EXHIBIT 99.1
NEWS RELEASE
Contact: James Stariha
Chief Financial Officer
(256) 747-8589
SOUTHERN ENERGY HOMES, INC. REPORTS
SECOND QUARTER RESULTS
ADDISON, Ala. - July 25, 2003 -- Southern Energy Homes, Inc. (NASDAQ: SEHI)
today reported its results for the second quarter ended July 4, 2003. Second
quarter net income was $346,000, or $0.03 per diluted share, on sales of $31.1
million.
"Southern Energy's results for the second quarter were affected by the
continuation of the soft economy, reduced financing options for our customers
and unusually wet weather in key markets that affected demand," stated Keith O.
Holdbrooks, chief executive officer of Southern Energy Homes. "Despite the soft
market, we remained focused on our strategy of providing customized options in
our homes, high quality and improved levels of customer service and dealer
support. We believe these strategies were important factors in Southern Energy
gaining market share in our top ten markets during the second quarter. We also
began to see some modest backlog growth late in the second quarter and first
part of the third quarter. Though it is too early to tell if this is the
beginning of a favorable trend, we are encouraged by the early indications.
"We continue to improve Southern Energy's operations and financial position. At
the end of the second quarter, we had no debt and almost $11.4 million in cash
as a result of receiving an income tax refund of $5.3 million and positive cash
flow from operating activities. We believe our strong cash position will be an
important part in supporting our operations until the market improves.
"We also continued to take steps to improve our profitability. We cut
administrative and manufacturing expenses during the second quarter to more
closely align our costs with reduced shipments. These steps were important in
our profit from manufacturing this quarter. We also closed our retail operation
in South Carolina and expect the closing to enhance our future profitability and
allow us to focus on improved support to our independent dealers.
"We are enthusiastic about interest in new financing opportunities for
manufactured homes from three major lenders. We believe the increased
availability of financing options for customers and dealers will be an important
stimulus for sales as the economy improves," continued Mr. Holdbrooks.
SECOND QUARTER RESULTS
Net revenues for the second quarter from continuing operations were $31.1
million compared with $39.7 million for the second quarter of last year. Total
homes sold declined to 921 compared with 1,260 in the second quarter of 2002, a
decline of 27.0%. Average selling prices increased 14.0% for retail homes sold
and 5.0% for wholesale sales as a result of price increases and increased
customization of homes sold. Results for the second quarter of 2003 included 12
weeks of operations compared with 13 weeks in the second quarter of 2002 due to
July 4th vacation week falling in the second quarter of 2003.
Gross profit was $5.5 million, or 17.7% of sales, in the second quarter of 2003
compared with $7.8 million, or 19.5% of sales, in the second quarter of 2002.
The lower gross margin was due primarily to lower sales volume that resulted in
an unfavorable variance on fixed overhead. Margin was also
affected by increased material prices and higher labor costs (due to increased
customization) compared with the second quarter of last year.
Income from continuing operations was $575,000 ($0.05 per share) in the second
quarter of 2003 compared with income from continuing operations of $1.3 million
($0.10 per share) in the second quarter of 2002. Loss from discontinued
operations was $229,000 ($0.02 per share) for the second quarter of 2003
compared with a loss from discontinued operations of $1.0 million ($0.08 per
share) in the second quarter of 2002. The closing of the South Carolina retail
facility resulted in a loss of approximately $190,000 in the second quarter of
2003. The company also recorded a tax credit of $330,000 in the second quarter
of 2003. Net income for the second quarter of 2003 was $346,000, or $0.03 per
share, compared with net income of $255,000, or $0.02 per share, in the second
quarter of 2002.
Commenting on the Company's improved financial condition, James Stariha, Chief
Financial Officer, said, "Southern Energy's balance sheet is significantly
stronger than last year. Our working capital from continuing operations has
improved from a negative $572,000 in the second quarter of 2002 to a positive
$13.9 million in the second quarter of this year. We had no debt at the end of
the quarter, providing us with increased flexibility to finance future growth
opportunities. We also expect the additional cost cutting measures taken in the
second quarter of 2003 to have a positive effect on our operating profitability
in the second half of this year."
SIX MONTHS RESULTS
For the six months ended July 4, 2003, total net revenues were $59.1 million
compared with $70.8 million in the same period of 2002. Loss from continuing
operations was $972,000 compared with income from continuing operations of $1.4
million for the six months ended June 28, 2002. The net loss for the period was
$1.1 million, or $0.09 per diluted share, compared with a loss of $543,000, or
$0.04 per diluted share, in the first six months of 2002.
ABOUT SOUTHERN ENERGY HOMES, INC.
Southern Energy Homes, Inc. operates five home manufacturing facilities in
Alabama and Texas, two retail sales centers in Alabama and three supply
companies in Alabama. Currently marketed under four brand names, the Company's
homes are sold in 22 states. In addition to its manufacturing, retail sales and
component supply operations, the Company's operations also include an insurance
segment.
Forward-looking statements in this news release, including without limitation,
statements relating to availability of financing for the Company's dealers and
customers, future operating results, plans and expectations, and the adequacy of
the Company's resources to support those plans, are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties, which could cause actual results to differ materially from those
in any forward-looking statements, including without limitation: the ultimate
financial and operational effects of discontinued operations being undertaken;
general economic conditions; the cyclical and seasonal nature of housing
markets; competitive pricing pressures at both the wholesale and retail levels;
changes in market demand; the impact of cost reduction programs and other
management initiatives; availability of financing for prospective purchasers of
the Company's homes and availability of floor plan financing for dealers;
availability and pricing of raw materials; concentration of the Company's
business in certain regional markets; adverse weather conditions that reduce
retail sales; the possibility of plant shutdowns from weather or other causes;
availability of labor for the Company to meet operating requirements; the highly
competitive nature of the manufactured housing industry; federal, state and
local regulation of the Company's business; the Company's contingent repurchase
liabilities with respect to dealer financing; the Company's reliance on
independent dealers; and other risks indicated
from time to time in the Company's filings with the Securities and Exchange
Commission. Southern Energy Homes is not responsible for updating the
information contained in this press release beyond the published date, or for
changes made to this document by wire services or Internet services.
SOUTHERN ENERGY HOMES, INC.
UNAUDITED BALANCE SHEET HIGHLIGHTS
(IN THOUSANDS)
July 4, 2003 June 28, 2002
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ASSETS
Cash and cash equivalents $ 11,381 $ 167
Current assets 27,681 29,523
Total assets $ 51,617 $ 70,020
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes Payable $ 0 $ 6,186
Current Liabilities 13,711 23,962
Long term debt 0 0
Total Liabilities 13,711 23,962
Stockholders' Equity $ 37,906 $ 46,058
Working capital (deficit) from continuing operations $ 13,939 $ (572)
SOUTHERN ENERGY HOMES, INC.
UNAUDITED FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Thirteen Weeks Ended
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July 4, 2003 June 28, 2002
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Net revenues $ 31,102 $ 39,656
Gross profit 5,490 7,755
Operating income 342 1,430
Income from continuing operations 575 1,272
Loss from discontinued operations (229) (1,017)
Net income 346 255
Basic and diluted earnings per share:
Income from continuing operations 0.05 0.10
Loss from discontinued operations (0.02) (0.08)
Net income 0.03 0.02
Weighted average shares outstanding:
Basic 12,140,643 12,133,865
Diluted 12,223,829 12,413,911
Twenty-six Weeks Ended
------------------------------
July 4, 2003 June 28, 2002
------------ -------------
Net revenues $ 59,146 $ 70,761
Gross profit 9,298 13,473
Operating income (loss) (1,078) 1,721
Income (loss) from continuing operations (972) 1,377
Loss from discontinued operations (93) (1,920)
Net loss (1,065) (543)
Basic and diluted earnings per share:
Income (loss) from continuing operations (0.08) 0.11
Loss from discontinued operations (0.01) (0.15)
Net loss (0.09) (0.04)
Weighted average shares outstanding:
Basic 12,137,217 12,133,865
Diluted 12,137,217 12,437,129
SOUTHERN ENERGY HOMES, INC.
SUMMARY OPERATING FACTS
Thirteen Weeks Ended
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July 4, 2003 June 28, 2002
------------ -------------
Number of company-owned retail centers at period end
(continuing operations) 2 3
Retail units sold:
New single-section 1 2
New multi-section 12 19
Used homes 7 6
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20 27
Wholesale units sold:
External Customers 886 1,187
Intercompany 15 46
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901 1,233
Total homes sold 921 1,260
Average sales prices - retail (new) $ 62,335 $ 54,663
Average sales price - wholesale $ 31,415 $ 29,931
Floor sections sold 1,570 2,142
Twenty-six Weeks Ended
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July 4, 2003 June 28, 2002
------------ -------------
Number of company-owned retail centers at period end
(continuing operations) 2 3
Retail units sold:
New single-section 1 8
New multi-section 25 41
Used homes 16 18
------------ ------------
42 67
Wholesale units sold
External Customers 1,711 2,108
Intercompany 31 82
------------ ------------
1,742 2,190
Total homes sold 1,784 2,257
Average sales prices - retail (new) $ 61,005 $ 50,861
Average sales price - wholesale $ 30,751 $ 29,376
Floor sections sold 3,053 3,826