Exhibit 99.1
| | | |
| Contact: | | Larry Keener |
| | President and Chief |
| | Executive Officer |
| | (972) 991-2422 |
PALM HARBOR HOMES, INC. REPORTS
SECOND QUARTER FISCAL 2005 RESULTS
DALLAS, Texas (October 19, 2004)-Palm Harbor Homes, Inc. (Nasdaq/NM:PHHM) today reported financial results for the second quarter and first six months of fiscal 2005 ended September 24, 2004.
Net sales for the second quarter totaled $150.5 million compared with $148.5 million in the year-earlier period. The net loss for the second quarter totaled $2.2 million, or $0.10 per share, compared with net income of $515,000, or $0.02 per share, a year ago. Net sales for the first six months of fiscal 2005 were $308.2 million compared with $304.4 million in the year-earlier period. The net loss for the first half of fiscal 2005 totaled $1.2 million, or $0.05 per share, compared with net income of $1.3 million, or $0.06 per share, in the first half of fiscal 2004.
Larry Keener, president and chief executive officer of Palm Harbor Homes, Inc., said, “As we previously announced, our retail sales for the second quarter were not as strong as we expected after the more positive activity we saw in the first quarter. Obviously, the recent severe hurricane activity on the east coast created a number of disruptions for Palm Harbor and others in our industry with the resultant delays in both wholesale and retail deliveries. Retail demand has continued to be erratic, especially in our key markets of Texas and the Carolinas, where we have a significant retail presence. Our overall profitability was also affected by higher raw materials and energy costs.
“We continue to build for the long term and we remain confident that we are taking the right steps to strategically position Palm Harbor for the future,” Keener continued. “We recognize that during uncertain times, we must stay focused on managing the fundamental aspects of our business that we can control. In order to improve our operating efficiencies, we believe it is imperative to balance our manufacturing and distribution capacity with the needs of the market. As such, during the third fiscal quarter, we intend to temporarily idle a plant in Texas and shift production to another plant. In addition, we will be liquidating 12 of our least productive sales centers in order to further reduce our overhead. Expenses associated with these actions are expected to approximate $2.5 million and primarily will be incurred in the third fiscal quarter. Resulting cost reductions should approximate $4.0 million annually and begin in the fourth fiscal quarter.
“We are encouraged by the consistent strength of our wholesale business and the trends in our backlog are favorable indicators entering the third quarter. Our modular business continues to grow steadily and sales of factory-built modular homes were up nearly 20 percent over the second quarter of last year. Our Discovery series is attracting higher quality customers to our sales centers and opening more conventional wholesale markets to our products. We are aggressively marketing this innovative product line and believe the interest and enthusiasm we are seeing now will translate into further growth in sales. Above all, we remain highly focused on exceeding our customers’ expectations by delivering value with a proven product offering. These are the key differentiators for Palm Harbor and we will continue to leverage our core strengths to build market share and produce tangible results,” Keener concluded.
Kelly Tacke, chief financial officer of Palm Harbor Homes, Inc., commented, “We have continued to focus on maintaining a strong financial position during these slow business cycles. We believe our demonstrated ability to carefully control our fixed costs and pursue a fiscally conservative operating approach remains a strategic advantage for Palm Harbor. As such, we have reduced our floor plan payable to $21.4 million, representing the lowest level since March 1996.”
A conference call regarding this release is scheduled for tomorrow, October 20, 2004, at 10:00 a.m. (Eastern Time). Interested parties can access a live simulcast on the Internet at www.PalmHarbor.com or www.FullDisclosure.com. A 30-day replay will be available on both websites.
Palm Harbor Homes is one of the nation’s leading manufacturers and marketers of multi-section manufactured homes. The Company markets nationwide through vertically integrated operations, encompassing manufacturing, marketing, financing and insurance.
PALM HARBOR HOMES, INC.
Condensed Consolidated Financial Results
| | | | | | | | | |
| | | Second Quarter Ended
|
| | | Sept. 24, | | Sept. 26, |
| | | 2004
| | 2003
|
| Net sales | | $ | 150,453,000 | | | $ | 148,547,000 | |
| Net income (loss) | | | (2,219,000 | ) | | | 515,000 | |
| Net income (loss) per share — basic and diluted | | | (0.10 | ) | | | 0.02 | |
| | | | | | | | | |
| | | Six Months Ended
|
| | | Sept. 24, | | Sept. 26, |
| | | 2004
| | 2003
|
| Net sales | | $ | 308,203,000 | | | $ | 304,446,000 | |
| Net income (loss) | | | (1,168,000 | ) | | | 1,327,000 | |
| Net income (loss) per share — basic and diluted | | | (0.05 | ) | | | 0.06 | |
This press release contains projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These projections and statements reflect the Company’s current views with respect to future events and financial performance. No assurance can be given, however, that these events will occur or that these projections will be achieved and actual results could differ materially from those projected as a result of certain factors. A discussion of these factors is included in the Company’s periodic reports filed with the Securities and Exchange Commission.
PALM HARBOR HOMES, INC.
Statements of Income
(Dollars in thousands, except earnings per share)
For the second quarter and six months ended September 24, 2004 and September 26, 2003
| | | | | | | | | | | | | | | | | |
| | | Second Quarter Ended
| | Six Months Ended
|
| | | Sept. 24, | | Sept. 26, | | Sept. 24, | | Sept. 26, |
| | | 2004
| | 2003
| | 2004
| | 2003
|
| | | (Unaudited) | | (Unaudited) |
| Net sales | | $ | 150,453 | | | $ | 148,547 | | | $ | 308,203 | | | $ | 304,446 | |
| Cost of sales | | | 111,945 | | | | 109,413 | | | | 229,076 | | | | 224,935 | |
| Selling, general and administrative expenses | | | 39,905 | | | | 39,075 | | | | 77,442 | | | | 79,370 | |
| | | |
| | | |
| | | |
| | | |
| |
| Income (loss) from operations | | | (1,397 | ) | | | 59 | | | | 1,685 | | | | 141 | |
| Interest expense | | | (2,079 | ) | | | (1,235 | ) | | | (4,027 | ) | | | (2,926 | ) |
| Equity in earnings (loss) of limited partnership | | | (202 | ) | | | 1,788 | | | | 243 | | | | 4,146 | |
| Other income | | | 40 | | | | 264 | | | | 183 | | | | 850 | |
| | | |
| | | |
| | | |
| | | |
| |
| Income (loss) before income taxes | | | (3,638 | ) | | | 876 | | | | (1,916 | ) | | | 2,211 | |
| Income tax benefit (expense) | | | 1,419 | | | | (361 | ) | | | 748 | | | | (884 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| Net income (loss) | | $ | (2,219 | ) | | $ | 515 | | | $ | (1,168 | ) | | $ | 1,327 | |
| | | |
| | | |
| | | |
| | | |
| |
| Net income (loss) per common share — diluted | | $ | (0.10 | ) | | $ | 0.02 | | | $ | (0.05 | ) | | $ | 0.06 | |
| | | |
| | | |
| | | |
| | | |
| |
| Weighted average common shares outstanding — assuming dilution | | | 22,834 | | | | 22,856 | | | | 22,837 | | | | 22,858 | |
| | | |
| | | |
| | | |
| | | |
| |
Condensed Balance Sheets
(Dollars in thousands)
September 24, 2004 and March 26, 2004
| | | | | | | | | |
| | | Sept. 24, | | March 26, |
| | | 2004
| | 2004
|
| | | (Unaudited) | | | | |
| Assets | | | | | | | | |
| Cash and cash equivalents | | $ | 33,955 | | | $ | 50,915 | |
| Trade receivables | | | 51,030 | | | | 48,766 | |
| Loans held for investment, net | | | 118,821 | | | | 96,833 | |
| Inventories | | | 123,607 | | | | 113,799 | |
| Property, plant and equipment, net | | | 77,634 | | | | 82,547 | |
| Other assets | | | 137,075 | | | | 128,962 | |
| | | |
| | | |
| |
| Total Assets | | $ | 542,122 | | | $ | 521,822 | |
| | | |
| | | |
| |
| Liabilities and Shareholders’ Equity | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 98,173 | | | $ | 105,252 | |
| Floor plan payable | | | 21,361 | | | | 84,069 | |
| Other debt | | | 168,365 | | | | 76,448 | |
| Shareholders’ equity | | | 254,223 | | | | 256,053 | |
| | | |
| | | |
| |
| Total Liabilities and Shareholders’ Equity | | $ | 542,122 | | | $ | 521,822 | |
| | | |
| | | |
| |
PALM HARBOR HOMES, INC.
Quick Facts
| | | | | | | | | | | | | | | | | |
| | | Second Quarter Ended
| | Six Months Ended
|
| | | Sept. 24, | | Sept. 26, | | Sept. 24, | | Sept. 26, |
| | | 2004
| | 2003
| | 2004
| | 2003
|
FACTORY-BUILT HOUSING: | | | | | | | | | | | | | | | | |
| Company-owned superstores and builder locations: | | | | | | | | | | | | | | | | |
| Beginning | | | 140 | | | | 158 | | | | 149 | | | | 158 | |
| Added | | | 2 | | | | 2 | | | | 3 | | | | 5 | |
| Closed | | | (6 | ) | | | (3 | ) | | | (16 | ) | | | (6 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| Ending | | | 136 | | | | 157 | | | | 136 | | | | 157 | |
| | | |
| | | |
| | | |
| | | |
| |
| Factory-built homes sold through: | | | | | | | | | | | | | | | | |
| Company-owned superstores and builder locations | | | 1,178 | | | | 1,570 | | | | 2,589 | | | | 3,253 | |
| Independent dealers | | | 765 | | | | 614 | | | | 1,504 | | | | 1,201 | |
| | | |
| | | |
| | | |
| | | |
| |
| Total factory-built homes sold | | | 1,943 | | | | 2,184 | | | | 4,093 | | | | 4,454 | |
| | | |
| | | |
| | | |
| | | |
| |
| Factory-built homes sold as: | | | | | | | | | | | | | | | | |
| Single-section | | | 90 | | | | 139 | | | | 183 | | | | 266 | |
| Multi-section | | | 1,545 | | | | 1,788 | | | | 3,284 | | | | 3,725 | |
| Modular | | | 308 | | | | 257 | | | | 626 | | | | 463 | |
| | | |
| | | |
| | | |
| | | |
| |
| Total factory-built homes sold | | | 1,943 | | | | 2,184 | | | | 4,093 | | | | 4,454 | |
| | | |
| | | |
| | | |
| | | |
| |
| Average sales prices: | | | | | | | | | | | | | | | | |
| Manufactured housing — retail | | $ | 71,000 | | | $ | 65,000 | | | $ | 73,000 | | | $ | 65,000 | |
| Manufactured housing — wholesale | | $ | 55,000 | | | $ | 44,000 | | | $ | 53,000 | | | $ | 43,000 | |
| Modular housing — retail | | $ | 136,000 | | | $ | 147,000 | | | $ | 132,000 | | | $ | 140,000 | |
| Modular housing — wholesale | | $ | 78,000 | | | $ | 64,000 | | | $ | 75,000 | | | $ | 64,000 | |
| | | |
| | | |
| | | |
| | | |
| |
| Homes produced | | | 1,971 | | | | 1,992 | | | | 4,068 | | | | 4,135 | |
| Internalization rate (manufactured and modular | | | 60 | % | | | 72 | % | | | 62 | % | | | 73 | % |
| | | |
| | | |
| | | |
| | | |
| |
FINANCIAL SERVICES | | | | | | | | | | | | | | | | |
| Loan originations: | | | | | | | | | | | | | | | | |
| CPM | | | 269 | | | | 336 | | | | 511 | | | | 656 | |
| BSM | | | 293 | | | | 288 | | | | 562 | | | | 793 | |
| | | |
| | | |
| | | |
| | | |
| |
