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Coachmen Industries, Inc. Posts Robust 2004 Results; Fourth Quarter Sales Up 9%; * 2004 EPS up 106% to $0.99 from $0.48 in 2003. - Net Income from continuing operations up 94% to $13.4 million, $0.87 per share. * 2004 revenues increase 24% to $865 million. * Company expects solid sales and earnings growth in 2005.

Article Excerpt
Coachmen Industries, Inc. today announced its financial results for the fourth quarter and full year ended December 31, 2004.

Sales for the fourth quarter increased 9% to $204 million versus $188 million during the same period last year. For the full year, revenues increased 24% to $865 million, from $698 million in 2003. Net income for the quarter, including discontinued operations, was $3.6 million, or $0.23 per share compared with $2.0 million, or $0.13 per share in the fourth quarter of 2003. Net income from continuing operations in the quarter was $1.9 million, down 5% from the fourth quarter of 2003. For the year, net income from continuing operations increased by 94% to $13.4 million compared with $6.9 million last year. EPS from continuing operations increased 93% from $0.45 in 2003 to $0.87, while EPS including discontinued operations increased 106% from $0.48 to $0.99.

Coachmen's fourth quarter results included the sale of its RV dealership, Colfax Country RV, LLC in North Carolina, consistent with the Company's goal to streamline when possible to better focus its human and financial capital on the Company's core strengths. As part of the sale, which closed on December 31, 2004, Coachmen recognized a gain on the sale of assets of approximately $1.7 million after tax. The operating results of Colfax, as well as the gain, are classified as discontinued operations, resulting in net income from discontinued operations of $1.9 million, or $0.12 per share. Prior periods have also been restated to reflect the reclassification of Colfax into discontinued operations.

In the fourth quarter, gross profit margins were 13.4% compared to 14.1% in 2003, which is primarily attributable to the effect the slowdown in the RV industry had on plant operations. Operating income decreased by 0.7%, while operating margins fell 0.1 percentage points to 1.1% of sales. For the full year, gross profit margins fell slightly to 14.4% from 14.6% last year. General, selling and administrative expenses improved by 0.8 percentage points to 12.4% of sales versus 13.2% in 2003. Operating income for 2004 increased 83% to $19.1 million, while operating margins improved 0.7 percentage points to 2.2% from 1.5% in 2003.

Claire C. Skinner, Chairman and Chief Executive Officer, remarked, "Our total EPS of $0.99 was above our most recent guidance of $0.88 to $0.93 outlined in our third quarter release. Our EPS of $0.87 from continuing operations is slightly below this range, but we are nevertheless pleased with our operating performance, given the normal seasonality of the fourth quarter, coupled with the challenging environment in the RV industry late in the year. We continue to monitor the market closely and are making adjustments to our RV production levels as needed to respond to shifting demand. On the Housing and Building side of our business, we are very pleased with top line growth, as well as the recent progress made towards improving profitability. Despite numerous challenges, the Company has made great strides in delivering much needed improvements, and we are confident that these gains will continue to mount in 2005."

In the fourth quarter, management adjusted its method for allocating corporate expenses to better reflect the actual use of corporate resources by the divisions. Historically, corporate expenses were allocated based on revenues. The new methodology allocates the expenses based on three dimensions: revenues, subsidiary structure and number of employees. The segment data discussed in this release and the historical tables that follow have been adjusted to reflect this change in corporate expense allocation, as well as the reclassification of the results of the Colfax Country RV, LLC operation into the discontinued operations section of the Statement of Operations.

Recreational Vehicle Segment

The Company's Recreational Vehicle Segment reported sales of $135.7 million during the fourth quarter of 2004, up 6.9% from the $127.0 million reported for the comparable period last year. RV Group wholesale unit shipments for the fourth quarter increased by 4.6% to 4,227 units. Gross profit for the segment was $10.3 million,...

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