National R.V. Holdings, Inc. Announces First Quarter Results and Financing

PERRIS, Calif., May 15 /PRNewswire-FirstCall/ -- National R.V. Holdings, Inc. (the "Company") today announced the financial results for its first quarter ended March 31, 2007.

Net sales from continuing operations declined to $21.9 million in the first quarter of 2007, down 59.9% from $54.6 million in the first quarter of 2006. The Company reported a loss from continuing operations of $8.8 million for the first quarter of 2007, compared to $2.5 million in the first quarter of 2006. These figures correspond to a loss from continuing operations of $0.85 per diluted share for the first quarter of 2007 compared to a loss from continuing operations of $0.24 per diluted share for the first quarter of 2006. The Company reported a net loss of $4.0 million for the first quarter of 2007, compared to $2.1 million in the prior year's first quarter, after reflecting a $7.3 million gain on the sale of Country Coach, Inc. and a $2.4 million loss reported by the discontinued operation. The net loss per share was $0.38 per diluted share for the first quarter of 2007 as compared to a net loss of $0.20 per diluted share for the first quarter last year.

The Company also announced that in order to refinance its balance sheet and put its assets to better use, it is moving forward on the execution of the sale and leaseback transaction with First Industrial Acquisitions, Inc. ("First Industrial). Under the terms of the agreement, the sales price is $31.75 million, and the Company will be entering into a 10-year, triple-net lease with approximately $2.7 million in annual lease payments, which increase 3% per year. The lease will include two 5-year renewal options. The transaction is scheduled to close later this month.

"The Crane Composites fiberglass problem discovered one year ago, led to a precipitous downward spiral in sales, which in turn caused a severe strain on our liquidity and created significant uncertainty amongst our customers," stated Brad Albrechtsen, the Company's chief executive officer. "These first quarter results hopefully reflect the bottom of that spiral and we believe that we are finally headed back up. We have significantly reduced overhead going forward, are once again well capitalized, are partnering with new dealers, and are introducing new and innovative products."

In elaborating on the restructuring and refinancing, Albrechtsen further stated, "On an annualized basis, when we complete our restructuring later this quarter, we expect to have reduced our costs by $13 to $15 million dollars compared to 2006. These cost reductions include substantial reductions in accounting and SOX compliance-related costs, a nearly 45% reduction in non-direct personnel, and the replacement of nearly $3 million of interest expense with interest income and purchase discounts, offset partially by lease payments. Combined with these substantial reductions in costs," continued Albrechtsen, "we have launched a commercial public relations campaign that combines a strategically directed media blitz highlighting our products and management team, with an ambitious effort on the part of senior management to get out and visit all of our dealer partners. All of these efforts are beginning to bear fruit as we are seeing demand for our products once again improve."

Wholesale unit shipments from continuing operations of diesel motorhomes for the quarter ended March 31, 2007 were 50, down 71% from 172 units shipped during the same period last year. Shipments of gas motorhomes for the first quarter of 2007 were 165, down 55% compared to the 368 gas units sold during the same period last year. Total unit shipments from continuing operations for the first quarter of 2007 were 215, a decrease of 60% over the first quarter of 2006, while the average selling price increased 1% to $102,000, compared to $101,000 in the first quarter of 2006.

The Company reported a gross loss from continuing operations for the quarter ended March 31, 2007 of 21.8% compared to a gross profit of 3.2% for the same period last year. The lower gross margins in the first quarter of 2007 were due to significantly lower sales volumes and the associated lower production rates leading to lower fixed-cost absorption, higher sales incentives and higher warranty costs.

Operating expenses from continuing operations for the first quarter of 2007 declined 6.4% to $3.7 million, or 16.7% of net sales, compared to $3.9 million, or 7.2% of net sales, for the first quarter of 2006. Reductions in personnel, marketing expenses and lower share-based compensation costs during the first quarter of 2007, were somewhat offset by increases in costs associated with the strategic process the Company was involved in during the quarter, along with increased litigation and loan costs.

About National R.V. Holdings, Inc.

National R.V. Holdings, Inc., through its wholly-owned subsidiary, National RV, Inc., is one of the nation's leading producers of motorized recreational vehicles, often referred to as RVs or motorhomes. From its Perris, California facility, NRV designs, manufactures and markets Class A gas and diesel motorhomes under model names Surf Side, Sea Breeze, Dolphin, Tropi-Cal, Pacifica and Tradewinds. NRV began manufacturing RVs in 1964. Based upon retail registrations for the year ended December 31, 2006, the Company, through its NRV subsidiary, is the seventh largest domestic manufacturer of Class A motorhomes.

This release and other statements by the Company contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including statements about the Company's future expectations, performance, plans, and prospects, as well as assumptions about future events. Investors are cautioned that forward-looking statements are inherently uncertain. Actual performance and results may differ materially from that projected or suggested herein due to certain risks and uncertainties including, without limitation, the cyclical nature of the recreational vehicle industry; continuation of losses; the ability of the Company to address the effects caused by fiberglass material supplied by a third party supplier; the ability of the Company's new and redesigned product introductions to achieve market acceptance; the ability of the Company to close the sale leaseback transaction discussed above; the ability of the Company to obtain long-term debt financing; seasonality and potential fluctuations in the Company's operating results; any material weaknesses in the Company's internal control over financial reporting; any failure to implement required new or improved internal controls; the Company's ability to maintain its stock exchange listing; the Company's dependence on chassis suppliers; potential liabilities under dealer/lender repurchase agreements; competition; government regulation; warranty claims; product liability; and dependence on certain dealers and concentration of dealers in certain regions. Certain risks and uncertainties that could cause actual results to differ materially from that projected or suggested are set forth in the Company's Form 10-K and other filings with the Securities and Exchange Commission (SEC) and the Company's public announcements, copies of which are available from the SEC or from the Company upon request.

Contact: Thomas J Martini [e-mail] R.V. HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) (Unaudited) March 31, December 31, 2007 2006 ASSETS Current assets: Cash and cash equivalents $7 $14 Restricted cash and cash equivalents 266 387 Receivables, less allowance for doubtful accounts of $252 and $239, respectively 6,159 9,800 Inventories 29,281 28,896 Prepaid expenses 498 826 Deferred income taxes 114 148 Assets of discontinued operations -- 67,768 Total current assets 36,325 107,839 Long-term restricted cash and cash equivalents 345 341 Property, plant and equipment, net 25,145 25,662 Other assets 1,202 1,355 Total assets $63,017 $135,197 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Book overdraft $1,547 $1,720 Accounts payable 9,242 17,828 Accrued expenses 10,159 9,595 Current portion of capital leases 61 63 Line of credit 5,222 29,012 Liabilities of discontinued operations -- 35,928 Total current liabilities 26,231 94,146 Long-term portion of capital leases 105 124 Deferred income taxes 114 148 Long-term accrued expenses 4,323 4,660 Total liabilities 30,773 99,078 Commitments and contingent liabilities -- -- Stockholders' equity: Preferred stock - $0.01 par value; 5,000 shares authorized, 4,000 issued and outstanding -- -- Common stock - $0.01 par value; 25,000,000 shares authorized, 10,339,484 issued and outstanding 103 103 Additional paid-in capital 38,437 38,353 Retained deficit (6,296) (2,337) Total stockholders' equity 32,244 36,119 Total liabilities and stockholders' equity $63,017 $135,197 NATIONAL R.V. HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) Three-Months Ended March 31, 2007 2006 (1) Net sales $21,930 $54,629 Cost of goods sold 26,703 52,855 Gross (loss) profit (4,773) 1,774 Selling expenses 980 1,236 General and administrative expenses 2,679 2,675 Operating loss (8,432) (2,137) Interest expense 541 420 Other income (188) (61) Loss from continuing operations before income taxes (8,785) (2,496) Provision for income taxes 23 10 Loss from continuing operations (8,808) (2,506) (Loss) income from discontinued operations (2,409) 461 Gain from sale of discontinued operations 7,328 -- Income taxes related to discontinued operations (70) (9) Net income from discontinued operations 4,849 452 Net loss $(3,959) $(2,054) Earnings (loss) per share - basic and diluted Continuing operations $(0.85) $(0.24) Discontinued operations 0.47 0.04 Total $(0.38) $(0.20) Weighted average number of shares outstanding: Basic 10,339 10,339 Diluted 10,339 10,339 (1) Adjusted to include the effect of discontinued operations. NATIONAL R.V. HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Three-Months Ended March 31, 2007 2006 Cash flows from operating activities: Net loss $(3,959) $(2,054) Less: Loss (income) from discontinued operations, net of taxes 2,409 (452) Less: Gain on sale of discontinued operations, net of taxes (7,258) -- Loss from continuing operations (8,808) (2,506) Adjustments to reconcile loss from continuing operations to net cash used in operating activities: Bad debt expense 89 9 Reserve and write down (up) of inventories 347 (240) Depreciation and amortization 596 689 Gain on asset disposal (24) (6) Share-based compensation 84 461 Changes in assets and liabilities: Decrease (increase) in receivables 3,552 (8,027) (Increase) decrease in inventories (732) 4,085 Decrease (increase) in prepaid expenses 328 (80) (Decrease) increase in accounts payable (8,586) 1,514 Increase (decrease) in accrued expenses 227 (838) Net cash used in operating activities by continuing operations (12,927) (4,939) Net cash used in discontinued operations (2,061) (6,069) Net cash flow used in operating activities (14,988) (11,008) Cash flows from investing activities: Decrease in restricted cash 117 -- Purchase of property, plant and equipment (208) (228) Proceeds from sale of assets 185 127 Decrease in other assets 121 65 Net cash provided by (used in) investing activities by continuing operations 215 (36) Proceeds from sale of discontinued operations 38,750 -- Net cash flow used in discontinued operations -- (1,110) Net cash flow provided by (used in) investing activities 38,965 (1,146) Cash flows from financing activities: (Decrease) increase in book overdraft (173) 272 Principal payments on capital leases (21) (10) Net (payments on) advances under line of credit (23,790) 4,528 Net cash (used in) provided by financing activities by continuing operations (23,984) 4,790 Net cash flow provided by discontinued operations -- 7,364 Net cash (used in) provided by financing activities (23,984) 12,154 Net decrease in cash and cash equivalents (7) -- Cash and cash equivalents, beginning of the year 14 11 Cash and cash equivalents, end of period $7 $11