Coachmen Industries Incurs Year-end Loss
Coachmen Industries Inc. today (Jan. 30) reported a net loss of $19.4 million for the company’s full year, ended Dec. 31.
The company said results were impacted by soft sales and heightened by pre-tax expenses of $14.3 million associated with defective materials used in recreational vehicle laminated sidewalls.
For the quarter, the Elkhart, Ind.-based builder had a net loss from continuing operations of $10.6 million compared with net income of $1.7 million the previous year. For the year, net loss from continuing operations was $19.4 million versus net income of $14.3 million.
Coachmen reported fourth-quarter sales fell 25.2% to $140 million from $187.2 million in 2004 and decreased 12.5% to $702 million from $802 million for the full year.
The company said several factors dragged down profits in its recreational vehicle segment, which incurred pre-tax losses for continued operations of $17.2 million and $40.8 million during the fourth quarter and year-end, respectively.
Coachmen noted: “More than half of the RV group’s pre-tax loss for the year is attributable to three factors: heavier retail and wholesale incentives of $5.9 million; the recall of defective camping trailer lift systems at a repair cost of $1 million, plus associated losses of sales and production; and defective material used in laminated sidewalls.”
The “sidewall issue” involved an estimated 1,200 units produced during the fall of 2004 through late spring of 2005. Coachmen said it would institute legal action to recover costs if an agreement couldn’t be reached with the supplier, adding, “in the meantime, a supply of an alternative material has been identified.”
Sales in the RV segment were $97.2 million during the fourth quarter, down 27.1% from the $133.4 million a year prior. For the full year, RV segment sales decreased 12.1% to $522 million from $594 million in 2004.
For the year, RV group wholesale shipments of all product types decreased by 11.9% to 18,162 units. Shipments of travel trailers increased 19.5%, aided by orders for approximately 3,500 “FEMA-related” units for hurricane relief efforts with a value of approximately $36 million.
Coachmen also updated progress in its “intensive recovery plan,” outlined in its third quarter earnings report, which included the divestiture of several interests in its manufactured housing operations.
In December, the company sold All American Homes of Kansas LLC, and during the fourth quarter, Coachmen reached an agreement to sell its Prodesign thermoformed plastics subsidiary.
The builder also identified several prospective buyers for its Miller Building Systems Inc. subsidiary, and is currently in negotiations to finalize a sale. Coachmen noted that the financial results for these three units have been classified as discontinued operations in its 2005 consolidated financial statements.
“As I commented previously, challenging business environments are a fact of life, and we must do a better job of managing through those challenges,” said Chairman and CEO Claire C. Skinner. “We have not been generating suitable returns for our shareholders and our ‘Intensive Recovery Plan’ represents management’s total commitment to major improvements in all areas of our performance.”