Coast Incurs 4Q Net Loss; Says Weather a Factor
Aftermarket supplier The Coast Distribution System Inc. reported net losses for its fourth quarter and full year, ended Dec. 31, impacted by inclement weather.
“We are disappointed with our financial performance in 2013,” said Coast CEO Jim Musbach. “Adverse weather conditions throughout the U.S. and Canada in 2013, including the unseasonably cold and wet conditions during the spring and summer months, negatively impacted RV usage and dampened demand for our products, particularly for air conditioners. Severe weather continues to be a significant factor in the first quarter of 2014, with record-cold temperatures and snowfall.”
Coast reported a net loss of $1.3 million, or 27 cents per diluted share for the fourth quarter compared to a net loss of $1.5 million, or 32 cents per diluted share, in the same quarter of 2012. For the full year, Coast recorded a net loss of $637,000, or 14 cents per diluted share, compared with a net loss of $2 million, or 44 cents per diluted share, for 2012. The decreases in net loss in the fourth quarter of 2013, and for the full year 2013, respectively, were primarily attributable to increases in the gross margin to 13.6% and to 17.7%, respectively, from 12.6% and 15.2% in the same periods of 2012.
Net sales for the fourth quarter decreased by 3.9% to $19.9 million, compared to net sales of $20.7 million in the fourth quarter of 2012, due primarily to higher sales of the company’s generators following Hurricane Sandy in October 2012. For the year, 2013, net sales increased by 0.4% to $113.9 million from $113.5 million in 2012.
Although consolidated sales were relatively unchanged in 2013, as compared to 2012, Coast’s sales in the United States increased by $2.1 million, or 2.5%, while sales in Canada declined by $1.7 million, or 6.1%, in each case as compared to 2012. The sales decrease in Canada was primarily attributable to additional competition from U.S. distributors selling into Canada. Additionally, the company’s U.S. and Canadian sales in 2013 were adversely impacted by colder than usual spring and summer weather in the Midwest, Northeast, and Southeast regions of the United States and throughout most of Canada.
In 2013’s fourth quarter, gross margin increased to 13.6% from 12.6% in the same quarter of 2012. For the full year, gross profit increased by $2.8 million, to $20.1 million, resulting in an increase in gross margin to 17.7% from 15.2 % in 2012. The increases in gross profit and gross margin in the fourth quarter and year ended December 31, 2013, primarily resulted from a change in the mix of products sold to a greater proportion of products on which Coast earns a higher gross margin, including proprietary products, and from selected price increases that were implemented in the first half of 2013.
Musbach noted, “Despite the weather-related impact on the industry over the past few quarters, early 2014 RV retail shows appear to have been successful when compared to the early 2013 retail shows. The Recreational Vehicle Industry Association (RVIA) has forecast a 6% increase in wholesale shipments of towable and motorized RVs for 2014. Given the momentum of the retail shows and the RVIA forecast, we expect that demand for recreational vehicles will continue to improve.”