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Monaco Reports Decline in 2Q Earnings

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July 26, 2006 by   Leave a Comment

Monaco Coach Corp. reported lower second-quarter earnings due to weakness in the motorized sector, resulting in production changes to better match soft market demand.
“The new production configuration for our various models provides the company much greater flexibility to build to market demand, and assists our dealer partners in maintaining the proper mix of models on their lots,” said Kay Toolson, Monaco chairman and CEO. “These manufacturing changes did impact efficiencies in our plants in the second quarter, but we believe these challenges should be behind us by the end of this quarter.”
The Coburg, Ore.-based builder issued a statement last Thursday warning that earnings would not meet expectations. Net income during the quarter was $372,000, which included a $107,000 loss related to the discontinued operations of the Royale Coach bus conversion facility, compared to $755,000 a year prior. Sales increased 5% to $321 million from $304.5 million, boosted by solid performance in the towable segment.
The company’s motorized operations reported revenues of $225.6 million in the quarter and a 12.3% drop in unit sales to 1,408. Monaco said its recent introductions at the company’s Dealer Congress, which reflected shifting market demand, were well received by the dealer body.
“We are focused on delivering new products at the price points where there have been positive trends, including low priced class B’s and C’s, and low to mid-priced diesels,” said President John Nepute.
The towable segment reported sales of $89.2 million during the second quarter while unit sales were 5,617, aided by 4,411 units from recently acquired R-Vision, Warsaw, Ind.
“Sales contributions and higher margins from the R-Vision business continued to positively impact sales and profitability in the towable RV segment,” said Nepute. “In the second quarter, the segment’s strong margins were the result of high utilization in the R-Vision plants and acceptance of their lightweight, less expensive travel trailers.”
The company’s resort segment saw a decline in sales and earnings during the quarter, reflecting seasonality in the sector. Monaco also announced the acquisition of two new motorhome resorts in La Quinta, Calif., and Naples, Fla.
“Our recent motorhome resort experience suggests that Southern California and in particular the Palm Springs area has excellent demand for the type of resorts and lots that we are developing,” said Toolson. “When completed, the La Quinta project will be comprised of approximately 400 lots.”
“Likewise, we believe the Naples area is ripe for this type of development and we are extremely pleased to enter this market with a top quality location. The Naples project is expected to contain roughly 200 lots and will have direct access to the Gulf of Mexico.”

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