American Homestar Corporation Announces Record Results for Fourth Quarter and Fiscal 1998; Net Income Up 43% for the Quarter, 36% for the Year.

HOUSTON--(BUSINESS WIRE)--June 25, 1998--American Homestar Corporation (Nasdaq/NM:HSTR) today announced record results for both the fourth fiscal quarter and the year ended May 31, 1998. For the fourth quarter of fiscal 1998, revenues increased 26% to $147 million from $116 million in the year-earlier period. Net income for the fourth quarter of fiscal 1998 increased 43% to $6.6 million, or $0.36 per diluted share, compared with net income of $4.6 million, or $0.26 per diluted share, in the prior-year period.

Revenues for the year ended May 31, 1998, increased 26% to $514 million from revenues of $409 million last year. Income from operations for fiscal 1998 increased 36% to $20.4 million, or $1.12 per diluted share, compared with $15.0 million, or $0.86 per diluted share, in fiscal 1997. Income from operations for fiscal 1998 excludes two non-recurring first quarter charges totaling $2.7 million, or $0.14 per share (after tax), relating to the acquisition of Brilliant Homes and the early extinguishment of debt.

All prior-year amounts have been restated to include Brilliant Homes, which was acquired in June 1997 and accounted for as a pooling of interests. In addition, all share and per share amounts have been adjusted to reflect the three-for-two stock split effected on October 31, 1997, and the new requirements under FAS No. 128, (Earnings Per Share).

Commenting on the results, Craig Reynolds, the Company's chief financial officer, said, "We are pleased to report that our vertical integration growth strategy continues to produce very strong results in all of our regional markets. Our core southwestern market is more fully integrated and is generating superior results through increased market share and greater manufacturing efficiencies. Our other, newer regional operations in the Pacific Northwest, Rocky Mountain, Deep South and Southeast regions accounted for a growing share of total revenues this year and are showing steady margin improvement as they become more fully integrated. The Company is now solidly established in these new regions and will continue to execute its growth strategy which is expected to produce increasing revenue with steadily improving operating margins."

The Company recently announced three planned acquisitions which will substantially increase its market presence in regions outside its core southwestern market. R-Anell Custom Homes, Inc. operates three manufacturing plants (housing four production lines) in North Carolina, producing both manufactured and modular homes. First Value Homes, Inc. operates two retail sales centers in North Carolina which focus on the sale of upscale manufactured and modular homes. The DWP companies operate six retail centers in the western region, three in Oregon, two in Washington, and one in New Mexico.

American Homestar is one of the leading vertically integrated manufactured housing companies. Exclusive of the pending acquisitions referenced above, the Company currently operates 11 manufacturing plants, 86 Company-owned retail sales centers, and serves more than 40 retail franchisees and over 300 independent retail locations in 28 states. The Company also provides retail financing through its finance affiliate, 21st Century Mortgage, and provides insurance and transportation services to its customers.

This press release may contain certain forward-looking statements and information based on the beliefs of the Company's management as well as assumptions made by, and information currently available to, the Company's management. Words like "anticipate," believe," "estimate," "should," "expect," and similar expressions used in this press release are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties, and assumptions, including the risk factors described in the Company's most recently filed registration statement and Form 10-K. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual events or results may vary from those described herein as anticipated, expected, believed, or estimated. -0-

                     AMERICAN HOMESTAR CORPORATION
                     Comparative Operating Summary

                                            Three Months Ended May 31,
                                           ---------------------------

Fourth Quarter - Fiscal 1998                   1998         1997(1)
                                           ------------   ------------
Average New Home Retail Selling Price      $     49,236   $     46,950
New Homes Sold at Retail                          1,568          1,229
Manufacturing Shipments(2)                        3,059          2,631
Retail Internalization Rate(3)                       84%            83%

Sales                                      $137,099,995   $108,788,676
Total Revenues                              146,862,204    116,139,922
Operating Income                             12,312,772      9,853,963
Net Income                                 $  6,563,822   $  4,588,018
                                           ============   ============
Diluted Earnings Per Common Share          $       0.36   $       0.26
                                           ============   ============
Weighted Average Diluted Common Shares
  Outstanding(4)                             18,333,464     17,652,218

                                                Year Ended May 31,
                                           ---------------------------

Full Year - Fiscal 1998                        1998         1997(1)
                                           ------------   ------------
Average New Home Retail Selling Price      $     48,154   $     45,902
New Homes Sold at Retail                          5,211          4,506
Manufacturing Shipments(2)                       10,723          9,013
Retail Internalization Rate(3)                       84%            74%

Sales                                      $481,946,542   $383,131,948
Total Revenues                              513,927,385    409,437,091
Income from Operations                       20,382,314     15,032,651
Non-recurring Charges (after tax):
    Brilliant pooling costs                   2,064,665             --
    Early extinguishment of debt                634,282             --
                                           ------------   ------------
Net income                                 $ 17,683,367   $ 15,032,651
                                           ============   ============
Diluted Earnings Per Common Share Data(4)
    Income from operations                 $       1.12   $       0.86
    Effects of non-recurring charges:
      Brilliant pooling costs                      0.11             --
      Early extinguishment of debt                 0.03             --
                                           ------------   ------------
    Diluted earnings per common share      $       0.98   $       0.86
                                           ============   ============
Weighted Average Diluted Common Shares
  Outstanding(4)                             18,135,392     17,564,325

(1)  All prior-year amounts have been restated to include Brilliant
     Homes, which was acquired in June 1997 and accounted for as a
     pooling of interests.

(2)  Including shipments to Company-owned retail locations.

(3)  Percentage of new homes sold at retail which were also
     manufactured by the Company.

(4)  Adjusted to reflect the three-for-two stock split on October 31,
     1997, and the new requirements under FAS No. 128, (Earnings Per
     Share).


    CONTACT:  American Homestar, Houston
               Craig Reynolds, 281/334-9702