MORGAN HILL, Calif., May 14 /PRNewswire-FirstCall/ -- The Coast Distribution System, Inc. reported its operating results for the first quarter ended March 31, 2008. Coast, one of North America's largest suppliers of aftermarket replacement parts, accessories and supplies for the recreational vehicle (RV), marine and outdoor recreation industries, reported a net loss of $850,000, or $0.19 per diluted share, on net sales of $39.5 million for the first quarter of 2008. For the same period of 2007, Coast reported a net loss of $642,000, or $0.15 per diluted share, on net sales of $43.6 million. The Company reported gross margin of 20.0 percent for the 2008 first quarter, a 7.0 percent, year-over-year improvement over gross margin of 18.7 percent in the corresponding quarter of 2007. Coast attributed the increase in gross margin to additional sales of higher-margin imported products and improved pricing. The 2008 first quarter also marked the third consecutive quarter of gross margin improvement. Coast attributed the nearly $4.2 million, or 9.6 percent, year-over-year decline in first quarter sales to decreases in the purchases and in the usage of RVs by consumers, which affects sales traffic to RV dealers, Coast's primary customer. The Recreational Vehicle Industry Association (RVIA) reported an 11.8 percent year-over-year decline in wholesale shipments of recreational vehicles for the first three months of 2008. Pleasure boat retailers also reported sales declines for that same three-month period. "Increased fuel prices, the credit crunch and economic uncertainties continue to adversely affect the RV and marine industries as a whole, including the aftermarket," said Coast's Chief Executive Officer and President James Musbach. "Despite the decline in sales, our pre-tax loss in this year's first quarter was nearly the same as the pre-tax loss in last year's first quarter. We believe this is an indication of our stronger market position, as well as our improved cost management, including SG&A costs. When our core markets eventually return to growth, Coast will be positioned to achieve meaningful improvements in our operating results." "In the meantime, we continue to anticipate a difficult year in 2008 based on conditions in the RV and marine industries. Our focus will be on areas which management can directly control, such as improving margins by increasing sales of Coast sourced and exclusive products." In April 2008, Coast's Board of Directors promoted Jim Musbach, the Company's President and Chief Operating Officer, to Chief Executive Officer. Musbach also continues to serve as Coast's President. Thomas R. McGuire, the former Chief Executive Officer, continues to serve as the Company's Executive Chairman. About The Coast Distribution System The Coast Distribution System, Inc. (www.coastdistribution.com) is one of North American's largest wholesale aftermarket suppliers of replacement parts, supplies and accessories for the recreational vehicle (RV), pleasure boat and outdoor recreation markets. Coast supplies more than 14,000 products from 500 manufacturers through 17 distribution centers located in the U.S. and Canada. Most of Coast's 12,000 customers consist of independently owned RV and marine dealers, supply stores and service centers. Coast is a publicly traded company on the American Stock Exchange under the ticker symbol CRV. Forward-Looking Information Statements in this news release regarding our expectations and beliefs about our future financial performance and trends in our markets are "forward- looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." The forward-looking statements in this news release regarding our future financial performance are based on current information and, because our business is subject to a number of risks and uncertainties, actual operating results in the future may differ significantly from the future financial performance expected at the current time. Those risks and uncertainties include, among others: Loss of confidence among consumers regarding economic conditions, which could adversely affect their willingness to purchase and use their RVs and boats and which, in turn, would affect their purchases of the products we sell; increases in interest rates or the imposition of more stringent credit standards, which affect the availability and affordability of financing for RVs and boats; increases in the costs and shortages in the supply of gasoline which increase the costs of using, and the willingness and ability of consumers to use, RVs and boats; and unusually severe or extended winter weather conditions, which can reduce the usage of RVs and boats for periods extending beyond the ordinary winter months or to regions that ordinarily encounter milder winter weather conditions; possible increases in price competition within our markets that could reduce our margins and, therefore, our earnings; our practice of obtaining a number of our products from single manufacturing sources, which could lead to shortages in the supply of products to us in the event any single source supplier were to encounter production or other problems; and possible changes in supply relationships in our markets, which could lead to increased competition or to reductions in the number of products we are able to offer our customers. Certain of these risks and uncertainties, as well as other risks, are more fully described in Item 1A, entitled "Risk Factors," in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as filed with the Securities and Exchange Commission, and readers of this news release are urged to review the discussion of those risks and uncertainties that is contained in that Report. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of today's date, or to make predictions based solely on historical financial performance. We also disclaim any obligations to update forward-looking statements contained in this news release or in the above referenced 2007 Annual Report, whether as a result of new information, future events or otherwise.
THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Three Months Ended March 31,
2008 2007
(unaudited) (unaudited)
Net sales $39,468 $43,638
Cost of sales, including distribution costs 31,556 35,471
Gross profit 7,912 8,167
Selling, general and administrative expenses 8,198 8,343
Operating loss (286) (176)
Other expense
Interest 402 539
Other 149 108
551 647
Loss before income taxes (837) (823)
Income tax provision (benefit) 13 (181)
Net loss $(850) $(642)
Basic and diluted loss per share $(0.19) $(0.15)
THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
March 31, March 31,
2008 2007
(unaudited)
ASSETS
CURRENT ASSETS
Cash $1,206 $964
Accounts receivable - net of allowances of $2,116
and $2,090 as of March 31, 2008 and 2007,
respectively 29,838 33,590
Inventories 45,828 48,517
Other current assets 3,847 4,086
Total current assets 80,719 87,157
PROPERTY, PLANT, AND EQUIPMENT, NET 3,313 2,547
OTHER ASSETS 1,305 1,482
$85,337 $91,186
LIABILITIES
CURRENT LIABILITIES
Current maturities of long-term obligations $128 $127
Accounts payable 10,807 13,661
Accrued liabilities 3,073 3,763
Total current liabilities 14,008 17,551
LONG-TERM OBLIGATIONS 40,212 42,605
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value: 2,000,000 shares
authorized: none issued or outstanding: - -
Common stock, $.001 par value: 10,000,000 shares
authorized; 4,445,596 and 4,423,682 shares issued
and outstanding at March 31, 2008 and 2007,
respectively 15,960 15,770
Accumulated other comprehensive income 1,849 717
Retained earnings 13,308 14,543
TOTAL STOCKHOLDERS EQUITY 31,117 31,030
$85,337 $91,186
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