Monaco Coach Corp. was profitable during the second quarter, although just barely, earning $582,000 on sales of $268.4 million.
The New York Stock Exchange-listed company’s net income during the April-through-June portion of this year compares with nearly $11 million earned in the same portion of 2002.
Monaco’s sales revenue of $268.4 million in the three months ended June 28 represents a 14% decline from its second-quarter 2002 sales total of $313.7 million.
The company’s sales revenue is down because it sharply cut its production rates early in April to reduce the size of its unsold “yard” inventory. The company was able to reduce its finished goods inventory by an estimated $20 million in the April-through-June period, said Kay Toolson, chairwoman and CEO.
“However, in order to realize this inventory reduction, we offered wholesale and retail sales incentives that pressured our margins and earnings,” Toolson added.
Meanwhile, Monaco’s 2004 models, some of which were introduced in March with the balance unveiled during the company’s Dealer Congress June 24-26, “have been very well accepted by dealers and consumers,” said John Nepute, president. “It has not been necessary to offer sales promotions on 2004 models. However, we are continuing to offer some retail sales incentives on 2003 models that remain on dealers’ lots.
“The successful introduction of our 2004 models, along with gradually strengthening retail sales have contributed to steady improvement to our (dealer) order backlog,” Nepute added.
Monaco anticipates its third-quarter sales revenue will about equal second-quarter sales total of $268.4 million, said Marty Daley, CFO. Based on current production rates, Daley believes the company’s finished goods inventory will be further reduced during the three-month period that will end in late September.
Because of the lower production rates and the continuation of certain retail sales incentive programs, Daley estimates Monaco’s third-quarter gross margins will be in the 10.5% to 11% range and its third-quarter sales, general and administrative expenses in the 8.75% to 9.25% range.