EXHIBIT 99.1
NEWS RELEASE
Contact: James Stariha
Chief Financial Officer
(256) 747-8589
SOUTHERN ENERGY HOMES, INC. REPORTS
THIRD QUARTER RESULTS
ADDISON, Ala. - October 23, 2003 -- Southern Energy Homes, Inc. (NASDAQ: SEHI)
today reported its results for the third quarter ended October 3, 2003. Third
quarter net income increased to $603,000, or $0.05 per diluted share, on sales
of $34.0 million compared with a loss of $2.9 million on sales of $34.5 million
in the third quarter of 2002, or $0.24 per diluted share.
"Southern Energy's sales performance outpaced the industry trends for the
quarter and highlights the strength of our products and dealer network in a
tough market," stated Keith O. Holdbrooks, chief executive officer of Southern
Energy Homes. "Our sales of $34.0 million from continued operations for the
third quarter of this year showed solid growth from the $31.1 million of the
second quarter of this year and were down only 1.5% from the third quarter of
last year. Although units shipped were down 12.2% from the third quarter of
last year, we compared very favorably to the industry that was down over 20% in
July and August.
"We also added to third quarter sales with the launch of a new housing
division, Southern Estates, which produced its first home in August, 2003.
Southern Estates homes fill a product gap by including the most popular options
with less customization. We are optimistic about expanding our market share
with the introduction of the new Southern Estates homes.
"To accommodate the new Southern Estates production line, we reconfigured our
manufacturing operations. We combined the Lifestyle homes into our Southern
Energy plant to provide manufacturing space for Southern Estates production
line. These changes took advantage of the excellent plant and staff at the
Lifestyle facility, allowing us to quickly ramp up operations on a profitable
basis. We are pleased that Southern Estates showed an operating profit in
September, its first complete month of operations.
"In addition, the combination of Lifestyle and Southern Energy provides
sufficient volume to invest $1.5 million to expand the Southern Energy plant
into adjacent facilities currently used by our Windmar Supply division. We will
use the expanded space for improving efficiencies in our finishing operations
on our higher end homes. Windmar will move into a new facility that will be
added to our distribution warehouse. We are excited about these changes and the
potential of offering increased value in our existing product lines while
launching a new one with minimal investment," continued Mr. Holdbrooks.
THIRD QUARTER RESULTS
Net revenues for the third quarter from continuing operations were $34.0
million compared with $34.5 million for the third quarter of last year. Total
homes sold declined to 975 compared with 1,110 in the third quarter of 2002, a
decline of 12.2%. Average selling prices increased 9.6% for wholesale sales as
a result of price increases and increased customization of homes sold. Average
selling prices declined 17% for retail sales as a result of a greater
percentage of single section units being sold than multi section units during
the third quarter 2003 compared to the third quarter of 2002.
Gross profit was $6.1 million, or 17.8% of sales, in the third quarter of 2003
compared with $7.0 million, or 20.2% of sales, in the third quarter of 2002.
Higher material prices and the start up of Southern Estates caused the lower
gross profit in the third quarter of 2003 compared to the third quarter of
2002.
Selling, general and administrative expenses were down 13.0% to $5.4 million
compared with $6.2 million in the third quarter of last year. The reductions
reflect the savings from cost-cutting measures implemented at the end of the
second quarter of this year.
Income from continuing operations was $656,000 ($0.05 per share) in the third
quarter of 2003 compared with income from continuing operations of $647,000
($0.05 per share) in the third quarter of 2002. Loss from discontinued
operations was $53,000 for the third quarter of 2003 compared with a loss from
discontinued operations of $3.5 million, which includes a tax benefit of $1.8
million in the third quarter of 2002. Net income for the third quarter of 2003
was $603,000, or $0.05 per share, compared with net loss of $2.9 million, or
$0.24 per share, in the third quarter of 2002.
Commenting on the Company's financial condition, James Stariha, Chief Financial
Officer, said, "Our financial position showed solid improvement since last
year. Our cash position increased to over $11.9 million allowing us increased
funding options, such as paying for the recent changes in our manufacturing
plants. In addition, we paid off our notes payable of $4.1 million since the
third quarter of last year and have no long-term debt.
"Working capital improved from $0.8 million in the third quarter of last year
to over $14.5 million in the latest quarter. We continue to review our
operations to improve operating efficiencies and believe we can leverage our
earnings further as sales build."
NINE MONTHS RESULTS
For the nine months ended October 3, 2003, total net revenues from continuing
operations were $93.1 million compared with $105.3 million in the same period
of 2002. Loss from continuing operations was $317,000 compared with income from
continuing operations of $2.0 million for the nine months ended September 27,
2002. The net loss for the period was $463,000, or $0.04 per diluted share,
compared with a loss of $3.4 million, or $0.28 per diluted share, in the first
nine 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)
October 3, September 27,
2003 2002
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ASSETS
Cash and cash equivalents $11,923 $ 0
Current assets 31,128 24,003
Total assets 55,097 62,608
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable 0 4,128
Current liabilities 16,589 21,167
Long term debt 0 0
Total liabilities 16,589 21,167
Stockholders' equity 38,508 41,442
Working capital from continuing operations 14,489 818
SOUTHERN ENERGY HOMES, INC.
UNAUDITED FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Thirteen Weeks Ended
-----------------------------------
October 3, September 27,
2003 2002
------------ -------------
Net revenues $ 33,993 $ 34,522
Gross profit 6,054 6,969
Operating income 655 761
Income from continuing operations 656 647
Loss from discontinued operations (53) (3,514)
Net income (loss) 603 (2,867)
Basic and diluted earnings per share:
Income from continuing operations 0.05 0.05
Loss from discontinued operations (0.00) (0.29)
Net income (loss) 0.05 (0.24)
Weighted average shares outstanding:
Basic 12,143,865 12,133,865
Diluted 12,425,955 12,301,516
Thirty-nine Weeks Ended
-----------------------------------
October 3, September 27,
2003 2002
------------ -------------
Net revenues $ 93,139 $ 105,282
Gross profit 15,352 20,442
Operating income (loss) (423) 2,482
Income (loss) from continuing operations (317) 2,025
Loss from discontinued operations (146) (5,435)
Net loss (463) (3,410)
Basic and diluted earnings per share:
Income (loss) from continuing operations (0.03) 0.17
Loss from discontinued operations (0.01) (0.45)
Net loss (0.04) (0.28)
Weighted average shares outstanding:
Basic 12,139,433 12,133,865
Diluted 12,139,433 12,386,841
SOUTHERN ENERGY HOMES, INC.
SUMMARY OPERATING FACTS
Thirteen Weeks Ended
--------------------------------
October 3, September 27,
2003 2002
--------- -------------
Number of company-owned retail centers at period end
(continuing operations) 2 3
Retail units sold:
New single-section 4 2
New multi-section 9 16
Used homes 2 10
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15 28
Wholesale units sold:
External customers 942 1,031
Intercompany 18 51
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960 1,082
Total homes sold 975 1,110
Average sales prices - retail (new) $47,706 $57,481
Average sales price - wholesale $32,367 $29,545
Floor sections sold 1,695 1,842
Thirty-nine Weeks Ended
--------------------------------
October 3, September 27,
2003 2002
--------- -------------
Number of company-owned retail centers at period end
(continuing operations) 2 3
Retail units sold:
New single-section 5 10
New multi-section 34 57
Used homes 18 28
------- -------
57 95
Wholesale units sold
External customers 2,653 3,135
Intercompany 49 137
------- -------
2,702 3,272
Total homes sold 2,759 3,367
Average sales prices - retail (new) $56,572 $52,639
Average sales price - wholesale $31,325 $29,432
Floor sections sold 4,748 5,667