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COACHMEN INDUSTRIES, INC.
2831 Dexter Drive • P.O. Box 3300 • Elkhart, Indiana 46515 • 574/262-0123 • Fax 574/262-8823
NEWS RELEASE
For immediate release Monday, October 30, 2006
COACHMEN INDUSTRIES, INC. ANNOUNCES THIRD QUARTER RESULTS
Elkhart, Ind. - Coachmen Industries, Inc. (NYSE: COA) today announced its financial results for the third quarter ended September 30, 2006.
“As a result of spreading soft conditions in both of our industry segments, sales for the third quarter were off more than 25% from 2006. Nonetheless, it is important to note that we sharply cut our losses in the face of these market conditions, and actually significantly improved our bottom line performance year-over-year by paring operating expenses,” commented Rick Lavers, Chief Executive Officer. “Faced with the unusual circumstance of troubled markets in both of our core businesses, which appears will extend into 2007, we have reduced our costs of doing business and our inventories while we have increased our cash position and carry minimal long-term debt. Going forward, we are re-defining our direction and have already made a number of market driven decisions to improve our performance results.”
Sales for the third quarter were $130.7 million, 27.4% less than the $180.2 million reported for the same period last year. At the bottom line, losses were reduced by 62.4% to $3.5 million, or $0.22 per share, versus a net loss of $9.3 million, or $0.60 per share in the third quarter of 2005. For the first nine months, net sales were $448.6 million versus $562.4 million last year. Net loss for the first nine months was also significantly reduced to $0.3 million, or $0.02 per share versus a net loss of $12.2 million or $0.78 per share during the comparable period of 2005.
The loss from continuing operations for the third quarter was $3.4 million, or $0.21 per share compared with a loss of $6.2 million, or $0.40 per share in the prior year. Loss
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October 30, 2006
from discontinued operations was $0.2 million, or $0.01 per share due to residual costs from restructuring actions completed in prior quarters. This compares to the loss from discontinued operations of $3.2 million, or $0.20 per share last year. For the first nine months, net loss from continuing operations was $1.9 million, or $0.12 per share compared with a loss from continuing operations of $8.8 million, or $0.56 per share for the first nine months of 2005. Income from discontinued operations was $1.5 million, or $0.10 per share compared with a net loss from discontinued operations of $3.4 million, or $0.22 per share in the prior year.
The Company increased its cash position as of September 30, 2006, from year-end 2005, by $8.9 million to $11.7 million with shareholders’ equity of $191.6 million. Cash flow from operations was $1.7 million for the first nine months, compared with cash flow from operations of $31.3 million in 2005 (which was primarily due to a $16.7 million reduction in accounts receivable and a $14.7 million increase in accounts payable resulting from timing differences during the year). Total working capital decreased to $87.6 million from $92.5 million last quarter. Total inventories were reduced to $103.6 million, compared to $112.3 million last quarter. Capital expenditures in the third quarter were $0.8 million compared with $0.7 million last year. Depreciation was $1.6 million for the third quarter versus $2.2 million for the third quarter of 2005.
Recreational Vehicle Segment
“Gross profit for the RV Group in the third quarter increased to 4.1% of sales from 1.1% last year, as a result of the Company’s cost reduction efforts and significant restructuring activities undertaken over the past year,” said Michael R. Terlep, President of the Coachmen RV Group. “However, because we are not operating at or near capacity, the slow down in demand has had a disproportionate impact on gross profit and earnings.”
The Company’s Recreational Vehicle Group reported sales of $90.5 million during the third quarter of 2006, down 30.3% from the $129.9 million reported for the comparable period last year, due to the continued softness in the Class A motorhome market, along with a more challenging towable market. The RV Group generated a pre-tax loss from continuing operations for the third quarter of $7.0 million compared with a pre-tax loss of $15.5 million for the year-ago quarter. For the first nine months, RV Group sales decreased to $321.5 million from $425.0 million last year. Despite the 24.4% decrease in sales, the RV Group’s pre-tax losses were reduced to $15.0 million versus $23.5 million in the first nine months of 2005. RV Group finished goods inventory was reduced by $5.0 million from the end of the second quarter and now stands at $46.2 million.
Housing and Building Segment
The Company’s Housing and Building Group continued to make progress in reducing costs and maintaining profitability in the face of challenging market conditions. The weakness in the Group’s core Midwestern markets has spread to other areas as the national housing market has shown increasing softness. For the quarter, the Group reported sales of $40.2 million, down 20.0% from $50.3 million in the third quarter of
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2005. Given the lower sales level, the Group reported a pre-tax profit of $0.3 million compared with a pre-tax profit of $1.1 million for the year-ago quarter. For the first nine months, net sales for the Housing and Building Group fell 7.5% to $127.1 million versus $137.4 million in 2005. At the same time, the Group posted a significant turnaround in pre-tax profits, reporting a pre-tax profit of $2.8 million for the first nine months of 2006, versus a pre-tax loss of $0.2 million in the first nine months of 2005.
The prospects of the Company’s All American Building Systems (AABS) special projects branch continued to improve. During the third quarter, AABS was a member of a consortium that was awarded a contract for the second phase of barracks construction at Fort Bliss in Texas. “We see great opportunities in military construction that will allow the Housing and Building Group to achieve significant growth potential in the years ahead,” commented CEO Lavers. “We are also participating in reconstruction of the Gulf Coast regions damaged by the hurricanes of 2005. During the quarter, the Housing and Building Group signed an agreement to provide two dozen systems-built homes for a neighborhood near New Orleans.”
Coachmen Industries will conduct a conference call to discuss the financial results contained in this release at 10 a.m. (Eastern Time), Tuesday, October 31, 2006. Members of the news media, investors and the general public are invited to access a live broadcast of the conference call over the internet at www.earnings.com. The online replay will be available at approximately 12:00 p.m. (Eastern Time) and continue for 30 days.
Coachmen Industries, Inc. is one of America’s leading manufacturers of recreational vehicles, systems-built homes and commercial buildings, with prominent subsidiaries in each industry. The Company’s well-known RV brand names include COACHMENâ, GEORGIE BOYÔ, SPORTSCOACHâ and VIKINGâ. Through ALL AMERICAN HOMES®, Coachmen is one of the nation’s largest producers of systems-built homes, and also a major builder of commercial structures with its ALL AMERICAN BUILDING SYSTEMSÔ products. Coachmen Industries, Inc. is a publicly held company with stock listed on the New York Stock Exchange (NYSE) under the ticker COA.
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 availability for floorplan financing for the Company’s recreational vehicle dealers and corresponding availability of cash to Company, uncertainties and timing with respect to sales resulting from recovery efforts in the Gulf Coast, uncertainties regarding the impact on sales of the disclosed restructuring steps in both the recreational vehicle and housing and building segments, the ability to sell and close the operations for sale as described, the accuracy of the estimates of the costs to remedy the disclose d recreational vehicle warranty issues, the impact of performance on the valuation of intangible assets, the availability and the price of gasoline, price volatility of raw materials used in production, the Company’s dependence on chassis and other suppliers, interest rates, the availability and cost of real estate for residential housing, the supply of existing homes within the company’s markets, the impact of home values on housing demand, the ability of the Housing and Building segment to perform in new market segments where it has limited experience, adverse weather conditions affecting home deliveries, competition, government regulations, legislation governing the relationships of the Company with its recreational vehicle dealers, consolidation of distribution channels in the recreational vehicle industry, consumer confidence, uncertainties of matters in litigation, further developments in the war on terrorism and related international crises, oil supplies, and other risks identified in the Co mpany’s SEC filings.
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October 30, 2006
For more information:
Colleen Zuhl
Jeffery A. Tryka, CFA
Chief Financial Officer
Director of Planning and Investor Relations
574-262-0123
574-262-0123
| | | | | | | | | | | | | | | | | |
Coachmen Industries, Inc. |
Consolidated Statements of Operations |
| | | | | | | | | |
(In Thousands, Except Per Share Data) |
(Unaudited) |
| | | | | | | | | |
| | | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| | | 2006 | | 2005 | | 2006 | | 2005 |
| | | | | | | | | |
Net Sales | | $ 130,715 | | $ 180,168 | | $ 448,590 | | $ 562,448 |
| | | | | | | | | |
Gross Profit - $ | | 13,065 | | 13,715 | | 43,694 | | 52,622 |
Gross Profit - % | | 10.0% | | 7.6% | | 9.7% | | 9.4% |
| | | | | | | | | |
GS&A - $ | | 19,830 | | 25,189 | | 54,579 | | 69,657 |
GS&A - % | | 15.2% | | 14.0% | | 12.2% | | 12.4% |
| | | | | | | | | |
Gain on Sale of Property - $ | | (291) | | 820 | | (6,340) | | 780 |
Gain on Sale of Property - % | | (0.2)% | | 0.5% | | (1.4)% | | 0.1% |
| | | | | | | | | |
Operating Income (Loss) - $ | | (6,474) | | (12,294) | | (4,545) | | (17,815) |
Operating Income (Loss) - % | | (5.0)% | | (6.8)% | | (1.0)% | | (3.2)% |
| | | | | | | | | |
Other Expense | | (183) | | 347 | | 554 | | 440 |
| | | | | | | | | |
Pre-Tax Profit (Loss) from Continuing Operations - $ | (6,291) | | (12,641) | | (5,099) | | (18,255) |
Pre-Tax Profit (Loss) from Continuing Operations - % | (4.8)% | | (7.0)% | | (1.1)% | | (3.2)% |
| | | | | | | | | |
Tax Expense (Credit) | | (2,937) | | (6,466) | | (3,249) | | (9,466) |
| | | | | | | | | |
Net Income (Loss) from Continuing Operations | | (3,354) | | (6,175) | | (1,850) | | (8,789) |
| | | | | | | | | |
Income (Loss) from Discontinued Operations (net of taxes) | (162) | | (3,171) | | (657) | | (3,413) |
Gain on Sale of Discontinued Operations (net of taxes) | - | | - | | 2,205 | | - |
| | | | | | | | | |
Net Income (Loss) | | (3,516) | | (9,346) | | (302) | | (12,202) |
| | | | | | | | | |
Earnings (Loss) per Share - Basic | | | | | | | | |
Continuing Operations | | (0.21) | | (0.40) | | (0.12) | | (0.56) |
Discontinued Operations | | (0.01) | | (0.20) | | 0.10 | | (0.22) |
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| | | | | | | | | | | | | | | | | |
Net Earnings (Loss) per Share | | (0.22) | | (0.60) | | (0.02) | | (0.78) |
| | | | | | | | | |
Earnings (Loss) per Share - Diluted | | | | | | | | |
Continuing Operations | | (0.21) | | (0.40) | | (0.12) | | (0.56) |
Discontinued Operations | | (0.01) | | (0.20) | | 0.10 | | (0.22) |
Net Earnings (Loss) per Share | | (0.22) | | (0.60) | | (0.02) | | (0.78) |
| | | | | | | | | |
Weighted Average Shares Outstanding | | | | | | | | |
Basic | | 15,634 | | 15,556 | | 15,664 | | 15,545 |
Diluted | | 15,634 | | 15,556 | | 15,664 | | 15,545 |
| | | | | | | | | |
| | | | | | | | | | |
Coachmen Industries, Inc. |
Condensed Consolidated Balance Sheets |
(In Thousands) |
(Unaudited) |
| | | | | |
ASSETS | | | | |
Current Assets | | 9/30/2006 | | 12/31/2005 |
| | | | | |
Cash and cash equivalents | | $11,728 | | $2,780 |
Accounts receivable | | 20,653 | | 47,174 |
Inventories | | 103,611 | | 121,304 |
Prepaid expenses and other | | 19,631 | | 16,245 |
Deferred income taxes | | 11,146 | | 11,421 |
Assets held for sale | | 2,375 | | 291 |
| | | | | |
Total Current Assets | | 169,144 | | 199,215 |
| | | | | |
Property, plant & equipment, net | | 58,348 | | 67,581 |
| | | | | |
Goodwill | | 16,865 | | 17,383 |
| | | | | |
Cash value of life insurance | | 30,651 | | 28,880 |
| | | | | |
Deferred income taxes | | 2,913 | | 4,279 |
| | | | | |
Other | | 9,380 | | 5,478 |
| | | | | |
Total Assets | | $287,301 | | $322,816 |
| | | | | |
| | | | | |
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| | | | | | | | | | |
LIABILITIES & SHAREHOLDERS' EQUITY | | | | |
Current Liabilities | | 9/30/2006 | | 12/31/2005 |
ST borrowings & current portion of LT debt | | $11,891 | | $14,499 |
Accounts payable, trade | | 26,116 | | 31,658 |
Floor plan notes payable | | 4,273 | | 4,361 |
Accrued income taxes | | - | | 533 |
Accrued expenses and other liabilities | | 39,294 | | 54,856 |
| | | | | |
Total Current Liabilities | | 81,574 | | 105,907 |
| | | | | |
Long-term debt | | 5,744 | | 12,913 |
| | | | | |
Postretirement deferred compensation benefits | | 8,427 | | 10,182 |
| | | | | |
Other | | - | | 11 |
| | | | | |
Total Liabilities | | 95,745 | | 129,013 |
| | | | | |
Shareholders' Equity | | 191,556 | | 193,803 |
| | | | | |
Total Liabilities and Equity | | $287,301 | | $322,816 |
| | | | | |
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Coachmen Industries, Inc. Announces Third Quarter Results
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| | | | | | | | | | |
| | Coachmen Industries, Inc. |
| | Consolidated Statements of Cash Flows |
| | (In Thousands) |
| | (Unaudited) |
| | | | | | |
| | | | Nine Months Ended |
| | | | September 30, |
| | | | 2006 | | 2005 |
| | Net income (loss) | | $(302) | | $(12,202) |
| | Depreciation | | 4,869 | | 6,638 |
| | Changes in current assets and liabilities | | (2,872) | | 36,891 |
| | Net Cash Provided by Operations | | 1,695 | | 31,327 |
| | | | | | |
| | Net Cash Provided by/(Used in) Investing Activities | | 18,931 | | (4,759) |
| | | | | | |
| | Net borrowings | | (9,865) | | (23,848) |
| | Issuance of stock | | 63 | | 283 |
| | Dividends | | (1,876) | | (1,887) |
| | Other | | - | | 67 |
| | Net Cash Used in Financing Activities | | (11,678) | | (25,385) |
| | | | | | |
| | Increase/(Decrease) in Cash and Cash Equivalents | | 8,948 | | 1,183 |
| | | | | | |
| | Beginning of period cash and cash equivalents | | 2,780 | | 14,992 |
| | | | | | |
| | Ending of Period Cash and Cash Equivalents | | $11,728 | | $16,175 |
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| | | | | | | | |
Coachmen Industries, Inc. |
Segment Information |
(In Thousands) |
(Unaudited) |
| | | | | | | | | |
| | | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| | | 2006 | | 2005 | | 2006 | | 2005 |
Sales | | | | | | | | |
Recreational Vehicle | | 90,490 | | 129,875 | | 321,454 | | 425,007 |
Housing and Building | | 40,225 | | 50,293 | | 127,136 | | 137,441 |
Total | | 130,715 | | 180,168 | | 448,590 | | 562,448 |
| | | | | | | | | |
Gross Profit | | | | | | | | |
Recreational Vehicle | | $3,708 | | $1,410 | | $13,770 | | $20,114 |
Housing and Building | | 9,357 | | 12,305 | | 29,924 | | 32,508 |
Total | | $ 13,065 | | $ 13,715 | | $ 43,694 | | $ 52,622 |
| | | | | | | | | |
GrossMarginPercentage | | | | | | | | |
Recreational Vehicle | | 4.1% | | 1.1% | | 4.3% | | 4.7% |
Housing and Building | | 23.3% | | 24.5% | | 23.5% | | 23.7% |
Total | | 10.0% | | 7.6% | | 9.7% | | 9.4% |
| | | | | | | | | |
Operating Expenses | | | | | | | | |
Recreational Vehicle | | $10,984 | | $16,577 | | $28,719 | | $43,027 |
Housing and Building | | 9,013 | | 11,321 | | 26,981 | | 32,861 |
Other | | (458) | | (1,889) | | (7,461) | | (5,451) |
Total | | $ 19,539 | | $ 26,009 | | $ 48,239 | | $ 70,437 |
| | | | | | | | | |
Operating ExpensePercentage | | | | | | | | |
Recreational Vehicle | | 12.1% | | 12.8% | | 8.9% | | 10.1% |
Housing and Building | | 22.4% | | 22.5% | | 21.2% | | 23.9% |
Total | | 14.9% | | 14.4% | | 10.8% | | 12.5% |
| | | | | | | | | |
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| | | | | | | | |
Operating Income / (Loss) | | | | | | | | |
Recreational Vehicle | | $(7,276) | | $(15,167) | | $(14,950) | | $(22,913) |
Housing and Building | | 344 | | 984 | | 2,944 | | (353) |
Other | | 458 | | 1,889 | | 7,461 | | 5,451 |
Total | | $ (6,474) | | $ (12,294) | | $ (4,545) | | $ (17,815) |
| | | | | | | | | |
Pre-Tax Income / (Loss) from Continuing Operations | | | | | |
Recreational Vehicle | | $(6,959) | | $(15,480) | | $(15,028) | | $(23,541) |
Housing and Building | | 316 | | 1,073 | | 2,843 | | (165) |
Other | | 352 | | 1,766 | | 7,086 | | 5,451 |
Total | | $ (6,291) | | $ (12,641) | | $ (5,099) | | $ (18,255) |
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