Monaco Coach Corp. on Monday (Oct. 18) projected third-quarter earnings of 24 to 27 cents per share, lower than the 40 cents per share projected in a survey of analysts by Thomson First Call, according to CBS MarketWatch.
In a press release, the Coburg, Ore.-based company said the reason for the lower projection was a decline in retail motorhome sales. Following the warning, Monaco stock dropped below its 52-week low in early trading and finished the day at 17.81, down $2.30.
The company estimated that revenue for the third quarter, which ended Oct. 2, would be in the $355 to $360 million range as anticipated, but that earnings per share would range from 24 to 27 cents per share.
That compares to revenues of $303 million and earnings of 21 cents per share for the third quarter of 2003.
Kay Toolson, chairman and CEO stated: “In the third quarter we saw challenges in the retail marketplace, as reflected by the August decline in retail motorhome sales. This weakness continued through September. The low- and midpriced diesel market segment continues to be very competitive.”
Toolson added that “while the overall market remains difficult, we were very encouraged by the strong reception to our 2005 product offerings at the summer retail shows. We also feel the long-term demographics remain very positive for the industry and our company.”
President John Nepute added that a soft retail market in the third quarter “was exacerbated by the hurricanes in the Southeast, where a significant amount of our motorhomes are sold. To help ensure the integrity of our balance sheet and discourage a buildup of finished-goods inventory, we utilized a combination of promotional activity and discounts to move the units to the dealer lots. While this certainly impacted results for the quarter, we felt it was in the best interest of the company long term.”
Additionally, the company announced, it has already taken steps to reduce production output in the fourth quarter.
“We continually monitor our rate of production vs. retail sales levels,” Vice President and CFO Marty Daley said. “After we saw a slowdown in the retail market in August and September, we adjusted our run rates to more closely align with weaker retail levels. This lower level of production should reduce our reliance on wholesale discounts and retail sales promotional activity.
“In addition to sales promotion expenses, our SG&A costs increased due to higher show and other marketing related expenses in the third quarter as compared to the second quarter of this year.”