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EXHIBIT 99.1
[LOGO]
COACHMEN INDUSTRIES, INC.
2831 DEXTER DRIVE O P.O. BOX 3300 O ELKHART, INDIANA 46515
574/262-0123 o FAX 574/262-8823
NEWS RELEASE
For immediate release Monday, July 28, 2003
COACHMEN INDUSTRIES, INC. SECOND QUARTER PROFITS
REVERSE FIRST QUARTER LOSSES
O EARNINGS OF $2.8 MILLION OR $0.18 PER SHARE BRINGS COMPANY TO
BREAK-EVEN POSITION FOR THE FIRST SIX MONTHS.
O SALES OF $173.9 MILLION SUBSTANTIALLY INCREASE OVER FIRST QUARTER
SALES OF $146.4 MILLION; OUTPERFORMS SALES OF $170.7 MILLION IN 2002.
O BOTH BUSINESS SEGMENTS SHOW IMPROVED PERFORMANCE.
ELKHART, IND. - Coachmen Industries, Inc. (NYSE: COA) today announced its
financial results for the second quarter ended June 30, 2003.
Coachmen reported net income of $2.8 million, or $0.18 per share for the
quarter, compared with a net loss of ($2.8) million or ($0.18) per share during
the first quarter of 2003. Income in the current quarter was below the $3.6
million or $0.22 per share in the year-earlier period; however, income from
operations was comparable at 2.9% of sales. Sales for the second quarter
increased to $173.9 million versus $146.4 million in the first quarter, and
compares favorably to $170.7 million reported during the same period of 2002.
Gross profit increased to 15.8% from 15.4% in the second quarter of 2002, and
from 11.6% in the first quarter of 2003. GS&A expenses as a percent of sales
were 12.9% versus 12.5% in the second quarter of 2002, and 14.6% in the first
quarter of 2003. The Company's operating income of $5.1 million increased from
$4.9 million during the same period last year, and substantially outperformed
the operating loss of ($4.4) million during the first quarter of 2003. Coachmen
recorded over $0.6 million of other expense due to the second quarter
recognition of losses associated with market value erosion in the Company's
preferred stock portfolio. This contrasts with over $1.1 million of other
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Coachmen Industries, Inc. Reports Second Quarter Results
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July 28, 2003
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income recorded in the second quarter of 2002 associated with gains on sale of
real estate and insurance proceeds. The improved performance of the second
quarter offset the reported losses from the first quarter, bringing year-to-date
earnings to slightly better than break-even or $0.00 per share, versus a loss of
($0.18) per share through the first three months.
Claire C. Skinner, Chairman, Chief Executive Officer and President, remarked,
"Significant progress was made during the second quarter, and we anticipate
further improvements as the year advances. Our second quarter results would have
been even stronger had we not once again encountered weather-related challenges
in our Modular Housing business, and model-change issues in our Recreational
Vehicle business. Unusually heavy rains in the eastern part of the country
continued to inhibit our ability to deliver ordered homes, as builders were
unable to complete the foundations and site-preparation. In addition, sales and
profits in our RV segment were negatively impacted by shortages and other
operating inefficiencies attributable to the model changeover process at the end
of the quarter. Most all of these issues have now been resolved, which should be
reflected in the RV segment's third quarter results."
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2003 2002 2003 2002
------------ ------------- ------------- ------------
SALES
Recreational Vehicle $ 115,516 $ 109,836 $ 222,912 $ 218,169
Modular Housing/Building 58,387 60,889 97,378 105,402
------------ ------------- ------------- ------------
Total $ 173,903 $ 170,725 $ 320,290 $ 323,571
============ ============= ============= ============
PRE-TAX INCOME/(LOSS)
Recreational Vehicle $ 919 $ 1,110 $ (602) $ 537
Modular Housing/Building 3,794 3,970 1,756 3,458
Other (392) 327 (1,130) 516
------------ ------------- -------------- ------------
Total $ 4,321 $ 5,407 $ 24 $ 4,511
============ ============= ============= ============
RECREATIONAL VEHICLE SEGMENT
The Company's RV Group reported sales of $115.5 million, up from $109.8 million
in the second quarter of 2002, and up from $107.4 million during the first
quarter of 2003. The segment's pre-tax income of $0.9 million was slightly lower
than the second quarter of 2002, primarily due to higher selling expenses, but
significantly improved upon the pre-tax loss of ($1.5) million reported during
the first quarter of 2003.
According to the most current data available from Statistical Surveys, Inc.,
Coachmen gained retail market share in Class A motorhomes, which increased to
6.4% year to date through May, from 6.2% last year at this time; Class C's went
from 15.3% to 13.7%; Travel Trailers went from 5.8% to 5.7%; Fifth Wheels went
from 2.9% to 2.8%; and
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Coachmen Industries, Inc. Reports Second Quarter Results
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Camping Trailers went from 10.2% to 10.0%. Coachmen retained its position as the
number one selling Travel Trailer and the number one combined Travel
Trailer/Fifth Wheel, and the Company's Viking brand camping trailer had a 26%
increase in market share through May, improving to 9.2%. At the same time, the
Company gained wholesale market share in nearly every product category during
the second quarter, which implies a future increase in retail market share.
Though Coachmen is gaining wholesale market share in the Camping Trailer product
category, this inexpensive product type has seen substantial erosion throughout
the industry. Industry retail registrations for Camping Trailers through May are
down 18.8% and industry wholesale shipments through May are down 24.0%.
Coachmen's wholesale shipments of Camping Trailers are outperforming the
industry, but are nevertheless down 15.8% through May, which impacts the
Company's overall unit comparisons.
Through June, Coachmen's wholesale shipments are down 5.2% versus one year ago.
However, excluding Camping Trailers, unit shipments are up 0.2%. Unit production
through June is down 3.2%, but excluding Camping Trailers, unit production is up
5.8%. RV production in June was temporarily hampered by parts shortages, which
in turn delayed the completion and sales of recreational vehicles. As a result,
work in process inventories grew to $15.7 million, up $7.7 million since
year-end. Consequently, overhead expenses were under-absorbed.
Backlogs remained comparable to the first quarter for all product categories
through much of the second quarter. Backlogs increased in late June and early
July, due to highly successful dealer meetings at which the Company's 2004
models were introduced. The Georgie Boy Class A motorhome subsidiary held its
first-ever new product dealer seminar in Tucson, Arizona, and in response to the
orders generated, will be increasing production rates in August. The Coachmen RV
Company dealer seminar, held in Dallas, Texas, resulted in strong orders
totaling nearly $100 million, up 22% over the same four-day event last year.
Coachmen's newly acquired 100,000 square foot facility in Fitzgerald, Georgia
began production in June. The Company's new state-of-the-art 127,000 square foot
Class C motorhome plant at its Middlebury, Indiana complex is on schedule to be
producing finished product in August. The new manufacturing facilities will help
Coachmen meet demand for its extensive Travel Trailer and Fifth Wheel product
offerings, and should increase overall motorized capacity by over 50 percent.
MODULAR HOUSING AND BUILDING SEGMENT
The Company's Modular Housing and Building segment reported second quarter sales
of $58.4 million, down slightly from $60.9 million in the year ago period, but
up substantially from $39.0 million in the first quarter of 2003. The segment
had pre-tax income of $3.8 million compared to pre-tax income of $4.0 million
during the same period one year ago and a pre-tax loss of ($2.0) million in the
first quarter of this year.
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Coachmen Industries, Inc. Reports Second Quarter Results
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Other than the two subsidiaries located in the eastern states, the Modular
Housing operations rebounded from the unusually severe weather conditions that
occurred during the first quarter of the year. Production for the combined
residential and commercial units was up 24.1% compared to the first quarter
while shipments increased 46.4%. The overall Housing Group has established
strong momentum going into the third quarter, achieving its highest year-to-date
levels of production, shipments and backlogs in June. However, weather continued
to have an unfavorable impact on the Company's performance, especially with
unseasonably heavy rains in the eastern half of the United States that impeded
the delivery of finished homes produced in the second quarter. Inventories of
homes waiting to be delivered increased again in the second quarter.
The commercial building subsidiary, Miller Building Systems, is also improving,
with strengthening production, shipments and backlogs due to some modest
recovery in their telecommunications-related business. For the second quarter,
Miller's loss from operations of ($0.6) million represented a meaningful
improvement over its loss of ($1.1) million in the first quarter. Improvements
were noted through the second quarter, and in June, Miller showed a slight
operating profit.
Much of the overall Housing Group's success is attributable to growth in the
Company's primary modular home markets. In addition, the All American Homes
modular housing business continues to make good progress into several new
strategic markets. The new Ameri-Log (TM) home series has been successfully
introduced, and the Company is in the process of selecting builder
representatives. Moving into primary sub-division housing markets, All American
has announced that it will partner with a developer and builder in a planned
residential community in Toledo, Ohio. Also during the quarter All American was
awarded the contract for an urban renewal project in Detroit, featuring duplexes
and triplexes, which will provide new homes for 63 families.
BALANCE SHEET/CASH FLOW
As of June 30, 2003, the Company had cash and marketable securities of $16.6
million and shareholders' equity of $204.5 million. Cash flow from operations
was a positive $10.0 million for the quarter, bringing year-to-date cash flow
from operations into positive territory. Capital expenditures totaled $4.9
million for the second quarter.
Joseph P. Tomczak, Executive Vice President and Chief Financial Officer, said,
"We are pleased that our second quarter performance brought us back to showing
positive income for the year. We'll be working hard to improve our financial
results throughout the remainder of the year. The keys to success are delivering
our inflated modular housing finished goods inventory, staying focused on our
business strategy of delivering great new products, being aggressive in the
market, and controlling our costs and expenses. Our capital structure and
balance sheet remain strong and the current trends in the business are
encouraging as we move into the second half of this year."
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Coachmen Industries, Inc. Reports Second Quarter Results
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July 28, 2003
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OUTLOOK
The economic environment continues to be uncertain. The Federal Reserve has
again lowered rates, now at the lowest point since 1953. Consumer Confidence has
improved over several months ago, but still is reflecting some negativism,
especially in the near-term. Within this environment, the Recreational Vehicle
Industry Association is now forecasting a slight (1.7%) decrease in wholesale
shipments for 2003.
Chairman Skinner said, "Our second quarter performance showed significant
improvements and we remain extremely focused on improving our results. We
believe that the improving trends in both our Recreational Vehicle and Modular
Housing and Building segments are indicative of even more positive results going
forward, especially because of the strong acceptance of our products. Since we
are now operating above break-even levels, additional volumes should drive even
greater earnings. We are very well positioned to increase our volumes, but so
much of this will be dependent on economic factors. Accordingly, forecasting our
results for the full year within this environment is extremely difficult.
Despite our first quarter loss, if our business trends continue to improve, we
believe we can achieve operating income comparable to 2002."
Coachmen Industries, Inc., founded in 1964, is one of the nation's leading
manufacturers of recreational vehicles with well-known brand names including
COACHMEN(R), GEORGIE BOY(R), SHASTA(R) and VIKING(R). Coachmen Industries is
also one of the largest systems-built home producers in the nation with its ALL
AMERICAN HOMES(R) subsidiaries. Modular commercial structures are manufactured
by the Company's Miller Building Systems subsidiary. Prodesign, LLC is a
subsidiary that custom thermoforms composite and plastic parts for numerous
industries under the PRODESIGN(R) brand. Coachmen Industries, Inc. is a publicly
held company with stock 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 CONDITION OF THE
TELECOMMUNICATIONS INDUSTRY WHICH PURCHASES MODULAR STRUCTURES, THE AVAILABILITY
AND THE PRICE OF GASOLINE, THE COMPANY'S DEPENDENCE ON CHASSIS SUPPLIERS,
INTEREST RATES, THE AVAILABILITY AND COST OF REAL ESTATE FOR RESIDENTIAL
HOUSING, THE ABILITY OF THE HOUSING AND BUILDING SEGMENT TO PERFORM IN NEW
MARKET SEGMENTS WHERE IT HAS LIMITED EXPERIENCE, COMPETITION, GOVERNMENT
REGULATIONS, LEGISLATION GOVERNING THE RELATIONSHIPS OF THE COMPANY WITH ITS
RECREATIONAL VEHICLE DEALERS, THE IMPACT OF CONSUMER CONFIDENCE AND ECONOMIC
UNCERTAINTY ON HIGH-COST DISCRETIONARY PRODUCT PURCHASES, FURTHER DEVELOPMENTS
IN THE WAR ON TERRORISM AND RELATED INTERNATIONAL CRISES, OIL SUPPLIES, AND
OTHER RISKS IDENTIFIED IN THE COMPANY'S SEC FILINGS.
For more information:
Joseph P. Tomczak
Executive Vice President and Chief Financial Officer
574-262-0123
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Coachmen Industries, Inc. Reports Second Quarter Results
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COACHMEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
----------- -------------- ---------- -----------
Net Sales $ 173,903 $ 170,725 $ 320,290 $ 323,571
Gross Profit - $ 27,546 26,299 44,580 44,569
Gross Profit - % 15.8% 15.4% 13.9% 13.8%
GS&A - $ 22,430 21,384 43,861 41,065
GS&A - % 12.9% 12.5% 13.7% 12.7%
Operating Income- $ 5,116 4,915 719 3,504
Operating Income- % 2.9% 2.9% 0.2% 1.1%
Other (Income)/Expense 795 (492) 695 (1,007)
Pre-Tax Profit- $ 4,321 5,407 24 4,511
Pre-Tax Profit - % 2.5% 3.2% --% 1.4%
Tax Expense 1,485 1,844 8 1,538
Net Income 2,836 3,563 16 2,973
Earnings per share -
Basic 0.18 0.22 0.00 0.19
Diluted 0.18 0.22 0.00 0.18
Weighted Average Shares Outstanding
Basic 15,379 16,112 15,442 16,065
Diluted 15,414 16,228 15,484 16,188
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COACHMEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
ASSETS 6/30/03 12/31/02
- ------ ------- --------
CURRENT ASSETS
Cash and temporary cash investments $ 6,062 $ 16,549
Marketable securities 10,501 7,641
Accounts receivable 34,488 29,408
Inventories 96,585 85,010
Prepaid expenses and other 7,255 8,862
Deferred income taxes 6,448 6,885
--------- ------------
Total Current Assets 161,339 154,355
Property & equipment, net 79,308 78,889
Goodwill 18,954 18,954
Cash value of life insurance 35,073 33,155
Real estate held for sale -- 276
Other 4,067 7,566
--------- ------------
Total Assets $ 298,741 $ 293,195
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LIABILITIES AND SHAREHOLDERS' EQUITY 6/30/03 12/31/02
- ------------------------------------ ------- --------
CURRENT LIABILITIES
ST borrowings & current portion of LT debt $ 1,105 $ 902
Accounts payable, trade 30,747 18,801
Accrued income taxes 879 1,222
Other accruals 37,608 39,856
--------- ------------
Total Current Liabilities 70,339 60,781
Long-term debt 9,974 10,097
Deferred income taxes 4,123 4,123
Other 9,776 8,768
--------- ------------
Total liabilities 94,212 83,769
Shareholders' Equity 204,529 209,426
--------- ------------
Total Liabilities and Shareholders' Equity $ 298,741 $ 293,195
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Coachmen Industries, Inc. Reports Second Quarter Results
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COACHMEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Six Months Ended
June 30,
2003 2002
---------- -----------
CASH FLOW FROM OPERATIONS $ 191 $ 20,866
CASH FLOW FROM/(USED IN) ACQUISITION & INVESTING ACTIVITIES (4,701) 4,585
Net Borrowings 80 (227)
Issuance/Purchase of Stock (4,201) 667
Dividends (1,856) (1,608)
---------- -----------
CASH FLOW USED IN FINANCING ACTIVITIES (5,977) (1,168)
INCREASE/(DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS (10,487) 24,283
Beginning of Period Cash and Temporary Cash Investments 16,549 28,416
---------- -----------
ENDING CASH AND TEMPORARY CASH INVESTMENTS $ 6,062 $ 52,699
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