Bad blood at National R.V.
Something about Bob Lee’s complete separation from National R.V. Holdings last week raised my eyebrows, enticing me to delve into the situation. His sale of all remaining stock signaled the presence of bad blood between the struggling manufacturer and the man who founded a company which eventually merged with National R.V. Or is it the red ink pouring from the California manufacturer that left Lee with a bad taste in his mouth?
Lee founded Country Camper in 1973, which later became Country Coach. In 1996, he sold the company to National R.V. for $9 million in stock and continued to serve as Country Coach CEO while also serving on the National R.V. board of directors. Last August, Lee announced his resignation from that board, citing a crisis that threatened the future of the company. The story is a sad ending to what was once one of the most profitable mergers in RV industry history. The story also calls attention to some questionable oversight at National R.V.
On Jan. 2, 1996 — the year Lee sold Country Coach — National R.V.’s stock was selling at $11.61 per share. By year’s end, the stock was up to $14.48. In the months that followed, the stock price soared to a high of $50.44, at which time the company offered a 3:2 stock split in July 1998. For the rest of the decade, the stock hovered in the mid-$20s, closing 1999 at $19.25 per share. It wouldn’t take a rocket scientist to see that the company had clearly turned the corner and was heading south.
The National R.V. board of directors responded by promoting Brad Albrechtsen to the position of CEO in September 2001 when stock prices opened at $12.26 and closed the month at $10. The firm enjoyed some success as stocks rose to a high of $14.10 in April of 2002. Since then, the company has been on the fast track to financial distress.
In November 2005, when stocks opened at $4.66 — just 9 percent of its all-time high — Lee sought to take over the company with the help of a Los Angeles investment banker. They proposed a buyout of $6.25 per share. But the board of directors refused the offer, opting instead to hold the course.
On Jan. 2 of this year, stocks opened at $3.67 per share. Yesterday, they closed at $4.46. In a few weeks, National R.V. will sell its manufacturing plant in Perris, Calif., for $31.75 million only to lease it back for the next 20 years. That’s a incredible expression of optimism if I’ve ever seen one.
You would expect the market to react negatively to a corporation’s stock when a sitting board member resigns in disgust — and it has. But, you would also expect the board of directors to heed the warning, sit up straight, set down the brie and crackers, wipe the Chateau Margaux from their lips and get to work investigating the claims before the stock could be sold on the penny market.
In 2006, the RV industry was stunned when manufacturing company Sunline suddenly shut its doors. In that instance, the public, employees and dealers were unaware of the impending financial crisis. That is not the case with National R.V. The firm has written its financial statements in red ink for nine straight quarters — and 17 of the past 21. We may have found something that can offer a worse return on investment than Social Security.
I credit Bob Lee with having the guts to call a spade a spade. He set the example by resigning from a company apparently set on milking investors and the firm’s hard-working employees and dealers who also have a great deal of sweat equity, if not a financial stake, in the firm’s long-term success. But, it seems to me that several more resignations are in order.
March 6th, 2007 at 3:10 pm
I am very happy to see Bob Lee get his company(Country Coach) back. I’ve known him for over 40 years and have much respect for him and his business choices. When NVH rejected his bid for CC, I sold all my stock and was very happy for that choice.
I can not beleive that the Board of Directors can’t see the big picture and get rid of this C E O. How much more MUD does this poor company have to be dragged through before he resigns.
Selling Country Coach is only a “BAND AID” for National’s red ink situation, and the only asset they have left is their property, and they are having a hard time selling that.
I can not think of any company who would want to take over that situation with the “CANCER” that it presently has.
February 22nd, 2007 at 5:47 pm
I met Bob at RVIA/Louisville. He seems like a cool guy. When National RV was looking for a new marketing director, they contacted me.
It was interesting that their recruiter asked me to take a look at their financials on the Internet before continuing the interviewing process. After I did some research, I had to decline. Why would I risk my career future for an uncertainty - particularly in light of the fact that they’ve been performing so abismally?
Right on, Greg! The execs at National need to put down that double-cream brie and those Bremner’s wafers!
February 3rd, 2007 at 12:51 pm
NRV just never really got the fact that they were the tail that was trying to wag the dog. What a great opportunity they wasted by not listening to and learning from Bob Lee.
January 31st, 2007 at 11:08 am
Another great story Greg! I spend 20-25 days per month calling on RV dealers across the country and I think you have really captured the essence of what everyone is thinking about National and CC.
Steve.
January 31st, 2007 at 9:30 am
Greetings fellow bloggers….
A few thoughts from the Rocket City desk. First, thanks Greg for bringing this sad tale to the forefront. Just finished reading the collective comments re: Bob Lee and the National RV disaster. Judging from all of the inuendo abounding in this instance, it causes me to recall the many business cases over the past twenty years where “beancounters” have overshadowed, dominated, and stunted the work of talented Sales, Marketing, and Engineeering folks. One does not need to have a Harvard MBA degree to see read the hand-writing on the wall.
In my view, Bob Lee was a visionary (in a time when visionaries abounded) in his day. He had the guts to try new ideas and the fortitude to see them brought to the marketplace. But that was 20+ years ago. Since that time, the business operation model has changed (and maybe not for the better) as stock holders have found the power to manipulate a Company’s management to meet their own objectives. Does anyone beside me smell a little “greed” here?
I would also suggest that a there is a lesson that may be hiding at the crux of this case. That lesson is one that all RV Companies need to take to heart. It is “Our Customers really run our Company.” Without a firm and well established customer base, the most successful and innovative company will soon find themselves in the place where National RV is today….
January 31st, 2007 at 8:34 am
Unless some fresh dynamic leadership appears soon at National RV, Bob Lee may get his chance to acquire the company for much less than $6.25 per share. Losing money for four of five years brings to mind an old parable: If you always do what you always did, you’ll always get what you always got.
January 30th, 2007 at 5:18 pm
NVH 4.23 -0.23
The real Q is ‘What will happen to NVH?’
Will Thor buy Country Coach from NVH to give themselves a ‘real’ high end product, or will Thor buy all of NVH, or will NVH go the way of Chinook???
January 30th, 2007 at 5:16 pm
I have sold National RV coaches since 1993. Through so many years you could see the innovation and creativity in the product lines. Then, somewhere around the merger with Country Coach you could see that spark of creativity and ability to read the consumers feedback started to fade. There were many trial balloon products that failed to work in the consumer’s eyes. I find it sad to see products with such greatly admired and recognized names be managed right into the ground. The consumer today is well educated and is cautious to buy a product with such a well publicized red ink trail.
January 30th, 2007 at 4:01 pm
I wonder if any of the board members or stockholders have thought about the impact the events at National RV are having on the confidence of their dealer network?
January 30th, 2007 at 7:46 am
Greg,
This is an outstanding summary of a tragic business story, if ever there was one. This was tainted from the very first announcement of National RV purchasing Country Coach … when the entire RV industry just shook their collective heads and asked; “shouldn’t this be the other way around?” Country Coach has always been one of the premier manufacturers in our industry and there was just nothing (money, brains or resources) that National RV could have brought to the table that would make anybody feel good about this transaction.
Try as he might, Bob Lee could not get the Board of Directors to understand his frustrations and apparently had no intention of listening to his concerns or acting on them.
Once again we are observing a classic business situation where the Board of Directors appears to have failed in their obligations to all stockholders in carrying out their fidiciary responsibilities to assure an effective management team, invest the company’s money wisely, and take the appropriate action to assure a profitable business operation.
I’m sure Bob Lee wasn’t the only frustrated stockholder at National RV Holdings. The real question is: where are all the others and what are they doing about the situation?