CEO: Monaco Coach to slash costs
Monaco Coach Corp. (NYSE:MNC) CEO Kay Toolson said that since the RV maker does not see a quick recovery in the RV market, the firm will be taking additional steps to cut costs and lower its breakeven point to quarterly sales of between $260 million and $280 million. Monaco will lower its production rates, lower expenses and more quickly facilitate other consolidations within the company. Toolson made the comments during a Wednesday afternoon conference call.
“While these steps are painful for many of our great employees, they are necessary to ensure the long-range stability and strength of our company,” Toolson said. “Additionally, we are focused on new product introductions that we feel will augment our business.”
The company is working on a new lightweight, fuel-efficient model, he said. The new model will be introduced in early 2009, the CEO said.
Toolson said the firm expects second-quarter sales slightly above first-quarter sales. However, CFO P. Martin Daley said it is difficult to forecast sales in the current economic environment.
Before Wednesday’s opening, Monaco reported a first-quarter loss of $8.5 million, or $0.28 per share, versus a profit of $1.5 million, or $0.05 per share, a year earlier. The results widely missed Wall Street’s estimate of a profit of $0.02 per share.
Quarterly sales fell 22% to $252.4 million from $322.2 million a year ago. Wall Street analysts projected revenue of $272.9 million.
“We are very disappointed with our results,” Toolson said. “When we were planning for 2008, no one was predicting the continuing decline of consumer confidence caused in part by deteriorating credit markets and record-breaking crude oil prices.”
Cost of sales during the three months ended March 31 fell to $236.6 million from $286.2 million a year earlier. Selling, general and administrative expenses similarly declined to $28.6 million from $32.4 million.
In response to an analyst’s question if the company had any potential buyers, Toolson said Monaco does not have any firm offers. The CEO also said the company has no plans to cut its dividend.
At closing on Wednesday, MNC shares were down 16.09%, or $1.36, at $7.09. Over the last 52 weeks, shares have ranged between $6.50 and $16.98.
