The Coast Distribution System Inc., an aftermarket supplier of replacement parts, accessories and supplies for the recreational vehicle, boating and outdoor recreation industries, today reported a reduction in net loss for the company’s fourth quarter, ended Dec. 31.

Coast incurred a net loss of $1.4 million, or $0.32 per diluted share, compared with a net loss of $1.7 million, or $0.38 per diluted share, in the year prior. Sales increased to $18.7 million versus $17.6 million in the previous year.

Morgan Hill, Calif.-based Coast said the reduction in net loss was primarily the result of increased net sales in the quarter along with slight reductions in operating expenses, which were partially offset by a lower gross margin. That decrease was primarily the result of a shift in the mix of products sold to a higher proportion of lower-margin products, principally air conditioners, and selected price reductions in response to increased price competition.

“Even as we continued to face pockets of softness within our core markets, we were pleased with the growth in our revenues and improvements in our bottom line during our seasonally weakest quarter,” said Coast CEO Jim Musbach.

For the full year, Coast reported a net loss of $0.9 million, or ($0.20) per diluted share, in 2011 compared to net earnings of $0.2 million, or $0.03 per diluted share, in 2010. Sales decreased by $0.4 million, or 0.4%, to $108.2 million in 2011, from $108.6 million in 2010. A shift in sales mix, together with price reductions on selected products in response to increased price competition in our markets, resulted in a $1.6 million decrease in gross profits for the full year.

According to Coast, the decrease in sales was driven principally by an industrywide reduction in total purchases and usage of RVs and boats in 2011, resulting from continuing economic uncertainties and relatively high unemployment that led consumers to limit discretionary spending. Also contributing to the decline in net sales were unusually severe weather conditions in the Northeastern United States and Canada in the first half of 2011.

Musbach noted: “As we look ahead into 2012, we see reasons for caution as well as encouraging signs of growth in our markets and the broader economy. The recent volatility of gas prices remains a concern among consumers that may affect the sales and use of RVs and boats, which could in turn affect our revenues and earnings. However, we see reasons for cautious optimism in the broader economy as recent trends in employment are starting to translate into improved consumer sentiment and an uptick in spending.”

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