) in deferred
income taxes 984 (5,388)
Net cash (used in) provided by
operating activities (15,850) 8,131
Cash flows from investing activities:
Increase in other assets (86) (239)
Proceeds from sale of assets 3,601 14
Proceeds from sale of discontinued
operation 942 --
Purchases of property, plant and
equipment (4,828) (1,568)
Net cash used in investing activities (371) (1,793)
Cash flows from financing activities:
Net advances under (payments on)
line of credit 12,690 (4,943)
Increase (decrease) in book overdraft 803 (943)
Principal payments on long-term debt (19) (22)
Principal payments on capital leases (8) --
Proceeds from issuance of common stock 707 1,615
Net cash provided by (used in)
financing activities 14,173 (4,293)
Net (decrease) increase in cash (2,048) 2,045
Cash, beginning of year 2,059 14
Cash, end of year $11 $2,059
