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EXHIBIT 99.1
COACHMEN INDUSTRIES, INC.
2831 Dexter Drive o P.O. Box 3300 o Elkhart, Indiana 46515
o 574/262-0123 o Fax 574/262-8823
NEWS RELEASE
For immediate release Monday, October 27, 2003
COACHMEN INDUSTRIES, INC. REPORTS STRONG THIRD QUARTER RESULTS
o Earnings of $5.4 million or $0.35 per share is the highest level of
quarterly earnings in the last 16 quarters.
o Sales of $200.8 million substantially increased over second quarter
sales $173.9 million and sales of $177.5 million in 2002.
o Company confirms 2003 operating income estimate
ELKHART, IND. - Coachmen Industries, Inc. (NYSE: COA) today announced its
financial results for the third quarter ended September 30, 2003.
Coachmen reported net income of $5.4 million, or $0.35 per share for the
quarter, an 89% increase compared to net income in the second quarter of $2.8
million, or $0.18 per share. Income in the current quarter was 24.7% higher than
income of $4.3 million or $0.27 per share in the third quarter of 2002. Sales
for the third quarter increased 15.5% to $200.8 million versus $173.9 million in
the second quarter and 13.1% above the $177.5 million during the same period of
2002.
Gross profit increased to 16.5% from 15.8% in the second quarter and compares to
16.6% in the third quarter of 2002. GS&A expenses as a percent of sales were
12.5% versus 12.9% in the second quarter and 12.8% in the third quarter a year
ago. The Company's operating income of $8.0 million increased 55.8% versus the
$5.1 million in the second quarter of 2003, and 18.5% compared to the $6.7
million in the comparable quarter of 2002. The improved performance of the third
quarter brings year-to-date earnings to $0.35 per share, which includes no
material non-operating gains, compared to $0.45 per share for the comparable
year-ago period, which included $0.08 per share from real estate and other
non-operating gains.
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Coachmen Industries, Inc. Reports Third Quarter Results
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October 27, 2003
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Claire C. Skinner, Chairman, Chief Executive Officer and President, remarked,
"Our third quarter results were gratifying, because the operating improvements
we've been forecasting have now begun to be realized. Both business segments
delivered increased sales and pre-tax income from the year ago quarter. Sales
for our Recreational Vehicle business surged nearly 20% in the third quarter
compared to the same quarter of 2002 as a result of the extremely positive
dealer response to our new line of 2004 models. The Modular Housing business
benefited from increased demand as well as from the delivery of ordered and
produced homes that we were unable to ship during the second quarter as a result
of the continuing poor weather conditions. Pre-tax income also improved
significantly from the second quarter. While pleased with these improvements, we
are not satisfied, and expect further improvement in both business segments
going forward."
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------
SALES
Recreational Vehicle $ 136,241 $ 113,643 $ 359,153 $ 331,812
Modular Housing/Building 64,568 63,892 161,946 169,294
------------ ------------- ------------- -------------
Total $ 200,809 $ 177,535 $ 521,099 $ 501,106
============= ============= ============= =============
PRE-TAX INCOME/(LOSS)
Recreational Vehicle $ 2,872 $ 2,578 $ 2,270 $ 3,115
Modular Housing/Building 5,528 3,550 7,284 7,008
Other (272) 512 (1,402) 1,028
------------- ------------- -------------- -------------
Total $ 8,128 $ 6,640 $ 8,152 $ 11,151
============= ============= ============= =============
RECREATIONAL VEHICLE SEGMENT
- ----------------------------
The Company's RV Group reported sales of $136.2 million, up 17.9% from $115.5
million during the second quarter of 2003, and up 19.9% from $113.6 million in
the third quarter of 2002. The segment's pre-tax income of $2.9 million
increased 212.5% from $0.9 million during the second quarter of 2003, and was
11.4% higher than the $2.6 million pre-tax income in 2002. RV Segment pre-tax
income during the quarter was hampered by operating inefficiencies related to
major material shortages, which were substantially resolved in late September.
As was previously reported, dealer reaction to the Company's new 2004 model
offerings was overwhelmingly positive. As a result, backlogs at the end of the
third quarter increased 78% compared to the June 30th levels for all product
categories and are 25% higher than year-end 2002. Production rates have been
increased in most plants, including two new production facilities, which should
drive market share gains at both the retail and wholesale levels during the
fourth quarter.
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Coachmen Industries, Inc. Reports Third Quarter Results
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October 27, 2003
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In response to strong demand, two new RV production facilities are now
operational. Coachmen's state-of-the-art 127,000-sq. ft. mini-motorhome plant
located Middlebury, Ind., began production in August. The facility features over
24,000 square feet of mezzanines for efficient offline sub-assembly processes,
and provides improved material flow. In Fitzgerald, Ga., production began in an
additional new 100,000-sq. ft. towable plant, providing the Coachmen RV of
Georgia subsidiary with the capability of locally producing all travel trailer
and fifth wheel product offerings.
In September, Coachmen also announced the formation of a private label finance
program that will provide exclusive financing services to RV dealers. The
creation of Coachmen Financial Services(SM)will offer industry-leading inventory
financing solutions to qualified dealers and should help expand the Company's
dealer network.
MODULAR HOUSING AND BUILDING SEGMENT
- ------------------------------------
The Company's Modular Housing and Building segment reported sales of $64.6
million, up 10.6% from $58.4 million during the second quarter of 2003, and up
1.1% from $63.9 million in the third quarter of 2002. The segment's pre-tax
income of $5.5 million increased 45.7% from $3.8 million during the second
quarter of 2003, and was 55.7% higher than the $3.6 million in 2002.
The improved results of the Modular Housing operations were driven by a strong
influx of new orders, coupled with the delivery of many finished homes that were
held up in inventory during prior quarters due to unseasonably heavy rains.
Although finished goods inventory was reduced, significant amounts of
residential finished goods still remain to be delivered as of the end of the
third quarter. With cooperative weather conditions, these should be delivered in
the fourth quarter. Residential backlogs at the end of the third quarter
increased 7.8% compared to the June 30th levels and are 32.5% higher than
year-end 2002.
All American Homes has placed renewed emphasis on expanding and strengthening
its builder network, which is helping overall demand in its modular home
markets. In addition, the Company is making excellent progress in its efforts to
expand into several new strategic markets. Model homes at The Quarry, a planned
residential community in Toledo, Ohio, are scheduled for opening this month. All
American has also delivered 63 homes for an urban renewal project in Detroit,
Michigan, and it is also pursuing a new subdivision opportunity in Charlotte,
Michigan, with a potential for more than 100 new homes. The new Ameri-Log (TM)
home series, a line of custom log homes, is also gaining momentum as the Company
is expanding its network of builder representatives.
With respect to the commercial modular business, the Miller Building Systems
unit, while still operating at a loss, has experienced a mild recovery in its
telecommunications shelter business, enabling positive cash flow to be reported
recently. The goodwill associated with this business, along with all other
recorded goodwill, will be evaluated for possible impairment during the fourth
quarter in accordance with the Company's normal procedure.
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Coachmen Industries, Inc. Reports Third Quarter Results
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October 27, 2003
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BALANCE SHEET/CASH FLOW
- -----------------------
As of September 30, 2003, the Company had cash and marketable securities of
$15.6 million and shareholders' equity of $209.5 million. Cash flow from
operations was a positive $3.4 million for the quarter, bringing year-to-date
cash flow from operations to $3.6 million. Capital expenditures totaled $4.2
million for the third quarter and $10.5 million year to date.
Joseph P. Tomczak, Executive Vice President and Chief Financial Officer, said,
"We are very pleased with our third quarter performance, and the underlying
trends going forward. The Company's capital structure, cash position, and
balance sheet remain strong to support future growth."
OUTLOOK
- -------
Chairman Skinner said, "We are pleased with the significant improvement in our
third quarter performance. We are very optimistic about the balance of the year,
though material shortages in our recreational vehicle segment may have a
negative impact on future earnings. As an example, we have just received
notification of a temporary shortage of a critical valve used in RV ovens, which
will impact production and profitability in the fourth quarter. Because of this,
and in recognition of the fact that our businesses can be significantly impacted
by economic, seasonal and climatic conditions, we are confirming our guidance of
$0.52 for the full year. However, due to the momentum generated in the third
quarter, we now feel there is a possibility for overachievement. Our earnings
per share should be at least $0.52, despite the loss of $0.18 in the first
quarter, and without the benefit of the gains on sale of real estate that 2002
enjoyed. This is excluding the effect of any impairment charges that may be
required due to the goodwill evaluation process that will be completed in the
fourth quarter.
We remain extremely focused on achieving our goals for the year and positioning
the Company for continued growth in 2004. The operating performance of both
business segments has been steadily improving, and we are experiencing strong
demand for our products in both Recreational Vehicles and Housing, reflecting
the very strong fundamentals underlying each segment. Our products are very well
positioned for our customers, we are expanding into new markets consistent with
a solid strategic plan, we've brought new capacity on line and we are building
greater strength in our managerial team. Based on these trends, we believe we
are poised for a very strong performance in 2004 and beyond."
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
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Coachmen Industries, Inc. Reports Third Quarter Results
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October 27, 2003
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Building Systems subsidiary. Prodesign, LLC is a subsidiary that produces custom
composite and thermoformed 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 Third Quarter Results
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October 27, 2003
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COACHMEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
----------- -------------- ---------- -----------
Net Sales $ 200,809 $ 177,535 $ 521,099 $ 501,106
Gross Profit - $ 33,130 29,445 77,710 74,014
Gross Profit - % 16.5% 16.6% 14.9% 14.8%
GS&A - $ 25,159 22,717 69,020 63,782
GS&A - % 12.5% 12.8% 13.2% 12.7%
Operating Income- $ 7,971 6,728 8,690 10,232
Operating Income- % 4.0% 3.8% 1.7% 2.0%
Other (Income)/Expense (157) 89 538 (918)
Pre-Tax Profit- $ 8,128 6,639 8,152 11,150
Pre-Tax Profit - % 4.0% 3.7% 1.6% 2.2%
Tax Expense 2,770 2,344 2,778 3,882
Net Income 5,358 4,295 5,374 7,268
Earnings per share -
Basic 0.35 0.27 0.35 0.45
Diluted 0.35 0.27 0.35 0.45
Weighted Average Shares Outstanding
Basic 15,427 16,080 15,436 16,070
Diluted 15,464 16,175 15,475 16,186
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Coachmen Industries, Inc. Reports Third Quarter Results
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October 27, 2003
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COACHMEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
ASSETS 9/30/03 12/31/02
- ------ ---------- -----------
Current Assets
- --------------
Cash and temporary cash investments $ 5,048 $ 16,549
Marketable securities 10,565 7,641
Accounts receivable 49,634 29,408
Inventories 102,828 85,010
Prepaid expenses and other 9,423 8,862
Deferred income taxes 6,316 6,885
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Total Current Assets 183,814 154,355
Property & equipment, net 80,328 78,889
Goodwill 18,954 18,954
Cash value of life insurance 35,614 33,155
Real estate held for sale -- 276
Other 3,945 7,566
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Total Assets $ 322,655 $ 293,195
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LIABILITIES AND SHAREHOLDERS' EQUITY 9/30/03 12/31/02
- ------------------------------------ ---------- -----------
Current Liabilities
ST borrowings & current portion of LT debt $ 995 $ 902
Accounts payable, trade 46,771 18,801
Accrued income taxes 3,481 1,222
Other accruals 37,953 39,856
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Total Current Liabilities 89,200 60,781
Long-term debt 9,961 10,097
Deferred income taxes 4,123 4,123
Other 9,854 8,768
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Total liabilities 113,138 83,769
Shareholders' Equity 209,517 209,426
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Total Liabilities and Shareholders' Equity $ 322,655 $ 293,195
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Coachmen Industries, Inc. Reports Third Quarter Results
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October 27, 2003
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COACHMEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
2003 2002
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CASH FLOW FROM OPERATIONS $ 3,616 $ 22,475
CASH FLOW FROM/(USED IN) ACQUISITION & INVESTING ACTIVITIES (8,202) 2,753
Net Borrowings (43) (18,849)
Issuance/Purchase of Stock (4,085) (2,922)
Dividends (2,787) (2,576)
---------- ------------
CASH FLOW USED IN FINANCING ACTIVITIES (6,915) (24,347)
INCREASE/(DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS (11,501) 881
Beginning of Period Cash and Temporary Cash Investments 16,549 28,416
---------- -----------
ENDING CASH AND TEMPORARY CASH INVESTMENTS $ 5,048 $ 29,297
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