Coachmen Industries, Inc. Expects Earnings Recovery in 2002
ELKHART, Ind., Feb. 13 Coachmen Industries, Inc. announced fourth quarter results that were consistent with its earlier guidance and support the Company's expectation for a return to profitability for the full year 2002.
The loss for the fourth quarter matched the previous announcement by Coachmen about the impact that the economic recession and attacks of Sept. 11 were having on the industries in which the Company participates. The loss of $1.4 million, or $0.09 per share, for the quarter compared with a loss of $7.8 million, or $0.50 per share, in the year-earlier period. Sales for the fourth quarter totaled $129.1 million versus $150.2 million in the fourth quarter of 2000.
For the year ended December 31, 2001, the Company reported a loss of $4.0 million, or $0.25 per share, compared with net income of $2.2 million, or $0.14 per share, for 2000. Net sales for 2001 were $593.9 million compared with $734.6 million for 2000.
Claire C. Skinner, Chairman, Chief Executive Officer and President, remarked, ``It is clear that the industry-wide demand for recreational vehicles was affected early in 2001 by the economic slowdown that subsequently was formally identified as a recession. Although we are not satisfied with the report of a loss for the fourth quarter or the year, sales began strengthening in the fourth quarter and gained momentum as the period developed. The recent RV shows in which we have participated have generated solid year-to-year gains in orders from dealers, reinforcing our optimism about Coachmen's prospects in 2002. We recognize the uncertainty that remains about the near-term path of the general economy, but expect to achieve a significant recovery in earnings for the year and establish a platform for further gains in 2003.''
Three Months Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Sales
Recreational Vehicle $ 71,105 $ 96,326 $349,810 $ 547,651
Modular Housing/Building 57,956 53,868 244,111 186,927
Total 129,061 150,194 593,921 734,578
Pre-Tax Income (Loss)
Recreational Vehicle $ (2,571) $(15,290) $(11,631) $ (5,784)
Modular Housing/Building 2,980 1,678 15,466 11,578
Other (2,591) 1,668 (9,953) (2,907)
Total (2,182) (11,944) (6,118) 2,887
Recreational Vehicle Segment
The Company's Recreational Vehicle segment was affected during 2001 by an industry-wide slowdown that was aggravated for manufacturers by a reduction in inventories at the dealer level. Unit deliveries for the industry to RV dealers for the full year declined approximately 15%, and retail unit sales in the industry were off 9% through the first 11 months. Consumer interest remained strong, but retail sales were affected by consumers' reluctance to make major expenditures in the face of the well-publicized uncertainty about the outlook for the economy. During the fourth quarter, unit shipments for the industry were down only 7% from a year ago, signaling a general improvement in demand. Coachmen's Recreational Vehicle segment experienced a similar trend with a decline in sales of 7% in the fourth quarter from a year ago when adjusted for discontinued operations. Despite the decline in sales, success in reducing costs enabled the Company to report a significantly lower loss in the fourth quarter versus the loss in the same period of 2000.
To regain positive momentum in market share, the Company launched an aggressive redesign effort that included over 50 new recreational vehicle models and styles for the 2002 model year. The success of these new products has contributed importantly to the improvement recorded in incoming orders and production levels. Orders at the national industry trade show in the fourth quarter were up 25%, and the Company also recorded significant gains in orders at subsequent regional retail shows. Based on the improved level of incoming orders, Coachmen plans to expand its manufacturing capacity by mid-year by reopening a motorhome facility closed late in 2000.
Modular Housing and Building Segment
The sales and income for the Company's modular housing/building segment for 2001 included significant contributions from acquired operations. Although housing starts remained strong nationally, several of the geographic regions where the Company has operations experienced declines in overall demand for new homes due to difficult local economic circumstances. To offset this trend, Coachmen has shifted its marketing emphasis to larger, more complex homes where demand is generally less cyclical and margins are higher. The Company is also focusing on a greater penetration of urban markets where there is the most concentrated demand. Coachmen's backlog for modular housing began strengthening late in the fourth quarter and was up more than 30% at the end of January 2002 from the year-earlier level.
Coachmen is continuing to find broadened uses for its modular products as commercial structures. Recent completions include modular structures for telecommunications companies, healthcare providers and educational institutions.
Balance Sheet/Cash Flow
As of Dec. 31, 2001, the Company had cash and marketable securities of $40.6 million, shareholders' equity of $208.7 million and book value of $13.18 per share. Capital expenditures totaled $0.7 million for the fourth quarter and $4.7 million for the full year.
Joseph P. Tomczak, Executive Vice President and Chief Financial Officer, said, ``Our financial management strategy during 2001 was focused on reducing working capital and utilizing our positive cash flow as effectively as possible. We had record cash flow from operations of $41.3 million, up from $29.9 million in 2000. EBITDA (earnings before interest, taxes, depreciation and amortization) amounted to $9.4 million for the year. We paid off all the debt related to our 2001 acquisitions, leaving us with only nominal long-term obligations at the end of the year.
Coachmen's balance sheet provides us considerable flexibility to fund the investments in new products necessary to drive internal gains and to support our interest in completing complementary, strategic acquisitions.``
Outlook
Skinner said, ``Based on current trends, we conservatively expect to achieve an approximate 10% gain in net sales for 2002. We believe this increased sales volume will translate into a solid profit recovery for the year, aided by the results of our cost reduction actions. We expect further progress toward profitability in the first quarter and to operate close to breakeven for the period. We anticipate reporting earnings in each of the subsequent quarters leading to earnings of approximately $0.75 per share for the full year. This return to profitability will compare very favorably with our 2001 results and establish a pattern that we can build on in 2003 and beyond.
``We believe that the structural factors in our business model offer the potential to return Coachmen fully to its historical levels of profitability. Our long-term record includes other cyclical periods in which economic slowdowns impacted us as well as other manufacturers of recreational vehicles. We have shown strong recoveries in the ensuing expansions based on the fundamental appeal of recreational vehicles and the attractiveness of our product offerings. We believe that our modular housing segment enhances our longer term growth prospects, and our balance sheet and demonstrated, positive cash flow provide the capital to fund internal investment opportunities as well as additional strategic acquisitions.''
Founded in 1964, Coachmen Industries, Inc. is one of the nation's leading manufacturers of recreational vehicles with well-known brand names including Coachmen®, Georgie Boy®, Shasta® and Viking®. Coachmen Industries is also the largest modular home producer in the nation with its All American Homes® and Mod-U-Kraf® subsidiaries. Modular commercial and telecommunication structures are manufactured by the Company's Miller Building Systems subsidiary. Coachmen 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 functioning of the Company's information technology systems, the availability and the price of gasoline, the Company's dependence on chassis suppliers, interest rates, 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 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 Twelve Months Ended
December 31, December 31,
2001 2000 2001 2000
Net Sales $ 129,061 $ 150,194 $ 593,921 $ 734,578
Gross Profit - $ 20,240 15,363 90,562 103,234
Gross Profit - % 15.7% 10.2% 15.2% 14.1%
General, Selling
& Administrative - $ 22,995 26,690 95,051 100,718
General, Selling &
Administrative - % 17.8% 17.8% 16.0% 13.7%
Operating Income/
(Loss) - $ (2,755) (11,327) (4,489) 2,516
Operating Income/
(Loss) - % (2.1)% (7.5)% (0.8)% 0.3%
Other (Income)/
Expense (573) 617 1,629 (371)
Pre-Tax Profit/
(Loss) - $ (2,182) (11,944) (6,118) 2,887
Pre-Tax Profit/
(Loss) - % (1.7)% (8.0)% (1.0)% 0.4%
Tax Expense/
(Benefit) (742) (4,105) (2,167) 723
Net Income/
(Loss) (1,440) (7,839) (3,951) 2,164
Earning/(Loss)
Per Share -
Basic & Diluted (0.09) (0.50) (0.25) 0.14
Weighted Average
Shares Outstanding
Basic 15,918 15,635 15,835 15,584
Diluted 15,996 15,717 15,939 15,639
Coachmen Industries, Inc.
Condensed Consolidated Balance Sheet
(In Thousands)
(Unaudited)
ASSETS 12/31/01 12/31/00
Current Assets
Cash $ 28,416 $ 2,614
Marketable securities 12,180 18,737
Accounts receivable 23,756 37,743
Inventories 80,477 97,315
Prepaid expenses and other 9,059 9,157
Deferred income taxes 7,319 8,384
Total Current Assets 161,207 173,950
Property, plant & equipment, net 80,233 84,163
Goodwill and other, net 18,954 15,983
Other 28,166 22,350
Total assets $288,560 $296,446
LIABILITIES AND SHAREHOLDER'S EQUITY 12/31/01 12/31/00
Current Liabilities
Current portion of long-term debt $ 917 $ 865
Accounts payable, trade 18,944 24,015
Accrued income taxes 494 845
Other accruals 38,846 31,988
Total Current Liabilities 59,201 57,713
Long-term debt 11,001 11,795
Deferred income taxes 1,257 3,370
Other 8,461 8,619
Total liabilities 79,920 81,497
Shareholder's equity 208,640 214,949
Total liabilities and equity $288,560 $296,446
Coachmen Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Twelve Months Ended
December 31,
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by operating activities $ 41,294 $ 29,932
CASH FLOWS USED IN INVESTING ACTIVITIES
Proceeds from:
Sale of marketable securities 51,672 134,673
Sale of properties 1,800 1,931
Sale of businesses -- 4,826
Acquisitions of:
Marketable securities (47,752) (121,972)
Property and equipment (4,719) (8,222)
Businesses, net of cash acquired (7,707) (34,351)
Other (922) (1,898)
Net cash used in investing activities (7,628) 25,013)
CASH FLOWS USED IN FINANCING ACTIVITIES
Proceeds from short-term borrowings -- 30,000
Payments of short-term borrowings -- (30,000)
Proceeds from long-term debt 13,500 --
Payments of long-term debt (18,909) (4,447)
Issuance of common shares under stock
option and stock purchase plans 734 896
Tax benefit from stock options exercised 10 91
Cash dividends paid (3,169) (3,114)
Purchase of common shares for treasury (30) --
Net cash used in financing activities (7,864) (6,574)
Increase (decrease) in cash and temporary
cash investments 25,802 (1,655)
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of period 2,614 4,269
End of period $ 28,416 $ 2,614
