Champion Enterprises, Inc. Reports Record First Quarter Results Revenues Increase 35% to $625 Million Earnings Rise 19% to $0.43 Per Share
AUBURN HILLS, Mich., April 21 /PRNewswire/ -- Champion Enterprises, Inc. (NYSE: CHB - news), the nation's leading housing manufacturer, today reported record first quarter sales and earnings for the quarter ended April 3, 1999. Revenues increased 35 percent to $625 million from $463 million in 1998. Net income reached $21.2 million, an increase of 20 percent, and diluted earnings per share grew 19 percent to $0.43 from $0.36 last year.
Champion's Chairman, President, and Chief Executive Officer, Walter R. Young, commented, ''These record first quarter results are a great start for the year. Wholesale home shipments increased 16 percent, including the results of our January 1999 acquisition of Homes of Merit. Retail sales almost tripled, benefiting from acquisitions completed in 1998 and 1999.''
Young continued, ''Operating margins were 6.5 percent of sales, about the same as a year ago, and operating income increased 34 percent to $40.7 million. As a percent of revenues, gross margins and SG&A expenses were higher than last year due to the results of our growing retail operations. Positive, stable industry demand and Champion's continued market improvements are a good foundation to begin 1999.''
Manufacturing revenues increase 19 percent
Champion's manufacturing revenues for the quarter rose 19 percent from a year ago to reach $506 million, the highest quarterly manufacturing sales in the company's history. Manufacturing segment income increased 17 percent to $41.3 million. Homes sold totaled 18,830, an increase of 16 percent from a year ago, while floors sold improved 20 percent to 31,291. Of the total homes sold, 13 percent were to company-operated sales centers and 65 percent were multi-sectionals. Including the six Homes of Merit plants, Champion now has 65 home building facilities, compared to 56 in the first quarter of 1998. Unfilled wholesale orders for housing totaled approximately $62 million at April 3, 1999, compared to $75 million a year ago, excluding Homes of Merit from both periods.
Champion's Chief Operating Officer, Philip C. Surles, commented, ''We are pleased that our manufacturing results continue to outpace the industry. Champion's growth in wholesale home shipments in the quarter, excluding Homes of Merit, was 9 percent, compared to a 3 percent increase reported by the industry for January and February of 1999. Wholesale revenues and segment income for the quarter continued to improve significantly over last year, with 87 percent of homes sold going to independent retailers. Manufacturing segment margins were 8.2 percent of quarterly revenues, comparable to a year earlier.''
Retail growth strong
During the first quarter of 1999, retail revenues were $185 million compared with $67 million in the prior year. New homes sold totaled 3,833 and pre-owned homes sold totaled 996. Segment income, before inventory financing charges, reached $13.2 million, or 7.1 percent of related sales. Of the total new homes sold, 57 percent were produced by Champion facilities.
Mark Cole, President, Retail Operations, commented, ''This is the first quarter to fully reflect results from the retail expansions we implemented last year. Today we are operating 268 sales centers in 28 states, up from 143 locations a year ago. The start-up cost of our new sales locations hampered our operating margins somewhat, but overall we have been pleased with the integration of our retail acquisitions.
''Retail traffic is strong in most parts of the country,'' continued Cole. ''As the year progresses, we should benefit from a number of programs we have implemented, including improved insurance and finance income, materials purchasing, and the utilization of computer systems to improve operational efficiencies. We will continue to share best practices among our retailers and to manage inventory levels.''
Financial position and 1999 outlook positive
Champion generated strong operating cash flow in the first quarter and earnings before interest, taxes, depreciation and amortization totaled $50 million, up from $36 million in 1998. Total debt was 45 percent of total capital at April 3, 1999. Bank borrowings during the quarter increased for the acquisitions of Homes of Merit and Heartland Homes in January 1999, and for seasonal working capital needs. To date the company has spent $3.9 million to repurchase 197,000 shares of common stock pursuant to a Board authorization announced in February 1999 for up to 3.0 million shares.
Young concluded, ''We are optimistic about our earnings growth potential in 1999. Consumer demand for our homes continues to be good. Strong consumer confidence, historic low mortgage rates and low unemployment are all positive factors for our industry. As the industry's largest producer, we are positioning the company for long-term growth by expanding manufacturing operations, enhancing programs for independent retailers, and improving our retail platform. We will continue to be opportunistic as we take steps to enhance shareholder value over the long term.'' |
