Monaco Coach Corp. today (Oct. 18) said it expects to report a third-quarter net loss of $6.8 million to $7.5 million on sales of $290 million to $294 million. That falls below analysts expectations and compares to revenues of $297 million a year ago.
The Coburg, Ore.-based builder noted continued weakness in motorhome wholesale shipments and more recently a tightening in the towable sector.
The company said wholesale shipments of Class A motorhomes year-to-date through August were down 17.7%, as reported by the Recreation Vehicle Industry Association (RVIA). Consistent with industry statistics, Monaco’s internal sales data reflected wholesale shipments of Class A motorhomes for the third quarter of approximately 1,178 units, down 17.4% as compared to third quarter last year.
Dealer orders also decreased due to softness in the retail markets, compounded by higher interest rates over the past year. Independent marketing firm Statistical Surveys Inc., Grand Rapids, Mich., reported retail sales of Class A motorhomes year-to-date through August were down 16.9%.
“Our financial results reflect the continued weakness in the Class A motorhome market, and intense competition at certain price points,” said Monaco Coach Corporation Chairman and CEO Kay Toolson. “While we believe the outlook for the motorhome business is becoming more optimistic with falling fuel prices, recent increases in consumer confidence, and a steadying of interest rates, we have not yet seen these factors translate into increased dealer orders.”
“In the towable segment this quarter, dealer inventories grew and manufacturers discounted wholesale prices to maintain shelf space at dealer lots,” added Toolson. “The increasing acceptance of our new lower-priced towable units, however, has been encouraging.”
The company also cited the impact of increased material costs, which prompted lower run rates and price adjustments to generate savings.
“We will continue to implement additional initiatives aimed at further cost savings,” said President John Nepute. “We are in the process of consolidating two sub-assembly plants into one of our main production facilities in Coburg, and believe these moves will reduce overhead expenses associated with the transportation and handling of multiple components at multiple locations. As we move into the fourth quarter and the next year, we will continue to analyze where we can remove costs and complexity in our business model.”