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MORGAN HILL, Calif. — The Coast Distribution System, Inc. (NYSE Amex: CRV), 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 sales of $33.1 million and net earnings of $1.2 million for the second quarter ended June 30, 2009.
In the same period last year, Coast generated earnings of $1.6 million on net sales of $41.2 million.
“Despite some of the most difficult conditions in the recreational vehicle industry since the oil crisis and economic downturns of the 1970s, Coast was profitable in the second quarter and six month period,” said Coast’s Chief Executive Officer Jim Musbach. “We achieved this performance because of the proactive and aggressive steps we have taken to control costs since the beginning of the industry downturn. These painful but necessary steps included reducing staffing levels across multiple departments, as well as cutting salaries across the board.”
In the 2009 second quarter, Coast says it reduced selling, general and administrative (SG&A) expenses by $1.7 million, or 27.8 percent as compared to the 2008 second quarter. The company also reported that it reduced its borrowings under its bank line of credit by $19.0 million, or 62.6 percent year-over-year and reduced inventory year-over-year by $16.9 million, or 40.6 percent.
The 19.6-percent decline in net sales in the 2009 second quarter (compared to Q2 2008), according to management, is attributed to lower retail traffic at RV and marine dealerships. The company reported that industry associations for both the RV and boating industries reported double-digit declines in industry shipments for the first half of the year. The Recreational Vehicle Industry Association reported RV industry shipments were off 55.3 percent year-over-year in the first six months of 2009.
“Though our primary markets remain very challenging, we have seen a slight uptick in recent demand, which may indicate our customers are restocking inventory in anticipation of the bottom of the industry slump,” Musbach said. “We do see this development as a positive sign, though we remain conservative and cautious in our approach.
“We will continue to reduce costs wherever possible, and are actively working with our product suppliers and our bank lender to ensure we have the proper resources into the future. Since the beginning of the economic recession, everyone at Coast has worked very hard to tackle challenges aggressively by taking steps to improve our operations and effectively position ourselves for the future. We continue to seek additional market share through greater penetration of our Coast-branded and partnered distribution products. Because of these efficiency improvements and increased demand for our products, we believe Coast is well positioned to take advantage when the economy eventually rebounds.”
For the six-month period ended June 30, 2009, Coast reported net earnings of $274,000 on net sales of $56.3 million, compared with net earnings of $711,000 on net sales of $80.7 million in the same six-month period of 2008.
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