Coast Distribution’s 3Q net sales decline

MORGAN HILL, Calif. – The Coast Distribution System, Inc., reported net earnings of $834,000, or $0.18 per diluted share, on net sales of $43.2 million for the third quarter 2007, ended Sept. 30, compared with net earnings of $705,000, or $0.15 per diluted share, on net sales of $44.3 million for the same period of 2006.

Coast reported net earnings of $1.7 million, or $0.38 per diluted share, on net sales of $137.6 million for the first nine months of 2007, compared with net earnings of $4.8 million, or $1.05 per diluted share, on net sales of $152.6 million for the nine-month period of 2006.

Net sales declined by 2.5 percent in the 2007 third quarter, as compared to net sales for the third quarter of 2006. However, Coast said this decline in net sales compares favorably to an 11.1 percent decline in shipments of new recreational vehicles during the eight-month period ended Aug. 31, 2007, the latest data available from industry analysts, indicating Coast’s ability to substantially overcome adverse conditions in the RV markets.

Coast is one of North America’s largest suppliers of aftermarket replacement parts, accessories and supplies for the recreational vehicle, marine and outdoor recreation industries.

“Increased gasoline prices and interest rates continue to cause difficulties for RV and boat retailers, which make up most of our customers,” said Coast Chairman and CEO Thomas R. McGuire. “Despite these challenges, we grew our margins in the quarter with increased sales of Coast’s proprietary and branded products, especially within our towing and outdoor furniture lines. Our third quarter results also reflected price increases on selected products, which we instituted based on our improved market position.”

As in past years, the company expects a loss in the fourth quarter of 2007 due to the traditional, seasonal slowdown in the quarter, as customers typically wait until the first quarter to begin placing their orders for the upcoming buying season, which commences in the spring.

“Industry analysts are forecasting a 7.5 percent year-over-year decline in RV shipments for fiscal 2007, which seems reasonable given the challenges our customers are reporting,” said McGuire. “However, we are seeing a slight increase in sales and margins in October compared with last year, which we believe is an indication of our improved market position and of our success in selling our products to new customers and into new markets, though we remain wary of the challenges the RV and marine industries are facing.”

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