The Coast Distribution System, Inc. Reports Results for Third Quarter and Nine Months Ended September 30, 2012

The Coast Distribution System, Inc. Reports Results for Third Quarter and Nine
                       Months Ended September 30, 2012

PR Newswire

MORGAN HILL, Calif., Nov. 14, 2012

MORGAN HILL, Calif., Nov. 14, 2012 /PRNewswire/ -- The Coast Distribution
System, Inc. (NYSE MKT: CRV), one of North America's largest aftermarket
suppliers of replacement parts, accessories and supplies for the recreational
vehicle (RV) and outdoor recreation industries, today reported financial
results for the third quarter and nine months ended September 30, 2012.

Coast reported net income of $307,000, or $0.07 per diluted share, for the
third quarter of 2012, compared to net income of $612,000, or $0.13 per
diluted share, in the same quarter of 2011. For the nine months ended
September30, 2012, Coast recorded a net loss of $534,000, or $0.12 per
diluted share, compared with net income of $553,000, or $0.12 per diluted
share, for the first nine months of 2011. The decline in net income in this
year's third quarter and the loss for the first nine months of 2012 were
primarily attributable to declines in gross profits, along with increases in
selling, general and administrative (SG&A) expenses in both periods.

Net sales for this year's third quarter increased by 9.2%, to $34.5 million,
compared to net sales of $31.6million in the third quarter of 2011. In the
nine months ended September30, 2012, net sales increased by 3.7%, to
$92.8million, from $89.5 million in the same nine-month period of 2011.
Those increases were primarily the result of increased sales in new
distribution channels of the Company's Powerhouse® generators and other RV
products to large mass merchandisers, which is a new distribution channel for
the Company.

In this year's third quarter, gross margin declined to 16.5% from 18.1% in the
same quarter of 2011, due primarily to an 11.3% increase in costs of sales
which more than offset the beneficial effect on gross margin of the increase
in net sales during this year's third quarter. In the nine months ended
September30, 2012, gross profits fell by $1.2 million, to $14.7 million,
resulting in a decline in gross margin to 15.8% from 17.8% in the same nine
months of 2011. These declines in gross margin were the result of price
reductions on selected products that Coast implemented in response to
aggressive price competition in the market, as well as a weakening of the
Canadian dollar, as compared to the U.S. dollar, which increased costs for the
Company's Canadian subsidiary purchasing products from U.S. suppliers. In
addition, the Company incurred additional costs primarily attributable to
quality control testing of new models of proprietary products introduced into
the market place in this year's third quarter and an increase in the warranty
reserve for proprietary products as a result of increases in sales of those
products.

SG&A expenses in this year's third quarter were $5.1 million compared to $4.7
million in the same quarter in 2011, remaining relatively flat as a percentage
of sales at 14.9% in both periods. In the nine months ended September30,
2012, SG&A expenses increased by $346,000, or 2.4%, compared to the same
nine-month period of 2011. Despite that increase, as a percentage of net
sales, these expenses declined to 16.1% of net sales in the nine months ended
September30, 2012, as compared to 16.3% for the same nine months in 2011.
The increases in absolute dollars in SG&A expenses were primarily due to
increased marketing and promotional costs for the Company's proprietary
products. Coast continues to focus on the growth of its proprietary products
as a key strategic initiative to enhance long-term growth in sales and
profitability.

On the balance sheet, accounts receivable increased $72,000, to $9.0 million
at September30, 2012 from $8.9million at September30, 2011. Inventories at
September 30, 2012 were $30.7 million, an increase of $2.5 million compared
with $28.2 million at September 30, 2011. The increase in inventory levels
from the prior year was a result of Coast's efforts to increase sales and its
market share of the Company's proprietary products.

"We continued to face challenging conditions in our markets throughout the
year to date, but we have reason for optimism surrounding the future of our
business," said Coast's Chief Executive Officer Jim Musbach. "Sales of our
proprietary products into new distribution channels positively impacted our
net sales during the quarter, and we will continue to foster this early
success as we build these channels and explore new opportunities. We are also
continuing to work on balancing pricing and product costs to improve our
overall margins, including fostering the growth of our proprietary products.
In looking at the broader recreational industry, recent consumer confidence
surveys suggest improvement among consumers in the United States, which we
should provide more favorable conditions as consumers become more comfortable
with discretionary spending associated with the purchase and usage of RVs and
boats."

About The Coast Distribution System

The Coast Distribution System, Inc. (www.coastdistribution.com) is one of
North America'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 10,000 products through
17 distribution centers located in the United States and Canada. Most of
Coast's customers consist of independently owned RV and marine dealers, supply
stores and service centers. Coast is a publicly traded company, and its
shares are listed on the NYSE Amex under the ticker symbol CRV.

Forward-Looking Information

Statements in this news release regarding our expectations and beliefs about
our future financial performance and financial condition, as well as trends in
our business and markets are "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
often include words such as "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 are based on current
information and, because our business is subject to a number of risks and
uncertainties, our actual operating results and financial condition in the
future may differ, possibly significantly, from the future financial
performance and financial condition expected at the current time as set forth
in those forward looking statements. Those risks and uncertainties include
the possible occurrence of declines in discretionary income and loss of
confidence among consumers regarding economic conditions, a tightening in the
availability of and increases in the cost of consumer credit, increases in the
costs of and shortages in the supply of gasoline, and unusually severe or
extended winter weather conditions, all of which can adversely affect the
willingness and ability of consumers to purchase and use RVs and boats and,
therefore, their need for and willingness to purchase the products we sell.
Moreover, the recent economic recession and credit crisis may have longer term
consequences for our business and future financial performance, because they
(i)have caused the closure or bankruptcies of a large number of RV and
boating dealers which could significantly reduce the number of aftermarket
customers who purchase products from us in the future; and (ii)may lead to
changes in consumer spending and borrowing habits that could extend well
beyond the economic recovery and, therefore, could result in longer term
declines in purchases and the usage of RVs and boats by consumers and,
consequently, also in their purchases of the products we sell. Additional
risks include, but are not limited to, our dependence on bank borrowings to
fund a substantial amount of our working capital requirements, which can make
us more vulnerable to downturns in economic conditions; further increases in
price competition within our markets that could further reduce our margins
and, therefore, our earnings; and 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 of our single source suppliers
were to encounter production or other problems or terminate their product
supply arrangements with us.

These risks and uncertainties, as well as other risks to which our business is
subject, 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 December31,
2011, which was filed with the Securities and Exchange Commission on March30,
2012, and readers of this news release are urged to review the discussion of
those risks and uncertainties 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
obligation to update forward-looking statements contained in this news release
or in the above-referenced 2011 Annual Report, whether as a result of new
information, future events or otherwise, except as may be required by law or
the rules of the NYSE MKT.



THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
                            Three Months Ended        Nine Months Ended
                            September30,             September 30,
                            2012         2011         2012         2011
Net sales                   $         $         $         $  
                            34,484       31,586      92,847       89,501
Cost of sales, including    28,796       25,880       78,141       73,595
distribution costs
Gross profit                5,688        5,706        14,706       15,906
Selling, general and        5,128        4,703        14,904       14,558
administrative expenses
Operating income            560          1,003        (198)        1,348
Other (income) expense
Interest                    127          128          415          427
Other                       35           (39)         46           63
                            162          89           461          490
Earnings (loss) before      398          914          (659)        858
income taxes
Income tax provision        91           302          (125)        305
(benefit)
Net earnings (loss)         $       $       $       $     
                            307           612        (534)        553
Basic earnings (loss) per   $        $       $        $    
share                       0.07        0.13         (0.12)       0.12
Diluted earnings (loss) per $        $       $        $    
share                       0.07        0.13         (0.12)       0.12



CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in thousands)
(Unaudited)
                                           September 30,    September 30,
                                           2012             2011
ASSETS
Cash                                       $     4,963  $     5,864
Accounts receivable, net                   8,980            8,908
Inventories, net                           30,669           28,180
Other current assets                       2,395            1,772
Total Current Assets                       47,007           44,724
Property, Plant & Equipment, net           1,228            1,437
Other Assets                               2,713            2,622
Total Assets                               $    50,948   $    48,783
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable                           $     5,207  $     3,273
Accrued liabilities                        3,545            3,342
Total Current Liabilities                  8,752            6,615
Long-Term Debt                             11,733           10,865
Total Stockholders' Equity                 30,463           31,303
Total Liabilities and Stockholder's Equity $    50,948   $    48,783





SOURCE The Coast Distribution System, Inc.

Contact: Sandra Knell, CFO, +1-408-782-6686, sknell@coastdist.com; or Jeff
Tryka, CFA, Lambert, Edwards & Associates, +1-616-233-0500,
jtryka@lambert-edwards.com
 
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