National R.V. Holdings, Inc. Announces Second Quarter Results

PERRIS, Calif., Aug. 13, 2007 -- National R.V. Holdings, Inc. today announced financial results for its second quarter and six months ended June 30, 2007.

Net sales from continuing operations were $23.4 million for the second quarter of 2007 a decline of 42.5% from $40.6 million in the second quarter of 2006. For the six months ended June 30, 2007, net sales from continuing operations declined 52.5% to $45.3 million from $95.3 million in the same period last year.

For the second quarter and the six months ended June 30, 2007, the Company reported losses from continuing operations of $8.0 million and $16.8 million, respectively, compared to losses from continuing operations of $8.4 million and $11.0 million for the comparable periods in 2006. These figures correspond to losses from continuing operations of $0.77 per diluted share for the second quarter of 2007 and $1.63 per diluted share for the first six months of 2007, compared to losses from continuing operations of $0.82 per diluted share for the second quarter of 2006 and $1.06 per diluted share for the first six months of 2006. The Company reported a net loss of $8.0 million for the second quarter and a net loss of $12.0 million for the six months ended June 30, 2007, after reflecting a $7.3 million gain on the sale of Country Coach, Inc. and a $2.4 million loss reported by the discontinued operation during the first quarter of 2007. The net losses per share for the second quarter and the six months ended June 30, 2007, were $0.77 and $1.16 per diluted share, respectively as compared to $0.69 and $0.89 for the same periods last year.

For the six months ended June 30, 2007, the Company's wholesale unit shipments of diesel motorhomes were 119, down 57.3% from 279 units during 2006. Wholesale unit shipments of gas motorhomes were 312 for the first six months of 2007, down 54.8% from 691 units shipped during the first six months of 2006. The Company's combined diesel and gas Class A motorhome shipments were down 55.6% in the first half of 2007 compared to 2006, while the average selling price increased 7.1% to $105,000 in the first half of 2007, compared to $98,000 in 2006.

During the second quarter of 2007, the Company completed the sale and leaseback transaction, with First Industrial Acquisitions, Inc., of its manufacturing facilities. Under the terms of the agreement, the sales price was $31.75 million, and the Company entered into a 10-year, triple-net lease with approximately $2.7 million in annual lease payments, which increase 3% per year. The lease includes two 5-year renewal options.

"Continued cost cutting efforts announced in our last earnings release and carried out during the second quarter, were mostly offset by high discounts and incentives to move model-year-end inventories, by inefficiencies related to manufacturing and launching new model-year products, and by high legal costs associated with the Company's lawsuit against a supplier," stated David Humphreys, the Company Chairman and newly appointed Interim CEO, "On the positive side," continued Humphreys, "there was no further erosion in sales, and 2008 model-year products are now out into the marketplace, including the completely redesigned Sea Breeze gas and Tropi-Cal diesel motorhomes. The Company signed several new dealers during the second quarter and the 2008 model-year products are being well received, which is resulting in planned increases in its build rate."

The Company reported gross loss margins from continuing operations for the second quarter and six months ended June 30, 2007, of (17.6)% and (19.6)%, respectively, compared to gross loss margins of (11.1)% and (2.9)% for the same periods last year. The lower gross margin for the first half of 2007 was due to significantly lower sales volumes, and the associated lower production rates leading to lower fixed-cost absorption, higher sales incentives and increased warranty costs, partially offset by a reduction in indirect labor costs and the costs related to the defective fiberglass material in the second quarter of 2006 not reflected in the 2007 results.

Operating expenses from continuing operations for the second quarter ended June 30, 2007 increased 13.4% to $3.8 million, or 16.5% of net sales, compared to $3.4 million, or 8.3% of net sales, for the second quarter of 2006. For the six months ended June 30, 2007, operating expenses increased 2.8% to $7.5 million, or 16.6% of net sales, compared to $7.3 million, or 7.7% of net sales, for the same period of the prior year. Increases associated with higher litigation and loan costs, were partially offset by reductions in personnel, marketing expenses and lower share-based compensation costs.

About National R.V. Holdings, Inc.

National R.V. Holdings, Inc., through its wholly-owned subsidiary, National RV, Inc., is one of the nation's leading producers of motorized recreational vehicles, often referred to as RVs or motorhomes. From its Perris, California facility, NRV designs, manufactures and markets Class A gas and diesel motorhomes under model names Surf Side, Sea Breeze, Dolphin, Tropi-Cal, Pacifica and Tradewinds. NRV began manufacturing RVs in 1964.