Cavalier Reports Third Quarter and Nine-Month Results.Business Editors ADDISON Addison, village (1990 pop. 32,058), Du Page co., NE Ill.; inc. 1884. An industrial suburb of Chicago, it manufactures machinery and plastic items. , Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. .--(BUSINESS WIRE)--Oct. 31, 2000 Cavalier cavalier (kăv'əlĭr`), in general, an armed horseman. In the English civil war the supporters of Charles I were called Cavaliers in contradistinction to the Roundheads, the followers of Parliament. Homes, Inc. (NYSE NYSE See: New York Stock Exchange :CAV (1) (Component Analog Video) See YPbPr. (2) (Constant Angular Velocity) Rotating an optical disc or hard disk at a constant speed. Contrast with "constant linear velocity" (CLV), in which the platter rotates at varying speeds. ) today announced its results for the third quarter and nine-month period ended September September: see month. 30, 2000. The results reflected an ongoing deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the Company's revenues as challenging competitive conditions persisted throughout the quarter, as they have since the current industry downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. began. The decline in industry sales and Cavalier's business reflects a number of trends such as excess inventory in retail channels, an increase in dealer failures, higher interest rates, a reduction in available consumer credit and wholesale financing for manufactured housing Manufactured housing (also known as prefab housing) is a type of housing unit that is largely assembled in factories and then transported to sites of use. In the United States, the term "manufactured home" specifically refers to a house built entirely in a protected , more restrictive credit standards Credit Standards The guidelines a company follows to determine whether a credit applicant is creditworthy. , and increased home repossessions which reenter re·en·ter also re-en·ter v. re·en·tered, re·en·ter·ing, re·en·ters v.tr. 1. To enter or come in to again. 2. To record again on a list or ledger. v.intr. distribution channels. In addition to the gross profit impact of lower volume, sales have declined more rapidly than the Company has been able to reduce its manufacturing, retail and operating overhead, even though Cavalier has made significant progress to adjust its capacity and costs in the face of these challenges. Cavalier's revenue for the third quarter totaled $69,860,000, down 49% from $135,835,000 in the year-earlier period. The largest component of revenue, home manufacturing sales, declined 50% to $63,488,000 for the quarter versus $126,083,000 as floor shipments fell 49% to 4,029 floors compared with 7,867 floors in the same period last year. Other sources of revenue, including retail sales, also declined from the year-earlier period due primarily to a reduction in the number of Company-owned retail sales centers since the end of the third quarter last year and weaker sales volume. The Company reported a net loss for the third quarter of $6,192,000 or $0.35 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared with a net loss in the prior-year period totaling $1,621,000 or $0.09 per diluted share. The results for the third quarter included a number of charges that affect the comparability of the current-year quarter and the year-earlier quarter. First, in the third quarter of 2000, Cavalier posted impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges aggregating $103,000 ($65,000 after tax or $0.00 per diluted share) reflecting primarily the closing of one retail sales center during the quarter. In the third quarter of 1999, Cavalier recorded impairment charges aggregating $1,453,000 ($879,000 after tax or $0.05 per diluted share) related to the idling of two home manufacturing plants. In the third quarter of 2000, Cavalier also recorded losses on resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. of repurchased inventory related to present and anticipated dealer failures totaling $852,000 ($537,000 after tax or $0.03 per diluted share); costs incurred for losses on resale of repurchased inventory in the year-earlier period were $367,000 ($222,000 after tax or $0.01 per diluted share). Additionally, the Company recorded as cost of sales inventory valuation charges totaling $292,000 ($184,000 after tax or $0.01 per diluted share) in the third quarter of 2000 associated with the closing of one retail sales center; there were no comparable charges recorded in the third quarter of 1999. In addition, Cavalier sold the inventory, tools and supplies at an underperforming home manufacturing operation in Adrian, Georgia Adrian is a city in Emanuel County, Georgia, United States. The population was 579 at the 2000 census. Geography Adrian is located at (32.531960, -82.590680)GR1. and leased the facility to a third party with an option to purchase. The operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. during the third quarter attributable to the Adrian Adrian, Roman emperor Adrian, Roman emperor: see Hadrian. Adrian, city, United States Adrian, city (1990 pop. 22,097), seat of Lenawee co., SE Mich., on the Raisin River; inc. 1836. plant, together with inventory valuation and other charges recorded in connection with the transaction, totaled $1,970,000 ($1,241,000 after tax or $0.07 per diluted share). In the year-earlier quarter, the Adrian plant sustained an operating loss of $129,000 ($78,000 after tax or $0.00 per diluted share). Cavalier's operating results, adjusting for the foregoing items, would reflect a loss of $0.24 per diluted share in the third quarter of 2000 versus a net loss of $0.03 per diluted share in the same period last year. Revenue for the first nine months of 2000 declined 45% to $257,437,000 from $466,610,000 in the first nine months of 1999. Home manufacturing sales declined 47% to $234,074,000 for the period versus $442,652,000 last year as floor shipments fell 46% to 14,789 floors compared with 27,184 floors in the comparable 1999 period. The Company's net loss for the first nine months of 2000 was $27,838,000 or $1.56 per diluted share compared with net income of $5,700,000 or $0.31 per diluted share in the prior-year period. The results for the first nine months included a number of charges that affect the comparability of the current-year period and the year-earlier period. The net loss for the first nine months of 2000 included impairment charges totaling $4,848,000 ($3,843,000 after tax or $0.21 per diluted share) related to plant idlings, retail sales center closings or dispositions, and the sale of a portion of the Company's insurance and premium finance business. In the same period last year, impairment charges totaled $1,453,000 ($879,000 after tax or $0.05 per diluted share). In the first nine months of 2000, Cavalier also recorded losses on resale of repurchased inventory related to present and anticipated dealer failures of $7,541,000 ($4,684,000 after tax or $0.26 per diluted share); costs incurred for losses on resale of repurchased inventory in the year-earlier period were $825,000 ($499,000 after tax or $0.02 per diluted share). Additionally, the Company recorded as cost of sales inventory valuation charges of $2,004,000 ($1,263,000 after tax or $0.06 per diluted share) associated with retail sales center closings or dispositions; there were no comparable charges recorded in the first nine months of 1999. Lastly, the nine-month results in 2000 included an operating loss and inventory and equipment valuation charges related to the Adrian plant totaling $3,450,000 ($2,173,000 after tax or $0.12 per diluted share). In the year-earlier period, the Adrian plant sustained an operating loss of $591,000 ($357,000 after tax or $0.02 per diluted share). Cavalier's operating results, adjusting for the foregoing items, would reflect a loss of $0.91 per diluted share for the first nine months of 2000 versus net income of $0.40 per diluted share in the same period last year. Commenting on the results, David Roberson Roberson is a surname, and may refer to
MHI Montreal Heart Institute (Montreal, Quebec, Canada) MHI Median Household Income MHI Main Hawaiian Islands MHI Material Handling Institute recently reported, shipments through August declined 24.6% for the industry compared with the first eight months of 1999. Shipments in Cavalier's 11-state core market region, which includes key manufactured housing states such as Texas, Alabama Alabama, indigenous people of North America Alabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). , North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. , South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. , and Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. fared even worse during this eight-month period, falling 27.3%. On top of that, we have continued to emphasize conservative inventory management with our dealers, a position we believe has had an impact on current sales but which we nevertheless believe is important to the Company's longer-term prospects." Cavalier has continued to take steps to take action; to move in a matter. See also: Step designed to reduce its cost structure. Since the third quarter of 1999, Cavalier has idled nine plants and disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of the operations of one other, reducing its manufacturing capacity 34% from its peak in 1999. Additionally, the Company has disposed of or closed 11 of 16 retail sales centers. Cavalier is continuing to review and evaluate capacity issues in light of market conditions that remain weak. Another area the Company has addressed is its overhead, as seen by the 33% decline in selling, general and administrative expenses, excluding losses on resale of repurchased inventory, during the third quarter compared with the same period last year. Cuts in these areas, together with reductions in the manufacturing capacity, have allowed Cavalier to lower its overall workforce about 46% since December 31, 1998. "Despite these efforts, sales have declined more rapidly than we have been able to reduce our manufacturing, retail and operating overhead," Roberson continued. "As we indicated earlier, Cavalier's goal was to reduce overhead and expenses by the fourth quarter to reach an operating breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations point based on annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. manufactured home sales in the range of $350 million, excluding any impairment charges and losses on resale of repurchased inventory. While I think we are close to reaching this target on the cost and overhead side of the equation, our sales and the market in general continue to be weaker than we expected even a few months ago. Equally important, we have continued to work with our dealers to significantly reduce retail inventory over the past year, and while we have more to do in this area over the next several months, we hope we are approaching a level that will allow us to return to a more offensive selling posture posture /pos·ture/ (pos´choor) the attitude of the body.pos´tural pos·ture n. 1. A position of the body or of body parts. 2. next spring. "We continue to believe that Cavalier is moving in the right direction with its cost reduction efforts so that the Company can be better positioned to take advantage of an improving market when the cycle reverses," he added. "Although we think further efficiencies can be found in our cost structure, we believe most of the cost-reduction work we previously have identified, based on current industry trends, is close to completion. We expect our focus going forward to be more on the revenue side as we continue to pursue plans and initiatives to gain momentum in sales. We have developed sales programs for our independent dealers - driven by specific promotions on attractive new product packages - that are geared toward providing increasing incentives as significant on-lot inventory reductions occur. We also are examining our product line from top to bottom with a view toward rationalizing our manufacturing capacity. To this end, in the fourth quarter, we have reopened a home manufacturing facility in Millen, Georgia Millen is a city in Jenkins County, Georgia, United States. The population was 3,492 at the 2000 census. The city is the county seat of Jenkins CountyGR6. Geography Millen is located at (32. , to produce a limited line, value-packed product. We want to ensure that we produce homes that enjoy broad demand and can contribute in a meaningful way to our sales efforts and gross profit, and we want to produce these homes in the most efficient setting. Our goal is for this to translate into a tighter, but more focused product line, a shifting of production among our plants to achieve greater manufacturing efficiencies, and lower manufacturing costs over the long term." Barry Donnell, Chairman of Cavalier, pointed out that Cavalier has sought to maintain a solid financial position during this industry downturn. Cavalier ended the third quarter with $29,801,000 in cash, cash equivalents and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has versus $22,337,000 at the same time last year. The Company also has trimmed its inventories to $31,187,000 from $61,882,000 at the end of the third quarter of 1999. Cavalier's inventory at dealer sales centers, including company-owned sales centers, declined to approximately $200,000,000 at September 30, 2000 from $292,000,000 a year ago and a record level of $314,000,000 at the end of June 1999. Donnell noted that Cavalier recently restructured its revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility to change its maturity date from April 2002 to April 2003 and provide more flexibility in meeting its financial covenants in order to take into account current industry and business conditions and the Company's financial performance. Under the amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. agreement the tangible net worth Tangible Net Worth Total assets less intangible assets and total liabilities. Notes: In terms of a consumer, tangible net worth is the sum of all your tangible assets (cash, home, cars, etc). requirement is reduced from $90,000,000 to $65,000,000; the capital expenditures limit is reduced from $15,000,000 to $10,000,000; and the cash flow to debt service covenant of 1.75 to 1.00 is required commencing with the year ended December 31, 2001 and thereafter. In addition, if the Company's tangible net worth is less than $85,000,000, the amount available under the facility is reduced from $35,000,000 to 35% of the Company's tangible net worth. The amendment generally provides that the interest rate on the loan changes from prime minus 0.5% to prime in the event the Company's tangible net worth is below $77,000,000. "Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). our credit line is another important step toward the goal of maintaining the Company's liquidity and financial position," Donnell said. "Based on the Company's tangible net worth as of the end of the most recent quarter, the facility provided total lending capacity of $28,800,000." At quarter's end, Cavalier's long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. totaled $24,329,000, including $15,000,000 against the lending capacity of the credit facility and $9,329,000 of other long-term debt, compared with total long-term debt of $6,175,000 at October 1, 1999. In other matters of interest to stockholders, Donnell said that Cavalier's Board of Directors recently eliminated the Company's quarterly dividend, which was cut from $0.04 per share to $0.01 per share last quarter. Additionally, he said that while the Company has continuing authorization The right or permission to use a system resource; the process of granting access. See access control. to purchase approximately 1.4 million shares under a Board-approved four-million share stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program, Cavalier did not repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. any shares during the third quarter. Also during the third quarter, members of the Company's only unionized operation, in Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York , ratified rat·i·fy tr.v. rat·i·fied, rat·i·fy·ing, rat·i·fies To approve and give formal sanction to; confirm. See Synonyms at approve. a new three-year bargaining contract. Cavalier Homes, Inc. and its subsidiaries produce, sell, and finance manufactured housing. The Company markets its homes primarily through independent dealers, including exclusive dealers that carry only Cavalier products, and provides financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. to retail purchasers of manufactured homes sold through its exclusive dealer network. A public, listen-only simulcast of Cavalier Homes' third quarter conference call will begin at 9:30 a.m. Eastern Time tomorrow (November 1, 2000) and may be accessed via the Company's web site, www.cavhomesinc.com, or www.vcall.com or www.streetevents.com. A replay of this call will be available for 20 days beginning at approximately noon tomorrow using these same links. With the exception of historical information, the statements made in this press release, including those containing the words "intends," "anticipates," "expects," "plans," "hopes," "believes," and words of similar import, and those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc industry trends and conditions, Cavalier's expectations for its results of operations in future periods, and Cavalier's plans and expectations for addressing current and future industry and business conditions, constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , are based upon current expectations, and are made pursuant to the "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements involve certain known and unknown assumptions, risks and uncertainties that could cause actual results to differ materially from those included in or contemplated by the statements. These assumptions, risks and uncertainties include, but are not limited to, those discussed or indicated in Cavalier's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the period ended December 31, 1999, under the heading "Item 1. Business-Risk Factors", and its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the period ended June 30, 2000, under the heading "'Safe Harbor' Statement under the Private Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995," as filed with the Securities and Exchange Commission, and in the other documents filed by Cavalier with the Securities and Exchange Commission. Cavalier disclaims any obligation to update any forward-looking statements as a result of developments occurring after the issuance of this press release.
Cavalier Homes, Inc.
Unaudited Financial Highlights
(In thousands, except per share amounts)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
---------------------- -----------------------
Sept. 30, Oct. 1, Sept. 30, Oct. 1,
2000 1999 2000 1999
--------- --------- --------- ---------
Revenue $ 69,860 $ 135,835 $ 257,437 $ 466,610
Income (loss)
before income
taxes (benefit)/a $ (9,830) $ (2,681) $ (43,593) $ 9,421
Net income (loss)/a $ (6,192) $ (1,621) $ (27,838) $ 5,700
Net income (loss)
per share
- diluted/a $ (0.35) $ (0.09) $ (1.56) $ 0.31
Weighted average
shares - diluted 17,836 17,949 17,792 18,304
a The Company recorded impairment charges of $103 ($65 net of taxes,
or $0.00 per diluted share) and $4,848 ($3,843 net of taxes, or
$0.21 per diluted share) in the thirteen- and thirty-nine week
periods ended September 30, 2000, respectively, related to the
idling of home manufacturing plants, the closure or planned sale
of retail sales centers, and the sale of a portion of its
insurance and premium finance business. During the thirteen- and
thirty-nine week period ended October 1, 1999, the Company
recorded impairment charges of $1,453 ($879 net of taxes, or $0.05
per diluted share) related to the idling of home manufacturing
plants.
Cavalier Homes, Inc. Data Sheet
Unaudited
($ in thousands, except per share amounts)
For the 39 Weeks Ended For the 13 Weeks Ended
---------------------- ----------------------
09/30/00 10/01/99 09/30/00 10/01/99
--------- --------- --------- ---------
STATEMENT OF INCOME SUMMARY
Home manufacturing
net sales $ 234,074 $ 442,652 $ 63,488 $ 126,083
Financial services 4,169 4,951 1,132 1,470
Retail 14,188 15,230 3,382 6,748
Other 5,006 3,777 1,858 1,534
--------- --------- --------- ---------
Total revenue $ 257,437 $ 466,610 $ 69,860 $ 135,835
========= ========= ========= =========
Cost of sales 225,886 377,666 61,095 110,883
Selling, general
and administrative 69,244 78,514 18,002 26,031
Impairment charge 4,848 1,453 103 1,453
--------- --------- --------- ---------
Operating profit
(loss) (42,541) 8,977 (9,340) (2,532)
--------- --------- --------- ---------
Other Income (Expense):
Interest Expense (2,013) (1,049) (774) (537)
Other, net 961 1,493 284 388
--------- --------- --------- ---------
(1,052) 444 (490) (149)
--------- --------- --------- ---------
Income (loss) before
income taxes
(benefit) (43,593) 9,421 (9,830) (2,681)
Income taxes
(benefit) (15,755) 3,721 (3,638) (1,060)
--------- --------- --------- ---------
Net income (loss) $ (27,838) $ 5,700 $ (6,192) $ (1,621)
========= ========= ========= =========
Net income (loss) per
basic & diluted
share $ (1.56) $ 0.31 $ (0.35) $ (0.09)
========= ========= ========= =========
Weighted average
shares outstanding 17,791,922 18,221,146 17,838,486 17,949,080
Weighted average
shares outstanding
assuming dilution 17,791,922 18,304,173 17,836,486 17,949,080
OPERATING DATA SUMMARY
Manufacturing sales:
Floor shipments 14,789 27,184 4,029 7,867
Home shipments
Single section 3,732 8,430 819 2,313
Multi section 5,509 9,340 1,600 2,764
-------- -------- -------- --------
Total shipments 9,241 17,770 2,419 5,077
Shipments to company
owned retail locations (165) (463) (47) (169)
-------- -------- -------- --------
Wholesale shipments
to independent
retailers 9,076 17,307 2,372 4,908
======== ======== ======== ========
Retail sales:
Single section 283 272 60 125
Multi section 250 198 57 86
-------- -------- -------- --------
Total sales 533 470 117 211
======== ======== ======== ========
Cavalier produced
homes sold 431 352 90 163
======== ======== ======== ========
Used homes sold 91 84 25 36
======== ======== ======== ========
Independent
exclusive dealer
locations 204 277 204 277
Company owned
stores 5 14 5 14
Home manufacturing
facilities - operating 14 22 14 22
Installment loan
purchases $ 49,376 $ 35,791 $ 17,252 $ 6,400
EBITDA $(34,071) $ 17,907 $ (6,686) $ 429
BALANCE SHEET SUMMARY
Cash, cash equivalents
& certificates of
deposit $ 23,805 $ 22,337 $ 23,805 $ 22,337
Working capital $ 32,322 $ 32,688 $ 32,322 32,688
Current ratio 1.4 to 1 1.3 to 1 1.4 to 1 1.3 to 1
Long-term debt $ 24,329 $ 6,175 $ 24,329 $ 6,175
Stockholders' equity $100,057 $134,347 $100,057 $134,347
Number of shares
outstanding 17,860,041 17,905,071 17,860,041 17,905,071
Stockholders' equity
per share $ 5.60 $ 7.50 $ 5.60 $ 7.50
CAC installment
loan portfolio $ 7,510 $ 8,296 $ 7,510 $ 8,296
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