Rexhall Industries Announces First Quarter Results
28 April 2000
Rexhall Industries Announces First Quarter Results
LANCASTER, Calif., April 28 Rexhall Industries, Inc.
(Nasdaq: REXL) today announced lower sales and earnings for its first quarter
ended March 31, 2000, reflecting the reorganization under Chapter 11
bankruptcy of its largest dealer.
The Lancaster, Calif. manufacturer of Class A motorhomes reported net
income of $964,000, or $0.31 per diluted share, in the 2000 first quarter,
compared with net income of $1.3 million, or $0.40 per diluted share, in the
same period in 1999. Rexhall posted net sales of $20.7 million in the current
quarter, versus net sales of $22.2 million in the prior year first quarter, a
7.0% decrease. Rexhall cited a halt in orders in the 2000 first quarter from
its largest customer, which since has declared bankruptcy, for the sales and
earnings shortfall. The Arizona-based multi-store dealer is Rexhall's only
dealer in the large Arizona market for RVs and accounted for 16% of Rexhall's
net sales in 1999.
"We are obviously disappointed in this development and its impact on our
financial results in the first quarter," said William J. Rex, Rexhall
chairman, president and CEO. "Excluding this one dealer, sales of our premium
Class A products were up in the period, though we did see some softening in
the overall RV market as gas prices and concern over interest rates have eased
demand."
Rex added: "We are working closely with the management of this dealership
and the bankers involved in the reorganization to recover our lost sales.
Though difficult in the short-term, we expect this issue will result in an
opportunity to expand our distribution with new dealers and in turn minimize
our risk in the important Arizona market."
Rexhall reported lower gross profit and operating margins in the quarter,
due principally to the spread of fixed expenses across a smaller base of
sales. The Company said it expects to continue to feel some residual effects
in the second quarter from the difficulties with its Arizona dealer. Rexhall
expects the addition of new dealers it has secured in other markets around the
country as well as immediate efforts it is undertaking to return to selling
its RVs in the Arizona market will offset the negative impact of the customer
bankruptcy.
"We have the innovative products that consumers demand, and we are
focusing on distribution in the coming quarters to get back on the growth
track," Rex concluded.
Rexhall Industries, Inc. (http://www.rexhall.com ) designs, manufactures and
sells various models of Class A motorhomes used for leisure travel and outdoor
activities. Rexhall's six lines of Class A motorhomes, sold through more than
100 dealer locations across the U.S., Canada and Europe, include Aerbus,
RexAir, Vision, American Clipper, Anthem and RoseAir. Rexhall was recently
ranked one of America's 100 Fastest Growing Companies by Individual Investor
magazine.
FORWARD-LOOKING STATEMENTS: RISK FACTORS. Our statements of our
intentions or expectations are "forward-looking statements", based on
assumptions and on facts known to us today. There are risks that actual
developments will not be as favorable as our expectations, both because of
risks existing today and because of new factors arising. We do not intend to
update this report. Rexhall's business is seasonal. The recreational vehicle
industry has in the past enjoyed favorable recreational vehicle industry sales
when we have low interest rates, low unemployment, and ready availability of
motor fuel. We see continual speculation that interest rates will rise, and
recent reports of decreased consumer confidence may reduce sales. Many of
Rexhall's competitors are substantially larger, and many of its suppliers also
have greater economic power, so that the volume and prices of both supplies
and sales may be adversely affected. Management intends to remain aware of
these factors and react to them, but cannot predict their timing or
significance.
REXHALL INDUSTRIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31, 2000 March 31, 1999
Net Revenues $20,664 $22,233
Cost of Sales 17,361 18,094
Gross Profit 3,303 4,139
Selling, General and Administrative
Expenses and Other Income and Expenses 1,648 2,044
Income Before Income Taxes 1,655 2,095
Income Tax Expense 691 836
Net Income $ 964 $1,259
Diluted Net Income Per Common Share (1) $0.31 $ 0.40
Weighted Average Shares Outstanding
- Diluted (1) 3,160,850 3,160,850
(1) Retroactively adjusted to give effect to 5% stock dividend of 150,488
shares in 1999.