By Marilyn Odendahl, Truth Staff
modendahl@etruth.com
COBURG, Ore. -- Despite posting a loss of nearly $72 million for the third quarter, Monaco Coach Corp. officials told investors Wednesday they are confident the company to return to profitability in 2009.
The recreational vehicle manufacturer has recorded falling revenues and net income for all of 2008. As part of an effort to rein in costs and lower production to meet declining demand, Monaco closed plants in Nappanee and Wakarusa during the quarter, idling about 1,400 workers.
In addition, to decrease its inventory and spark sales, the company offered between $8 million and $9 million in discounts from July through September to dealers and retail customers.
The company also announced it was hoping to finalize a new loan package from Bank of America by Friday which would provide the manufacturer with the ability to sustain itself through the current economic downturn.
"I am encouraged by the actions our government is taking to spur the economy by working to free up money in the banking system which will allow consumer confidence and the business environment to begin on the road to recovery," said Kay Toolson, Monaco chairman and chief executive officer. "However with the changes we've made in our company and the restructuring we've done, we have positioned ourselves to return to profitability even in a market as difficult as this one has been."
Monaco reported a net loss of $71.8 million during the third quarter, down from the $3.7 million net income recorded in the third quarter 2007. Revenues fell as well to $166.3 million from $322.4 million.
Year-to-date, the RV maker turned in a loss of $89.9 million and revenues of $620.5 million, compared to a net income of $9.6 million and revenues of $980.0 million in 2007.
At one point during the conference call, Monaco officials were asked if they would entertain a proposal to be acquired given the company stock is currently trading around $1 a share.
"Like every public company, I suspect, everyone could be approached by anyone at any time," Toolson replied. "You have a board of director that takes a look at that and makes a decision if it makes sense or not. We are not in discussion with anyone. No one has made an offer to acquire our company. We're in a big restructuring plan that we think is going to, and our board of directors feels is going to, be the best for increasing shareholder value as we turn this company around and return it to profitability next year. I think that's as much as we can say about that right now."
The costs associated with the closures of the Wakarusa facilities did put pressure on the gross profit, dropping it to $782,000 from $36.2 million in the third quarter of 2007.
Still the company expects the realignment to bring a savings between $5 million and $7 million per quarter beginning in the fourth quarter of 2008 and continuing into 2009.
"The decision we made to close our major manufacturing operations in northern Indiana and consolidate our production of diesel motorhomes to Oregon and gas motorhomes to our Warsaw, Ind., complex was very difficult," Toolson said. "But the resulting smaller footprint helps assure we will weather the current market."
Production lines have been shifted to the existing facilities in Indiana and Oregon. The properties in Wakarusa have been listed on the market, said John Nepute, Monaco president, and while some potential buyers have toured the plants, no one has made an offer to buy.