Editor’s Note: The following is an official statement from Skyline Corp. responding to Cavco Industries Inc.’s Sept. 26 announcement of its “interest in acquiring” the longtime Elkhart, Ind.-based manufactured housing and RV builder. Click here to view Cavco’s statement, which was issued shortly after news of a tentative agreement for Skyline to sell its RV interests to EverGreen Recreational Vehicles LLC. Click here to view the Skyline/EverGreen story posted on RVBusiness.com.
Skyline Corp. today issued the following statement regarding its ongoing efforts to evaluate strategic initiatives and to rebut certain statements contained in the Sept. 26 release issued by Cavco Industries Inc. and Cavco’s letter dated Sept. 22.
“The Skyline board of directors and management team are committed to act in the best interests of the company and our shareholders. In this regard, Skyline’s board of directors regularly considers initiatives to help optimize shareholder value over the long term.
Our board has established a special committee tasked to evaluate strategic initiatives and make recommendations to the full board. As part of its work, that committee, with input from our management team and advisors, plans to thoroughly evaluate all potential strategic proposals and other initiatives to further improve operations and strengthen our capitalization.
We are disappointed and find it counterproductive that Cavco issued its press release and published its letter. Contrary to the statements set forth in the release, the first time our board received a proposal with any semblance of specificity from Cavco was Sept. 22. While the board believes Cavco’s Sept. 22 letter significantly undervalues Skyline’s stock, the special committee and the board will thoroughly review Cavco’s proposals and respond in due course.
Upon receiving Cavco’s letter, the board promptly advised Cavco that it needed more time to consider the proposals. Following this communication, Cavco chose to publish its letter just four days after delivering the letter to Skyline, and on the same day that Skyline had previously announced it signed a letter of interest for EverGreen Recreational Vehicles LLC to acquire substantially all of the assets of the company’s recreational vehicle division. The board believes this transaction with EverGreen is aligned with our strategic objectives and is in the best interest of shareholders.
As always, our board and management team remain committed to executing on the company’s strategic plan and driving long-term shareholder value.”
Cavco Industries Inc. announced Friday (Sept. 26) its interest in a potential acquisition of Skyline Corp., a publicly-traded company, at “a significant market premium.” The announcement came shortly after news of a tentative agreement to sell Skyline’s RV division to EverGreen Recreational Vehicles LLC was released.
According to a press release, over the past several weeks, Cavco has attempted to open a dialogue with the board of directors of Skyline through a series of formal communications. Cavco has suggested that it would be in the best interest of Skyline shareholders for its board to discuss the various proposals by Cavco to improve shareholder value, including a purchase by Cavco of all outstanding shares of Skyline at an attractive premium to current market prices.
Cavco, a leading producer of manufactured homes, said that Skyline did not respond to any of its attempts over an approximately 30-day period to engage in a productive dialogue, which included a series of letters addressed to Skyline’s board of directors, phone calls to Skyline’s longest serving board member and former CEO, and Joseph Stegmayer, president and CEO of Cavco, attending Skyline’s annual meeting of shareholders in an effort to discuss the matter with any of Skyline’s directors who would be open to exploring options for maximizing shareholder value.
After Cavco sent two additional written communications addressed to Skyline’s board of directors, one of which asked Skyline to respond within one week to simply schedule a time for preliminary discussions between the companies, Cavco received a letter on Sept. 25 from Skyline’s lead director stating without further explanation that the board would not be able to respond to Cavco’s request within the requested time frame. To view the Sept. 22 communication from Cavco with Skyline click here.
Cavco’s proposed offer set forth in its letter would provide liquidity for Skyline shareholders at a substantial premium of 29% to 66% above the Sept. 24 closing price of $2.71 per share. Cavco’s offer would have no financing contingencies. Cavco also offered other possible concepts that would assist Skyline.
Skyline reported in a press release issued Friday that it is pursuing the sale of its RV division. While a successful sale of that division may provide short-term liquidity for Skyline, it would not address the substantially larger operating losses incurred by the housing segment in the last seven fiscal years, Cavco said. The RV division of Skyline’s business represented less than half of Skyline’s fiscal 2014 loss before income taxes of $11.9 million. In contrast, Cavco has proposed to purchase all of Skyline’s operations at a significant premium to market that Cavco believes will provide a greater and more assured and definitive return to Skyline’s shareholders.
Stegmayer commented, “Cavco has a great deal of respect for the Skyline brand and for Skyline’s experienced and highly credentialed board members. Unfortunately, Skyline has experienced difficult times during the past seven years and has meaningfully underperformed.”
Skyline has reported annual losses before income taxes for seven consecutive fiscal years, 2008 through 2014. These cumulative losses total approximately $122 million before income taxes, the majority of which were incurred by the housing segment. Skyline shareholders’ equity declined from approximately $178 million at the beginning of fiscal 2008 to approximately $34 million at May 31, 2014. On August 22, 2014, Skyline’s independent accounting firm issued a qualified opinion regarding Skyline’s ability to continue as a going concern.
Skyline’s Form 10-K for the fiscal year ended May 31, 2014, further disclosed, “Due to recurring losses, the corporation experienced negative cash flows from operating activities. As a result, the corporation has utilized its cash, investments in U.S. Treasury Bills, proceeds from the sale of assets and borrowings from the cash surrender of life insurance policies. The level of historical negative cash flows from operations and not having available funding from outside financing sources raise substantial doubt about the corporation’s ability to continue as a going concern.”
Cavco said it remains interested in holding productive discussions with Skyline. With the cooperation of Skyline’s officers and directors, Cavco and its advisors are prepared to conduct an expedited due diligence review and expect that a transaction can be concluded in a relatively quick time frame.
The release stated, “Although Skyline’s operating losses and financial distress and its board’s unwillingness to even entertain preliminary discussions have made it difficult for Cavco to determine the precise valuation it will apply in a transaction, Cavco has been able to establish the range mentioned in the letter attached based on Cavco’s and its advisors’ analysis of Skyline’s public filings. It is possible that a higher figure could be justified following open discussions with Skyline.”
Skyline Corp. has signed a letter of interest for Middlebury, Ind.-based, towable RV builder EverGreen Recreational Vehicles LLC to acquire substantially all of the assets of Skyline’s Recreational Vehicle Division.
The release stated that the obligations of Skyline and EverGreen under this letter of interest are “contingent upon the negotiation, execution and delivery of a definitive asset acquisition agreement satisfactory to both parties.”
The tentative transaction includes some real estate, EverGreen spokesmen confirm.
“I am very excited to be acquiring the RV division from Skyline,” Kelly Rose, chairman of EverGreen RV, stated in a press release. “(Skyline founder) Art Decio has been a longtime friend of mine and a person who I hold in the highest esteem and respect. As everyone knows in our community, as well as our industry, Art is an icon and legend in the manufactured housing and RV industry.
“I consider this a great honor to accept the reins from Art and carry on a longtime tradition of quality and integrity that Art has instilled in his companies over the years,” said Rose, who has established a pretty rich legacy of his own in the RV industry that includes ownership of the former Starcraft Corp., several supplier companies and, most recently, majority partner in EverGreen, a six-year-old, 350-employee RV builder.
Rose added, in prepared remarks, that the EverGreen management team, led by CEO Mike Schoeffler and President and COO Mark Boessler, are “extremely excited” about the challenges of merging the two recreational vehicle brand portfolios.
“Obviously, the most important issues that face us immediately are retaining the very loyal employees of Skyline as well as solidifying and building on the tremendous dealer body that has partnered with Skyline over the decades,” stated Rose.
“The (Skyline) brand names of Nomad, Layton and Aljo,” added Schoeffler, “have been in the marketplace for 50 years, and remain our focus on continuing building on the great image.”
Spokesmen for Skyline were unavailable for comment.
Founded in 1951 in Elkhart as a manufactured housing builder – a business sector that remains the company’s strength today — Skyline opened its first travel trailer plant in 1960 and generally focused on affordable lines over the years. The publicly traded company operated for decades in the black, and, for about five years during the late 1980s and early ‘90s, built Class C motorhomes.
But Skyline, which was posting sales of as much as $645 million in 1996 versus net sales of $191.7 million in fiscal 2014, clearly hadn’t performed up to expectations in recent times.
Net 2014 sales for Skyline’s RV segment totaled $45.9 million compared to $66.5 million for the same period in fiscal 2013. For fiscal 2014, the companywide net loss was $11.9 million compared to a net loss of $10.5 million a year earlier.
However, Skyline’s RV division was in the midst of a turnaround effort that included an all-new lineup of Trident, Javelin and Dart towables on display at the recent Elkhart County RV Open House. Skyline, meanwhile, has retained a viable second place market share in the manufacture of park model RVs, with a 12.4% share of that niche market.
The Skyline RV Group will be displaying brand new, completely redesigned models during the Sept. 16-18 Elkhart County RV Open House as part of its display on Executive Parkway adjacent to the RV/MH Hall of Fame.
According to a press release, the Open House will provide dealers with their first look at the new Trident, Javelin and Dart brands of laminated trailers. They will also be displaying the all-new, redesigned Nomad and Layton stick-and-tin product lines. In total, Skyline will have 20 units on display.
“This has been a total rebuild from the ground up. In June, we displayed a sampling of the new brands and they were very well received. Since then, we have continued to develop and refine the product and business model based upon dealer and market input,” said Don Emahiser, president of the RV Group. “Since we began shipping in June, retail response has been very strong and so has dealer profits. That’s the important test to pass.”
“As we outlined in our annual report, we are in a very aggressive schedule to return Skyline to its position of leadership in the RV industry both from a market share and financial standpoint,” said Skyline CEO Bruce Page. “As reported, we’ve made tremendous gains in the housing market in the last 12 months. Recreation vehicles are very important to the history and culture of Skyline and all of us are very excited and optimistic about the new direction.”
For further information, contact Emahiser at email@example.com.
Pledging to eliminate what its executives termed “commodity-driven RV sales,” Skyline RV Group staged its first dealer meeting since before to the Great Recession for a group of about 80 retailers June 3-5 at the sprawling Pheasant Run Resort in St. Charles, Ill., in the west Chicago suburbs.
Skyline’s informal get-together — more akin to a product launch and private sale than a structured conference — attracted dealers representing nearly 120 markets across the U.S., according to Don Emahiser, president of the Elkhart, Ind.-based RV-building subsidiary of Skyline Corp., a publicly held builder of RVs and manufactured housing. However, while the atmosphere was intentionally low-key, the message conveyed by Emahiser and Brad Whitehead, Skyline RV’s director of sales and marketing, outlined an aggressive focus on steps taken by the firm’s realigned management team to refresh the venerable company’s RV segment.
“What you’ll see shortly are 10 new coaches from the ground up. We didn’t just take what Skyline had, put a new TV in it and call it a day,” Emahiser told the dealers following an early breakfast in the resort’s atrium. “We’ve re-engineered how we believe a stick-and-tin travel trailer or laminated travel trailer should be. The industry doesn’t need just another version of a tan lightweight with blue stickers.”
“If we look across the spectrum of product available today, I believe that there’s very little separation — I call it the ‘sea of sameness,’’ added Whitehead. “It just varies by very small degrees. We believe it’s time to do something different, and it’s something we’re acting upon. It’s something we’re putting into practice. We are going to differentiate ourselves from the other companies out there. We’re going to get off of the ‘commodity train’ and roll out product that’s very different from what’s available in the rest of the business.”
That product, as the assembled dealers discovered, included a virtual rebuilding of the company’s entire towable lineup. But while Skyline’s stick-and-tin travel trailers, marketed under the Nomad, Layton and Weekender brand names, have been substantially upgraded, it’s all been completely redesigned. “Essentially,” Whitehead noted, “we just retained those names. The biggest changes were made to Skyline’s laminated offerings, where the existing Koala, Walkabout and Eco-Camp lines were eliminated.”
In their place, dealers learned, Skyline debuted its all-new 7 ½-foot-wide ultra-lite Dart, 8-foot-wide lightweight Javelin and Trident, a premium, full-featured laminated travel trailer.
Included in the rollout were several “SKYsmart” features that are being utilized throughout all of its travel trailer brands. These run the gamut from 63-inch by 80-inch queen beds — said to be the largest standard bed available in travel trailers today — to SKYsteps in bunk models plus flush-mount range covers to maximize countertop space and convenient USB plugs in the bedroom.
Skyline’s overhaul is a result of a renewed commitment by the company to revive its RV division. “RVs are a part of Skyline’s DNA,” Emahiser noted. “The company has been a ‘player’ in the RV market for much of its 60-plus years, but it fell off in recent years. So they (Skyline’s corporate managers) are very, very committed to making sure we not only are viable but also are a thriving entity in the RV world.”
Along with the product rollout, Whitehead also announced a number of new business practices intended to enhance the company’s relationship with its dealer body, including a major investment by Skyline to eliminate paperwork for replacement parts and warranty work. “We invested the dollars and are going to online parts ordering, online submissions for payments. This isn’t ‘down the road’ — we’re already locked in the contracts and the wheels are in motion.”
Among other company initiatives:
• A profit-centered business plan. “Margins are back in play,” Whitehead offered, “because we have built into the product the things that will create separation. Our business philosophy is going to be profit-centered from the standpoint of our partners.”
• Secure “farmland” for dealers. “We will protect dealership territories — and have chosen to not do business with dealerships whose primary part of their business is Internet-based selling. We want dealers who are interested in brick-and-mortar businesses, growing markets, growing their influence and market share and customer base.”
• Establishing dealership-managed marketing funds. “Usually with a co-op account, there is all sorts of bantering and bickering and having to get permission. Not with us. We’re setting aside 1% of the net invoice on every purchase for platinum- and gold-level buyers that goes into a fund — and it’s your fund to use. You don’t need our permission; just send us a receipt or show-space contract — you decide what you’re using it for.”
• Fall/Winter inventory assistance. “We have an ‘I-squared” (i2) inventory incentive that takes the place of conventional interest reimbursement.”
• Build to order. “We’ve committed ourselves to being a ‘build-to-order’ company, not a ‘build to sell’ company,” Whitehead pointed out. “We won’t set unsustainable run rates, we’re not going to build excessive yards and we’re not going to build acres of ‘opens.’ That also means that we’ve opted out of the ‘auction’ that takes place at the end of every month.”
▪ Doug Graham Jr. joins the Skyline RV Group with over 12 years of sales and management experience in the RV industry. Graham spent six years at Forest River Inc., four years with Keystone RV Co. and most recently two years at CrossRoads RV. As a regional sales manager, Graham will be responsible for growing and developing Skyline’s stick-and-tin travel trailer business in the southwestern and southeastern states from New Mexico to Florida.
▪ Darren Williams brings 22 years of industry experience to the Skyline RV Group. As a manufacturer’s rep, Williams spent 10 years at Fleetwood Enterprises Inc., six years with Country Coach Inc. and two years at CrossRoads RV. Williams also spent four years on the retail side of the business as a general manager. Williams will be responsible for growing and developing Skyline’s lightweight laminated travel trailer business in the Great Lakes and south central states in the U.S., as well as the Canadian provinces of Alberta, Saskatchewan, Manitoba and Ontario.
▪ Matt Berg has been in the industry since 1995. Spending 12 of his 19 years with Keystone, he has held various sales and management positions. He joins the Skyline RV sales team as a regional sales manager for the laminated lightweight travel trailer division. Berg will be responsible for managing accounts and growing Skyline’s market presence in the west central third of the U.S. from New Mexico, Texas, and Louisiana north to Minnesota, North Dakota and Montana. Skyline said Berg has spent most of his career in the territory developing outstanding dealer relationships.
Brad Whitehead, director of sales and marketing for the RV Group, noted, “We’ve been very busy assembling a truly outstanding team of talented people who are held in high regard throughout the industry, both on the operational side and the sales side of the business. The addition of Doug, Darren, and Matt strengthens and completes what I believe to be one of the strongest sales departments in the industry, meaning that our dealer partners will be able to expect and receive an industry-best sales, service and support experience.”
For further information, contact President Don Emahiser at firstname.lastname@example.org.
• Joe Burr has been hired as the new production manager for Plant 66 in Elkhart, Ind., where he will be responsible for improving production processes and operations. Burr brings 19 years of manufacturing experience, most recently serving as plant manager for CrossRoad RV’s Sunset Trail line.
• Rito Islas has been brought in as the new production manager for the Plant 61 in Bristol. Islas has logged over 10 years of senior RV leadership responsibilities, most recently with Heartland Recreational Vehicles LLC.
• Landon Foote, formerly employed by Crossroads RV, has been appointed as an RV designer with extensive RV engineering and development experience.
• Brent Burlew has been hired at the Bristol facility as a materials manager. Burlew previously worked for Crossroads RV and KZ RV where he gained over 10 years of RV purchasing and materials management experience.
“As we continue to refine the Skyline RV products, these new staff additions will strengthen our production capabilities,” said President Don Emahiser.
For further information, contact Don Emahiser at email@example.com.
Elkhart, ind.-based Skyline Corp. announced that John Fisher has joined its RV Group as national sales manager, reporting to Director of Sales and Marketing Brad Whitehead.
According to a press release, Fisher was previously product manager for the Sunset Trail Division at CrossRoads RV.
“I’m really excited to work with the dynamic team that Skyline has formed to revitalize the RV Group,” said Fisher.
Don Emahiser, president of the RV Group, added, “This new appointment of John to the RV Group, along with the recent hiring of Brad, gives us a very strong advantage in the RV market. We are eager to move forward and make Skyline what it is meant to be – an RV industry leader.”
For further information, contact Don Emahiser at firstname.lastname@example.org.
Indiana-based Skyline Corp. announced a restructuring of its RV Group at the company’s Elkhart and Bristol locations, according to a press release.
In addition to the recent hiring of Don Emahiser as president of the RV Group, two new positions were created to consolidate operations of both facilities.
Skyline named Michael Worden as the new director of operations. Worden formerly served as division manager of the Elkhart plant and is a 21-year employee of Skyline.
“These are very talented people in key positions,” said Emahiser. “Previously, each division operated independent of each other. By combining leadership, we will become more cohesive in our products, strategy and operations.”
For further information, contact Don Emahiser at email@example.com.
Skyline Corp., a manufactured housing and towable RV manufacturer headquartered in Elkhart, Ind., announced that veteran RV executive Don Emahiser has been hired to lead the company’s RV business group.
According to a press release, Emahiser will serve as president of the RV division and report to Skyline’s president and CEO. Emahiser will focus on product development, marketing and sales along with production and engineering.
Prior to joining Skyline, Emahiser served as the president of Crossroads RV, Redwood RV and Carriage RV. “I’m honored to be a part of the tradition-rich Skyline organization and can’t wait to assist with future successes,” said Emahiser.
Terry Decio, Skyline’s vice president of marketing and sales, noted, “We are truly excited to have Don join our team and we look forward to harnessing his solid RV experience as we grow our business.”
Skyline, founded more than 62 years ago, manufactures RVs under the brand names Nomad, Aljo, Layton and Weekender along with its newer, ultra-light Koala, Walkabout and EcoCamp trailers.