Eroding demand in its core markets contributed to a $30.9 million net loss for Coachmen Industries Inc. during the company’s fourth quarter, ended Dec. 31.
“In 2006, we encountered contracting markets in both of our industry segments for the second consecutive year, representing the most difficult markets we’ve faced since 1989,” said CEO Rick Lavers, who took the position when Claire Skinner, daughter of co-founder Tom Corson, elected for early retirement last August. “The overall markets for both motorized recreational vehicles and housing declined by more than 10%…These declines severely hurt our financial results.”
The Elkhart, Ind.-based company reported that fourth-quarter sales were $115.8 million, 17.3% less than the $140 million reported for the same period the previous year.
The net loss, which compared to a net loss of $14.1 million in 2005, included pre-tax gains on the sale of properties of $2.3 million. In addition, the company incurred a net income tax expense of $19.2 million for the quarter.
In its report, Coachmen noted: “The company has historically carried as assets on its books tax loss carry-forwards from past results and other deferred tax assets in the amount of $24.2 million, which can be used to offset taxes on future income. However, due mainly to the losses incurred by the company over the last two years, financial accounting standards required the company to write down all of these deferred tax assets to $0 as of Dec. 31, 2006. Accordingly, in the fourth quarter the company was required to record a non-cash charge for the full book value of these deferred tax assets.”
For the full year, sales were $564.4 million versus $702.4 million the previous year while the net loss increased to $31.2 million compared with a net loss of $26.4 million.
Coachmen said its corporatewide restructuring efforts had improved results, helping reduce the “pre-tax” net loss by over $15 million on the RV side.
“In addition, we made significant strides on our balance sheet, reducing total inventory levels by $20.1 million from last quarter, including a $15.6 million reduction in finished goods while also reducing our debt levels,” Lavers added.
The company’s Recreational Vehicle Group reported sales of $83.3 million during the fourth quarter, down 14.3% from the $97.2 million the year prior. For the full year, RV Group sales decreased 22.5% to $404.7 million from $522.2 million last year.
“We had a number of successes in the fourth quarter, including a very positive reception to our new products at the National RV Trade Show in Louisville and a significant reduction in our inventory levels,” said Michael R. Terlep, president of the Coachmen RV Group. “Despite these positive developments, our much lower production and sales levels in the quarter adversely impacted the group’s margins.”