Perris, Calif.-based National RV Holdings Inc. reported a net loss for its second quarter, impacted by a soft motorhome market and expenditures related to the use of sidewalls and tires the builder claims were defective.
The company, parent to Perris-based National RV Inc. (NRV) and Country Coach Inc., Junction City, Ore., said the net loss during the period, ended June 30, totaled $7.1 million compared with a net loss of $5.4 million a year ago. Second-quarter sales declined 11% to $110.2 million from $123.2 million.
For the six months, National RV Holdings incurred a net loss of $9.2 million compared with a net loss of $6.9 million last year while sales decreased 10% to $223.1 million from $248.8 million.
In a July 14 statement, National RV Holdings said it was suing Channahon, Ill.-based supplier Crane Composites Inc., a subsidiary of Crane Co., Stamford, Conn., claiming that fiberglass material was defective in sidewalls used on around 70 NRV coaches, resulting in over $5 million in costs to repair the problem. The company also set aside $1.1 million to recall tires supplied by another vendor used on Country Coach units built between 1995 and 2000.
“The adverse impact of the defective fiberglass material supplied to our company by Crane Composites Inc. has been substantial,” said Brad Albrechtsen, National RV Holdings president and CEO. “Obviously the negative impact to earnings in the second quarter was significant and costs continue to be incurred in the third quarter, though to a lesser degree.
“However, the greatest and most difficult aspect of the issue has been its strain on our cash flows. This latter impact is believed to exceed $13 million, which, combined with the normal operating fluctuations in cash flow, has necessitated our seeking to raise additional capital.”
During the second quarter, the company exercised two options to increase its asset-based revolving credit facility by a total of $10 million, bringing the total to $40 million at the end of the quarter.
Albrechtsen also noted that the Class A motorhome market “continued to be challenging,” and the company had implemented cost-cutting measures, including production cutbacks at NRV.
The company reported that combined diesel and gas Class A motorhome shipments were down 13% in the first half of 2006 compared to last year.