The Coast Distribution System Inc. (nyse mkt:CRV), one of North America’s largest aftermarket suppliers of replacement parts, accessories and supplies for the recreational vehicle and outdoor recreation industries, today reported a 19.5% increase in net income for its third quarter, ended Sept. 30.
Net sales for the third quarter increased by 5.2% to $34.8 million, compared to net sales of $33.1 million in the 2013 third quarter. That increase resulted primarily from sales of new products introduced into the marketplace during the prior 18 months and increased product sales to specialty retailers. Also, over the past several months, in anticipation of increased sales demand, Coast increased its inventory, including 1,500 additional products not previously sold by the company.
Net earnings for the third quarter of 2014 increased to $582,000, or 12 cents per diluted share, compared to $487,000, or 10 cents per diluted share, a year ago. The increase in net earnings was primarily attributable to improvements in both sales and gross profit, partially offset by an increase in selling, general and administrative expenses, the company said.
Gross profit in the 2014 third quarter increased to $6.6 million, from approximately $6.1 million in the same quarter of 2013. As a result, gross margin increased to 19% of net sales, up from 18.4% in the same quarter of 2013.
For the first nine months, Coast’s net sales increased by 2.6% to $96.5 million, up from $94.1 million for the same nine months of 2013. Net earnings for the first nine months decreased by 2.2% to $631,000, or 13 cents per diluted share, from $645,000, or 14 cents per diluted share, the previous year. This decrease was largely due to a rise in SG&A expenses, which resulted from increased professional fees and marketing and selling costs, as well as the one-time costs incurred from the closing, during the second quarter of 2014, of an administrative office in Taiwan that we no longer needed for our Asian operations.
Gross profit for the nine months eincreased to $17.8 million from $17.4 million for the same period of 2013. Gross margin remained relatively flat at 18.4% of net sales, compared to 18.5%t for the same period of 2013, due to the impact of the severance costs associated with the closing of the Taiwan office.
“We are pleased, although not entirely satisfied, with our financial results this quarter,” said Coast CEO Jim Musbach. “We believe that the improvements in our sales and gross margin demonstrate that our strategy to boost growth through the introduction of innovative new products and marketing and sales initiatives will have a beneficial impact on our operating results not only in this year’s fourth quarter, but also in 2015.”
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