Monaco has strong 2nd quarter.

Byline: Tim Christie The Register-Guard

Monaco Coach Corp. reported profits of $4.5 million in the second quarter on Wednesday, up from $372,000 a year ago. Earnings were 15 cents per share, compared to a penny a share in the second quarter of 2006, the company said.

The big jump in profits is due to improved sales as well as improvements in plant efficiency, company spokesman Craig Wanichek said.

Second quarter revenues for the Coburg-based RV maker were $335.3 million, up 4.4 percent from $321.3 million in the second quarter of 2006.

Monaco shares closed up $1.05 on Wednesday at $14.77 per share.

Despite the strong second quarter, profits for the Coburg-based RV maker this year are still lagging behind last year: $6 million in the first six months compared with $8.7 million for the first half of 2006.

Revenues were $657.6 million in the first six months of 2007, compared with $706.4 million for the same period in 2006. Earnings were 20 cents per share, compared to 29 cents per share in the first six months of 2006. Wanichek said Monaco had a strong first quarter in 2006 because of about $25 million in trailer sales to the Federal Emergency Management Agency in the wake of Hurricane Katrina.

Kay Toolson, Monaco's chairman and chief executive officer, said the profitable second quarter this year was the result of strong sales of the company's Class A motor homes. Class A refers to large, bus-like motor homes.

Monaco's Class A business is up 6 percent year-to-date, while the industry-wide class A market was down 6.6 percent, Toolson said.

The company increased its market share in motor homes by 6.3 percent, while industry wide motor home registrations declined 7.9 percent.

"These market share gains, along with improving margins and steady consumer demand through the first six months of 2007 in the motor home segment, has strengthened our confidence in the retail market for our products," Toolson said in a statement.

Gross profit margin increased in the second quarter to 10.9 percent, compared to 9.5 percent a year ago thanks to reductions in wholesale discounting and better use of its plants, among other things, the company said. The improvements offset higher material costs due to increased production of mid-priced diesel RVs.

Last year, Monaco reconfigured its production lines, reducing the number of lines producing motor homes from seven to five. That allowed the company to build more similarly priced products on each line, which makes it easier to adjust production mix to meet demand.

Monaco President John Nepute said the company is paying close attention to what customers and dealers want, "and that has enabled us to consistently build the proper mix of models for our dealer partners and manage our level of finished goods inventory." That means the company needs to offer fewer discounts and special incentives, he said.

The company also made changes in production configuration and capacity last year that helped it become a more efficient manufacturer, Nepute said. The company expects to see additional efficiencies in the fourth quarter when it consolidates towable manufacturing at two existing facilities, he said.

The company broke down its performance in its three main areas of business:

Motor homes: Sales of Monaco motor homes overall increased 11.1 percent in the second quarter to $250.7 million, compared to a year ago. Monaco builds its higher-end models in Coburg, Wanichek said.

Towables: Monaco sold $81 million worth of towable RVs in the second quarter, down from $89.2 million a year ago.

Resorts: Sales in the RV resorts segment were $3.7 million, down 42 percent from a year ago. Looking ahead to the rest of the year, the company said it is "optimistic" about achieving earnings of 37 cents to 41 cents per share based on sales of about $1.3 billion.

With about 2,200 employees, Monaco is one of Lane County's largest private employers.