Coachmen Industries Will Report a Loss in Fourth Quarter; Profit for the Year
12 January 2001
Coachmen Industries Will Report a Loss in Fourth Quarter; Profit for the Year
ELKHART, Ind., Jan. 12 Coachmen Industries, Inc.
announced today that it will report a loss for the fourth quarter
ending December 31, 2000, though the company will remain profitable for the
year. The fourth quarter performance is due to the company's recreational
vehicle (RV) segment that continues to struggle with market conditions
affecting the RV industry. Increases in interest rates, high fuel prices,
dealer inventory adjustments and reduced consumer confidence began to impact
RV industry shipments last summer, and continued to do so through the fourth
quarter. Coachmen's other core business, the modular segment, has remained
profitable.
Recreational Vehicle Segment
In light of the challenging conditions in the RV market and anticipated
continuing softness during the first half of 2001, Coachmen has taken several
proactive steps to gain efficiencies and reduce expenses. During the fourth
quarter, Coachmen RV Company consolidated production from its Oregon travel
trailer plant into two Indiana facilities, and also consolidated production of
its class A motorhomes into one facility in Middlebury, Indiana. Prodesign,
the plastics company, has also consolidated into fewer facilities.
Consistent with its strategic plan to improve efficiencies and asset
utilization, earlier Georgie Boy Manufacturing completed a consolidation of
its Indiana diesel motorhome production into its Michigan complex. Shasta
Industries was consolidated into Coachmen RV Company, and the RV Group has
been reorganized to better leverage efficiencies. As previously announced,
the company also exited the furniture industry with its sale of the Lux
Company. And, the company has also exited RV retailing, with the exception of
two stores that will be retained for R&D and regional service purposes. All
of the remaining stores were closed and liquidated during the fourth quarter
at a greater than anticipated loss.
In spite of the difficult RV market, Coachmen is pleased with the orders
received at the National Trade Show in Louisville, Kentucky held in late
November. During the show, Coachmen RV Company introduced two new travel
trailer and fifth wheel product lines. The Cascade(TM), is targeted to entry-
level buyers and the Ultra-Lite(TM), is positioned to capture the lightweight
market. The company also introduced two innovative new class A motorhome
lines: the Aurora(TM), a mid-range gas powered product and the Cross
Country(TM), an affordable diesel-powered motorhome positioned to appeal to
the important and growing segment of diesel buyers. Due to the success of
these new models, and the strong acceptance of the complete line-up of 2001
product offerings, dealer orders were measurably ahead of the previous year.
Also at the National Trade Show, the company introduced a wholesale
financing program with Transamerica Distribution Finance exclusively available
for dealers of Coachmen Industries products. This new program offers Coachmen
and its qualifying dealers a strong marketing advantage.
"Coachmen continues to be dedicated to meeting customer's needs and dealer
requirements in light of these soft market conditions," noted Claire C.
Skinner, Chairman, CEO and President of Coachmen Industries. "We have been
and will continue to be responsive to these changing conditions and focused on
meeting and enhancing stakeholder and shareholder value."
Modular Segment
The modular segment continued its profitable performance during the fourth
quarter and has a backlog of orders. The more favorable growth and profit
opportunities in the modular segment underscore the strategic plan of the
company to actively seek growth opportunities in this core business. Earlier
in the year, Coachmen expanded its modular segment with the purchase of Mod-U-
Kraf, a Rocky Mount, Virginia modular homebuilder. During the fourth quarter,
the company completed its acquisition of Miller Building Systems, an Elkhart,
Indiana company that concentrates on telecommunications and commercial modular
structures. In November the company signed a proposal to purchase KanBuild,
Inc., an established modular homebuilder with plants in Kansas and Colorado.
KanBuild would become part of the company's All American Homes subsidiary, the
nation's largest modular home producer. In December, the company and KanBuild
reached a definitive agreement, and subject to remaining due diligence, the
company expects this acquisition to be completed during the first quarter of
2001. These acquisitions meet the company's criteria of being accretive to
earnings, and support the company's goal of bringing a balance between its two
core businesses.
"While the fourth quarter was especially challenging, Coachmen continues
to have a strong balance sheet," said James E. Jack, Executive Vice President
and Chief Financial Officer. "We continue to make significant progress with
our strategic plan to improve asset utilization and efficiencies and we will
continue to look for ways to grow our two core businesses, RVs and modular
construction."
Coachmen Industries, Inc., founded in 1964, is one of the nation's leading
full-line manufacturers of recreational vehicles. The company is also a
leader in modular construction. Coachmen is one of the industry's best-known
brand names of RVs and All American Homes, one of the company's modular
subsidiaries, is America's leading listed on the New York Stock Exchange
(NYSE) under the COA ticker symbol.
This release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned not
to place undue reliance on forward-looking statements, which are inherently
uncertain. Actual results may differ materially from that projected or
suggested due to certain risks and uncertainties including, but not limited to
the potential fluctuations in the company's operating results, the
implementation of its enterprise-wide software, the availability and pricing
of gasoline, the company's dependence on chassis suppliers, interest rates,
competition, government regulations, legislation governing the relationships
of the company with its recreational vehicle dealers, the impact of economic
uncertainty on high-cost discretionary product purchases and other risks
identified in the company's SEC filings.