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 drop in sales and net income for the second quarter.
Coast reported net income of $1 million, or 21 cents a diluted share, for the quarter that ended June 30, compared with net income of $1.2 million, or 26 cents a diluted share, in the same quarter in 2010.
Net sales for the quarter fell 4.1 percent, to $33.2 million, compared with net sales of $34.6 million in the quarter last year. The company said the decrease was attributable to a slowing economy and weak consumer spending.
Inventories as of June 30 were $29.3 million, a decrease of $500,000 from $29.8 million last June. The company typically builds inventories during the first half of the year in anticipation of improved customer orders during the spring and summer months, when product sales increase because of seasonal increases in usage and purchases of RVs and boats.
The reduction in inventory levels from the prior year was primarily attributable to lower sales levels, along with active management of inventory turnover. Long-term debt was reduced to $12.7 million from $13.3 million a year earlier, reflecting the strength of Coast's balance sheet.
“The slowing economy and resulting weakness in consumer spending, along with additional weakness in our industry, took their toll on our results in the second quarter,” CEO Jim Musbach said in a statement. “Concerns over unemployment and price inflation eating away at discretionary spending negatively impacted the sales and use of RVs in the first half of 2011. The RV industry as a whole has continued along a path of relatively anemic growth, particularly in terms of retail sales of RVs.”
For the six-month period that ended June 30, Coast reported a net loss of $59,000, or 1 cent a diluted share, on net sales of $57.9 million, compared with net earnings of $1.2 million, or 26 cents a diluted share, on net sales of $58.7 million in the same six-month period in 2010.