Exhibit 99.1
FOR IMMEDIATE RELEASE: | October 29, 2008 |
| CONTACT: | Craig Wanichek |
| | Director of Investor Relations |
| | Monaco Coach Corporation |
| | (541) 681-8029 |
| | craig.wanichek@monacocoach.com |
Monaco Coach Corporation Reports Third Quarter Results
COBURG, OREGON – October 29, 2008 – Monaco Coach Corporation (NYSE: MNC), one of the nation’s leading manufacturers of recreational vehicles, today reported results for the third quarter ended September 27, 2008 and provided an update on its credit facilities. Monaco Coach Corporation reported it is in the final stages of concluding its new loan agreements to replace its existing credit facility. The Company believes the agreements will be concluded by the end of the week.
“Together our new loans would provide us the flexibility and liquidity to continue executing our operational restructuring as we move through and beyond this cycle,” said Kay Toolson, Chairman and CEO of Monaco Coach Corporation.
Third Quarter Results
Third quarter 2008 revenues were $166.3 million, compared to $322.4 million in revenues for the third quarter of 2007. The operating loss of $90.6 million for the third quarter included restructuring and impairment charges of $68.5 million. These results compare to operating income of $6.5 million for the third quarter of 2007. Net loss for the third quarter of 2008 was $71.8 million, or a loss of $2.40 per share, compared to net income of $3.7 million and earnings of $0.12 per share for the third quarter a year ago.
For the nine months ended September 27, 2008, revenues were $620.5 million, compared to $980.0 million for the first three quarters of 2007. The Company reported a net loss of $89.9 million for the first nine months of 2008, compared to net income of $9.6 million for the same period in 2007. Net loss per share for the first nine months of 2008 was $3.01, compared to earnings per share of $0.32 for the same period last year.
“Our results clearly reflect the continuation of extremely difficult market conditions, which became even more challenging in the third quarter,” said Toolson. “Lack of consumer confidence and tight consumer lending trends have impacted retail sales, which has dealers looking to reduce their inventories.”
“We anticipated the second half of 2008 would be challenging, and as difficult as the decision was to make, we believe that significantly reducing our manufacturing capacity has helped position the Company to return to break-even during the first half of 2009. Our much smaller manufacturing footprint allows for better results at significantly lower production volumes. In addition, we’ve reduced the complexity of our manufacturing operations by building all diesel motorhomes in Oregon and moving all gas motorhome manufacturing to Warsaw, Indiana. We’ve also been able to keep our core labor force intact in our remaining locations, which will allow us to continue to improve the quality of our products. However, we remain prepared to take additional steps as necessary if market conditions deteriorate further.”
Gross profit for the third quarter of 2008 was 0.5% of sales or $782,000 compared to 11.2% of sales or $36.2 million in the third quarter of 2007. Gross profit was negatively impacted by high levels of wholesale discounting, resulting from competition for shelf space on dealer lots. Wholesale discounting above historical levels approached $8.0 to $9.0 million in the third quarter of 2008. In addition, gross margins were negatively impacted by inefficiencies in production operations as the Company completed the closure and relocation of its Wakarusa, Indiana motorized facility to its Coburg, Oregon campus. The Company believes that the consolidation will result in on-going savings of $5.0 to $7.0 million per quarter related to indirect plant manufacturing costs beginning in the fourth quarter of 2008, and continuing into 2009.
Selling, general, and administrative expenses (SG&A) for the third quarter of 2008 were $22.9 million or 13.8% of sales, compared to $29.7 million, or 9.2% of sales, in the third quarter of 2007. Reductions in SG&A dollars were the result of lower sales volumes as well as Company initiatives to reduce wages and salaries, advertising costs, information system expenses, and other miscellaneous general expenses. In addition, the Company experienced some cost savings as a result of plant consolidations. Ongoing SG&A savings related to plant consolidations are expected to approach $3.0 to $4.0 million per quarter.
In connection with operating losses in the business segments as well as the relocation of the Indiana motorized operations, the Company reviewed and adjusted goodwill carrying values and the carrying values of certain other long-lived assets, and took necessary charges for costs associated with the closure and relocation of operations. These related costs have been included in the results of operations and total $68.5 million. Goodwill valuation was calculated in accordance with Statement of Financial Accounting Standards 142, “Goodwill and Other Intangible Assets”. Based on the Company’s assessment, it was determined that all goodwill associated with our motorized segment was impaired resulting in a charge of $47.0 million. Due to our plant closures and the weak real estate market, asset impairment charges of $16.4 million were calculated using appraisals and fair market analysis in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. Additionally, in accordance with Statement of Financial Accounting Standard No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” the Company recorded $5.1 million in restructuring costs associated with the closure of its Indiana motorized facility.
Motorized Recreational Vehicle Segment
The Company reported motorized sales of $128.5 million in the third quarter of 2008, compared to $258.0 million in the third quarter of 2007. Wholesale demand, particularly for our diesel-motorized units, was a direct result of weak retail sales activity and dealers seeking to reduce their inventories.
As reported by Statistical Surveys, Inc., Class A motorhome retail sales year-to-date were down 40.1% for the industry through August. Monaco Coach Corporation experienced a 7.0% increase in Class A motorhome market share year-to-date through August 2008.
“Product enhancements throughout the line-up over the past several months have resulted in market share gains this year, notably in the lower end of the motorhome market,” said John Nepute, President of Monaco Coach Corporation. “Our unmatched support of retail customers will continue to attract existing and new customers to our brands while also helping to build our market share.”
Unit sales of the Motorized RV Segment for the third quarter of 2008 totaled 813, down from 1,470 units for the prior year period. Class A diesel units shipped for the quarter were 459 versus 1,080, Class A gas units shipped were 212 versus 230, and Class C units shipped were 142 versus 160. As reported by the Recreation Vehicle Industry Association, wholesale shipments of Class A motorhomes declined 48.8% through September 2008, compared to the same period in 2007.
Towable Recreational Vehicle Segment
The Company reported towable sales of $37.1 million for the third quarter of 2008, compared to sales of $64.2 million for the third quarter of 2007. Statistical Surveys showed a year-to-date industry decrease of 20.2% for travel trailer and fifth-wheel retail registrations through August 2008. The Company reported a 14.1% decline in its towable retail segment market share for the same period.
“We continue to have success in the lightweight, lower cost segment of the market in both wholesale and retail activity, and have successfully introduced new models in this price segment of the travel trailer market,” said Nepute.
Gross margin for the third quarter of 2008 for the Towable RV Segment was $647,000, compared to $6.7 million, for the third quarter of 2007. Operating loss was $4.4 million, compared to operating income of $871,000 for the third quarter of 2007.
For the third quarter of 2008, towable unit sales, including specialty trailers, were 2,469 units, down from 3,940 units for the same period a year ago. Wholesale shipments according to the Recreation Vehicle Industry Association declined 20.6% through September 2008, compared to the first nine months of 2007.
Motorhome Resorts Segment
Resort sales for the third quarter of 2008 were $657,000 up from $219,000 in the third quarter of 2007. Currently, 47 lots are available in Indio, California and Las Vegas, Nevada. The first phase of the Bay Harbor, Michigan resort has been completed and there are currently 73 lots available for sale. Operating loss for the segment was $1.4 million compared to an operating loss of $1.2 million for the same period last year.
The Company’s new resort location in Naples, Florida area is currently under development and new lots at this resort are expected to be available for sale in the fourth quarter of 2008.
Conference Call to be Held
Monaco Coach Corporation will conduct a conference call in conjunction with this news release at 2:00 p.m. Eastern Time, Wednesday, October 29, 2008. Members of the news media, investors, and the general public are invited to access a live broadcast of the conference call via the Investor Relations page of the Company's website at www.monaco-online.com. The event will be archived and available for replay for the next 90 days.
About Monaco Coach Corporation
Monaco Coach Corporation, a leading national manufacturer of motorized and towable recreational vehicles, is ranked as the number one producer of diesel-powered motorhomes. Dedicated to quality and service, 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.
Headquartered in Coburg, Oregon, with manufacturing facilities in Indiana, 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, and RVision brand names. The Company maintains RV service centers in Harrisburg, Oregon and Wildwood, Florida and operates motorhome-only resorts in California, Florida, Nevada and Michigan.
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.
The statements above regarding (i) the anticipated closing and funding of the new credit facilities, (ii) the sufficiency of the new credit facilities to meet the Company’s future capital needs, (iii) our belief that our plant consolidations have helped to position the Company to return to profitability in the first half of 2009, (iv) our projected ongoing savings in manufacturing costs and SG&A expenses from these consolidations, (v) our ability to increase motorized and towables market share and (vi) the availability for sale of lots at our Naples, Florida resort in the fourth quarter of 2008 are forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties include our ability to conclude new, definitive credit agreements, the fact that we are in violation of certain covenants under our existing credit agreement and, if we are unable to conclude the new credit agreements, we would have to seek a further waiver from our existing lenders, which may or may not be granted, further declines in the wholesale and retail markets for recreational vehicles, consumers’ preference for certain models and resort lots including competitors’ offerings, the failure to generate the anticipated cash flow and improved operating results from our production realignment, a further decline in consumer confidence, an increase in interest rates and credit standards affecting retail and wholesale financing and an increase in the price or availability of fuel. Please refer to the Company’s SEC reports for additional risks and uncertainties, including but not limited to the most recent Form 10-Q, the annual report on Form 10-K for 2007, and the 2007 Annual Report to Shareholders for additional factors. These filings can be accessed over the Internet at http://www.sec.gov or http://www.monaco-online.com.
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