Coast Distribution System, one of North America's largest aftermarket suppliers for the recreational vehicle, boating and outdoor recreation industries, today reported an increase in sales, though a net loss, for the first quarter.
Despite a 2.5 percent increase in sales, Coast had a net loss of $1 million, or 23 cents a diluted share, on net sales of $24.7 million for the quarter that ended March 31, compared with break-even results on net sales of $24.1 million in the same quarter in 2010.
The increase in net sales during the quarter was a result of an increase in sales of air conditioners that are installed in RVs. This increase in air-conditioner sales was attributable to the withdrawal of a supplier of aftermarket air conditioners that had previously supplied air conditioners to competing distributors.
The first-quarter 2011 loss was primarily attributable to a decrease in gross profits and, to a lesser extent, an increase in selling, general and administrative expenses.
That decrease was primarily attributable to a change in the mix of products sold to include a greater proportion of air conditioners, which tend to generate lower gross margins, and to selected price reductions on certain products, which were implemented in response to an increase in price competition in the market.
“The first quarter marked a significant turn in the industries we serve, most notably the RV industry. Poor weather in the first quarter, combined with higher gas prices and continued uncertainty surrounding the economy, have created a potent combination of factors to dampen the sales and use of RVs,” CEO Jim Musbach said in a statement.
“The current state of the RV industry is rather weak, particularly in terms of retail sales of motorized RVs. In the United States, motorized RV retail registrations fell 15.2 percent in February, while sales in Canada fared even worse, with motorized retail registrations down 42.4 percent in February,” he added. “While it appears consumer demand may remain soft over the near term we are taking added steps to increase sales while managing our overall cost structure. As the current softness in our markets runs its course we anticipate continued pressure on our sales and margins over the near term."