USA. Coast Distribution reports 06 operating results increase due to sales of portable generators Print E-mail
Tuesday, 14 November 2006
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The Coast Distribution System (AMEX:CRV) has reported its operating results for the third quarter and nine months ended, Sept. 30, 2006.

Coast, one of North America's largest suppliers of aftermarket replacement parts, accessories and supplies for the recreational vehicle (RV) and marine industries, reported net earnings of $705,000, or $0.15 per diluted share, on net sales of $44.3 million for the third quarter 2006, compared with net earnings of $1.7 million, or $0.36 per diluted share, on net sales of $45.4 million for the third quarter 2005.

For the nine months ended September 30, 2006 Coast reported net earnings of $4.8 million, or $1.05 per diluted share, on net sales of $152.6 million, compared with net earnings of $4.8 million, or $1.01 per diluted share, on net sales of $147.0 million for the same period of 2005. The year-to-date increase in sale was primarily attributable to increased sales of Kipor standby and portable generators.

"Coming off a second quarter that was the best quarter in company history, we are pleased with our sustained profitability in a difficult market," said Coast Chairman and CEO Thomas R. McGuire. "Both the RV and marine industries, our primary markets, suffered this summer due to global instability and high fuel prices. The high fuel prices also created pressure on our gross margins as it lead to higher shipping costs.

"Likewise, the year-over-year sales comparison is made more difficult by the fact that last year's third quarter included volume resulting from Katrina and other hurricane-related recovery demand in the 2006 third quarter. Though it is difficult to calculate how much of an impact last year's Gulf Coast hurricanes had on our third quarter 2005 results, we do know it had an impact." Coast reported gross margin of 18.0 percent in the third quarter of 2006, compared with 18.9 percent for the same period in 2005. The decrease in gross margin in the third quarter of 2006 was due to increased freight costs associated with overseas products and increased shipping costs as a result of higher fuel prices.

The company reported a gross margin of 20.1 percent for the first nine months of this year compared to 19.3 percent for the same period of 2005. The improvement in gross margin for the nine months period was due primarily to increased sales of Kipor generators and the company's proprietary products, both of which are high-margin categories for Coast.

Selling, general & administrative (SG&A) expenses increased by 10.5 percent in the third quarter of 2006 and 9.8 percent for the nine month period of 2006 as compared to 2005. The increases in SG&A expenses were primarily due to increased labor costs associated with promoting, managing and testing the new lines of Kipor generators and to the recognition of stock-based compensation expenses which were not required to be recognized in 2005. Pursuant to SFAS No. 123(R), Coast realized stock-based compensation expenses of $26,000 in the third quarter and $70,000 for nine months ended Sept. 30, 2006.


Last Updated ( Tuesday, 14 November 2006 )
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