Monaco Coach Corporation Reports Third Quarter 2007 Results
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COBURG, Ore., Oct. 31, 2007 -- Monaco Coach Corporation , one of the nation's leading manufacturers of recreational vehicles, today reported revenues and earnings for the third quarter ended September 29, 2007.
Third quarter 2007 revenues were $322.4 million, up 10.2% compared to $292.5 million in revenues for the third quarter of 2006. The Company reported a 95.7% increase in gross profit to $36.2 million for the third quarter of 2007, compared to $18.5 million a year ago. Net income for the third quarter of 2007 was $3.7 million, compared to a $7.1 million loss a year ago. For the third quarter of 2007, diluted earnings per share were $0.12 versus a loss of $0.24 for the same period last year.
For the nine months ended September 29, 2007, revenues were $980.0 million, compared to $998.8 million for the nine months ended September 30, 2006. The Company reported net income of $9.6 million for the recent nine-month period, compared to $1.6 million for the same period in 2006. Earnings per share on a diluted basis for the first nine months of 2007 were $0.32, compared to $0.05 for the same period last year.
"We have made good progress on several initiatives so far in 2007," said Kay Toolson, Chairman and Chief Executive Officer of Monaco Coach Corporation. "Most noticeably, our extensive realignment of production and consolidation of sub-assembly plants have improved our operations and margins. We expect to continue to improve our plant efficiencies during the fourth quarter and into next year with the consolidation of the Elkhart towable operations into our existing facilities in Wakarusa and Warsaw, Indiana."
"We are pleased to report a rise in our motorhome market share, and 17% growth for the third quarter in our core motorized segment. Our Company has remained aggressive in 2007 with new product developments, introducing new floor plans and features that meet consumers' changing desires," noted Toolson.
"The recreational vehicle industry faces challenges such as declining consumer confidence, higher fuel prices and volatile equity markets. Nevertheless, we are convinced that the long-term positive prospects for our Company and the RV industry are compelling, as millions of baby boomers retire and are drawn to the appeal of the RV lifestyle."
Gross profit margin for the Company increased in the third quarter of 2007 to 11.2%, compared to 6.3% in the third quarter of 2006. The Company's gross profit margin improved because of better plant efficiencies, including improved material usage, higher absorption of indirect costs and direct labor savings. The Company also experienced favorable workers' compensation claim experience. A shift in mix to higher margin motorized sales and reductions in the reliance on discounts used to market products further increased gross profit margins during the period.
"Our low finished goods inventory level at the beginning of the quarter and sales visibility throughout the quarter resulted in a balance between production and demand," stated John Nepute, President of Monaco Coach Corporation.
"Internally, the Company and employees benefited from better control of rising health care costs. This success was due to a variety of initiatives, including our on-site health care clinic, which has provided better access to health care for many of our employees."
For the third quarter of 2007, reductions in selling and marketing costs led to selling, general and administrative expenses of 9.2% of sales, down from 10.1% a year ago.
"Our Custom Chassis Products joint venture is making progress and we expect to generate a profit from that investment in the fourth quarter," Nepute added.
The Company reported cash balances at the end of the quarter of $35.2 million compared to $5.0 million at the end of the 2006 fiscal year. Inventories at the end of the third quarter 2007 were $148.1 million, down from $155.9 million at year-end. The Company reported a zero balance on its line of credit and had $30.5 million of long-term debt. Accounts payable at the end of the third quarter was $95.4 million, up from $72.6 million at the end of the 2006 fiscal year.
Motorized Recreational Vehicle Segment
Motorized sales of $258.0 million in the third quarter of 2007 increased 17.2% compared to $220.2 million in the third quarter of 2006. Total Class A wholesale shipments for the first three quarters were 3,955, compared to 3,981 for the same period in 2006. As reported by Statistical Surveys, Inc., Monaco Coach Corporation had a 0.4% decrease in domestic motorhome retail registrations sold year-to-date through August 2007, while industry-wide there was a decline of 4.9%, resulting in a 4.8% rise in the Company's market share for the same period.
Segment gross profit for the third quarter of 2007 was $29.4 million, or 11.4% of sales, compared to $12.2 million, or 5.5% of sales, for the third quarter of 2006. Operating income for the recent quarter was $6.8 million, or 2.6% of sales, compared to an operating loss of $7.7 million in the third quarter of 2006.
Unit sales of the Motorized RV Segment for the quarter ended September 29, 2007 totaled 1,470, up 9.6% from 1,341 units for the prior year period. Diesel Class A units shipped were 1,080 versus 1,088, gas Class A units shipped were 230 versus 85, and Class C units shipped were 160 versus 168.
Towable Recreational Vehicle Segment
The Company reported towable sales of $64.2 million for the third quarter of 2007, compared to sales of $70.5 million for the third quarter of 2006. Total towable shipments for the first three quarters were 13,439, compared to 16,811 for the same period last year, which included 2,019 FEMA units. Travel trailer and fifth-wheel retail registrations for the overall domestic market, according to Statistical Surveys, reported a year-to-date increase of 2.8% through August 2007, and for the Company they reported a 1.9% decline in retail sales for the same period.
Gross profit for the third quarter of 2007 for the towable segment was $6.7 million, or 10.4% of sales, compared to $5.1 million, or 7.2% of sales for the third quarter of 2006. Operating income was $871,000, compared to a loss of $2.3 million for the third quarter of 2006.
For the third quarter of 2007, towable unit sales, including specialty trailers, were 3,940 units, down slightly from 3,977 units for the same period a year ago.
Motorhome Resorts Segment
Resort sales for the third quarter of 2007 were $219,000, compared to $1.9 million in the third quarter of 2006. Lot sales in the third quarter are typically slow as fewer prospective owners visit the southwest desert region during the summer months. Reductions in sales were also a function of declining consumer confidence, shrinking inventories of available lots, competition from lot resale activity at the resort itself and to a lesser extent, softness in the national real estate markets. However, the availability of credit has not surfaced as an issue facing this segment.
Currently 35 lots are available in Indio and 33 lots are available in Las Vegas, leaving approximately 8% of the original 807 developed lots. The operating loss for the segment was $1.2 million for the third quarter 2007, compared to an operating loss of $904,000 for the same period last year.
The Company's new resort locations in the Palm Springs, Calif. area and Naples, Fla. are currently under development, with lots expected to be available for sale in the second quarter of 2008 and fourth quarter 2008 at the Naples and Palm Springs locations, respectively.
Business Outlook
"Based upon our current backlog, rates of production and production days available in the fourth quarter, our revenue will be between $290 million and $300 million," said Marty Daley, Chief Financial Officer of Monaco Coach Corporation. "This level of revenue along with our consolidation of towable operations will lead to lower margins and earnings per share for the fourth quarter of $0.02 to $0.04."
"Based on the Recreational Vehicle Industry Association's flat 2008 class A shipment forecast, our fiscal 2008 sales are expected to be approximately even with 2007, or $1.27 billion to $1.28 billion," continued Daley. "Gross profit will benefit from a full-year of the towable consolidation, continued plant efficiency gains, including better material usage and should fall between 11.4% and 11.5%. Selling, general and administrative expenses are expected to be in the range of 9.37% to 9.47%."
About Monaco Coach Corporation
Dedicated to quality and service, Monaco Coach Corporation is one of the nation's leading manufacturers of motorized and towable recreational vehicles. Headquartered in Coburg, Oregon, with substantial manufacturing facilities in Indiana, Monaco Coach employs approximately 5,200 people. The Company offers a variety of RVs, from entry-level priced towables to custom-made luxury models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie, R-Vision and Dodge brand names. Monaco Coach maintains RV service centers in Harrisburg, Ore., Elkhart, Ind., and Wildwood, Fla. The Company operates motorhome only resorts in California, Florida and Nevada.
Ranked as the number one manufacturer of diesel-powered motorhomes, Monaco Coach is a leader in innovative RVs designed to meet the needs of a broad range of customers with varied interests and offers products that appeal to RVers across generations. Monaco Coach Corporation trades on the New York Stock Exchange under the symbol "MNC," and the Company is included in the S&P Small-Cap 600 stock index. For additional information about Monaco Coach Corporation, please visit www.monaco-online.com or www.trail-lite.com.
Additional Information*
Backlog units
Backlog value
Dealer Inventory (units)
Number of production lines
Capacity utilization
Number of independent distribution points**
Motorized Recreational Vehicle Segment
Nine Months Nine Months
Ended Ended
September 30, % of September 29, % of
2006 Sales 2007 Sales
Net sales $700,728 100.00% $754,192 100.00%
Cost of sales 647,910 92.46% 672,029 89.11%
Gross profit 52,818 7.54% 82,163 10.89%
Selling, general
and administrative
expenses & corporate
overhead 58,718 8.38% 65,760 8.72%
Plant relocation costs 269 0.04% -- 0.00%
Operating income
(loss) $(6,169) -0.88% $16,403 2.17%
Units Sold
Class A Diesel 3,211 3,288
Class A Gas 770 667
Class C 383 493
Total 4,364 4,448
Average Gross Wholesale Price
Class A Diesel $194 $203
Class A Gas 84 79
Class C 52 54
Internal retail registrations
Class A Diesel 3,126 3,500
Class A Gas 911 767
Class C 254 352
Total 4,291 4,619
Additional Information*
Backlog units 668
Backlog value 114,379
Dealer Inventory (units) 3,139
Number of production lines 5
Capacity utilization 66%
Number of independent distribution points** 247
* As of 10/24/2007
** Includes Canadian Dealers
Towable Recreational Vehicle Segment
Quarter Quarter
Ended Ended
September 30, % of September 29, % of
2006 Sales 2007 Sales
Net sales $70,450 100.00% $64,221 100.00%
Cost of sales 65,346 92.76% 57,531 89.58%
Gross profit 5,104 7.24% 6,690 10.42%
Selling, general
and administrative
expenses & corporate
overhead 7,409 10.52% 5,819 9.06%
Operating income
(loss) $(2,305) -3.27% $871 1.36%
Units Sold
Travel trailer and fifth wheel 2,957 2,880
Specialty trailer 1,020 1,060
Total 3,977 3,940
Average Gross Wholesale Price
Travel trailer and fifth wheel $23 $20
Specialty trailer 9 11
Internal retail registrations
Travel trailer and fifth wheel 2,830 3,900
Additonal Information*
Backlog units travel trailers
and fifth-wheels
Backlog value
Number of production lines
Capacity utilization
Number of independent
distribution points
Towable Recreational Vehicle Segment
Nine Months Nine Months
Ended Ended
September 30, % of September 29, % of
Net sales $274,092 100.00% $214,669 100.00%
Cost of sales 244,839 89.33% 194,970 90.82%
Gross profit 29,253 10.67% 19,699 9.18%
Selling, general
and administrative
expenses & corporate
overhead 24,953 9.10% 18,053 8.41%
Operating income
(loss) $4,300 1.57% $1,646 0.77%
Units Sold
Travel trailer and
fifth wheel 13,120 10,046
Specialty trailer 3,691 3,393
Total 16,811 13,439
Average Gross Wholesale Price
Travel trailer and
fifth wheel $20 $20
Specialty trailer 8 10
Internal retail
registrations
Travel trailer and
fifth wheel 9,889 10,328
Additonal Information*
Backlog units travel
trailers and
fifth-wheels 605
Backlog value 14,025
Number of production
lines 7
Capacity utilization 59%
Number of independent
distribution points 674
* As of 10/24/2007
Motorhome Resorts Segment
Quarter Quarter
Ended Ended
September 30, % of September 29, % of
2006 Sales 2007 Sales
Net sales $1,864 100.00% $219 100.00%
Cost of sales 634 34.01% 147 67.12%
Gross profit 1,230 65.99% 72 32.88%
Selling, general and administrative
expenses & corporate overhead 2,134 114.48% 1,272 580.82%
Operating income (loss) $(904) -48.50% $(1,200) -547.95%
Lots sold in period 9 1
Unsold developed lots
Project-to-date lots sold
Lots with deposits
Motorhome Resorts Segment
Nine Months Nine Months
Ended Ended
September 30, % of September 29, % of
2006 Sales 2007 Sales
Net sales $24,003 100.00% $11,124 100.00%
Cost of sales 8,602 35.84% 4,213 37.87%
Gross profit 15,401 64.16% 6,911 62.13%
Selling, general and
administrative
expenses & corporate
overhead 9,211 38.37% 6,072 54.58%
Operating income (loss) $6,190 25.79% $839 7.54%
Lots sold in period 117 50
Unsold developed lots 154 68
Project-to-date lots sold 653 739
Lots with deposits 8 --
Resort Locations:
Las Vegas, NV
Total lots in resort are 407, all of which have been developed.
Indio, CA
Total lots in resort are 400, all of which have been developed.
LaQuinta, CA
Total expected lots in resort are 400, some of which will be
available to sell fourth quarter of 2008.
Naples, FL
Total expected lots in resort are 198, some of which will be available
to sell second quarter of 2008.