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MORGAN HILL, Calif. – The Coast Distribution System, Inc. (NYSE Amex: CRV) achieved profitability for the full year ended Dec. 31, despite a decrease in net sales for the year, it reported in a recent statement.
Coast, an aftermarket suppliers of replacement parts, accessories and supplies for the recreational vehicle (RV), boating and outdoor recreation industries, reported an increase in sales and a significantly reduced net loss in the fourth quarter of 2009 as compared to the same quarter of 2008. The net loss for the fourth quarter of 2009 was $1.1 million on net sales of $17.3 million. For the same period of 2008, Coast reported a net loss of $2.3 million on net sales of $16.9 million.
Gross margin as a percentage of sales increased to 13.7 percent in the 2009 fourth quarter, compared to 9.9 percent in the same quarter of 2008. The improvement was the result of reduced shipping costs as fuel prices declined, a change in product mix and improved pricing, according to the company.
In addition, in the 2009 fourth quarter, Coast reduced selling, general and administrative (SG&A) expenses by $1.5 million, or 28.5 percent, as compared to the 2008 fourth quarter. The company attributed the decrease in SG&A to a variety of cost-cutting measures implemented throughout the year.
For the full year ended Dec. 31, 2009, Coast reported net earnings of $0.1 million on net sales of $103.2 million. This compares with a net loss of $1.8 million on net sales of $132.2 million in 2008. In 2009, gross margin as a percentage of sales improved to 18.8 percent from 18.6 percent in the prior year. SG&A expenses were reduced by $8.0 million, or 30.1 percent, which drove the turnaround in operating income and earnings generated in 2009, according to Coast.
The supplier also reduced borrowings under its bank line of credit by $7.4 million, or 43.6 percent year-over-year, and reduced inventory year-over-year by $7.7 million, or 25.2 percent, to $23.0 million at Dec. 31. Coast generated $10.2 million in operating cash flow in 2009, contributing to its ending cash balance of $5.6 million, up from $1.9 million at the end of 2008.
“Given the adverse economic and industry conditions in 2009, we are pleased with our results for the quarter and full year,” said Coast Chief Executive Officer Jim Musbach. “Driving our return to profitability were improved operating margins, which were the result of the combined impact of an improved product mix as well as our efforts over the last year to reduce costs and create a leaner organization. Looking ahead, it is our plan to capture additional market share to offset expected declines in net sales resulting from the recessionary conditions and limited credit availability we expect will continue throughout 2010. We also believe we can achieve further improvements in gross margin by working to increase sales of higher-margin proprietary products and foreign-sourced products. In addition, we will continue to monitor SG&A expenses in response to the difficult economic climate.”
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