Net sales for the 2014 fourth quarter increased to $22.3 million compared to net sales of $19.9 million in the 2013 fourth quarter. Coast said that the sales increase was primarily a result of continuing improvement in market conditions in the RV industry, highlighted by increased shipments of RVs, growing acceptance of its marketing programs and branded products, and increased sales to specialty retailers.
“We are pleased with the positive sales momentum during the fourth quarter, and that momentum has continued through the first quarter of 2015,” said Coast CEO Jim Musbach. “We achieved the fourth-quarter increase in sales despite the West Coast port strike which tied up our products for several weeks, increasing our costs and slowing our sales progress.”
For the year, net sales increased by 4.3% to $118.8 million, up from $113.9 million in 2013, notwithstanding the effect on the adverse effect on sales during the first half of 2014 of unusually cold spring and summer weather in the Midwest, Northeast and Southeast of the United States and throughout most of Canada negatively impacted overall.
Coast incurred a net loss of $1.2 million, or 23 cents per diluted share, for the fourth quarter, compared to a net loss of $1.3 million, or 27 cents per diluted share, for the fourth quarter of 2013. For the full year the company recorded a net loss of $523,000, or 11 cents per diluted share, compared to a net loss of $637,000, or 14 cents per diluted share, for 2013. The modest reduction in net loss was primarily a result of increased sales and gross margin, partially offset by increased selling, general and administrative (SG&A) expenses.
Gross profit in the fourth quarter increased to $3.3 million, up from $2.7 million in the same quarter of 2013. For the 12 months, gross profit increased by $971,000 to $21.1 million, from $20.1 million the previous year. Gross margin increased to 14.9% of net sales in the fourth quarter of 2014, up from 13.6% in the same quarter of 2013. Gross margin in the year was essentially unchanged at 17.8%, compared to 17.7% in 2013, due primarily to the impact of severance costs incurred in connection with the consolidation in the second quarter of 2014 of an import and quality control facility in Taiwan into the company’s mainland China-based operating unit for increased efficiency.
Musbach noted, “Looking ahead, the Recreation Vehicle Industry Association (RVIA) has recently forecast that it expects 2015 shipments for towables and motorized RVs to be approximately 315,200 and 46,200 units, respectively, which is 0.8% and 5.1% higher, respectively, than in 2014 and, combined, would represent the highest number of shipments in any year since record levels were achieved in 2006. According to the RIVA, these projections are based on a number of factors, including rising consumer confidence, improved credit availability and prospects for continued gains in job and disposable income. Additionally, favorable demographic trends support a positive longer-term outlook for the RV business, as more people reach the age group that historically accounts for the majority of RV sales.
“We believe that the factors on which RVIA based its forecast of increased RV shipments in 2015, such as improving economic conditions and increases in consumer confidence and disposable income, will lead to increases in purchases and in the usage of RVs by consumers which, in turn, usually result in increases in their purchases of the products we sell,” added Musbach. “For that reason, we also believe that our sales will increase and our gross margins will improve in 2015.”
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