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Coachmen Industries Inc. today (July 11) announced that it expects to report a loss of between $500,000 and $1.5 million for the second quarter ending June 30, while also reporting several production-related consolidations resulting in work force reductions.
Final second quarter results and segment details will be released on July 25.
During the second quarter, the RV Group continued to experience sales and margin pressure due to an industrywide softening of wholesale shipments.
In its preliminary report, the Elkhart, Ind.-based full-line builder cited heavy discounting due to “excessive inventories at the dealer and manufacturer level, coupled with the model-year changeover process,” which dictated production cutbacks and “a reduction in pre-tax profit of approximately $2.7 million in the quarter.”
Claire C. Skinner, chairman and CEO, stated, “We expected to see improvements in both our RV and housing markets during the second quarter, which did not occur. Accordingly, in late May we launched a series of aggressive steps that needed to be taken, in light of the market conditions and our unacceptable level of profitability.”
Companywide, salaried positions were reduced by approximately 12.5% and the company’s hourly workforce was pared by 10% across both of its business segments.
In the RV segment, Coachmen closed a towable facility and one of the two Class C minimotorhome production lines. The company noted that all RV service operations, including customer service, parts, warranty and business systems, have been consolidated into one unit, to reduce staffing and eliminate duplicative activities.
In addition, numerous new model year product lines were consolidated, slower selling models were eliminated, options were significantly reduced, and where possible, selling prices were increased to improve operating efficiencies.
“Due to the current uncertainty in both of our core businesses, at this point, the second half of 2005 cannot be forecasted with any degree of accuracy,” said Skinner. “Based on our performance in the second quarter, it appears that we will not be able to meet our full-year earnings guidance provided at the end of the first quarter.
“At the same time, the recently released reports on consumer confidence by the Conference Board and the University of Michigan show that this important indicator rose significantly in June, which is quite consistent with our dealer’s subjective observations. We are continuing to assess all available information regarding our markets and the changing business environment.”
Skinner added, “We expect to provide additional thoughts on the remainder of the year in conjunction with our formal earnings release on July 25. In the interim, we are encouraged by recent order trends among our RV dealers, and we are steadfast in our commitment to continue reducing costs and improving operating performance throughout our company.”