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Reacting to lagging sales that resulted in a $9.3 million third-quarter loss, Coachmen Industries Inc. has instituted an “intensive recovery plan” to better manage operations in its recreational vehicle and modular homes divisions.
During the third quarter, ended Sept. 30, the Elkhart, Ind.-based builder reported revenues declined 14.8% to $198 million versus $232 million during the same period last year. The $9.3 million loss compared to net income of $5.9 million in the previous year.
The company’s RV group posted third-quarter sales of $133.5 million, down 15.3% from $157.6 million a year ago.
For the nine months, Coachmen had a net loss of $12.2 million compared with net income of $11.8 million a year ago while revenues dropped to $612.1 million from $660.9 million.
Coachmen said it had “instituted aggressive cost reduction and restructuring actions” in the quarter – primarily in its modular homes operations – to improve efficiencies, which accounted for charges of $7.5 million.
“Rather than waiting for market conditions to improve, we are taking aggressive actions now to bring our Company to acceptable performance levels. During the second quarter we launched the first of numerous actions under our ‘intensive recovery plan,’ ” said Chairman and CEO Claire C. Skinner. “These continued during the third quarter, and more steps will be implemented in the periods ahead. Though some of these bold actions penalize earnings in the short-term, they will have lasting long-term benefits.”
Elements of the plan included:
• In September, Coachmen announced the relocation of Georgie Boy Manufacturing LLC from Edwardsburg, Mich., to the company’s manufacturing complex in Middlebury, Ind.
• The company reached an agreement to sell its Prodesign thermoformed plastics subsidiary to an investor group, which is expected to close in the fourth quarter.
• The divestiture of its Miller Building Systems Inc. commercial structures subsidiary, acquired in 2000, which resulted in an asset impairment charge of $4.3 million in the third quarter.
• Closure of the company’s All American Homes operation in Springfield, Tenn., in August, resulting in non-cash charges of around $2 million.
• The company signed a binding letter of intent to sell its housing operation in Osage City, Kan., to a local investor group, with an anticipated closing in the fourth quarter.
These moves are in addition to the elimination of approximately 130 salaried workers and the consolidation of service and production operations during the second quarter.
Coachmen said it is also in negotiations for the sale of several idle properties, vacant land and the company aircraft.
“We have made significant strides in reducing the working capital requirements of our business, particularly with regard to our inventory levels,” said Joseph P. Tomczak, executive vice president and CFO.