Exhibit 99.1
PHHM Reports First Quarter Fiscal 2010 Results
Page 5
July 14, 2009
| | | | |
| | Contact: | | Kelly Tacke |
| | | | Executive Vice President and Chief Financial Officer |
| | | | (972) 991-2422 |
PALM HARBOR HOMES, INC. REPORTS
FIRST QUARTER FISCAL 2010 RESULTS
DALLAS, Texas (July 14, 2009)–Palm Harbor Homes, Inc. (NASDAQ: PHHM) today reported financial results for the first quarter ended June 26, 2009.
Net sales for the first quarter of fiscal 2010 totaled $82.4 million compared with $130.0 million for the first quarter of fiscal 2009. Palm Harbor reported an operating loss of $5.1 million for the first quarter of fiscal 2010 compared with operating income of $0.8 million in the same period last year. Net loss for the first quarter of fiscal 2010 totaled $10.0 million, or $0.44 per share, compared with a net loss of $0.5 million, or $0.02 per share, a year ago. The results for the first quarter of fiscal 2009 included a pre-tax gain of $3.0 million on the repurchase of convertible senior notes.
Larry Keener, chairman and chief executive officer of Palm Harbor Homes, Inc., said, “The prevailing economic uncertainties and depressed housing market have continued to challenge our industry and our business in the first quarter of 2010. Palm Harbor’s revenues for the quarter are indicative of the weak demand for factory-built housing products, however, the year over year decline is not as severe as the overall pace of national industry shipments. Total industry shipments, including both HUD-code and modular products, were down almost 50 percent through the most recent reporting period. Palm Harbor retail deliveries were down 36 percent as compared with the first quarter of fiscal 2009. The major portion of this decline continues to be from the key states of Florida, Arizona and California.
“While the sales environment has been extremely challenging, we were encouraged that our revenues were up 4.5 percent sequentially over the fourth quarter of fiscal 2009,” Keener continued. “We have also made considerable progress in reducing our operating costs and managing our business as efficiently as possible in this environment. Our selling, general and administrative expenses were down 15 percent from the previous quarter and we reduced our operating loss by over 47 percent. Our go forward operational breakeven level is now $200 million lower than 18 months ago with a $54 million total annual reduction in selling, general and administrative costs.
“As we focus on returning the Company to sustained profitability, we are aggressively pursuing key revenue growth initiatives. We are pleased with the initial response to our innovative “Flex” products, which allow many homes to be sold from one model. Not only does this product line offer more options to the homebuyer, it also provides us with greater manufacturing flexibility and reduces our inventory costs. We continue to expand our commercial and
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PHHM Reports First Quarter Fiscal 2010 Results
Page 6
July 14, 2009
military modular business channels, which represent higher margin business than residential sales. We are the winning bidder of approximately $13.5 million in new government contracts for military installations to be completed in fiscal 2010. Our direct-to-consumer Internet sales continue to gain momentum as this marketing strategy is driving new customers to Palm Harbor and capturing more retail sales through a cost-effective channel. Finally, our financial services operations have remained a bright spot for Palm Harbor. Standard Casualty, our insurance subsidiary, and Country Place Mortgage, the Company’s mortgage lending subsidiary, both delivered a profitable performance in the first quarter of fiscal 2010. As a fully integrated company, having a profitable insurance and finance operation provides a distinct competitive advantage for Palm Harbor in today’s market,” Keener concluded.
Kelly Tacke, executive vice president and chief financial officer of Palm Harbor Homes, Inc., commented, “We continue to focus on cash generation and cash preservation in every area of our operations as managing our liquidity is a top priority for fiscal 2010. Our balance sheet reflected $22.3 million in cash and cash equivalents at the end of the first fiscal quarter, compared with $12.4 million at the end of fiscal 2009. For the first quarter of fiscal 2010, our selling, general and administrative costs were down 22 percent compared with a year ago. At the same time, we have reduced inventories and have continued to carefully manage our balance sheet during these unprecedented economic conditions,” added Tacke.
A conference call regarding this release is scheduled for Wednesday, July 15, 2009, at 10:00 a.m. (Eastern Time). Interested parties can access a live simulcast on the Internet atwww.PalmHarbor.com orwww.earnings.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. For more information on the Company, please visitwww.palmharbor.com.
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.
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PHHM Reports First Quarter Fiscal 2010 Results
Page 7
July 14, 2009
PALM HARBOR HOMES, INC.
Statements of Operations
(Dollars in thousands, except per share data)
For the first quarter ended June 26, 2009 and June 27, 2008
| | | | | | | | |
| | | First Quarter Ended | |
| | | June 26,
2009 | | | June 27,
2008(1) | |
| | | (Unaudited) | |
Net sales | | $ | 82,421 | | | $ | 130,021 | |
Cost of sales | | | 63,097 | | | | 98,064 | |
| | | | | | | | |
Gross profit | | | 19,324 | | | | 31,957 | |
Selling, general and administrative expenses | | | 24,378 | | | | 31,179 | |
| | | | | | | | |
| | |
Income (loss) from operations | | | (5,054 | ) | | | 778 | |
| | |
Interest expense | | | (4,964 | ) | | | (4,879 | ) |
Gain on repurchase of convertible senior notes | | | — | | | | 3,037 | |
Other income | | | 228 | | | | 581 | |
| | | | | | | | |
| | |
Loss before income taxes | | | (9,790 | ) | | | (483 | ) |
Income tax expense | | | (188 | ) | | | (58 | ) |
| | | | | | | | |
| | |
Net loss | | $ | (9,978 | ) | | $ | (541 | ) |
| | | | | | | | |
| | |
Loss per common share: | | | | | | | | |
Basic and diluted | | $ | (0.44 | ) | | $ | (0.02 | ) |
| | | | | | | | |
| | |
Weighted average common shares outstanding: | | | | | | | | |
Basic and diluted | | | 22,875 | | | | 22,852 | |
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| (1) | The results for the first quarter of fiscal 2009 have been adjusted - see footnote below. |
Condensed Balance Sheets
(Dollars in thousands)
June 26, 2009 and March 27, 2009
| | | | | | |
| | | June 26,
2009 | | March 27,
2009(1) |
| | | (Unaudited) | | |
Assets | | | | | | |
Cash and cash equivalents | | $ | 22,314 | | $ | 12,374 |
Trade accounts receivables | | | 24,908 | | | 23,458 |
Consumer loans receivable, net | | | 188,908 | | | 191,597 |
Inventories | | | 88,791 | | | 97,144 |
Property, plant and equipment, net | | | 34,631 | | | 35,937 |
Other assets | | | 45,191 | | | 51,172 |
| | | | | | |
Total Assets | | $ | 404,743 | | $ | 411,682 |
| | | | | | |
| | |
Liabilities and Shareholders’ Equity | | | | | | |
Accounts payable and accrued liabilities | | $ | 75,339 | | $ | 64,836 |
Floor plan payable | | | 43,436 | | | 49,401 |
Convertible debt | | | 48,528 | | | 47,939 |
Warehouse revolving debt | | | 4,799 | | | 3,589 |
Securitized financings | | | 135,121 | | | 140,283 |
Shareholders’ equity | | | 97,520 | | | 105,634 |
| | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 404,743 | | $ | 411,682 |
| | | | | | |
| (1) | Included in the Company’s first quarter results for fiscal 2010 and 2009 is the impact of approximately $589,000 and $800,000, respectively, of non-cash interest expense related to the adoption of FASB Staff Position APB 14-1’ “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” or FASB APB 14-1. This additional non-cash interest expense represents the amortization of a debt discount recorded against the Company’s convertible debt as required under FASB APB 14-1. |
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PALM HARBOR HOMES, INC.
Quick Facts
| | | | | | | | |
| | | First Quarter Ended | |
| | | June 26,
2009 | | | June 27,
2008 | |
FACTORY-BUILT HOUSING: | | | | | | | | |
Company-owned sales centers and builder locations: | | | | | | | | |
Beginning | | | 86 | | | | 87 | |
Added | | | — | | | | — | |
Closed | | | (5 | ) | | | — | |
| | | | | | | | |
| | |
Ending | | | 81 | | | | 87 | |
| | | | | | | | |
Factory-built homes sold through: | | | | | | | | |
Company-owned sales centers and builder locations | | | 580 | | | | 909 | |
Independent dealers, builders and developers | | | 149 | | | | 284 | |
| | | | | | | | |
| | |
Total factory-built homes sold | | | 729 | | | | 1,193 | |
| | | | | | | | |
| | |
Factory-built homes sold as: | | | | | | | | |
Single-section | | | 134 | | | | 197 | |
Multi-section | | | 422 | | | | 715 | |
Modular | | | 173 | | | | 281 | |
| | | | | | | | |
| | |
Total factory-built homes sold | | | 729 | | | | 1,193 | |
| | | | | | | | |
Commercial buildings: | | | | | | | | |
Number of commercial buildings sold | | | 29 | | | | 26 | |
| | |
Net sales from commercial buildings sold (in 000’s) | | $ | 7,910 | | | $ | 9,215 | |
| | |
Average sales prices: | | | | | | | | |
Manufactured housing – retail | | $ | 70,000 | | | $ | 76,000 | |
Manufactured housing – wholesale | | $ | 56,000 | | | $ | 50,000 | |
Modular housing – consumer | | $ | 169,000 | | | $ | 172,000 | |
Modular housing – builder and developer | | $ | 75,000 | | | $ | 79,000 | |
| | | | | | | | |
| | |
Homes produced | | | 656 | | | | 1,020 | |
Internalization rate (residential manufactured and modular) | | | 74 | % | | | 69 | % |
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FINANCIAL SERVICES: | | | | | | | | |
CPM loan originations | | | 62 | | | | 117 | |
| | |
Insurance penetration: | | | | | | | | |
Warranty | | | 90 | % | | | 93 | % |
Physical damage | | | 70 | % | | | 69 | % |
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