Monaco Coach Corp. senior management believes it can return SMC Corp. to breakeven during the third quarter of this year, they said during a conference call with Wall Street market analysts today (June 26).
Basically, Monaco Chairman and CEO Kay Toolson believes that with the acquisition of SMC, Monaco can repeat the success it had with the acquisition of Holiday Rambler Corp. in 1996.
Holiday Rambler lost $13 million during the year before Monaco bought it from Harley-Davidson Corp., he said.
In comparison, SMC lost $1.8 million during the first quarter of this year and $5.4 million during 2000.
Monaco expects to complete the acquisition of SMC late next month.
“We will strengthen the product first and then work to expand distribution, as we did with Holiday Rambler,” said John Nepute, president.
Currently, SMC has 70 Beaver and Safari dealers, including 20 that also stock Monaco-built units. Toolson plans to double the number of Beaver/Safari dealers.
SMC is primarily a builder of diesel engine Class A motorhomes and the acquisition will give Monaco 36% of the diesel motorhome market, Nepute said. Diesel motorhomes accounted for 45% of the Class A motorhome market during the first quarter of this year, he added.
Monaco will pay $36 million in cash and debt for SMC, and Toolson said Monaco is primarily buying the “brand equity,” particularly of the Beaver brand.
Beaver production will remain in Bend, Ore., in the eastern portion of that state. Safari production will be shifted from Harrisburg, Ore., to Coburg, Ore.; both located in the western portion of the state.
Currently, SMC is building 11 Safari units per week in Harrisburg. Monaco will build 50 units a week at its Coburg plant, after Safari’s 11 units a week are moved into the Coburg facility.
The Coburg plan has a weekly capacity of 100 units, Toolson added.
Monaco has no immediate plan to revive SMC’s Harney Coach brand because it was redundant with the Safari brand, Toolson said.