Exhibit 99.1
FOR RELEASE: July 26, 2006
CONTACT: Craig Wanichek
Director of Investor Relations
Monaco Coach Corporation
(541) 686-8011
craig.wanichek@monacocoach.com
Monaco Coach Corporation Reports Second Quarter Results
COBURG, Oregon, July 26, 2006 — Monaco Coach Corporation (NYSE: MNC), one of the nation’s leading manufacturers of motorized and towable recreational vehicles, today reported results for the second quarter ended July 1, 2006.
Revenues for the second quarter were $321.3 million, representing an increase of approximately 5.2% above last year’s second quarter revenues of $304.5 million. Results for the second quarter 2006 include the R-Vision business acquired in November 2005. Second quarter net income of $372,000, or one cent per share, which included a $107,000 loss related to the discontinued operations of the Royale Coach bus conversion facility, compares to net income of $755,000, or three cents per share, for the second quarter of 2005.
For the six months ended July 1, 2006, earnings per share on a diluted basis were 29 cents, compared to 20 cents per share for the same period last fiscal year. Revenues for the six months ended July 1, 2006 were $706.4 million, an 11.5% increase from $633.3 million for the first six months of 2005. Net income for the six months ended July 1, 2006 was $8.7 million, compared to $6.1 million earned for the comparable period in 2005.
“Strength in the towable and resorts segments during the second quarter mitigated some of the challenges we faced in the motorized business,” said Kay Toolson, Chairman and CEO of Monaco Coach Corporation. “Lower consumer confidence resulting from rising interest rates and high fuel prices limited dealer ordering, negatively affecting sales of motorhomes in the quarter. However, we have made changes in our capacity utilization that we believe will help us generate improving results over the next two quarters.”
“The new production configuration for our various models provides the Company much greater flexibility to build to market demand, and assists our dealer partners in maintaining the proper mix of models on their lots,” said Toolson. “These manufacturing changes did impact efficiencies in our plants in the second quarter, but we believe these challenges should be behind us by the end of this quarter.”
Motorized Recreational Vehicle Segment
The Motorized RV Segment reported sales of $225.6 million during the second quarter. Second quarter 2006 motorhome sales of 1,408 units were down 12.3% compared to second quarter 2005. The Motorized RV Segment reported gross profit of $15.9 million, or 7.0% of net sales in the second quarter of 2006.
“Our recent Dealer Congress, where we introduced the 2007 model year line-up to our dealer
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body, was extremely positive,” said John Nepute, President of Monaco Coach Corporation. “We are focused on delivering new products at the price points where there have been positive trends, including low priced class B’s and C’s, and low to mid-priced diesels.”
Net sales for the Motorized RV Segment in the first six months of 2006 were $480.6 million. Gross profit for the first six months of 2006 was $41.0 million, or 8.5% of net sales.
Towable Recreational Vehicle Segment
The Towable RV Segment reported sales of $89.2 million during the second quarter. Gross profit for the segment was $9.6 million, or 10.8% of net sales. Second quarter 2006 results include the R-Vision group. Second quarter 2006 towable sales were 5,617 units, including 4,411 R-Vision units.
“Sales contributions and higher margins from the R-Vision business continued to positively impact sales and profitability in the Towable RV Segment. In the second quarter, the segment’s strong margins were the result of high utilization in the R-Vision plants and acceptance of their lightweight, less expensive travel trailers,” said Nepute.
Net sales for the Towable RV Segment in the first six months of 2006 were $203.6 million. Gross profit for the first six months of 2006 was $23.8 million, or 11.7% of net sales.
Motorhome Resorts Segment
Net sales for the second quarter were $6.4 million down from $12.5 million for the second quarter of 2005. Gross profit for the Motorhome Resorts Segment was $5.0 million, down from $8.2 million for the same period last year.
“The demand for motorhome resorts remains extremely positive,” said Nepute. “The reduction in sales volume in this segment during the quarter was typical for the season. Second quarter 2005 net sales included normal seasonal sales plus released lots that had been reserved with deposits in the first quarter 2005.”
During the first six months of 2006, the Motorhome Resorts Segment reported sales of $22.1 million, up from sales of $17.8 million during the first six months of 2005. Gross profit for the segment increased to $14.2 million, up from $11.6 million for the first six months of 2005.
Monaco Coach Corporation is pleased to announce the expansion of its motorhome resort business with the acquisition of land for two new motorhome resort properties. The Company purchased approximately 80 acres near La Quinta, California and has agreed to terms on 24 acres in Naples, Florida. Lots are expected to be ready for sale at both locations in late 2007 or early 2008.
“Our recent motorhome resort experience suggests that Southern California and in particular the Palm Springs area has excellent demand for the type of resorts and lots that we are developing,” said Toolson. “When completed, the La Quinta, California project will be comprised of approximately 400 lots.”
“Likewise, we believe the Naples, Florida, area is ripe for this type of development and we are extremely pleased to enter this market with a top quality location. The Naples project is expected
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to contain roughly 200 lots and will have direct access to the Gulf of Mexico.”
Consolidated Financial Results and Outlook
“The strong motorhome resorts results and contribution from towables did not offset lower than expected motorhome sales and higher than expected sales incentives, all of which led to the lower quarterly gross profit,” said Marty Daley, Monaco Coach Corporation Vice President and Chief Financial Officer. “We are pleased that second quarter selling, general and administrative expenses decreased to 9.2% of net sales, compared to 9.5% of net sales for second quarter last year, and we will continue to work on initiatives aimed to reduce these expenses further.”
“We expect to generate third quarter net sales of approximately $330 million - $340 million. Increases in motorhome sales should help offset typical seasonal declines in the towables and resorts segments,” said Daley. “We anticipate that the third quarter will remain challenging; consolidated gross profit margin should range between 8.25% and 8.75%, and selling, general and administrative expenses will range between 8.0% and 8.5%.”
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 on Wednesday, July 26, 2006. 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 conference call will be archived and available for replay for the next 90 days.
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 Corporation employs approximately 6,000 people. Monaco Coach offers entry-level priced towable RVs up to custom made luxury recreational vehicle models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie and R-Vision brand names. Monaco Coach maintains RV service centers in Harrisburg, OR, Elkhart, IN and Wildwood, FL.
Ranked number one in the manufacturing of diesel powered motorhomes in the industry, Monaco Coach is a leader in innovative RV design to meet the needs of a broad range of customers with varied interests. 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.
Except for historical information contained herein, the matters set forth in this news release, including the anticipated effects of shifting various production operations and the expenses associated with those changes and management’s expectations regarding third quarter 2006 sales, shipments, gross profit margins, and expense levels are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Potential risks and uncertainties include such factors as our ability to carry out the planned production changes successfully and within budget, acceptance of existing and new product offerings; success of the “Franchise for the Future” program promotional activities and pricing strategies by competitors; warranty expenses; the availability
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of floorplan financing for the Company’s dealers; environmental and product safety regulatory activity; effects of weather; fuel prices and availability; commodity costs; uninsured product liability claims; a loss of dealers or deterioration in the relationships with dealers and overall economic conditions, including inflation, interest rates and consumer confidence and spending. Investors are also directed to consider other risks and uncertainties discussed in the Company’s SEC reports, including but not limited to the most recent Form 10-Q, the annual report on Form 10-K for 2005, and the 2005 Annual Report to Shareholders. These filings can be accessed over the Internet at www.sec.gov.
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MONACO COACH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
| | December 31, 2005 | | July 1, 2006 | |
| | | | (unaudited) | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash | | $ | 586 | | $ | 2,428 | |
Trade receivables, net | | 102,666 | | 103,226 | |
Inventories, net | | 183,292 | | 190,134 | |
Resort lot inventory | | 9,135 | | 8,218 | |
Prepaid expenses | | 4,364 | | 5,426 | |
Income taxes receivable | | 206 | | 0 | |
Deferred income taxes | | 36,345 | | 41,580 | |
Discontinued operations | | 4,922 | | 2,242 | |
Total current assets | | 341,516 | | 353,254 | |
| | | | | |
Property, plant, and equipment, net | | 159,304 | | 158,136 | |
Land held for investment purposes | | 0 | | 16,300 | |
Debt issuance costs net of accumulated amortization of $678, and $794, respectively | | 695 | | 580 | |
Goodwill | | 85,952 | | 86,003 | |
Total assets | | $ | 587,467 | | $ | 614,273 | |
| | | | | |
LIABILITIES | | | | | |
Current liabilities: | | | | | |
Book overdraft | | $ | 14,550 | | $ | 0 | |
Current portion of long-term debt | | 5,714 | | 5,714 | |
Line of credit | | 25,000 | | 32,108 | |
Accounts payable | | 78,299 | | 95,737 | |
Product liability reserve | | 19,275 | | 18,092 | |
Product warranty reserve | | 32,902 | | 34,230 | |
Income taxes payable | | 0 | | 2,236 | |
Accrued expenses and other liabilities | | 37,732 | | 46,446 | |
Discontinued operations | | 853 | | 516 | |
Total current liabilities | | 214,325 | | 235,079 | |
| | | | | |
Long-term debt, less current portion | | 34,786 | | 31,929 | |
Deferred income taxes | | 21,624 | | 21,492 | |
Other long term liabilities | | 0 | | 983 | |
Total liabilities | | 270,735 | | 289,483 | |
| | | | | |
| | | | | |
STOCKHOLDERS’ EQUITY | | | | | |
Preferred stock, $.01 par value; 1,934,783 shares authorized, no shares outstanding | | 0 | | 0 | |
Common stock, $.01 par value; 50,000,000 shares authorized, 29,561,766 and 29,712,546 issued and outstanding, respectively | | 296 | | 297 | |
Additional paid-in capital | | 59,005 | | 61,960 | |
Retained earnings | | 257,431 | | 262,533 | |
Total stockholders’ equity | | 316,732 | | 324,790 | |
Total liabilities and stockholders’ equity | | $ | 587,467 | | $ | 614,273 | |
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MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited: dollars in thousands, except share and per share data)
| | Quarter Ended | | Six Months Ended | |
| | July 2, 2005 | | July 1, 2006 | | July 2, 2005 | | July 1, 2006 | |
Net sales | | $ | 304,512 | | $ | 321,283 | | $ | 633,325 | | $ | 706,350 | |
Cost of sales | | 271,526 | | 290,792 | | 564,442 | | 627,410 | |
Gross profit | | 32,986 | | 30,491 | | 68,883 | | 78,940 | |
| | | | | | | | | |
Selling, general, and administrative expenses | | 28,980 | | 29,429 | | 55,938 | | 63,407 | |
Plant relocation costs | | 2,352 | | 269 | | 2,352 | | 269 | |
Operating income | | 1,654 | | 793 | | 10,593 | | 15,264 | |
| | | | | | | | | |
Other income, net | | 26 | | 256 | | 140 | | 388 | |
Interest expense | | (187 | ) | (940 | ) | (672 | ) | (2,192 | ) |
Income before income taxes discontinued operations | | 1,493 | | 109 | | 10,061 | | 13,460 | |
| | | | | | | | | |
Provision for income taxes, continuing operations | | 528 | | (370 | ) | 3,733 | | 4,688 | |
| | | | | | | | | |
Net income from continuing operations | | 965 | | 479 | | 6,328 | | 8,772 | |
| | | | | | | | | |
Loss from discontinued operations, net of tax provision | | (210 | ) | (107 | ) | (250 | ) | (107 | ) |
| | | | | | | | | |
Net income | | $ | 755 | | $ | 372 | | $ | 6,078 | | $ | 8,665 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Earnings per common share: | | | | | | | | | |
Basic from continuing operations | | $ | 0.03 | | $ | 0.01 | | $ | 0.22 | | $ | 0.29 | |
Basic from discontinued operations | | $ | 0.00 | | $ | 0.00 | | $ | (0.01 | ) | $ | 0.00 | |
Basic | | $ | 0.03 | | $ | 0.01 | | $ | 0.21 | | $ | 0.29 | |
| | | | | | | | | |
Diluted from continuing operations | | $ | 0.03 | | $ | 0.01 | | $ | 0.21 | | $ | 0.29 | |
Diluted from discontinued operations | | $ | 0.00 | | $ | 0.00 | | $ | (0.01 | ) | $ | 0.00 | |
Diluted | | $ | 0.03 | | $ | 0.01 | | $ | 0.20 | | $ | 0.29 | |
| | | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | | |
Basic | | 29,502,165 | | 29,708,892 | | 29,481,152 | | 29,672,558 | |
Diluted | | 29,824,570 | | 29,891,165 | | 29,859,237 | | 29,859,549 | |
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MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited: dollars in thousands)
| | Six Months Ended | |
| | July 2, 2005 | | July 1, 2006 | |
Increase (Decrease) in Cash: | | | | | |
| | | | | |
Cash flows from operating activities: | | | | | |
Net income | | $ | 6,078 | | $ | 8,665 | |
| | | | | |
Adjustments to reconcile net income to net cash (used) provided by operating activities: | | | | | |
Gain (Loss) on sale of assets | | 24 | | (12 | ) |
Depreciation and amortization | | 5,039 | | 6,973 | |
Deferred income taxes | | (613 | ) | (5,367 | ) |
Stock based compensation expense | | 0 | | 1,720 | |
Changes in working capital accounts: | | | | | |
Trade receivables, net | | 21,828 | | (560 | ) |
Inventories | | (8,653 | ) | (6,841 | ) |
Resort lot inventory | | 2,120 | | 917 | |
Prepaid expenses | | (120 | ) | (1,068 | ) |
Accounts payable | | (3,328 | ) | 17,439 | |
Product liability reserve | | (457 | ) | (1,184 | ) |
Product warranty reserve | | 16 | | 1,328 | |
Income taxes payable | | (1,937 | ) | 2,443 | |
Accrued expenses and other liabilities | | (927 | ) | 8,663 | |
Deferred revenue | | 0 | | 983 | |
Discontinued operations | | (1,978 | ) | 2,247 | |
Net cash provided by operating activities | | 17,092 | | 36,346 | |
| | | | | |
Cash flows from investing activities: | | | | | |
Additions to property, plant, and equipment | | (7,646 | ) | (5,771 | ) |
Land purchased for investment | | 0 | | (16,300 | ) |
Proceeds from sale of assets | | 68 | | 98 | |
Discontinued operations | | (4 | ) | 0 | |
Net cash used in investing activities | | (7,582 | ) | (21,973 | ) |
| | | | | |
Cash flows from financing activities: | | | | | |
Book overdraft | | 19,774 | | (14,545 | ) |
Advances (Payments) on lines of credit, net | | (26,562 | ) | 7,108 | |
Payments on long-term notes payable | | 0 | | (2,857 | ) |
Debt issuance costs | | (10 | ) | 0 | |
Dividends paid | | (3,539 | ) | (3,563 | ) |
Issuance of common stock | | 748 | �� | 1,236 | |
Discontinued operations | | 79 | | 90 | |
Net cash used by financing activities | | (9,510 | ) | (12,531 | ) |
| | | | | |
Net change in cash | | 0 | | 1,842 | |
Cash at beginning of period | | 0 | | 586 | |
Cash at end of period | | $ | 0 | | $ | 2,428 | |
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Monaco Coach Corporation
Segment Reporting
(Unaudited)
Results of Consolidated Operations
| | Quarter | | | | Quarter | | | | Six Months | | | | Six Months | | | |
| | Ended | | | | Ended | | | | Ended | | | | Ended | | | |
| | July 2,
2005 | | % of
Sales | | July 1,
2006 | | % of
Sales | | July 2,
2005 | | % of
Sales | | July 1,
2006 | | % of
Sales | |
Net sales | | $ | 304,512 | | 100.00 | % | $ | 321,283 | | 100.00 | % | $ | 633,325 | | 100.00 | % | $ | 706,350 | | 100.00 | % |
Cost of sales | | 271,526 | | 89.17 | % | 290,792 | | 90.51 | % | 564,442 | | 89.12 | % | 627,410 | | 88.82 | % |
Gross profit | | 32,986 | | 10.83 | % | 30,491 | | 9.49 | % | 68,883 | | 10.88 | % | 78,940 | | 11.18 | % |
| | | | | | | | | | | | | | | | | |
Selling, general and administrative expenses | | 28,980 | | 9.52 | % | 29,429 | | 9.16 | % | 55,938 | | 8.83 | % | 63,407 | | 8.98 | % |
| | | | | | | | | | | | | | | | | |
Plant relocation costs | | 2,352 | | 0.77 | % | 269 | | 0.08 | % | 2,352 | | 0.37 | % | 269 | | 0.04 | % |
| | | | | | | | | | | | | | | | | |
Operating income | | 1,654 | | 0.54 | % | 793 | | 0.25 | % | 10,593 | | 1.67 | % | 15,264 | | 2.16 | % |
| | | | | | | | | | | | | | | | | |
Other income and interest expense | | 161 | | 0.05 | % | 684 | | 0.21 | % | 532 | | 0.08 | % | 1,804 | | 0.26 | % |
Income before income taxes | | 1,493 | | 0.49 | % | 109 | | 0.03 | % | 10,061 | | 1.59 | % | 13,460 | | 1.91 | % |
| | | | | | | | | | | | | | | | | |
Income taxes | | 528 | | 0.17 | % | (370 | ) | -0.12 | % | 3,733 | | 0.59 | % | 4,688 | | 0.66 | % |
| | | | | | | | | | | | | | | | | |
Net income from continuing operations | | 965 | | 0.32 | % | 479 | | 0.15 | % | 6,328 | | 1.00 | % | 8,772 | | 1.24 | % |
| | | | | | | | | | | | | | | | | |
Loss from discontinued operations, net of tax provision | | (210 | ) | -0.07 | % | (107 | ) | -0.03 | % | (250 | ) | -0.04 | % | (107 | ) | -0.02 | % |
Net income | | $ | 755 | | 0.25 | % | $ | 372 | | 0.12 | % | $ | 6,078 | | 0.96 | % | $ | 8,665 | | 1.23 | % |
Motorized Recreational Vehicle Segment
| | Quarter | | | | Quarter | | | | Six Months | | | | Six Months | | | |
| | Ended | | % of | | Ended | | % of | | Ended | | % of | | Ended | | % of | |
| | July 2, 2005 | | Sales | | July 1, 2006 | | Sales | | July 2, 2005 | | Sales | | July 1, 2006 | | Sales | |
Net sales | | $ | 259,931 | | 100.00 | % | $ | 225,620 | | 100.00 | % | $ | 550,084 | | 100.00 | % | $ | 480,569 | | 100.00 | % |
Cost of sales | | 237,685 | | 91.44 | % | 209,727 | | 92.96 | % | 496,999 | | 90.35 | % | 439,589 | | 91.47 | % |
Gross profit | | 22,246 | | 8.56 | % | 15,893 | | 7.04 | % | 53,085 | | 9.65 | % | 40,980 | | 8.53 | % |
| | | | | | | | | | | | | | | | | |
Selling, general and administrative expenses | | 10,354 | | 3.98 | % | 8,730 | | 3.87 | % | 20,608 | | 3.75 | % | 17,259 | | 3.59 | % |
Corporate overhead allocation | | 12,312 | | 4.74 | % | 10,050 | | 4.45 | % | 23,886 | | 4.34 | % | 21,611 | | 4.50 | % |
Bend relocation costs | | 2,352 | | 0.90 | % | 269 | | 0.12 | % | 2,352 | | 0.43 | % | 269 | | 0.06 | % |
Operating income (loss) | | $ | (2,772 | ) | -1.07 | % | $ | (3,156 | ) | -1.40 | % | $ | 6,239 | | 1.13 | % | $ | 1,841 | | 0.38 | % |
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Towable Recreational Vehicle Segment
| | Quarter | | | | Quarter | | | | Six Months | | | | Six Months | | | |
| | Ended | | % of | | Ended | | % of | | Ended | | % of | | Ended | | % of | |
| | July 2, 2005 | | Sales | | July 1, 2006 | | Sales | | July 2, 2005 | | Sales | | July 1, 2006 | | Sales | |
Net sales | | $ | 32,124 | | 100.00 | % | $ | 89,226 | | 100.00 | % | $ | 65,491 | | 100.00 | % | $ | 203,643 | | 100.00 | % |
Cost of sales | | 29,541 | | 91.96 | % | 79,582 | | 89.19 | % | 61,270 | | 93.55 | % | 179,853 | | 88.32 | % |
Gross profit | | 2,583 | | 8.04 | % | 9,644 | | 10.81 | % | 4,221 | | 6.45 | % | 23,790 | | 11.68 | % |
| | | | | | | | | | | | | | | | | |
Selling, general and administrative expenses | | 1,089 | | 3.39 | % | 3,559 | | 3.99 | % | 2,323 | | 3.55 | % | 7,188 | | 3.53 | % |
Corporate overhead allocation | | 1,596 | | 4.97 | % | 4,498 | | 5.04 | % | 2,984 | | 4.56 | % | 10,321 | | 5.07 | % |
Operating income (loss) | | $ | (102 | ) | -0.32 | % | $ | 1,587 | | 1.78 | % | $ | (1,086 | ) | -1.66 | % | $ | 6,281 | | 3.08 | % |
Motorhome Resorts Segment
| | Quarter | | | | Quarter | | | | Six Months | | | | Six Months | | | |
| | Ended | | % of | | Ended | | % of | | Ended | | % of | | Ended | | % of | |
| | July 2, 2005 | | Sales | | July 1, 2006 | | Sales | | July 2, 2005 | | Sales | | July 1, 2006 | | Sales | |
Net sales | | $ | 12,457 | | 100.00 | % | $ | 6,437 | | 100.00 | % | $ | 17,750 | | 100.00 | % | $ | 22,138 | | 100.00 | % |
Cost of sales | | 4,300 | | 34.52 | % | 1,483 | | 23.04 | % | 6,173 | | 34.78 | % | 7,968 | | 35.99 | % |
Gross profit | | 8,157 | | 65.48 | % | 4,954 | | 76.96 | % | 11,577 | | 65.22 | % | 14,170 | | 64.01 | % |
| | | | | | | | | | | | | | | | | |
Selling, general and administrative expenses | | 2,568 | | 20.61 | % | 1,581 | | 24.56 | % | 4,030 | | 22.70 | % | 4,653 | | 21.02 | % |
Corporate overhead allocation | | 1,061 | | 8.52 | % | 1,011 | | 15.71 | % | 2,107 | | 11.87 | % | 2,375 | | 10.73 | % |
Operating income | | $ | 4,528 | | 36.35 | % | $ | 2,362 | | 36.69 | % | $ | 5,440 | | 30.65 | % | $ | 7,142 | | 32.26 | % |
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