EX-99 2 coa1q07earningsrelease.htm PRESS RELEASE PRESS RELEASE TO FORM 8-K FILED APRIL 23, 2007

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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, April 23, 2007


COACHMEN INDUSTRIES, INC. ANNOUNCES FIRST QUARTER RESULTS


Elkhart, Ind. - Coachmen Industries, Inc. (NYSE: COA) today announced its financial results for the first quarter ended March 31, 2007.


“At the bottom line, results for the first quarter were very disappointing.  However, much of this was due to events which we do not expect to re-occur, and generally due to the continued contraction of the markets in both our industry segments.  Further, increases in market share on the RV side, and the coming on line of several projects on the Housing side, make us feel confident that these results will not be repeated in the second quarter,” commented Rick Lavers, Chief Executive Officer.  “Compounding last year’s market declines, for the first two months of 2007, total industry shipments of all RV types fell 16.3%, while in housing, single-family housing starts fell 24.6% from March 2006.  These declines exacted a severe penalty on our financial results.  Nonetheless, in the face of these market conditions, it is extremely encouraging that in the most current Industry data, through February we achieved retail market share gains in both Class C and Rear Diesel Class A motorhomes.  Further, total company sales increased sequentially month over month in the first quarter of 2007.  We reduced finished goods inventory levels by $4.2 million from last quarter.  In addition, we managed our balance sheet, reducing our debt levels and managing working capital, resulting in $4.1 million in operating cash flows for the quarter.”  


Sales for the first quarter were $130.2 million, 19.9% less than the $162.6 million reported for the same period last year.  Gross profits declined as a result of increased discounts on RVs and reduced operating leverage with lower production levels.  Warranty expense declined by $1.1 million from the first quarter of 2006, however as a percent of sales, warranty expense increased due to the lower revenue levels.  Selling, general and administrative expenses increased $4.0 million from last year, but the first



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Coachmen Industries, Inc. Announces First Quarter Results

Page 2

April 23, 2007



quarter of 2006 included legal settlements that reduced total SG&A expenses last year by $3.6 million.  The remaining $0.4 million increase in SG&A expenses was largely the result of costs associated with the introduction of new products at the Housing Group during the quarter.  Pre-tax loss for the first quarter was $10.4 million compared with a


pre-tax profit of $0.6 million in 2006.  Results for the first quarter of 2007 include pre-tax gains on the sale of assets of $0.4 million whereas results for the prior year’s first quarter included gains on the sale of assets of approximately $2.7 million.  At the bottom line, the Company reported a net loss from continuing operations of $10.4 million, or $0.67 per share, versus net income from continuing operations of $0.4 million, or $0.03 per share in the first quarter of 2006.  


During the first quarter, the Company also altered its method of reporting delivery income and expense to make its financial statements more comparable to its industry peers.  Beginning in 2007, delivery expenses will be included in the cost of goods sold, while delivery income will remain in total revenues, causing reported gross profit and operating expenses to decrease, however the bottom line results are unchanged.  Results from the prior year’s quarter have been adjusted to reflect the current method of accounting for delivery income and expense.


Recreational Vehicle Segment


“The RV Group’s financial results for the first quarter were far below our goals, largely due to soft market conditions resulting in an incentive rich selling environment.  Even so, the changes to our products and organizational structure undertaken in late 2006 began to show encouraging results in the quarter.  The positive reception to our new product offerings resulted in retail market share gains in Rear Diesel Class A and Class C motorhomes as well as growing momentum in our fifth-wheel and sport utility trailer offerings which should bolster future revenues,” said Michael R. Terlep, President of the Coachmen RV Group.  “Despite these positive developments, the Group’s margins were sharply reduced due largely to a selling environment replete with discounts and incentives coupled with a shift to lower priced units and much lower production levels.”  


The Company’s Recreational Vehicle Group reported sales of $104.2 million during the first quarter of 2007, down 13.1% from the $119.9 million reported for the comparable period last year.  Gross margins for the RV Group fell due to increased discounts and lower operating leverage and fixed overhead absorption with lower capacity utilization levels.  The Group’s operating expenses increased over the first quarter of 2006 due mainly to legal settlements that reduced net operating expenses in the prior year as well as increased sales incentives in the current year.  The RV Group generated a pre-tax loss from continuing operations for the quarter of $8.0 million compared with a pre-tax loss of $2.7 million for the year-ago quarter.  The Group effectively managed its inventory to avoid a build-up of product.  RV Group finished goods inventory was reduced by $5.4



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Coachmen Industries, Inc. Announces First Quarter Results

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April 23, 2007



million from the end of 2006 and now stands at the lowest level since the third quarter of 2003, at $29.7 million, consisting virtually entirely of current model products.  


Housing and Building Segment


The continued nationwide softening of the housing market along with unusual winter weather patterns created an especially challenging environment for the Housing and Building Group, particularly in its core Midwestern markets.  In addition, timing of initial deliveries of the Ft. Bliss project was delayed into the second quarter, resulting in lower


revenues and profits in the first quarter.  “We are making steady progress in our strategy of pursuing growth opportunities beyond our traditional scattered-lot single-family business,” commented Housing Group President Rick Bedell.  “We started production of the second phase of the Fort Bliss barracks project at our Iowa plant, we are continuing our efforts to grow our traditional business with new products and we remain focused on controlling costs and enhancing margins.”  In March, the Group introduced its new Craftsman home collection which generated an enthusiastic response by its builders.  The Craftsman collection supplements the entry-level Harwick collection introduced late in the fourth quarter.


For the quarter, the Group reported sales of $26.1 million, down 38.9% from $42.7 million in the first quarter of 2006 due in large part to the continued weakness in single-family housing, particularly in the Midwest.  With the lower sales level, and costs associated with initial production of several larger projects which will not be recouped until delivery, gross profit fell to $2.3 million, or 8.8% of sales from $5.1 million, or 12.0% of sales in the first quarter of 2006 while operating expenses were flat compared to last year.  Accordingly, the Group generated a pre-tax loss of $2.7 million, compared with a pre-tax profit of $0.1 million for the year-ago quarter.  


Coachmen Industries will conduct a conference call to discuss its financial results in this release at 10:00 a.m. (Eastern Time), Tuesday, April 24, 2007.  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



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Coachmen Industries, Inc. Announces First Quarter Results

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April 23, 2007



to certain risks and uncertainties including, but not limited to, the potential fluctuations in the Company’s operating results, increased interest rates 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 of the company to generate taxable income in future years to utilize deferred tax assets and net operating loss carry-forwards available for use, 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, 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.


For more information:

     Colleen Zuhl

Jeffery A. Tryka, CFA

     Chief Financial Officer

Director of Planning and Investor Relations

     574-262-0123

574-262-0123



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Coachmen Industries, Inc. Announces First Quarter Results

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April 23, 2007





Coachmen Industries, Inc.

Consolidated Statements of Operations

 

 

 

 

 

(In Thousands, Except Per Share Data)

(Unaudited)

 

 

 

 

 

 

 

 Three Months Ended

 

 

March 31,

 

 

2007

 

2006

 

 

 

 

 

Net Sales

 

 $         130,244 

 

 $         162,554 

 

 

 

 

 

Gross Profit - $

 

 1,427 

 

 6,413 

Gross Profit - %

 

1.1%

 

3.9%

 

 

 

 

 

GS&A - $

 

 12,048 

 

 8,030 

GS&A - %

 

9.2%

 

4.9%

 

 

 

 

 

(Gain)/Loss on Sale of Property - $

 

 (445)

 

 (2,677)

(Gain)/Loss on Sale of Property - %

 

(0.3)%

 

(1.7)%

 

 

 

 

 

Operating Income/(Loss) - $

 

 (10,176)

 

 1,060 

Operating Income/(Loss) - %

 

(7.8)%

 

0.7%

 

 

 

 

 

Other Expense

 

 273 

 

 442 

 

 

 

 

 

Pre-Tax Income/(Loss) from Continuing Operations - $

 

 (10,449)

 

 618 

Pre-Tax Income/(Loss) from Continuing Operations - %

 

(8.0)%

 

0.4%

 

 

 

 

 

Tax Expense/(Credit)

 

 (1)

 

 214 

 

 

 

 

 

Net Income/(Loss) from Continuing Operations

 

 (10,448)

 

 404 

 

 

 

 

 

Loss from Discontinued Operations (net of taxes)

 

 - 

 

 (329)

Gain on Sale of Discontinued Operations (net of taxes)

 

 - 

 

 2,835 

 

 

 

 

 

Net Income/(Loss)

 

 (10,448)

 

 2,910 

 

 

 

 

 

Earnings/(Loss) per Share - Basic and Diluted

 

 

 

 

  Continuing Operations

 

 (0.67)

 

 0.03 

  Discontinued Operations

 

 - 

 

 0.16 

Net Income/(Loss) per Share

 

 (0.67)

 

 0.19 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

     Basic

 

 15,700 

 

 15,593 

     Diluted

 

 15,700 

 

 15,650 




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Coachmen Industries, Inc. Announces First Quarter Results

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April 23, 2007




Coachmen Industries, Inc.

Condensed Consolidated Balance Sheets

(In Thousands)

(Unaudited)

 

 

 

 

 

ASSETS

 

March 31,

 

 December 31,

Current Assets

 

 2007

 

 2006

 

 

 

 

 

   Cash and cash equivalents

 

 $3,669 

 

 $2,651 

   Accounts receivable

 

 36,544 

 

 25,874 

   Inventories

 

 86,187 

 

 83,511 

   Refundable income taxes

 

 4,161 

 

 10,820 

   Prepaid expenses and other

 

 5,322 

 

 6,289 

   Assets held for sale

 

 - 

 

 288 

 

 

 

 

 

Total Current Assets

 

 135,883 

 

 129,433 

 

 

 

 

 

Property, plant & equipment, net

 

 55,895 

 

 57,018 

 

 

 

 

 

Goodwill

 

 16,865 

 

 16,865 

 

 

 

 

 

Cash value of life insurance

 

 33,196 

 

 31,119 

 

 

 

 

 

Note receivable

 

 6,191 

 

 6,269 

 

 

 

 

 

Other

 

 2,389 

 

 2,430 

 

 

 

 

 

Total Assets

 

 $250,419 

 

 $243,134 

 

 

 

 

 

 

 

 

 

 

LIABILITIES & SHAREHOLDERS' EQUITY

 

March 31,

 

 December 31,

Current Liabilities

 

2007

 

2006

   ST borrowings & current portion of LT debt

 

 $8,651 

 

 $10,361

   Accounts payable, trade

 

 35,062 

 

 16,998

   Floor plan notes payable

 

 4,319 

 

 4,156

   Accrued income taxes

 

 5 

 

 18

   Other accruals

 

 36,604 

 

 35,116

 

 

 

 

 

Total Current Liabilities

 

 84,641 

 

 66,649

 

 

 

 

 

Long-term debt

 

 3,825 

 

 3,862

 

 

 

 

 

Postretirement deferred compensation benefits

 

 7,854 

 

 7,768

 

 

 

 

 

Deferred income taxes

 

 4,524 

 

 4,524

 

 

 

 

 

Other

 

 22 

 

 -  

 

 

 

 

 

Total Liabilities

 

 100,866 

 

 82,803

 

 

 

 

 

Shareholders' Equity

 

 149,553 

 

 160,331

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

 $250,419 

 

 $243,134



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Coachmen Industries, Inc. Announces First Quarter Results

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April 23, 2007




Coachmen Industries, Inc.

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

 

 

 

 

 

 

 

 Three Months Ended

 

 

 March 31,

 

 

2007

 

2006

Net income/(loss)

 

 $(10,448)

 

 $2,910 

Depreciation

 

 1,506 

 

 1,669 

Changes in current assets and liabilities

 

 13,060 

 

 786 

   Net Cash Provided by Operations

 

 4,118 

 

 5,365 

 

 

 

 

 

   Net Cash Provided by/(Used in) Investing Activities

 

 (1,091)

 

 14,939 

 

 

 

 

 

Net payments on borrowings

 

 (1,584)

 

 (13,326)

Net issuance of stock

 

 46 

 

 85 

Dividends paid

 

 (471)

 

 (937)

   Net Cash Used in Financing Activities

 

 (2,009)

 

 (14,178)

 

 

 

 

 

Increase in Cash and Cash Equivalents

 

 1,018 

 

 6,126 

 

 

 

 

 

Beginning of period cash and cash equivalents

 

 2,651 

 

 2,780 

 

 

 

 

 

Ending of Period Cash and Cash Equivalents

 

 $3,669 

 

 $8,906 

 

 

 

 

 




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Coachmen Industries, Inc. Announces First Quarter Results

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April 23, 2007




Coachmen Industries, Inc.

Quarterly Segment Data

(In Thousands)

(Unaudited)

 

 

 

 

 

 

 

 Three Months Ended

 

 

 March 31,

 

 

2007

 

2006

Sales

 

 

 

 

Recreational Vehicle

 

 104,152 

 

 119,854 

Housing

 

               26,092 

 

               42,700 

     Total

 

             130,244 

 

             162,554 

 

 

 

 

 

Gross Profit

 

 

 

 

Recreational Vehicle

 

 $(866)

 

 $1,306 

Housing

 

 2,293 

 

 5,107 

     Total

 

 $              1,427 

 

 $              6,413 

 

 

 

 

 

Gross Profit Percentage

 

 

 

 

Recreational Vehicle

 

-0.8%

 

1.1%

Housing

 

8.8%

 

12.0%

     Total

 

1.1%

 

3.9%

 

 

 

 

 

Operating Expenses

 

 

 

 

Recreational Vehicle

 

 $7,072 

 

 $3,654 

Housing

 

 5,022 

 

 4,999 

Other

 

                  (491)

 

               (3,300)

     Total

 

 $            11,603 

 

 $              5,353 

 

 

 

 

 

Operating Expense Percentage

 

 

 

 

Recreational Vehicle

 

6.8%

 

3.0%

Housing

 

19.2%

 

11.7%

     Total

 

8.9%

 

3.3%

 

 

 

 

 

Operating Income/(Loss)

 

 

 

 

Recreational Vehicle

 

 $(7,938)

 

 $(2,347)

Housing

 

 (2,279)

 

 107 

Other

 

                    491 

 

                 3,300 

     Total

 

 $          (10,176)

 

 $              1,060 

 

 

 

 

 

Pre-Tax Income/(Loss) from Continuing Operations

 

 

 

Recreational Vehicle

 

 $(8,044)

 

 $(2,668)

Housing

 

 (2,677)

 

 142 

Other

 

                    272 

 

                 3,144 

     Total

 

 $          (10,449)

 

 $                 618 

 

 

 

 

 


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