Coast Distribution System reports sales decline
MORGAN HILL, Calif. – Aftermarket supplier Coast Distribution System (Amex: CRV) has been hit by sales declines in both the RV and boating industries, as reflected by its results for the first quarter ended March 31.
Coast, one of North America’s largest suppliers of aftermarket replacement parts, accessories and supplies for the recreational vehicle (RV) and marine industries, experienced a net loss of $642,000 on net sales of $43.6 million for the first quarter 2007, compared with net earnings of $1.1 million on net sales of $51.5 million for the same period of 2006, according to a statement from the company today.
Coast attributed its loss in the first quarter of 2007 to a 15-percent reduction in year-over-year net sales, driven by a decline in retail sales in both the RV and boating industries.
“We continue to face challenges due to softness in our primary markets, as our sales decline in the first quarter was in line with industry-wide sales declines,” said Coast Chairman and CEO Thomas R. McGuire. “We are concerned by the rise in fuel prices in the last several months, which are creating higher shipping costs for Coast while also putting pressure on the RV and marine industries. We are pleased with our efforts to manage our overhead in the quarter, as we slightly reduced our SG&A expenses year-over-year.”
Coast reported gross margin of 18.7 percent in the first quarter of 2007, compared with 20.6 percent for the same period in 2006. The decrease in gross margin in the first quarter of 2007 was due to the effect of lower sales on flat warehouse costs and to higher shipping costs because of increasing fuel prices. Selling, general & administrative (SG&A) expenses decreased slightly in the first quarter of 2007 compared to the same period of 2006.
“We also made several important strategic improvements over the quarter, which we see as a foundation for growth over the longer-term,” said McGuire. “During the quarter, we placed two experienced industry executives to lead our Husky Towing and Kipor product lines respectively. Both of these product lines have substantial market opportunities in both our primary markets and beyond, and we expect their leadership will positively affect our results in the next nine months.”
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