Coachmen Industries, Inc. Reports Strong Third Quarter Results -
Earnings of $5.4 million or $0.35 per share is the highest level of
quarterly earnings in the last 16 quarters. - Sales of $200.8
million substantially increased over second quarter sales $173.9
million and sales of $177.5 million in 2002. - Company confirms
2003 operating income estimate ELKHART, Ind., Oct. 27
/PRNewswire-FirstCall/ -- Coachmen Industries, Inc. 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. 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. 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 in 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. 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 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. 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 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 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 Total Assets $322,655 $293,195 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 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 Total liabilities 113,138 83,769 Shareholders' Equity
209,517 209,426 Total Liabilities and Shareholders' Equity $322,655
$293,195 Coachmen Industries, Inc. Condensed Consolidated
Statements of Cash Flows (In Thousands) (Unaudited) Nine Months
Ended September 30, 2003 2002 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
DATASOURCE: Coachmen Industries, Inc. CONTACT: Joseph P. Tomczak,
Executive Vice President and Chief Financial Officer of Coachmen
Industries, Inc., +1-574-262-0123 Web site:
http://www.coachmen.com/
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