Champion Enterprises, Inc. Reports EPS from Continuing Operations Up 32% For The Year
Revenues Increase 35% to $2.3 Billion Operating Income Up 46%
AUBURN HILLS, Mich., Feb. 10 /PRNewswire/ -- Champion Enterprises, Inc. (NYSE: CHB - news), the nation's leading housing manufacturer, today reported record earnings and sales for the year ended January 2, 1999. Income from continuing operations rose 32 percent to $1.91 per diluted share from $1.45 per share in 1997. Revenues reached $2.3 billion, increasing 35 percent, and operating income improved 46 percent to $170 million. Net income was $94 million.
Champion's Chairman, President, and Chief Executive Officer, Walter R. Young, said, ''We are pleased to report the highest
earnings and revenues in Champion's 45-year history. During the year we acquired top-notch retail organizations, improved our programs for independent retailers, and grew our manufacturing operations with additional facilities and quality products. These outstanding results reflect the strength of our retail organization, the incremental effect of retail profits on overall margins, and increased demand for our homes. Operating margins for the year improved to 7.6 percent of revenues, rising from 7.0 percent a year ago.''
Manufacturing improves margins and market share
Champion's manufacturing revenues in 1998 rose 15 percent to $1.9 billion from the sale of 70,359 homes, 9.4 percent more than a year ago. Of the total homes sold, 11 percent were to company-operated sales centers. Total floors sold increased 12.7 percent, resulting in a 63 percent multi-section mix for the year. U.S. wholesale industry shipments of homes in 1998 rose 5.5 percent and floors sold increased 7.8 percent. Following the January 1999 acquisition of Homes of Merit, the company now has 65 home building facilities and plans to construct four additional facilities this year, including rebuilding the one destroyed by fire in New York last month.
Champion's Chief Operating Officer, Philip C. Surles, commented, ''We are pleased that both our manufacturing segment margins and market share improved during 1998. Segment margins rose to 8.7 percent of related sales with four plant startups and numerous new model introductions. Our U.S. market share increased to 18.3 percent from 17.7 percent in 1997. Strong sales to independent and company-operated retailers contributed to these improvements. Unfilled orders for housing totaled approximately $73 million at the beginning of this year, 73 percent higher than a year ago, excluding Homes of Merit from both periods.''
Retail successfully expanded
During 1998 the company acquired a core group of manufactured housing retail organizations for $253 million in net cash, $12 million in stock and contingent amounts based on future profits. Retail operations for the year posted strong results on revenues of $562 million, up from $61 million a year ago. During 1998 retail operations sold 11,738 new homes, 49 percent of which were produced by Champion facilities. Segment income, before charges for inventory financing, was 8.4 percent of retail sales.
Mark Cole, President, Retail Operations, commented, ''We made substantial progress in implementing our retail strategy in 1998 and are delighted with the strong results our retailers reported. As a result of internal expansions and acquisitions, including the Heartland Homes transaction completed in early-1999, we currently operate 264 home centers in 28 states. During 1999 we will continue to look for retail acquisitions and internal expansions. We are on track to meet our goal of at least $1 billion in retail revenues by the year 2000.''
Record fourth quarter
Champion reported record fourth quarter revenues and earnings from continuing operations for the quarter ended January 2, 1999. Revenues reached $594 million, up 38 percent, and earnings from continuing operations rose 18 percent to $0.46 per diluted share. These results are particularly impressive since the fourth quarter of 1997 included 14 weeks versus a normal 13 week quarter in 1998. Operating margins for the quarter were comparable to last year at 7.1 percent of sales, but were affected by the opening of retail locations in late-1998.
Manufacturing margins for the quarter were 8.0 percent of related revenues, which reached $484 million. Homes sold increased 9.4 percent and floors sold rose 10.6 percent. For the three-month period, the industry reported that wholesale home shipments and floors sold were up 8.6 percent and 10.3 percent, respectively. Retail operations had quarterly revenues totaling $178 million and segment margins before flooring interest of 7.1 percent of related sales.
1999 outlook positive
The company generated strong operating cash flow in 1998 and earnings before interest, taxes, depreciation and amortization was $197 million, up from $134 million in 1997. Total debt was 39 percent of total capital at January 2, 1999 and return on average equity for the year was 27.5 percent.
Champion's Executive Vice President, Chief Strategic and Financial Officer, Joseph H. Stegmayer, commented, ''We are optimistic about the prospects for 1999. The expansion of our manufacturing segment and the start- up of a large retail operation in 1998 provide excellent platforms for continued growth. While there are sure to be challenges in the general economy as well as within the industry, our decentralized, autonomous operations give us flexibility to manage costs and to react quickly to regional economic conditions.''
Young concluded, ''We are committed to further improving our operations and to pursuing new, related platforms that will continue to generate long-term growth for our shareholders. Our long-term goal is to increase earnings per share at a minimum compound annual growth rate of 15 percent.'' |
