Attached files
| file | filename |
|---|---|
| 8-K - PALM HARBOR HOMES INC /FL/ | v172807_8k.htm |
| EX-99.1 - PALM HARBOR HOMES INC /FL/ | v172807_ex99-1.htm |
 |
Contact:
Kelly Tacke
Executive
Vice President
and
Chief Financial Officer
(972)
991-2422
|
PALM
HARBOR HOMES, INC. REPORTS
THIRD
QUARTER FISCAL 2010 RESULTS
DALLAS, Texas (February 1,
2010) ─ Palm Harbor Homes, Inc.
(NASDAQ:PHHM) today reported financial results for the third quarter and nine
months of fiscal 2010 ended December 25, 2009.
Net sales for the third quarter totaled
$71.8 million compared with $89.6 million in the prior year
period. Net loss for the third quarter totaled $9.2 million, or
($0.40) per share, compared with a net loss of $13.7 million, or ($0.60) per
share, a year ago.
Net sales
for the nine months ended December 25, 2009, were $229.0 million compared with
$330.4 million in the nine months ended December 26, 2008. Net loss
for the year-to-date period in fiscal 2010 totaled $29.6 million, or ($1.29) per
share, compared with net loss of $22.1 million, or ($0.97) per share, in the
prior-year period.
Financing
and Restructuring Initiatives
Commenting on the results, Larry
Keener, chairman and chief executive officer of Palm Harbor Homes, Inc., said,
"Our results for the third quarter reflect the current market environment in the
overall housing industry. We have continued to revise our operating
strategy and better position the Company to sustain this downturn and, at the
same time, benefit from any market improvement when it occurs. Our
primary focus has been to maintain adequate liquidity for
operations. On January 27, 2010, we reached an agreement with Textron
Financial Corporation to amend the terms of our floor plan facility and extend
the expiration date until April 2011, and in certain circumstances, further
extend through June 2012. The Company, through Country Place
Mortgage, has also closed on a new, four-year, $20 million secured term loan
from entities managed by Virgo Investment Group LLC
(“Virgo”). Proceeds will be used for working capital and general
corporate purposes. We are very pleased to secure this new term loan
from Virgo, which represents a creative financing transaction at a critical
inflection point in our business. We believe this transaction
reflects the financial community’s confidence in Palm Harbor’s business strategy
and the strength of our asset base.
“We have also taken additional steps to
reduce our manufacturing capacity and distribution channels and realign our
operational overhead to meet current and expected demand. As a
result, we will be closing two factories and 21 underperforming sales centers
and will have seven factories in operation and a total of 57 sales
locations. We expect to incur restructuring charges of approximately
$6.0 million over the next two fiscal quarters. Additionally, we
continue to identify ways to lower our quarterly selling, general and
administrative expenses, increase margins and further reduce our receivables and
inventory levels.
Further
Improvement in Operating Efficiencies
“In spite of the decline in sales, we
have made considerable progress in managing our costs and improving our
operating efficiencies in this current sales environment,” added
Keener. “While revenues declined 19 percent over the prior year
period, our gross margin for the quarter was a solid 23.4 percent, compared with
21.2 percent a year ago. This improvement indicates improved
manufacturing efficiencies, a higher internalization rate and a strong
performance by Standard Casualty and Country Place Mortgage. For the
third quarter of fiscal 2010, our selling, general and administrative expenses
declined by $5.2 million, or 18 percent, reflecting continued cost control
initiatives and seven fewer retail locations. With the additional
restructuring actions, we expect to realize annual savings of approximately $8.0
million. Overall, we reduced our quarterly operating loss by $4.6
million from the same period a year ago. These
results include a one-time gain of $1.8 million from the sale of renewal rights
for a division of Standard Casualty included in other income.
 |
-MORE-
15303
Dallas Parkway, Suite 800, Addison, TX 75001 • Voice: (972) 991-2422 •
Fax: (972) 991-5949
www.palmharbor.com
|
PHHM
Reports Third Quarter Fiscal 2010 Results
Page
2
February
1, 2010
“Going forward, we will continue to
focus on carefully managing our costs, achieving further gross margin
improvement and maintaining adequate liquidity to sustain our business through
this cycle. At the same time, we are pursuing innovative ways to both
expand our product offering and reach new distribution channels to further drive
revenues. Regardless of market conditions, we will continue to
leverage Palm Harbor’s core strengths - the most trusted brand name in the
industry, a diverse and high-quality product line, a profitable insurance and
finance operation, manufacturing excellence and exceptional customer
satisfaction. “
Profitable
Insurance and Finance Businesses
“Our financial services operations have
remained a bright spot for Palm Harbor through this challenging
environment. Standard Casualty, our insurance subsidiary, has
remained a very consistent performer for the Company with a profitable third
quarter and steady growth in policies written. Country Place
Mortgage, Palm Harbor’s mortgage lending subsidiary, also remains profitable and
year-to-date loan originations are up four percent in spite of a very tight
lending environment. During the third quarter, Country Place also
became a Ginnie Mae approved lender, a significant advantage in today’s
market. Country Place’s reputation and track record clearly
demonstrates that a good factory-built lending practice can continue to perform
well in a challenging economy,” added Keener.
Cash
Management
Kelly Tacke, executive vice president
and chief financial officer of Palm Harbor Homes, Inc.,
commented, “We continue to maintain a very disciplined focus on
controlling our costs and carefully managing our cash. As a result of
our efforts and previous restructuring actions, we have reduced our selling,
general and administrative expenses by over 20 percent through the first nine
months of this fiscal year. Positive cash flows from operating
activities for the same period were approximately $11.5 million. We
remain committed to maintaining a strong balance sheet in light of today’s
challenging economic conditions.”
A
conference call regarding this release is scheduled for tomorrow, Tuesday,
February 2, 2010, at 9:00 a.m. (Central Time), 10:00 a.m. (Eastern Time).
Interested parties can access a live simulcast on the Internet at www.PalmHarbor.com or
www.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 visit www.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.
-MORE-
PHHM
Reports Third Quarter Fiscal 2010 Results
Page
3
February
1, 2010
PALM
HARBOR HOMES, INC.
Statements
of Operations
(Dollars
in thousands, except earnings per share)
For the
third quarter and nine months ended December 25, 2009 and December 26,
2008
|
Third Quarter Ended
|
Nine Months Ended
|
|||||||||||||||
|
Dec.
25,
|
Dec.
26,
|
Dec.
25,
|
Dec.
26,
|
|||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
|
Net
sales
|
$ | 71,802 | $ | 89,642 | $ | 229,020 | $ | 330,379 | ||||||||
|
Cost
of sales
|
54,981 | 70,597 | 174,862 | 252,742 | ||||||||||||
|
Selling,
general and administrative expenses
|
24,119 | 29,323 | 73,154 | 91,586 | ||||||||||||
|
Loss
from operations
|
(7,298 | ) | (10,278 | ) | (18,996 | ) | (13,949 | ) | ||||||||
|
Interest
expense
|
(4,046 | ) | (4,637 | ) | (13,064 | ) | (14,009 | ) | ||||||||
|
Gain
or repurchase of convertible senior notes
|
0 | 467 | 0 | 4,242 | ||||||||||||
|
Other
income
|
2,232 | 655 | 2,671 | 1,819 | ||||||||||||
|
Loss
before income taxes
|
(9,112 | ) | (13,793 | ) | (29,389 | ) | (21,897 | ) | ||||||||
|
Income
tax benefit (expense)
|
(66 | ) | 58 | (163 | ) | (184 | ) | |||||||||
|
Net
loss
|
$ | (9,178 | ) | $ | (13,735 | ) | $ | (29,552 | ) | $ | (22,081 | ) | ||||
|
Net
loss per common share - basic and diluted
|
$ | (0.40 | ) | $ | (0.60 | ) | $ | (1.29 | ) | $ | (0.97 | ) | ||||
|
Weighted
average common shares outstanding – basic and diluted
|
22,875 | 22,875 | 22,875 | 22,857 | ||||||||||||
Condensed
Balance Sheets
(Dollars
in thousands)
December
25, 2009 and March 27, 2009
|
December
25,
|
March
27,
|
|||||||
|
2009
|
2009
(1)
|
|||||||
|
(Unaudited)
|
||||||||
|
Assets
|
|
|||||||
|
Cash
and cash equivalents
|
$ | 7,711 | $ | 12,374 | ||||
|
Trade
accounts receivables
|
18,359 | 23,458 | ||||||
|
Consumer
loans receivable, net
|
178,544 | 191,597 | ||||||
|
Inventories
|
78,559 | 97,144 | ||||||
|
Property,
plant and equipment, net
|
32,049 | 35,937 | ||||||
|
Other
assets
|
44,269 | 51,172 | ||||||
|
Total
Assets
|
$ | 359,491 | $ | 411,682 | ||||
|
Liabilities
and Shareholders' Equity
|
||||||||
|
Accounts
payable and accrued liabilities
|
$ | 58,086 | $ | 64,836 | ||||
|
Floor
plan payable
|
44,402 | 49,401 | ||||||
|
Convertible
debt
|
49,794 | 47,939 | ||||||
|
Warehouse
revolving debt
|
2,398 | 3,589 | ||||||
|
Securitized
financings
|
126,130 | 140,283 | ||||||
|
Shareholders'
equity
|
78,681 | 105,634 | ||||||
|
Total
Liabilities and Shareholders' Equity
|
$ | 359,491 | $ | 411,682 | ||||
|
(1)
|
Included
in the Company’s third quarter results for fiscal 2010 and 2009 is the
impact of approximately $677,000 and $741,000, respectively, of non-cash
interest expense related to the retrospective adoption of the new
accounting rules related to convertible debt instruments that may be
settled in cash upon conversion. For the year-to-date period
for fiscal 2010 and 2009, the impact is approximately $1,900,000 and
$2,200,000, respectively. This additional non-cash interest
expense represents the amortization of a debt discount recorded against
the Company’s convertible debt as required under the new accounting rules,
applied retrospectively.
|
-MORE-
PHHM
Reports Third Quarter Fiscal 2010 Results
Page
4
February
1, 2010
PALM HARBOR HOMES,
INC.
Quick Facts
|
Third Quarter Ended
|
Nine Months Ended
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|
Dec.
25,
|
Dec.
26,
|
Dec.
25,
|
Dec.
26,
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|
2009
|
2008
|
2009
|
2008
|
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FACTORY-BUILT
HOUSING:
|
||||||||||||||||
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Company-owned
sales centers and builder locations:
|
||||||||||||||||
|
Beginning
|
78 | 87 | 86 | 87 | ||||||||||||
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Added
|
1 | 0 | 1 | 0 | ||||||||||||
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Closed
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(1 | ) | (1 | ) | (9 | ) | (1 | ) | ||||||||
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Ending
|
78 | 86 | 78 | 86 | ||||||||||||
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Factory-built
homes sold through:
|
||||||||||||||||
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Company-owned
sales centers and builder locations
|
578 | 654 | 1,754 | 2,391 | ||||||||||||
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Independent
dealers, builders & developers
|
177 | 213 | 496 | 809 | ||||||||||||
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Total
factory-built homes sold
|
755 | 867 | 2,250 | 3,200 | ||||||||||||
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Factory-built
homes sold as:
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||||||||||||||||
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Single-section
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177 | 148 | 482 | 534 | ||||||||||||
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Multi-section
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409 | 459 | 1,262 | 1,847 | ||||||||||||
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Modular
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169 | 260 | 506 | 819 | ||||||||||||
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Total
factory-built homes sold
|
755 | 867 | 2,250 | 3,200 | ||||||||||||
|
Commercial
buildings:
|
||||||||||||||||
|
Number
of commercial buildings sold
|
7 | 9 | 47 | 40 | ||||||||||||
|
Net
sales from commercial buildings sold (in 000’s)
|
$ | 655 | $ | 856 | $ | 10,300 | $ | 10,664 | ||||||||
|
Average
sales prices:
|
||||||||||||||||
|
Manufactured
housing – retail
|
$ | 64,000 | $ | 69,000 | $ | 67,000 | $ | 74,000 | ||||||||
|
Manufactured
housing – wholesale
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$ | 50,000 | $ | 65,000 | $ | 52,000 | $ | 54,000 | ||||||||
|
Modular
housing – consumer
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$ | 158,000 | $ | 178,000 | $ | 165,000 | $ | 174,000 | ||||||||
|
Modular
housing – wholesale
|
$ | 77,000 | $ | 67,000 | $ | 75,000 | $ | 71,000 | ||||||||
|
Homes
produced
|
650 | 694 | 2,022 | 2,766 | ||||||||||||
|
Internalization
rate (manufactured and modular)
|
73 | % | 69 | % | 74 | % | 69 | % | ||||||||
|
FINANCIAL
SERVICES
|
||||||||||||||||
|
Loan
originations:
|
||||||||||||||||
|
CPM
|
88 | 52 | 231 | 223 | ||||||||||||
|
Insurance
penetration:
|
||||||||||||||||
|
Warranty
|
82 | % | 90 | % | 86 | % | 92 | % | ||||||||
|
Physical
damage
|
65 | % | 73 | % | 67 | % | 70 | % | ||||||||
-END-