The RV industry’s recent slowdown “actually underscores the merit” of Coachmen Industries Inc.’s decision to invest in two long-term growth initiatives: the acquisition of a factory for building the new Coleman by Coachmen product series and the opening of a West Coast service center in Southern California, according to Claire Skinner, the company’s chairman and CEO.
Launching the Coleman by Coachmen series and opening the West Coast service center “will serve to strengthen the company’s position by expanding our product and distribution opportunities as well as enhancing our brand value,” Skinner said during a webcast conference call with investment analysts on Tuesday (Oct. 26).
Coachmen completed in early July the purchase of a 147,000-square-foot facility in Middlebury, Ind., from Jayco Inc., that will be used for building the new Coleman product line, said Matt Schafer, Coachmen’s president and COO. “In the third quarter we completed the tooling of the facility and hired key production employees and supervisors. Our product design team also has been busy finalizing the exciting designs for the new Coleman product line.”
Schafer did not reveal when the first Coleman by Coachmen units will be ready for shipment to dealers.
Meanwhile, work on the new West Coast service center continued throughout the third quarter and “we expect it to be up and running in the fourth quarter,” Schafer added.
The one-time-only expenses that Coachmen incurred during the third quarter associated with the service center and the Coleman initiatives lowered its RV group’s pre-tax profit by nearly $900,000, Schafer said. However, Coachmen’s RV group still earned $3.3 million pre-tax during the July-through-September period, compared with $2.9 million earned pre-tax during the same portion of 2003.
Schafer also pointed out that Coachmen’s fifth-wheel shipments declined 31.1% during the third quarter of this year primarily because its fifth-wheel shipments increased 107% in the third quarter of 2003. Coachmen’s fifth-wheel shipments were up 42% in the third quarter of 2004 when compared with the third quarter of 2002, he said.
Skinner added that she believes the industry now is going through a short-term correction, rather than a long-term contraction.
“The fundamentals that have supported and driven the RV industry’s very impressive growth over the last four or five years are still in existence,” Skinner said. “Consumers are just postponing their purchasing decisions. Historically, we see this kind of pause just before presidential elections.”
Coachmen’s RV order backlogs were down 57.8% when Sept. 30, 2004 is compared with Sept. 30, 2003, which is why certain Coachmen plants now are working four-day weeks while others are building fewer units per day, Schafer said.
Concerning the recent California RV show in Pomona, Oct.18-24, Skinner said, “Results were somewhat down. My impression is that it was slightly off, but we must bear in mind they had enormous amounts of rain and the local authorities were advising people to stay at home rather than to venture out, and that was right in the middle of the show, which certainly had an impact.”
Despite the softer retail and wholesale demand, Skinner said, “We are confident in the RV group’s ability to emerge on solid ground for the start of 2005.”