Exhibit 99.1
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| Contact: | | Larry Keener
President and Chief
Executive Officer
(972) 991-2422 |
PALM HARBOR HOMES, INC. REPORTS
THIRD QUARTER FISCAL 2005 RESULTS
DALLAS, Texas (January 18, 2005)-Palm Harbor Homes, Inc. (Nasdaq/NM:PHHM) today reported financial results for the third quarter and first nine months of fiscal 2005 ended December 24, 2004.
Net sales for the third quarter totaled $154.6 million compared with $144.2 million in the year-earlier period. The net loss for the third quarter totaled $4.6 million, or $0.20 per diluted share, compared with a net loss of $4.1 million, or $0.18 per diluted share, a year ago. The financial results for the third quarter of fiscal 2005 include $2.8 million, or $0.12 per diluted share, for charges related to closing sales centers, streamlining retail operations and idling a production line.
Net sales for the first nine months of fiscal 2005 were $462.8 million compared with $448.7 million in the year-earlier period. The net loss for the first nine months of fiscal 2005 totaled $5.8 million, or $0.25 per diluted share, compared with a net loss of $2.8 million, or $0.12 per diluted share, in the prior-year period.
Larry Keener, president and chief executive officer of Palm Harbor Homes, Inc., said, “We are pleased with our ability to show both sequential and year over year improvement in sales this quarter. Our top line growth reflects slightly stronger consumer demand and higher average sales prices. While we are encouraged by these sales trends, we have also recognized the need to move forward and take more aggressive steps to effectively position Palm Harbor in today’s market. During the quarter, we proceeded with our previously announced plans to temporarily idle a production line in Texas and shift production to another plant. In addition, we have closed 12 of our least productive retail sales centers in order to more effectively align our resources with current demand. Our results for the third quarter clearly reflect the impact of these decisions. However, going forward the resulting cost reductions should now approximate $5.0 million annually. More importantly, we believe we have taken the necessary steps to right-size the Company and significantly enhance our competitive position.
“We are encouraged to see more tangible evidence that industry conditions are improving and are optimistic about a solid recovery,” added Keener. “Sales are definitely picking up and our backlog trends look favorable for the remainder of fiscal 2005. Modular housing sales continue to accelerate and now account for almost 20 percent of our business. Models of our innovative Discovery series are on display at one-half of our retail locations, which is helping drive an increase in customer traffic. The initial response from our customers and independent builders and dealers gives us confidence that Discovery will continue to add important momentum to our business. Above all, we are intent on delivering value and believe we have the right products and the right strategy in place to reward both our customers and shareholders.”
Kelly Tacke, chief financial officer of Palm Harbor Homes, Inc., commented, “Maintaining a strong balance sheet and carefully adhering to a fiscally conservative operating strategy remain top priorities for Palm Harbor. Our financial position is strong and we believe we will benefit from the decisions we have made to significantly reduce our costs going forward. More importantly, we have the financial flexibility to pursue our growth initiatives as industry conditions improve.”
A conference call regarding this release is scheduled for tomorrow, January 19, 2005, at 10:00 a.m. (Eastern Time). Interested parties can access a live simulcast on the Internet at www.PalmHarbor.com orwww.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
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| | | Third Quarter Ended | |
| | | Dec. 24, | | | Dec. 26, | |
| | | 2004 | | | 2003 | |
| Net sales | | $ | 154,624,000 | | | $ | 144,215,000 | |
| Net loss | | | (4,647,000 | ) | | | (4,132,000 | ) |
| Net loss per share — basic and diluted | | | (0.20 | ) | | | (0.18 | ) |
| | | | | | | | | |
| | | Nine Months Ended | |
| | | Dec. 24, | | | Dec. 26, | |
| | | 2004 | | | 2003 | |
| Net sales | | $ | 462,827,000 | | | $ | 448,661,000 | |
| Net loss | | | (5,815,000 | ) | | | (2,805,000 | ) |
| Net loss per share — basic and diluted | | | (0.25 | ) | | | (0.12 | ) |
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 Operation
(Dollars in thousands, except earnings per share)
For the third quarter and nine months ended December 24, 2004 and December 26, 2003
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| | | Third Quarter Ended | | | Nine Months Ended | |
| |
| | | Dec. 24, | | | Dec. 26, | | | Dec. 24, | | | Dec. 26, | |
| | | 2004 | | | 2003 | | | 2004 | | | 2003 | |
| |
| | | (Unaudited) | | | (Unaudited) | |
| Net sales | | $ | 154,624 | | | $ | 144,215 | | | $ | 462,827 | | | $ | 448,661 | |
| Cost of sales | | | 118,115 | | | | 107,587 | | | | 347,191 | | | | 332,522 | |
| Selling, general and administrative expenses | | | 41,539 | | | | 40,163 | | | | 118,981 | | | | 119,533 | |
| |
| Loss from operations | | | (5,030 | ) | | | (3,535 | ) | | | (3,345 | ) | | | (3,394 | ) |
| Interest expense | | | (2,285 | ) | | | (1,202 | ) | | | (6,312 | ) | | | (4,128 | ) |
| Equity in earnings (loss) of limited partnership | | | (726 | ) | | | (2,073 | ) | | | (483 | ) | | | 2,073 | |
| Other income | | | 421 | | | | 15 | | | | 604 | | | | 865 | |
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| Loss before income taxes | | | (7,620 | ) | | | (6,795 | ) | | | (9,536 | ) | | | (4,584 | ) |
| Income tax benefit | | | 2,973 | | | | 2,663 | | | | 3,721 | | | | 1,779 | |
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| Net loss | | $ | (4,647 | ) | | $ | (4,132 | ) | | $ | (5,815 | ) | | $ | (2,805 | ) |
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| Net loss per common share — diluted | | $ | (0.20 | ) | | $ | (0.18 | ) | | $ | (0.25 | ) | | $ | (0.12 | ) |
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| Weighted average common shares outstanding — assuming dilution | | | 22,830 | | | | 22,859 | | | | 22,835 | | | | 22,858 | |
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Condensed Balance Sheets
(Dollars in thousands)
December 24, 2004 and March 26, 2004
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| | | Dec. 24, | | | March 26, | |
| | | 2004 | | | 2004 | |
| |
| Assets | | (Unaudited) | | | | |
| Cash and cash equivalents | | $ | 24,611 | | | $ | 50,915 | |
| Trade receivables | | | 57,366 | | | | 48,766 | |
| Loans held for investment, net | | | 127,933 | | | | 96,833 | |
| Inventories | | | 125,235 | | | | 113,799 | |
| Property, plant and equipment, net | | | 73,838 | | | | 82,547 | |
| Other assets | | | 141,008 | | | | 128,962 | |
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| Total Assets | | $ | 549,991 | | | $ | 521,822 | |
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| Liabilities and Shareholders’ Equity | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 98,176 | | | $ | 105,252 | |
| Floor plan payable | | | 23,907 | | | | 84,069 | |
| Other debt | | | 178,029 | | | | 76,448 | |
| Shareholders’ equity | | | 249,879 | | | | 256,053 | |
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| Total Liabilities and Shareholders’ Equity | | $ | 549,991 | | | $ | 521,822 | |
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PALM HARBOR HOMES, INC.
Quick Facts
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| | | Third Quarter Ended | | | Nine Months Ended | |
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| | | Dec. 24,
2004 | | | Dec. 26,
2003 | | | Dec. 24,
2004 | | | Dec. 26,
2003 | |
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FACTORY-BUILT HOUSING: | | | | | | | | | | | | | | | | |
| Company-owned superstores and builder locations: | | | | | | | | | | | | | | | | |
| Beginning | | | 136 | | | | 157 | | | | 149 | | | | 158 | |
| Added | | | 2 | | | | 2 | | | | 5 | | | | 6 | |
| Closed | | | (12 | ) | | | (7 | ) | | | (28 | ) | | | (12 | ) |
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| Ending | | | 126 | | | | 152 | | | | 126 | | | | 152 | |
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| Factory-built homes sold through: | | | | | | | | | | | | | | | | |
| Company-owned superstores and builder locations | | | 1,145 | | | | 1,402 | | | | 3,734 | | | | 4,655 | |
| Independent dealers and builders | | | 853 | | | | 618 | | | | 2,357 | | | | 1,819 | |
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| Total factory-built homes sold | | | 1,998 | | | | 2,020 | | | | 6,091 | | | | 6,474 | |
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| Factory-built homes sold as: | | | | | | | | | | | | | | | | |
| Single-section | | | 88 | | | | 107 | | | | 271 | | | | 373 | |
| Multi-section | | | 1,517 | | | | 1,694 | | | | 4,801 | | | | 5,419 | |
| Modular | | | 393 | | | | 219 | | | | 1,019 | | | | 682 | |
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| Total factory-built homes sold | | | 1,998 | | | | 2,020 | | | | 6,091 | | | | 6,474 | |
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| Average sales prices: | | | | | | | | | | | | | | | | |
| Manufactured housing — retail | | $ | 71,000 | | | $ | 70,000 | | | $ | 73,000 | | | $ | 67,000 | |
| Manufactured housing — wholesale | | $ | 56,000 | | | $ | 46,000 | | | $ | 54,000 | | | $ | 44,000 | |
| Modular housing — retail | | $ | 130,000 | | | $ | 151,000 | | | $ | 131,000 | | | $ | 144,000 | |
| Modular housing — wholesale | | $ | 71,000 | | | $ | 71,000 | | | $ | 71,000 | | | $ | 67,000 | |
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| Homes produced | | | 2,008 | | | | 1,860 | | | | 6,076 5 | | | | ,995 | |
| Internalization rate (manufactured and modular | | | 57 | % | | | 69 | % | | | 61 | % | | | 72 | % |
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FINANCIAL SERVICES | | | | | | | | | | | | | | | | |
| Loan originations: | | | | | | | | | | | | | | | | |
| CPM | | | 241 | | | | 360 | | | | 752 | | | | 1,016 | |
| BSM | | | 172 | | | | 118 | | | | 734 | | | | 908 | |
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