Monaco Coach Corp. reported a net loss on a 40% drop in revenue for its second quarter, reflecting the “continued deterioration of the recreational market” that prompted its recent closure of three Indiana facilities and the layoff of 1,400 workers.
“As difficult as the decision to close three Indiana facilities was, we knew that we needed to respond decisively to the rapidly changing business environment,” said Kay Toolson, chairman and CEO of the Coburg, Ore.-based firm. “Together with the steps previously taken, we will now be in a position to come out of this cycle leaner, stronger and with a significantly lower breakeven level.”
Revenue in the quarter, ended June 28, fell to $201.9 million from $335.3 million in the year-ago period while the builder reported a net loss of $9.7 million compared with net income of $4.5 million.
For the six months, sales declined 33% to $454.3 million from $657.6 million in the year prior and the net loss for the period was $18.2 million versus net income of $6 million.
The company said it has received a waiver for non-compliance with certain financial covenants as of the end of the second quarter from its current syndicate of banks. Monaco said it has also signed a commitment letter with an existing bank syndicate member for a three-year $100 million senior credit facility that will replace its existing credit facility.
As part of its financial restructuring, Monaco will seek approximately $30-$40 million in subordinated debt financing, which it said would enable it to meet opening availability requirements under the new senior credit facility.
“We believe that the company’s current asset base is sufficient to enable it to secure the additional debt financing,” said Toolson.
A breakdown of segment performance in the quarter showed:
• Motorized segment: Second-quarter motorhome sales dropped to $148.6 million from $250.7 million a year ago while the company reported an operating loss of $10 million compared with operating income of $6.2 million. Unit sales for the motorized division totaled 920, down 39.4% from 1,518 units for the prior year period. Class A diesel units shipped for the quarter were 540 versus 1,096; Class A gas units shipped were 231 versus 239; and Class C units shipped were 149 versus 183.
• Towable segment: Second-quarter towable sales declined to $53.1 million from $81 million last year and the company reported an operating loss of $4.7 million compared to operating income of $2.4 million. Towable unit sales, including specialty trailers, were 3,945 units, down from 5,210 units for the same period a year ago.
• Motorhome resorts segment: Resort sales for the second quarter were $0.3 million, down from $3.7 million a year ago. Operating loss for the segment was $317,000, down from $88,000 of operating income for the same period last year. Currently 50 lots are available at its resorts in Indio, Calif., and Las Vegas while new resort locations in the Bay Harbor, Mich., and Naples, Fla., are currently under development.