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Discounting, production inefficiencies and high overhead costs cut into profits for National RV Holdings Inc., resulting in a $5.9 million loss for the company’s third quarter, ended Sept. 30.
The Perris, Calif.-based firm also reported that it is out of compliance with the New York Stock Exchange (NYSE) listing rules and will present a plan for continued listing within 45 days.
Net sales for the quarter were $108.2 million, down 4% from $112.5 million a year ago. The $5.9 million net loss compared to net income of $0.1 million during the same period last year.
For the nine months, net sales increased 7% to $357.1 million from $335 million the previous year, while the company reported a net loss of $12.8 million during the period versus net income of $3.3 million.
“The decrease in consumer sentiment in the third quarter has exacerbated the industry-wide slump in demand for Class A motorhomes,” said Brad Albrechtsen, president and CEO for National RV Holdings. “This condition, which we first started to experience in a meaningful way in the second quarter, has continued into the third.”
The firm, parent to motorhome builders Country Coach Inc., Junction City, Ore., and Perris-based National RV Inc., said discounting practices were used primarily on lower-priced motorhomes which factored into a relatively low 2% gross profit margin.
“The use of sales incentives on our lower priced gasoline-powered and diesel motorhomes continued into the third quarter, but at a lower rate than in the second quarter,” Albrechtsen said. “We are maintaining reduced production rates for these products.”
National RV Holdings said it was informed by NYSE that it was considered “below criteria” because its total market capitalization was less than $75 million over a consecutive 30 trading-day period and its shareholders’ equity was less than $75 million as of June 30, 2005.
“While the company was in compliance with previous continued listing standards set forth by the NYSE, the NYSE adopted new continued listing standards, effective June 2005, which increased the former standards significantly,” National RV Holdings said in its earnings report.
The builder said it will present a plan “demonstrating how it intends to comply with the continued listing standards within 18 months of its receipt of the notice.”
In addition, the company continues to monitor and adjust inventory levels to reflect the retail marketplace.
“During the third quarter, we continued to focus on inventory, which declined by $4.9 million, compared to the second quarter of 2005,” said Tom Martini, CFO for National RV Holdings.
Albrechtsen added: “We are also continuing our efforts to sign new dealers and to introduce new products. As previously announced, we have rolled out both lower-priced gas and diesel units here in the fourth quarter, both in segments that seem to be doing relatively well in this weak market.”