Country Coach Update

Country Coach is a public company, so it must release its financials on a regular basis. Below is the full release they sent out... if you don't care to read it all, here are a few things I learned from it:

• They lost $7.1 million this quarter (somewhat due to 74 coaches that went out with defective materials... fiberglass, I believe)
• Sales are down 15% from the same quarter last year
• They signed up BeaudryRV to sell Prevost conversions (the site has 5 Prevosts listed right now)
• They have previewed their new Rhapsody 900 coach (non Prevost) that is going to go for over $1 million bucks.




Here's the long version:

National R.V. Holdings, Inc. Announces Third Quarter 2006 Financial Results
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All PRNewswire News
PERRIS, Calif., Nov. 10 /PRNewswire-FirstCall/ -- National R.V. Holdings, Inc. NVH, the owner of leading RV manufacturers National RV, Inc. (NRV) and Country Coach, Inc. (CCI), today announced financial results fos third quarter and nine months ended September 30, 2006.

Net sales were $92.0 million for the third quarter of 2006, a decline of 15% from $108.2 million in the third quarter of 2005. For the nine months ended September 30, 2006, net sales declined 12% to $315.1 million from $357.1 million in the same period last year.

For the third quarter and the nine months ended September 30, 2006, the Company reported a net loss of $7.1 million and $16.3 million, respectively, compared to a net loss of $5.9 million and $12.8 million for the comparable periods in 2005. These figures correspond to a net loss of $0.68 per diluted share for the third quarter of 2006 and $1.57 per diluted share for the first nine months of 2006, compared to a net loss of $0.57 per diluted share for the third quarter of 2005 and $1.24 per diluted share for the first nine months of 2005.

Brad Albrechtsen, National R.V. Holdings' chief executive officer, stated, "The third quarter was particularly difficult as we continued to work through the fiberglass sidewall issue, dealt with continued slowing in the Class A industry, and worked through very aggressive new product introductions involving both divisions. We continue to look for ways to reduce costs. We are also continuing our efforts to raise new capital and explore strategic alternatives, and are evaluating several opportunities on both fronts.

"On a more positive note, we expect shipments to new dealers to total more than $5 million in the 4th quarter, which, combined with the successful new product launches, we believe will continue to support our growing market share and ultimately higher production and sales levels. At Country Coach, the new ultra high-end Rhapsody product was debuted recently at the Atlanta Speedway to glowing reviews. There is sufficient demand for this million dollar plus unit to support a planned build rate of 16 to 20 units in 2007. Having signed a new Prevost bus conversion dealer recently, Beaudry RV, we are hopeful that production of buses will also increase in 2007. Country Coach's newly launched Tribute and redesigned Inspire products were also well received during the 3rd quarter and are helping that division continue to grow its share of the high line business as well as the Class A diesel market overall.

"On the National RV side, the mid-priced diesel Pacifica product launched in the 3rd quarter is doing extremely well and the entry-level gas Surfside model continues to garner consumer and dealer support," continued Albrechtsen. "Unfortunately, the growth in market share experienced by both our divisions is not enough to offset the sales decline caused by the decline in industry Class A shipments."

Year-to-date, the Company's wholesale unit shipments of diesel motorhomes were 952, down 12% from 1,087 units during the first nine months of 2005. Wholesale unit shipments of gas motorhomes were 911 for the first nine months of 2006, down 15% from 1,073 units shipped during the first nine months of 2005. The Company's combined diesel and gas Class A motorhome shipments were down 14% in the first nine months of 2006 compared to 2005, while industry Class A shipments were down 18%. The average selling price increased 2%, to $169,000 in the first nine months of 2006, compared to $165,000 for the same period in 2005.

In response to declining sales, the Company adjusted its weekly motorhome production rate down from 50 in the second quarter to 43 in the third quarter, and expects fourth-quarter production to average approximately 38 to 40 units per week.

The gross margin for the quarter ended September 30, 2006 was 0.9% compared to 2.0% for the same period last year. For the nine months ended September 30, 2006, the gross margin was 1.9% compared to 2.8% for the nine months ended September 30, 2005. During the third quarter the Company introduced one redesigned and three new products into production and into the market place. These new product introductions resulted in approximately $2.0 million in higher cost of sales during the quarter. The gross margin in the third quarter was also negatively impacted by lower fixed overhead absorption resulting from decreased sales and a $1.5 million increase in the workers' compensation reserve for a significant injury and a revised actuarial estimate on the overall reserve.

Operating expenses for the third quarter of 2006 declined 9% to $7.0 million, or 7.6% of net sales, compared to $7.7 million, or 7.1% of net sales, for the third quarter of 2005. For the nine months ended September 30, 2006, operating expenses decreased 6% to $20.5 million, or 6.5% of net sales, compared to $21.8 million, or 6.1% of net sales, for the same period in the prior year. Operating costs decreased in both the quarter and year-to-date periods of 2006 due to the Company's cost containment initiatives, partially offset by higher banking and professional fees associated with the Company's capital raising efforts and strategic process.

"During the third quarter," said Tom Martini, National R.V. Holdings' chief financial officer, "we remained focused on providing enough liquidity for the Company to simultaneously continue to repair the 74 motorhomes affected by defective materials, continue our R & D efforts, complete new product introductions, and continue to produce high quality motorhomes for our dealer network. The declining market demand for the industry's products has forced us to complete additional cost cutting initiatives to conserve available funds. We will continue our focus on providing liquidity in the near term through the reduction of inventory levels, and through our capital-raising efforts and strategic process review."

Conference Call

National R.V. Holdings' management team will host a live audio webcast to discuss its third quarter financial results and recent events. The webcast of the conference call will be held today at 10:00 a.m., PST (1:00 p.m., EST). To listen to the conference call via the Internet, please visit National R.V. Holdings' website at www.nrvh.com at least 10 minutes prior to the start of the call in order to register, download and install any necessary software.

About National R.V. Holdings, Inc.

National R.V. Holdings, Inc., through its two wholly owned subsidiaries, National RV, Inc. (NRV) and Country Coach, Inc. (CCI), is one of the nation's leading producers of motorized recreation vehicles. NRV is located in Perris, California where it produces Class A gas and diesel motor homes under model names Dolphin, Islander, Pacifica, Sea Breeze, Surf Side, Tradewinds and Tropi-Cal. CCI is located in Junction City, Oregon where it produces high-end Class A diesel motor homes under the model names Affinity, Allure, Inspire, Intrigue, Tribute, Rhapsody and Magna, and bus conversions under the Country Coach Prevost brand.

Ben,

Your article reports NRV Holdings results as a whole not CCI individually (both CCI and National are included). CCI information is not broken out in this release.

It has been "assumed" for quite some time that CCI is the bright spot in NRV Holdings and that the real drag on NRV was the actual National line of RV products. There has also been two efforts by Bob Lee to wrestle CCI back from NRV, both unsuccessful.

As one looks at the recent history of CCI one can see an effort by NRV to use CCI to it's best advantage. NRV seems to be trying to leverage CCI's reputation for quality and after sale support into increased unit sales. This seems to be reflected in NRV's push to have CCI expand it's line of offerings (expanding downward it's "entry level" offerings) and the Rhapsody offering that seems to target the Newell buyer.

CCI's Prevost conversions have an interesting history. CCI has tried several approaches to selling their Prevost conversions, from single dealerships to multiple dealerships and back. It seems they are still looking for the right answer. CCI has long been rumored to be getting out of the conversion business. This has proved to be false to date as they continue to do a number of conversions every year.

There have been rumors that a certain stock price will trigger some interesting action. We'll have to wait and see. It is fun to watch and guess what will happen next in this business soap opera.

Michael

We are putting TURBOS on our generators now.

I have no opinion I'm trying to share about Country Coach... just interesting facts I found from their report... please interpret them however you'd like... just don't assume I'm trying to push any agenda about the company.

Sorry if I generalized about the parent company versus Country Coach... it was unintentional.

Did a little snooping around about Country Coach and have discovered this:

They are trying to get the Prevost conversion volume up to about 22 coaches a year, primarily to bulk up Beaudry RV's inventory as a western dealer.

As many of us have communicated in the past, the Prevost conversion dealers are Florida-heavy and the converters who can get going west of the Big Muddy have the opportunity to move some product.

It has been announced that Bob Lee and some investors have bought up Western RV. They make the Alpine motorhome and the Alpenlite 5th Wheel. Bob Lee will be the CEO. Guess he decided not wait for National RV Holdings to fold. Or this is a small step to that end.