The Coast Distribution System, one of North America's largest aftermarket suppliers of replacement parts, accessories and supplies for the recreational vehicle, boating and outdoor recreation industries, today reported a slight decrease in net income for the third quarter.
Coast reported net income of $600,000, or 13 cents a diluted share, for the quarter that ended Sept. 30, compared with net income of $700,000, or 14 cents a diluted share, in the same quarter last year. Net sales for the quarter fell 2 percent, to $31.6 million, compared with net sales of $32.2 million in the prior year’s quarter.
The company said the decrease in net sales was the result of continued weakness in the economy and in consumer spending.
Gross profits declined by $200,000, resulting in a decrease in gross margin to 18.1 percent in the quarter from 18.2 percent in the quarter a year earlier. The decrease was the result of slightly higher shipping costs, the company said.
“We are pleased with our performance in the third quarter despite the continued softness in our industry, which resulted in a small decrease in the top line,” CEO Jim Musbach said in a statement.
“Even with these broader market challenges we made progress in increasing the penetration of our branded products, and we began making inroads into a number of large retailers in the United States and Canada, which is a new area for us,” he added. “We continue to take steps to increase sales, particularly through new supply relationships that should allow us to source from lower-cost, high-quality overseas suppliers.”
For the nine-month period that ended Sept. 30, Coast reported net earnings of $553,000, or 12 cents a diluted share, on net sales of $89.5 million, compared with net earnings of $1,865,000, or 41 cents a diluted share, on net sales of $91 million in the first nine months of 2010.
The decrease in net income was attributable to the decrease in net sales as a result of weaker economic conditions, combined with severe weather conditions affecting the northeastern United States and Canada in the first half of 2011, which led to decreased use of RVs and boats by consumers in those areas, the company said.