Soft Markets Result in 2Q Loss for Coachmen
“Severe contraction” in the recreational vehicle and manufactured housing markets signaled a second-quarter loss for Coachmen Industries Inc. despite market share gains on the RV side and a return to profitability in its housing group.
“The market declines of 2006 have continued this year, and for the first six months of 2007, total industry shipments of all RV types fell another 12.9%, while in housing, single-family housing starts fell 21.6% from June 2006,” said Rick M. Lavers, president and CEO for the Elkhart, Ind.-based builder. “These continued market declines caused considerable damage to our financial results. Despite these market conditions, it is noteworthy that our sales for the second quarter were down a comparatively modest 3.6% from 2006. Through May we achieved retail market share gains in Class C and rear diesel Class A motorhomes, travel trailers and fifth-wheels.”
Sales for the second quarter, ended June 30, dipped to $149.8 million from $155.3 million a year ago. Net loss during the three-month period was $10.1 million compared with a net profit of $304,000 the year prior.
For the six months, sales fell to $280 million from $317.9 million last year while the net loss totaled $20.6 million compared with net income of $884,000.
During the second quarter, Coachmen reported that selling, general and administrative expenses increased $2.3 million from last year, due in part to the timing of the RV Group’s dealer seminar which occurred in the second quarter of 2007, as opposed to the third quarter of 2006. The bottom line was also impacted by significant legal expenses due to litigation from efforts to recover damages caused by sidewall lamination and camping trailer lift system issues of 2005 along with a non-cash charge of $3.9 million for impairment of goodwill associated with the RV Group.
The RV Group posted sales of $111.2 million during the second quarter, up slightly from the $111.1 million reported for the same period last year. Gross margins for the division fell due to increased discounts, lower capacity utilization and a shift in product mix towards products with lower margins. Including the goodwill impairment charge, the RV Group generated a pre-tax loss from continuing operations for the quarter of $12.3 million compared with a pre-tax loss of $5.3 million for the year-ago quarter.
Coachmen said the RV Group continued to effectively manage its inventory levels, reducing finished goods inventory by $6 million from the end of the first quarter. Total RV finished goods inventory now stands at $23.8 million.