EX-99 2 ex9910312006.htm PRESS RELEASE THIRD QUARTER PRESS RELEASE

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COACHMEN INDUSTRIES, INC.

2831 Dexter Drive • P.O. Box 3300 • Elkhart, Indiana 46515 • 574/262-0123 • Fax 574/262-8823



NEWS RELEASE


For immediate release Monday, October 30, 2006



COACHMEN INDUSTRIES, INC. ANNOUNCES THIRD QUARTER RESULTS



Elkhart, Ind. - Coachmen Industries, Inc. (NYSE: COA) today announced its financial results for the third quarter ended September 30, 2006.


“As a result of spreading soft conditions in both of our industry segments, sales for the third quarter were off more than 25% from 2006.  Nonetheless, it is important to note that we sharply cut our losses in the face of these market conditions, and actually significantly improved our bottom line performance year-over-year by paring operating expenses,” commented Rick Lavers, Chief Executive Officer.  “Faced with the unusual circumstance of troubled markets in both of our core businesses, which appears will extend into 2007, we have reduced our costs of doing business and our inventories while we have increased our cash position and carry minimal long-term debt.  Going forward, we are re-defining our direction and have already made a number of market driven decisions to improve our performance results.”


Sales for the third quarter were $130.7 million, 27.4% less than the $180.2 million reported for the same period last year.  At the bottom line, losses were reduced by 62.4% to $3.5 million, or $0.22 per share, versus a net loss of $9.3 million, or $0.60 per share in the third quarter of 2005.  For the first nine months, net sales were $448.6 million versus $562.4 million last year.  Net loss for the first nine months was also significantly reduced to $0.3 million, or $0.02 per share versus a net loss of $12.2 million or $0.78 per share during the comparable period of 2005.  


The loss from continuing operations for the third quarter was $3.4 million, or $0.21 per share compared with a loss of $6.2 million, or $0.40 per share in the prior year.  Loss



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Coachmen Industries, Inc. Announces Third Quarter Results

Page 2

October 30, 2006


from discontinued operations was $0.2 million, or $0.01 per share due to residual costs from restructuring actions completed in prior quarters.  This compares to the loss from discontinued operations of $3.2 million, or $0.20 per share last year.  For the first nine months, net loss from continuing operations was $1.9 million, or $0.12 per share compared with a loss from continuing operations of $8.8 million, or $0.56 per share for the first nine months of 2005.  Income from discontinued operations was $1.5 million, or $0.10 per share compared with a net loss from discontinued operations of $3.4 million, or $0.22 per share in the prior year.


The Company increased its cash position as of September 30, 2006, from year-end 2005, by $8.9 million to $11.7 million with shareholders’ equity of $191.6 million.  Cash flow from operations was $1.7 million for the first nine months, compared with cash flow from operations of $31.3 million in 2005 (which was primarily due to a $16.7 million reduction in accounts receivable and a $14.7 million increase in accounts payable resulting from timing differences during the year).  Total working capital decreased to $87.6 million from $92.5 million last quarter.  Total inventories were reduced to $103.6 million, compared to $112.3 million last quarter.  Capital expenditures in the third quarter were $0.8 million compared with $0.7 million last year.  Depreciation was $1.6 million for the third quarter versus $2.2 million for the third quarter of 2005.  


Recreational Vehicle Segment


“Gross profit for the RV Group in the third quarter increased to 4.1% of sales from 1.1% last year, as a result of the Company’s cost reduction efforts and significant restructuring activities undertaken over the past year,” said Michael R. Terlep, President of the Coachmen RV Group.  “However, because we are not operating at or near capacity, the slow down in demand has had a disproportionate impact on gross profit and earnings.”  


The Company’s Recreational Vehicle Group reported sales of $90.5 million during the third quarter of 2006, down 30.3% from the $129.9 million reported for the comparable period last year, due to the continued softness in the Class A motorhome market, along with a more challenging towable market.  The RV Group generated a pre-tax loss from continuing operations for the third quarter of $7.0 million compared with a pre-tax loss of $15.5 million for the year-ago quarter.  For the first nine months, RV Group sales decreased to $321.5 million from $425.0 million last year.  Despite the 24.4% decrease in sales, the RV Group’s pre-tax losses were reduced to $15.0 million versus $23.5 million in the first nine months of 2005.  RV Group finished goods inventory was reduced by $5.0 million from the end of the second quarter and now stands at $46.2 million.  


Housing and Building Segment


The Company’s Housing and Building Group continued to make progress in reducing costs and maintaining profitability in the face of challenging market conditions.  The weakness in the Group’s core Midwestern markets has spread to other areas as the national housing market has shown increasing softness.  For the quarter, the Group reported sales of $40.2 million, down 20.0% from $50.3 million in the third quarter of



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October 30, 2006


2005.  Given the lower sales level, the Group reported a pre-tax profit of $0.3 million compared with a pre-tax profit of $1.1 million for the year-ago quarter.  For the first nine months, net sales for the Housing and Building Group fell 7.5% to $127.1 million versus $137.4 million in 2005.  At the same time, the Group posted a significant turnaround in pre-tax profits, reporting a pre-tax profit of $2.8 million for the first nine months of 2006, versus a pre-tax loss of $0.2 million in the first nine months of 2005.


The prospects of the Company’s All American Building Systems (AABS) special projects branch continued to improve.  During the third quarter, AABS was a member of a consortium that was awarded a contract for the second phase of barracks construction at Fort Bliss in Texas.  “We see great opportunities in military construction that will allow the Housing and Building Group to achieve significant growth potential in the years ahead,” commented CEO Lavers.  “We are also participating in reconstruction of the Gulf Coast regions damaged by the hurricanes of 2005.  During the quarter, the Housing and Building Group signed an agreement to provide two dozen systems-built homes for a neighborhood near New Orleans.”


Coachmen Industries will conduct a conference call to discuss the financial results contained in this release at 10 a.m. (Eastern Time), Tuesday, October 31, 2006.  Members of the news media, investors and the general public are invited to access a live broadcast of the conference call over the internet at www.earnings.com.  The online replay will be available at approximately 12:00 p.m. (Eastern Time) and continue for 30 days.


Coachmen Industries, Inc. is one of America’s leading manufacturers of recreational vehicles, systems-built homes and commercial buildings, with prominent subsidiaries in each industry.  The Company’s well-known RV brand names include COACHMENâ, GEORGIE BOYÔ, SPORTSCOACHâ and VIKINGâ.  Through ALL AMERICAN HOMES®, Coachmen is one of the nation’s largest producers of systems-built homes, and also a major builder of commercial structures with its ALL AMERICAN BUILDING SYSTEMSÔ products.  Coachmen Industries, Inc. is a publicly held company with stock listed on the New York Stock Exchange (NYSE) under the ticker COA.


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 availability for floorplan financing for the Company’s recreational vehicle dealers and corresponding availability of cash to Company, uncertainties and timing with respect to sales resulting from recovery efforts in the Gulf Coast, uncertainties regarding the impact on sales of the disclosed restructuring steps in both the recreational vehicle and housing and building segments, the ability to sell and close the operations for sale as described, the accuracy of the estimates of the costs to remedy the disclosed recreational vehicle warranty issues, the impact of performance on the valuation of intangible assets, the availability and the price of gasoline, price volatility of raw materials used in production, the Company’s dependence on chassis and other suppliers, interest rates, the availability and cost of real estate for residential housing, the supply of existing homes within the company’s markets, the impact of home values on housing demand, the ability of the Housing and Building segment to perform in new market segments where it has limited experience, adverse weather conditions affecting home deliveries, competition, government regulations, legislation governing the relationships of the Company with its recreational vehicle dealers, consolidation of distribution channels in the recreational vehicle industry, consumer confidence, uncertainties of matters in litigation, further developments in the war on terrorism and related international crises, oil supplies, and other risks identified in the Company’s SEC filings.



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Coachmen Industries, Inc. Announces Third Quarter Results

Page 4

October 30, 2006




For more information:

     Colleen Zuhl

Jeffery A. Tryka, CFA

     Chief Financial Officer

Director of Planning and Investor Relations

     574-262-0123

574-262-0123


Coachmen Industries, Inc.

Consolidated Statements of Operations

         

(In Thousands, Except Per Share Data)

(Unaudited)

         
  

 Three Months Ended

 

 Nine Months Ended

  

September 30,

 

September 30,

  

2006

 

2005

 

2006

 

2005

         

Net Sales

 

 $      130,715 

 

 $    180,168 

 

 $    448,590 

 

 $      562,448 

         

Gross Profit - $

 

 13,065 

 

 13,715 

 

 43,694 

 

 52,622 

Gross Profit - %

 

10.0%

 

7.6%

 

9.7%

 

9.4%

         

GS&A - $

 

 19,830 

 

 25,189 

 

 54,579 

 

 69,657 

GS&A - %

 

15.2%

 

14.0%

 

12.2%

 

12.4%

         

Gain on Sale of Property - $

 

 (291)

 

 820 

 

 (6,340)

 

 780 

Gain on Sale of Property - %

 

(0.2)%

 

0.5%

 

(1.4)%

 

0.1%

         

Operating Income (Loss) - $

 

 (6,474)

 

 (12,294)

 

 (4,545)

 

 (17,815)

Operating Income (Loss) - %

 

(5.0)%

 

(6.8)%

 

(1.0)%

 

(3.2)%

         

Other Expense

 

 (183)

 

 347 

 

 554 

 

 440 

         

Pre-Tax Profit (Loss) from Continuing Operations - $

 (6,291)

 

 (12,641)

 

 (5,099)

 

 (18,255)

Pre-Tax Profit (Loss) from Continuing Operations - %

(4.8)%

 

(7.0)%

 

(1.1)%

 

(3.2)%

         

Tax Expense (Credit)

 

 (2,937)

 

 (6,466)

 

 (3,249)

 

 (9,466)

         

Net Income (Loss) from Continuing Operations

 

 (3,354)

 

 (6,175)

 

 (1,850)

 

 (8,789)

         

Income (Loss) from Discontinued Operations (net of taxes)

 (162)

 

 (3,171)

 

 (657)

 

 (3,413)

Gain on Sale of Discontinued Operations (net of taxes)

 - 

 

 - 

 

 2,205 

 

 - 

         

Net Income (Loss)

 

 (3,516)

 

 (9,346)

 

 (302)

 

 (12,202)

         

Earnings (Loss) per Share - Basic

        

  Continuing Operations

 

 (0.21)

 

 (0.40)

 

 (0.12)

 

 (0.56)

  Discontinued Operations

 

 (0.01)

 

 (0.20)

 

 0.10 

 

 (0.22)



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Coachmen Industries, Inc. Announces Third Quarter Results

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October 30, 2006





Net Earnings (Loss) per Share

 

 (0.22)

 

 (0.60)

 

 (0.02)

 

 (0.78)

         

Earnings (Loss) per Share - Diluted

        

  Continuing Operations

 

 (0.21)

 

 (0.40)

 

 (0.12)

 

 (0.56)

  Discontinued Operations

 

 (0.01)

 

 (0.20)

 

 0.10 

 

 (0.22)

Net Earnings (Loss) per Share

 

 (0.22)

 

 (0.60)

 

 (0.02)

 

 (0.78)

         

Weighted Average Shares Outstanding

        

     Basic

 

 15,634 

 

 15,556 

 

 15,664 

 

 15,545 

     Diluted

 

 15,634 

 

 15,556 

 

 15,664 

 

 15,545 

         



Coachmen Industries, Inc.

Condensed Consolidated Balance Sheets

(In Thousands)

(Unaudited)

     

ASSETS

    

Current Assets

 

 9/30/2006

 

12/31/2005

     

   Cash and cash equivalents

 

 $11,728 

 

 $2,780 

   Accounts receivable

 

 20,653 

 

 47,174 

   Inventories

 

 103,611 

 

 121,304 

   Prepaid expenses and other

 

 19,631 

 

 16,245 

   Deferred income taxes

 

 11,146 

 

 11,421 

   Assets held for sale

 

 2,375 

 

 291 

     

Total Current Assets

 

 169,144 

 

 199,215 

     

Property, plant & equipment, net

 

 58,348 

 

 67,581 

     

Goodwill

 

 16,865 

 

 17,383 

     

Cash value of life insurance

 

 30,651 

 

 28,880 

     

Deferred income taxes

 

 2,913 

 

 4,279 

     

Other

 

 9,380 

 

 5,478 

     

Total Assets

 

 $287,301 

 

 $322,816 

     
     



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Coachmen Industries, Inc. Announces Third Quarter Results

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October 30, 2006




LIABILITIES & SHAREHOLDERS' EQUITY

    

Current Liabilities

 

 9/30/2006 

 

 12/31/2005 

   ST borrowings & current portion of LT debt

 

 $11,891 

 

 $14,499 

   Accounts payable, trade

 

 26,116 

 

 31,658 

   Floor plan notes payable

 

 4,273 

 

 4,361 

   Accrued income taxes

 

 - 

 

 533 

   Accrued expenses and other liabilities

 

 39,294 

 

 54,856 

     

Total Current Liabilities

 

 81,574 

 

 105,907 

     

Long-term debt

 

 5,744 

 

 12,913 

     

Postretirement deferred compensation benefits

 

 8,427 

 

 10,182 

     

Other

 

 - 

 

 11 

     

Total Liabilities

 

 95,745 

 

 129,013 

     

Shareholders' Equity

 

 191,556 

 

 193,803 

     

Total Liabilities and Equity

 

 $287,301 

 

 $322,816 

     



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October 30, 2006




 

Coachmen Industries, Inc.

 

Consolidated Statements of Cash Flows

 

(In Thousands)

 

(Unaudited)

      
   

 Nine Months Ended

   

 September 30,

   

 2006

 

 2005

 

Net income (loss)

 

 $(302)

 

 $(12,202)

 

Depreciation

 

 4,869 

 

 6,638 

 

Changes in current assets and liabilities

 

 (2,872)

 

 36,891 

 

   Net Cash Provided by Operations

 

 1,695 

 

 31,327 

      
 

   Net Cash Provided by/(Used in) Investing Activities

 

 18,931 

 

 (4,759)

      
 

Net borrowings

 

 (9,865)

 

 (23,848)

 

Issuance of stock

 

 63 

 

 283 

 

Dividends

 

 (1,876)

 

 (1,887)

 

Other

 

 - 

 

 67 

 

   Net Cash Used in Financing Activities

 

 (11,678)

 

 (25,385)

      
 

Increase/(Decrease) in Cash and Cash Equivalents

 

 8,948 

 

 1,183 

      
 

Beginning of period cash and cash equivalents

 

 2,780 

 

 14,992 

      
 

Ending of Period Cash and Cash Equivalents

 

 $11,728 

 

 $16,175 





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Coachmen Industries, Inc. Announces Third Quarter Results

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October 30, 2006




Coachmen Industries, Inc.

Segment Information

(In Thousands)

(Unaudited)

         
  

 Three Months Ended

 

 Nine Months Ended

  

 September 30,

 

 September 30,

  

2006

 

2005

 

2006

 

2005

Sales

        

Recreational Vehicle

 

 90,490 

 

 129,875 

 

 321,454 

 

 425,007 

Housing and Building

 

       40,225 

 

       50,293 

 

     127,136 

 

     137,441 

     Total

 

     130,715 

 

     180,168 

 

     448,590 

 

     562,448 

         

Gross Profit

        

Recreational Vehicle

 

 $3,708 

 

 $1,410 

 

 $13,770 

 

 $20,114 

Housing and Building

 

 9,357 

 

 12,305 

 

 29,924 

 

 32,508 

     Total

 

 $    13,065 

 

 $    13,715 

 

 $    43,694 

 

 $    52,622 

         

Gross Margin Percentage

        

Recreational Vehicle

 

4.1%

 

1.1%

 

4.3%

 

4.7%

Housing and Building

 

23.3%

 

24.5%

 

23.5%

 

23.7%

     Total

 

10.0%

 

7.6%

 

9.7%

 

9.4%

         

Operating Expenses

        

Recreational Vehicle

 

 $10,984 

 

 $16,577 

 

 $28,719 

 

 $43,027 

Housing and Building

 

 9,013 

 

 11,321 

 

 26,981 

 

 32,861 

Other

 

         (458)

 

       (1,889)

 

       (7,461)

 

       (5,451)

     Total

 

 $    19,539 

 

 $    26,009 

 

 $    48,239 

 

 $    70,437 

         

Operating Expense Percentage

        

Recreational Vehicle

 

12.1%

 

12.8%

 

8.9%

 

10.1%

Housing and Building

 

22.4%

 

22.5%

 

21.2%

 

23.9%

     Total

 

14.9%

 

14.4%

 

10.8%

 

12.5%

         



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Coachmen Industries, Inc. Announces Third Quarter Results

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Operating Income / (Loss)

        

Recreational Vehicle

 

 $(7,276)

 

 $(15,167)

 

 $(14,950)

 

 $(22,913)

Housing and Building

 

 344 

 

 984 

 

 2,944 

 

 (353)

Other

 

           458 

 

        1,889 

 

        7,461 

 

        5,451 

     Total

 

 $    (6,474)

 

 $  (12,294)

 

 $    (4,545)

 

 $  (17,815)

         

Pre-Tax Income / (Loss) from Continuing Operations

     

Recreational Vehicle

 

 $(6,959)

 

 $(15,480)

 

 $(15,028)

 

 $(23,541)

Housing and Building

 

 316 

 

 1,073 

 

 2,843 

 

 (165)

Other

 

           352 

 

        1,766 

 

        7,086 

 

        5,451 

     Total

 

 $    (6,291)

 

 $  (12,641)

 

 $    (5,099)

 

 $  (18,255)




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