Coast Distribution System, Morgan Hill, CA, attributed strong Canadian operations for improvements in both sales and gross margin for the first quarter ended March 31, 2010.
The company reported net income of $22,000 for the first quarter of 2010, compared against a net loss of $0.9 million for the first quarter of 2009 – a turnaround of nearly nearly $1 million year-over-year (all figures $US). Net sales increased by 3.9 percent to $24.1 million in the first quarter of 2010, while gross margin increased to 20.4 percent, up from 18.6 percent in the same quarter of 2009. “The improvements in both sales and gross margin were attributable to the Company's Canadian operations, and were due primarily to an improving Canadian economy and a strengthening of the Canadian dollar vis-a-vis the U.S. dollar,” notes a company press release dated May 13, 2010. “Sales and gross margin in the United States declined slightly in the first quarter due to the ongoing impact of the economic recession and credit crisis.”
On the company's balance sheet, accounts receivable increased by $1.2 million, to $17.9 million, from $16.7 million at March 31, 2009, as a result of increased sales in Canada. Combined with inventory reductions, this allowed Coast to reduce long-term debt by 37 percent (to $12.8 million at March 31, 2010 from $20.2 million at March 31, 2009).
“The actions we implemented in response to the difficult economic and industry conditions over the last six quarters provided the foundation for the solid financial results we posted to start 2010,” said Coast's Chief Executive Officer Jim Musbach. “The improvement in our results was driven by the strength of margins at our Canadian operations combined with continued control over the Company's SG&A expenses. We achieved our better overall financial results despite the absence of strength in our U.S. operations, which posted slight declines in sales and gross margins in this year's first quarter. Although wholesale shipments of recreational vehicles improved industry-wide in the first quarter, we believe that improvement was driven by inventory rebuilding at the dealer level rather than significantly improved retail sales. As a result, it may take more time for these factors to translate into improved sales and usage of RVs and boats, which would in turn generate better results for Coast.”
With Canadian operations in Langley, BC, Calgary, AB, Orillia, ON and St-Bruno, QC, the Coast Distribution System is among North American's largest wholesale aftermarket suppliers of replacement parts, supplies and accessories for the recreational vehicle, pleasure boat and outdoor recreation markets.