MORGAN HILL, Calif. — The Coast Distribution System, Inc., today reported financial results for the third quarter ended Sept. 30, 2009, highlighted by net earnings despite lower sales, driven by improved margins and a leaner operating structure.
Coast, one of North America’s largest aftermarket suppliers of replacement parts, accessories and supplies for the recreational vehicle (RV), boat and outdoor recreation industries, reported net earnings of $0.9 million, or $0.20 per diluted share, on net sales of $29.6 million for the third quarter of 2009. For the same period of 2008, Coast reported a net loss of $0.3 million, or $0.07 per diluted share, on net sales of $34.7 million.
Gross margin as a percentage of sales increased to 20.7 percent in the 2009 third quarter, compared to 17.9 percent in the same quarter of 2008. The increase was a result of reduced freight costs, discounts and volume rebates, workforce reductions in our warehouses, and the introduction of additional higher-margin Coast branded products.
In the 2009 third quarter, Coast reduced selling, general and administrative (SG&A) expenses by $2.1 million, or 30.9 percent as compared to the 2008 third quarter. The company attributed the decrease in SG&A to an aggressive cost control program, which has included reducing staffing levels and company-wide reductions in salaries. Coast reduced its borrowings under its bank line of credit by $11.2 million, or 55.2 percent year-over-year and reduced inventory year-over-year by $10.2 million, or 28.8 percent to $25.3 million, at September 30, 2009.
For the nine-month period ended Sept. 30, 2009, Coast reported net earnings of $1.2 million, or $0.26 per diluted share, on net sales of $85.9 million, compared with net earnings of $0.4 million, or $0.09 per diluted share, on net sales of $115.4 million in the same period of 2008.
“Given the difficult industry conditions, we are pleased with our results in the quarter,” said Coast’s Chief Executive Officer Jim Musbach. “Driving our profits were improved margins, which for a large part were the result of several important yet painful steps we have taken in the past 18 months to create a leaner, stronger company. Looking ahead, our focus is on new product introductions to capture market share and increase volume beginning in 2010.
“We are also encouraged as we are seeing our customers restocking inventory in anticipation of an upturn in our industry,” said Musbach. “We will continue to reduce costs wherever practicable to improve our operations and effectively position ourselves for the eventual industry recovery, while expanding our customer base for Coast-branded and partnered distribution products.”
Net sales in the 2009 third quarter declined 14.7 percent year-over-year, which management attributed to lower retail traffic at RV and marine dealerships, Coast’s primary customers, reflecting the continuing effects of the recession and credit crisis. Industry associations for both the RV and boating industries reported double-digit declines in industry shipments for the first nine months of the year. The Recreational Vehicle Industry Association (RVIA) reported year-to-date RV industry shipments were off 42.7 percent year-over-year in the nine-month period.
As in past years, the company expects a loss in the fourth quarter of 2009 due to the traditional, seasonal slowdown in the quarter, as customers typically wait until the first quarter to begin placing orders for the upcoming season, which commences in the spring.
About The Coast Distribution System
The Coast Distribution System, Inc. is one of North American’s largest wholesale aftermarket suppliers of replacement parts, supplies and accessories for the recreational vehicle (RV), pleasure boat and outdoor recreation markets. Coast supplies more than 12,000 products through 17 distribution centers located in the U.S. and Canada. Most of Coast’s customers consist of independently owned RV and marine dealers, supply stores and service centers. Coast is a publicly traded company and its shares are listed on the American Stock Exchange under the ticker symbol CRV.
For more information, visit www.coastdistribution.com.
SOURCE: Coast Distribution System press release