Coburg, Ore.-based Monaco Coach Corp. continues to look for ways to cut costs and overhead and liquidate non-performing or underperforming assets.
During an investor conference call Wednesday (July 30), Monaco President John Nepute said appraisals are under way on the company’s 2 million square feet of manufacturing space in Indiana that will be idled by the end of the third quarter.
He said the company likely “won’t want to sell off all the facilities, but it is difficult to estimate which ones a potential buyer might want.” Monaco is working with the state of Indiana to find a user for some of the idled space, either for warehousing or other manufacturing purposes.
“If we remove 1 million square feet, we’d be happy,” he said.
Monaco’s hope would be that it could hold onto some of the facilities to “fire back up when the market turns,” he said.
Monaco was operating at about 47% of capacity in its motorized plants and 50% in its towable factories by the end of the second quarter, and with extended holiday shutdowns factored in, the rate was closer to 40%. Once the restructuring is complete, Monaco’s Class A motorized operations – the majority consolidated in Oregon with the Indiana closures – will be near 75%.
Earlier in the day, Monaco reported a 39.8% fall in second quarter revenues to $201.9 million from $335.3 million in the previous year. Net loss totaled $9.7 million for the quarter and $18.2 million for the first six months. Monaco’s loss of 33 cents per share exceeded analysts forecast of 22 cents per share and prompted heavy trading on Wall Street as over 1 million shares were traded. Shares finished the day down 17 cents at $2.50.
Kay Toolson, chairman and CEO, said Monaco is looking at cutting its dividend or selling off portions of its resort business to improve liquidity.
Toolson projected that deep cuts in its Indiana operations, where Monaco is idling 1,400 workers and transferring some work to its West Coast facilities, and other restructuring will help the company reach a “break-even” point at about $175 million in sales by the end of the fourth quarter or early in the first quarter of 2009.
Amid all the talk on cost-cutting, Toolson said Monaco remains focused on improving its products and redoubling its efforts to come out with more fuel-efficient towable and motorized products. Nepute noted in passing that Monaco, despite the cutbacks, was able to gain market share in both gas and diesel motorhome retail sales during the second quarter.
Toolson and others stressed the importance of obtaining a new, three-year $100 million senior credit facility that will replace its current financing arrangement. Bank of America is the lead bank for this new arrangement, which is currently in negotiations.
Once the fall elections are over and Americans see the direction that the U.S.is taking, Toolson said, he expects “the RV industry will come back stronger than ever.”