EXHIBIT 99.1
MONACO COACH CORPORATION REPORTS
THIRD QUARTER RESULTS
COBURG, Oregon – October 28, 2005 - Monaco Coach Corporation (NYSE: MNC), one of the leading manufacturers of motorized and towable recreational vehicle products, today reported results for the third quarter ended October 1, 2005. Revenues for the third quarter were $297 million, approximately 17% lower than last year’s third quarter record revenues of $358 million. The third quarter loss of $6 million or 20 cents per share, included a $1.5 million pre-tax cost associated with the relocation of Beaver manufacturing and a $1.6 million net of tax charge related to the discontinued operations of the Royale Coach bus conversion facility. This compares to net income of $7.4 million, or 25 cents per share for the third quarter of 2004. Third quarter 2005 motorhome sales totaled 1,500 units, towable sales totaled 1,287 units, and FEMA sales totaled 680 units, for a total of 3,467.
For the nine months ended October 1, 2005, earnings per share, on a diluted basis were break-even compared to $1.04 per share for the same period last fiscal year. Revenues for the nine months ended October 1, 2005 were $930 million, a 12.6% decrease from $1.06 billion for the first nine months of 2004. Net income for the nine months ended October 1, 2005 was $115 thousand, compared to $31.3 million earned for the comparable period in 2004. Unit sales of Monaco Coach Corporation products for the nine months ended October 1, 2005 totaled 9,303 units. Nine-month motorhome sales totaled 4,904 units, nine-month towable recreational vehicles totaled 3,719 units and nine-month FEMA units totaled 680 units.
“I am disappointed that our track record of 48 straight quarters of profitability since becoming a public company was disrupted,” said Kay Toolson, Monaco Coach Chairman and CEO. “The quarter was impacted by a variety of events including the difficult wholesale markets, and the start-up of our Franchise for the Future initiative, which we believe going forward should create a more consistent retail and wholesale demand for our products at dealer lots. Additionally, we feel we have made the appropriate responses in our business, including our announced reduction in workforce and additional cost saving measures. We continue to believe in the compelling demographic trends for this industry and will strive to continue manufacturing the highest quality RV’s for our owners.”
“We have continued to focus on managing our production run-rates which has resulted in maintaining the overall integrity of the balance sheet,” said John Nepute, Monaco Coach President. “Although the financial consequences were tough, our 2005 model year incentive promotions have helped move products off our dealer’s lots which should bode well for us and our dealer partners in the future. The class A motorhome market however remains fiercely competitive.”
Recreational Vehicle Segment
The RV segment reported sales of $289 million during the third quarter, down 18% from $353 million during the third quarter of 2004. Third quarter 2005 motorhome sales of 1500 units were down 28.9% compared to third quarter 2004, and third quarter towable sales of 1,287 units were up 2.6% compared to third quarter of 2004.
The RV segment reported gross profit of $20 million, or 6.8% of sales in the third quarter of 2005, compared to $41 million or 11.7% of sales in the third quarter of 2004. “The motorized market has been tough across the board, but particularly in the low-end diesel and high-end gas markets,” said Mike Snell Vice President of Sales and Marketing for Monaco Coach.
Net sales for the RV segment in the first nine months of 2005 were $905 million, a 13.7% decline from $1 billion last year. Gross profit for the first nine months of 2005 declined to $77 million or 8.5% of sales versus 12.0% of sales and $126 million last year.
“Over the past few quarters, we have placed an emphasis on increasing sales of our towable products, and we are pleased that our eight month retail towable units sold were up 23%, excluding the FEMA units,” said Mike Snell. “The market response to our lighter-weight, less expensive travel trailers and toy-haulers has been excellent.
Our Franchise for the Future program has had a very strong reception, with virtually all of our dealers signed up for the program. Monaco, Holiday Rambler, Beaver and Safari motorhomes will now be highlighted in distinctive areas at the majority of dealer lots by name, logo and key benefits, differentiating the value of Monaco Coach’s products from the competition.”
Motorhome Resorts Segment
“The motorhome resorts part of our business continues to be strong,” said Nepute. “Demand for quality RV Resorts remains robust in the Southern California and Las Vegas areas.”
Sales for the third quarter were $8 million up from $4.5 million for the third quarter of 2004. Gross profit for the segment was $5 million, up from $2 million for the same period last year.
Through the first nine months of 2005, the motorhome resorts segment reported sales of $25.7 million, up from sales of $16.8 million during the first nine months of 2004. Gross profit for the segment increased to $16.6 million, up from $7 million for the first nine months of 2004.
Financial Results and Outlook
“The results for the quarter were primarily impacted by lower than expected sales,” said Monaco Coach Vice President and Chief Financial Officer, Marty Daley. “This was largely the result of holding the line on discounting prices at the end of the quarter. In addition, the lower corresponding level of production resulted in higher indirect and selling, general and administrative expenses as a percentage of sales. Also, retail promotions were increased significantly during the quarter, both sequentially and year-over-year, to assist in the sales of 2005 products from our dealer’s lots.
We expect to generate fourth quarter revenues of approximately $300 million - $ 310 million,” said Daley. “At that level of sales, combined with implemented cost saving initiatives, the Company’s financial results should be near break-even.”
“Looking at the year ahead, we anticipate fiscal 2006 will remain somewhat challenging, in particular the first half of the year,” said Daley. “We expect sales levels to be approximately $1.275 billion to $1.325 billion for the year. Even with the uncertain retail markets we believe our dealer inventory is in good shape and wholesale sales should approximate retail sales in 2006. Consolidated gross profit margin should range between 11.0% and 11.3% and selling, general, and administrative expenses will range between 8.75% and 9%.”
Monaco Coach Corporation will conduct a conference call in conjunction with this news release at 2:00 p.m. Eastern on Friday, October 28, 2005. Members of the news media, investors, and the general public are invited to access a live broadcast of the conference call via the Investor Relations page of the Company’s website at www.monaco-online.com . The conference call will be archived and available for replay for the next 90 days.
Headquartered in Coburg, Oregon, with additional manufacturing facilities in Indiana, Monaco Coach Corporation employs more than 5,200 people and is one of the nation’s leading manufacturers of recreational vehicles. The Company offers entry-level priced towable RVs up to custom made luxury recreational vehicle models under the Monaco, Holiday Rambler, Safari, Beaver and McKenzie brand names. For additional information about Monaco Coach Corporation, please visit www.monaco-online.com.
The statements above regarding the Company’s expectations for the “Franchise for the Future” program, demand for RV Resorts and forecasts for fourth quarter and fiscal 2006 revenues, gross margin and expenses are forward-looking statements based on current information and expectations and involve a number of risks and uncertainties. A number of factors could cause actual results to differ materially from these statements, including slower than anticipated sales of new and existing products, the availability of floorplan financing for the Company’s dealers, further discounting by manufacturers, a general slowdown in the economy, deterioration of consumer confidence, oil and fuel supply and price increases, new product introductions by competitors, a loss of dealers or deterioration in the relationships with dealers. Please refer to the Company’s SEC reports, including but not limited to the most recent Form 10-Q, the annual report on Form 10-K for 2004, and the 2004 Annual Report to Shareholders for additional factors. These filings can be accessed over the Internet at www.sec.gov.
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited: dollars in thousands)
|
|
|
January 1, |
|
October 1, |
|
|||||
|
ASSETS |
|
|
|
|
|
|||||
|
Current assets: |
|
|
|
|
|
|||||
|
Trade receivables, net |
|
$ |
127,380 |
|
$ |
99,376 |
|
|||
|
Inventories |
|
169,777 |
|
178,437 |
|
|||||
|
Resort lot inventory |
|
7,315 |
|
7,887 |
|
|||||
|
Prepaid expenses |
|
5,190 |
|
4,450 |
|
|||||
|
Income taxes receivable |
|
0 |
|
5,144 |
|
|||||
|
Deferred income taxes |
|
33,188 |
|
32,797 |
|
|||||
|
Total current assets |
|
342,850 |
|
328,091 |
|
|||||
|
|
|
|
|
|
|
|||||
|
Property, plant, and equipment, net |
|
141,563 |
|
143,062 |
|
|||||
|
Debt issuance costs net of accumulated amortization of $661 and $636, respectively |
|
571 |
|
480 |
|
|||||
|
Goodwill |
|
55,254 |
|
55,254 |
|
|||||
|
Total assets |
|
$ |
540,238 |
|
$ |
526,887 |
|
|||
|
|
|
|
|
|
|
|||||
|
LIABILITIES |
|
|
|
|
|
|||||
|
Current liabilities: |
|
|
|
|
|
|||||
|
Book overdraft |
|
$ |
1,587 |
|
$ |
2,888 |
|
|||
|
Line of credit |
|
34,062 |
|
12,715 |
|
|||||
|
Accounts payable |
|
79,072 |
|
87,666 |
|
|||||
|
Product liability reserve |
|
20,233 |
|
19,676 |
|
|||||
|
Product warranty reserve |
|
32,369 |
|
29,279 |
|
|||||
|
Income taxes payable |
|
2,087 |
|
0 |
|
|||||
|
Accrued expenses and other liabilities |
|
31,533 |
|
38,677 |
|
|||||
|
Total current liabilities |
|
200,943 |
|
190,901 |
|
|||||
|
|
|
|
|
|
|
|||||
|
Deferred income taxes |
|
19,679 |
|
20,193 |
|
|||||
|
Total liabilities |
|
220,622 |
|
211,094 |
|
|||||
|
|
|
|
|
|
|
|||||
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|||||
|
Preferred stock, $.01 par value; 1,934,783 shares authorized, no shares outstanding |
|
|
|
|
|
|||||
|
Common stock, $.01 par value; 50,000,000 shares authorized, 29,425,787 and 29,557,074 issued and outstanding, respectively |
|
294 |
|
296 |
|
|||||
|
Additional paid-in capital |
|
57,454 |
|
58,826 |
|
|||||
|
Retained earnings |
|
261,868 |
|
256,671 |
|
|||||
|
Total stockholders’ equity |
|
319,616 |
|
315,793 |
|
|||||
|
|
|
|
|
|
|
|||||
|
Total liabilities and stockholders’ equity |
|
$ |
540,238 |
|
$ |
526,887 |
|
|||
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited: dollars in thousands, except share and per share data)
|
|
|
Quarter Ended |
|
Nine-Months Ended |
|
||||||||||||
|
|
|
October 2, |
|
October 1, |
|
October 2, |
|
October 1, |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net sales |
|
$ |
357,762 |
|
$ |
296,953 |
|
$ |
1,064,756 |
|
$ |
930,278 |
|
||||
|
Cost of sales |
|
314,335 |
|
272,334 |
|
931,830 |
|
836,776 |
|
||||||||
|
Gross profit |
|
43,427 |
|
24,619 |
|
132,926 |
|
93,502 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Selling, general, and administrative expenses |
|
30,805 |
|
30,514 |
|
81,733 |
|
86,451 |
|
||||||||
|
Plant relocation costs |
|
0 |
|
1,480 |
|
0 |
|
3,832 |
|
||||||||
|
Operating income (loss) |
|
12,622 |
|
(7,375 |
) |
51,193 |
|
3,219 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Other income, net |
|
43 |
|
15 |
|
256 |
|
155 |
|
||||||||
|
Interest expense |
|
(370 |
) |
(271 |
) |
(1,147 |
) |
(943 |
) |
||||||||
|
Income (loss) before income taxes and discontinued operations |
|
12,295 |
|
(7,631 |
) |
50,302 |
|
2,431 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Provision for income taxes, continuing operations |
|
4,709 |
|
(3,227 |
) |
18,869 |
|
458 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Loss from discontinued operations, net of tax provision |
|
(150 |
) |
(1,559 |
) |
(126 |
) |
(1,858 |
) |
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net income (loss) |
|
$ |
7,436 |
|
$ |
(5,963 |
) |
$ |
31,307 |
|
$ |
115 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Earnings per common share: |
|
|
|
|
|
|
|
|
|
||||||||
|
Basic from continuing operations |
|
$ |
0.26 |
|
$ |
(0.15 |
) |
$ |
1.07 |
|
$ |
0.06 |
|
||||
|
Basic from discontinued operations |
|
(0.01 |
) |
(0.05 |
) |
0.00 |
|
(0.06 |
) |
||||||||
|
Basic |
|
$ |
0.25 |
|
$ |
(0.20 |
) |
$ |
1.07 |
|
$ |
0.00 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Diluted from continuing operations |
|
$ |
0.25 |
|
$ |
(0.15 |
) |
$ |
1.04 |
|
$ |
0.06 |
|
||||
|
Diluted from discontinued operations |
|
0.00 |
|
(0.05 |
) |
0.00 |
|
(0.06 |
) |
||||||||
|
Diluted |
|
$ |
0.25 |
|
$ |
(0.20 |
) |
$ |
1.04 |
|
$ |
0.00 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
||||||||
|
Basic |
|
29,410,086 |
|
29,545,315 |
|
29,354,598 |
|
29,502,539 |
|
||||||||
|
Diluted |
|
29,962,722 |
|
29,868,628 |
|
29,981,063 |
|
29,862,363 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
2
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited: dollars in thousands)
|
|
|
Nine Months Ended |
|
||||
|
|
|
October 2, |
|
October 1, |
|
||
|
|
|
|
|
|
|
||
|
Increase (Decrease) in Cash: |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
||
|
Net income from continuing operations |
|
$ |
31,433 |
|
$ |
1,973 |
|
|
Adjustments to reconcile net income to net cash (used) provided by operating activities: |
|
|
|
|
|
||
|
Loss on sale of assets |
|
240 |
|
12 |
|
||
|
Depreciation and amortization |
|
8,006 |
|
7,764 |
|
||
|
Deferred income taxes |
|
832 |
|
905 |
|
||
|
Changes in working capital accounts: |
|
|
|
|
|
||
|
Trade receivables, net |
|
(40,134 |
) |
29,372 |
|
||
|
Inventories |
|
(32,314 |
) |
(4,891 |
) |
||
|
Resort lot inventory |
|
5,737 |
|
1,219 |
|
||
|
Prepaid expenses |
|
(2,678 |
) |
732 |
|
||
|
Accounts payable |
|
31,857 |
|
11,727 |
|
||
|
Product liability reserve |
|
(128 |
) |
(557 |
) |
||
|
Product warranty reserve |
|
4,350 |
|
(3,025 |
) |
||
|
Income taxes payable |
|
3,508 |
|
(6,612 |
) |
||
|
Accrued expenses and other liabilities |
|
6,284 |
|
6,046 |
|
||
|
Net cash provided by operating activities |
|
16,993 |
|
44,665 |
|
||
|
|
|
|
|
|
|
||
|
Cash flows from investing activities: |
|
|
|
|
|
||
|
Additions to property, plant, and equipment |
|
(7,060 |
) |
(11,009 |
) |
||
|
Proceeds from sale of assets |
|
1,927 |
|
72 |
|
||
|
Net cash used in investing activities |
|
(5,133 |
) |
(10,937 |
) |
||
|
|
|
|
|
|
|
||
|
Cash flows from financing activities: |
|
|
|
|
|
||
|
Book overdraft |
|
0 |
|
1,301 |
|
||
|
Payments on lines of credit, net |
|
0 |
|
(21,347 |
) |
||
|
Payments on long-term notes payable |
|
(11,250 |
) |
0 |
|
||
|
Debt issuance costs |
|
(66 |
) |
(39 |
) |
||
|
Dividends paid |
|
(4,404 |
) |
(5,312 |
) |
||
|
Issuance of common stock |
|
1,912 |
|
1,374 |
|
||
|
Net cash used by financing activities |
|
(13,808 |
) |
(24,023 |
) |
||
|
|
|
|
|
|
|
||
|
Net change in cash |
|
(1,948 |
) |
9,705 |
|
||
|
Net cash used by discontinued operations |
|
(2,712 |
) |
(9,705 |
) |
||
|
Cash at beginning of period |
|
13,066 |
|
0 |
|
||
|
Cash at end of period |
|
$ |
8,406 |
|
$ |
0 |
|
3
Monaco Coach Corporation
Segment Reporting
Results of Consolidated Operations
|
|
|
Quarter |
|
% of |
|
Quarter |
|
% of |
|
Nine-Months |
|
% of |
|
Nine-Months |
|
% of |
|
||||
|
Net Sales |
|
$ |
357,762 |
|
100.00 |
% |
$ |
296,953 |
|
100.00 |
% |
$ |
1,064,756 |
|
100.00 |
% |
$ |
930,278 |
|
100.00 |
% |
|
Cost of Sales |
|
314,335 |
|
87.86 |
% |
272,334 |
|
91.71 |
% |
931,830 |
|
87.52 |
% |
836,776 |
|
89.95 |
% |
||||
|
Gross Profit |
|
43,427 |
|
12.14 |
% |
24,619 |
|
8.29 |
% |
132,926 |
|
12.48 |
% |
93,502 |
|
10.05 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Selling, General and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Administrative Expenses |
|
30,805 |
|
8.61 |
% |
30,514 |
|
10.28 |
% |
81,733 |
|
7.68 |
% |
86,451 |
|
9.29 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Plant Relocation Costs |
|
0 |
|
0.00 |
% |
1,480 |
|
0.50 |
% |
0 |
|
0.00 |
% |
3,832 |
|
0.41 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operating Income (Loss) |
|
12,622 |
|
3.53 |
% |
(7,375 |
) |
-2.48 |
% |
51,193 |
|
4.81 |
% |
3,219 |
|
0.35 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other Income and Interest Expense |
|
327 |
|
0.09 |
% |
256 |
|
0.09 |
% |
891 |
|
0.08 |
% |
788 |
|
0.08 |
% |
||||
|
Income Before Income Taxes |
|
12,295 |
|
3.44 |
% |
(7,631 |
) |
-2.57 |
% |
50,302 |
|
4.72 |
% |
2,431 |
|
0.26 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income Taxes |
|
4,709 |
|
1.32 |
% |
(3,227 |
) |
-1.09 |
% |
18,869 |
|
1.77 |
% |
458 |
|
0.05 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net Income (Loss) from Continuing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operations |
|
7,586 |
|
2.12 |
% |
(4,404 |
) |
-1.48 |
% |
31,433 |
|
2.95 |
% |
1,973 |
|
0.21 |
% |
||||
|
Loss from Discontinued Operations, Net of Tax Provision |
|
(150 |
) |
-0.04 |
% |
(1,559 |
) |
-0.52 |
% |
(126 |
) |
-0.01 |
% |
(1,858 |
) |
-0.20 |
% |
||||
|
Net Income (Loss) |
|
$ |
7,436 |
|
2.08 |
% |
$ |
(5,963 |
) |
-2.01 |
% |
$ |
31,307 |
|
2.94 |
% |
$ |
115 |
|
0.01 |
% |
Recreational Vehicle Segment
|
|
|
Quarter |
|
% of |
|
Quarter |
|
% of |
|
Nine-Months |
|
% of |
|
Nine-Months |
|
% of |
|
||||
|
Net Sales |
|
$ |
353,288 |
|
100.00 |
% |
$ |
289,002 |
|
100.00 |
% |
$ |
1,047,924 |
|
100.00 |
% |
$ |
904,577 |
|
100.00 |
% |
|
Cost of Sales |
|
311,918 |
|
88.29 |
% |
269,357 |
|
93.20 |
% |
922,105 |
|
87.99 |
% |
827,627 |
|
91.49 |
% |
||||
|
Gross Profit |
|
41,370 |
|
11.71 |
% |
19,645 |
|
6.80 |
% |
125,819 |
|
12.01 |
% |
76,950 |
|
8.51 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Selling, General and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Administrative Expenses |
|
16,602 |
|
4.70 |
% |
19,594 |
|
6.78 |
% |
41,811 |
|
3.99 |
% |
66,786 |
|
7.38 |
% |
||||
|
Corporate Overhead Allocation |
|
12,066 |
|
3.42 |
% |
8,279 |
|
2.86 |
% |
33,203 |
|
3.17 |
% |
12,523 |
|
1.38 |
% |
||||
|
Plant Relocation Costs |
|
0 |
|
0.00 |
% |
1,480 |
|
0.51 |
% |
0 |
|
0.00 |
% |
3,832 |
|
0.42 |
% |
||||
|
Operating Income (Loss) |
|
$ |
12,702 |
|
3.60 |
% |
$ |
(9,708 |
) |
-3.36 |
% |
$ |
50,804 |
|
4.85 |
% |
$ |
(6,191 |
) |
-0.68 |
% |
Motorhome Resorts Segment
|
|
|
Quarter |
|
% of |
|
Quarter |
|
% of |
|
Nine-Months |
|
% of |
|
Nine-Months |
|
% of |
|
||||
|
Net Sales |
|
$ |
4,474 |
|
100.00 |
% |
$ |
7,951 |
|
100.00 |
% |
$ |
16,832 |
|
100.00 |
% |
$ |
25,701 |
|
100.00 |
% |
|
Cost of Sales |
|
2,417 |
|
54.02 |
% |
2,977 |
|
37.44 |
% |
9,725 |
|
57.78 |
% |
9,149 |
|
35.60 |
% |
||||
|
Gross Profit |
|
2,057 |
|
45.98 |
% |
4,974 |
|
62.56 |
% |
7,107 |
|
42.22 |
% |
16,552 |
|
64.40 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Selling, General and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Administrative Expenses |
|
796 |
|
17.79 |
% |
1,721 |
|
21.65 |
% |
3,029 |
|
18.00 |
% |
5,751 |
|
22.38 |
% |
||||
|
Corporate Overhead Allocation |
|
1,341 |
|
29.97 |
% |
920 |
|
11.57 |
% |
3,689 |
|
21.92 |
% |
1,391 |
|
5.41 |
% |
||||
|
Operating Income (Loss) |
|
$ |
(80 |
) |
-1.78 |
% |
$ |
2,333 |
|
29.34 |
% |
$ |
389 |
|
2.31 |
% |
$ |
9,410 |
|
36.61 |
% |
4