Monaco Coach Corp.’s acquisition of R-Vision continues to pay dividends as the Warsaw-Ind.-based manufacturer generated two-thirds of Monaco’s towable revenues in the second quarter.
In a conference call following release of Monaco’s financial results on Wednesday (July 26), Kay Toolson, chairman and CEO, said R-Vision is effective in competing at price points lower than traditional Monaco products.
R-Vision accounted for nearly $60 million of the $89.2 million in revenues Monaco realized from towables in the quarter ending July 1. Second-quarter towable sales were 5,617 units, including 4,411 R-Vision units. R-Vision also shipped about 1,200 low-dollar volume utility trailers to the specialty market not counted in the towable figures. Profit from the R-Vision side more than offset losses from the Holiday Rambler and McKenzie side.
Monaco’s 5% share of the towable market is expected to rise with continued success of the R-Vision line, especially in the Western markets, said John Nepute, president. The newly priced Holiday Rambler and McKenzie line of low-priced towables, the Aluma-Lite and Star-Lite, will be built in Oregon as well as in Indiana.
Toolson also noted a good response to R-Vision’s new Class C, B and B+ motorhomes at the recent Monaco Dealer Congress and for Monaco’s new front-engine Class A diesel toy hauler, the Simba.
Overall, sales of gas-powered motorhomes remain soft and the company has had to offer incentives to dealers to take the remaining ’06 models, said Nepute. Currently, Monaco is building about 90 Class A motorhomes a week, about two-thirds of which are lower-priced diesel and gas units, Nepute said. The company expects to raise weekly production to 100 units next week, he added.
Order backlogs are primarily coming from lower-end towables and motorized, Nepute stated, as higher-end towables face “particular challenges.” Backlog levels are normal for this time of year, but “still not as robust as we had coming out of Louisville last year,” he said.
Monaco has a 24% share of the diesel motorhome market and 8% of the gasoline market, according to the latest data from Statistical Surveys Inc.
On the resorts side of Monaco’s business, the company will spend between $45 million and $50 million to buy and develop an 80-acre site it recently purchased near La Quinta, Calif. Monaco will develop close to 400 lots at the site and generate around $106 million in revenue, said Marty Daley, vice president and chief financial officer.
Monaco also has agreed to terms to buy 24 acres in Naples, Fla. Monaco will spend around $24 million to buy and develop the site into nearly 200 sites and produce revenues of close to $47 million, he said. The latter development will have direct access to the Gulf of Mexico. Funds for these purchases will come from Monaco’s $105 million line of credit. Lots are expected to be ready for sale at both locations in late 2007 or early 2008.
Daley projected third quarter sales of $330 million to $340 million, with towables representing between $82 million and $87 million of that total. Daley also projected revenues of between $6 million and $8 million from the sale of existing resort lots in the fourth quarter.
When asked where Monaco and the RV industry are in the current business cycle, Toolson said he didn’t know, especially because of “the uncertainties in the world.”
But he said, based on past experience, when the RV business rebounds, it comes back very robust. “We expect to do the same thing. That pent-up desire doesn’t leave. When it returns, we have our company in position to react very quickly,” Toolson said.