Despite 65 Percent Decline in Sales in its Seasonally Slowest
Quarter, Company Maintains Nearly $50 Million in Total Liquidity
TROY, Mich., April 24 /PRNewswire-FirstCall/ -- Champion
Enterprises, Inc. (NYSE:CHB), a leader in factory-built
construction, today announced the results for its first quarter
ended April 4, 2009. Revenues for the quarter decreased 64.5
percent to $105.2 million compared to $296.7 million for the first
quarter of 2008. The Company's first quarter 2009 net loss totaled
$17.6 million, or $0.23 per diluted share, compared to a net loss
of $20.5 million, or $0.26 per diluted share, for the first quarter
of 2008. The Company reported a loss before income taxes of $18.6
million for the first quarter compared to a pretax loss of $20.9
million in the same period of 2008. The loss before income taxes in
the first quarter of 2009 included the following items totaling
$3.6 million of income: $4.3 million gain from the settlement of
insurance claims, foreign currency transaction losses on
intercompany loans of $0.6 million and restructuring charges of
$0.1 million. The first quarter 2008 pretax loss included the
following items totaling $13.9 million of expense: restructuring
and other plant closing charges totaling $9.8 million, foreign
currency transaction losses of $2.3 million and retail segment
inventory impairment charge of $1.8 million. "We are pleased to
have ended our seasonally most difficult quarter with nearly $50
million of liquidity and in compliance with each of our senior debt
covenants," stated William Griffiths, chairman, president and chief
executive officer of Champion Enterprises, Inc. "While it is not
uncommon to consume cash during the winter months, the extremely
difficult economic environment has weighed heavily on our results.
However, our efforts to reduce costs and preserve liquidity led to
a 33 percent improvement in cash used in operations over the prior
year quarter despite a 65 percent reduction in revenues. "Order
intake rates are now beginning to show some improvement,
particularly in Canada. In addition, the outlook for the second
half of the year in the U.K. remains favorable both in terms of
profitability and improved cash from operations. While we look
forward to a better second quarter, we do not anticipate a material
improvement in our results until the second half of the year,"
concluded Griffiths. North American Manufacturing Segment --
Manufacturing segment net sales for the first quarter decreased
57.2 percent to $77.7 million compared to $181.5 million in the
same period of the prior year. -- Revenues from the sale of modular
homes in the U.S. totaled $26 million for the quarter, down from
$49 million in the first quarter of 2008. -- The manufacturing
segment reported a loss of $6.1 million for the quarter compared to
a loss of $9.0 million in the first quarter of 2008. The loss for
the quarter ended April 4, 2009 included a $4.3 million gain
resulting from the settlement of property and business interruption
insurance claims. The segment loss in the first quarter of 2008
included $9.3 million of restructuring and other plant closing
charges. -- Segment backlogs totaled $10 million at April 4, 2009,
an improvement over the year-end 2008 level of $7 million but down
from $25 million at the end of last year's first quarter.
International Manufacturing Segment -- International segment
revenues decreased 80.3 percent to $21.7 million for the quarter
from the peak first quarter 2008 level of $110.4 million as a
result of reduced prison sector revenues and the slowdown in
construction activity caused by difficult economic conditions in
the U.K. In addition, $8.3 million of the decline in sales was
caused by the decrease in exchange rates from the prior year first
quarter. -- As a result of the significant decrease in sales,
international segment income fell to $0.1 million for the first
quarter of 2009 from $8.4 million in the same period of the prior
year. -- International segment order backlogs remained strong
during the quarter, with firm contracts and orders pending
contracts under framework agreements totaling approximately $155
million at April 4, 2009 compared to approximately $150 million at
the end of 2008. Retail Segment -- Retail segment first quarter
2009 revenues totaled $7.4 million, down 18.1 percent from $9.0
million for the same period last year. -- On lower sales, retail
segment results improved to a loss of $0.2 million for the quarter
compared to a loss of $2.8 million in the first quarter of 2008.
The prior year first quarter segment loss included a $1.8 million
impairment charge to reduce the value of aged inventory. Other
Items -- Cash used for operating activities totaled $18.5 million
for the first quarter of 2009 compared to cash used of $27.7
million for the same period of the prior year. The favorable
variance was primarily the result of working capital improvements
during the quarter. -- Cash, cash equivalents and short-term
investments totaled $47.8 million as of April 4, 2009 compared to
$52.8 million at the end of 2008 and $105.4 million at the end of
the first quarter of 2008. Inclusive of available borrowing
capacity under the revolving line of credit, Champion's total
liquidity stood at $49.2 million compared to $65.6 million at the
end of 2008. -- Champion's total debt increased to $323.9 million
as of April 4, 2009 from $313.1 million at the end of 2008
primarily as a result of borrowing $10.0 million under the
revolving line of credit during the quarter. -- As of April 4,
2009, the Company reclassified the outstanding debt under its
senior credit facility, totaling $123.0 million, from long-term to
current because, absent a significant recovery or a successful
renegotiation with its senior lenders, it is not likely that the
Company will be in compliance with its debt covenants in effect for
the first fiscal quarter of 2010. "Our most important priorities
over the next several months include the completion of targeted
asset sales with the goal of retiring or substantially reducing the
outstanding senior debt well in advance of the first quarter of
2010," stated Phyllis Knight, executive vice president and chief
financial officer. "We continue to make progress toward this goal
and remain confident that, upon completion, the Company will be
better positioned, with a significantly lower interest burden, to
participate in a recovery. "With a leaner debt structure consisting
primarily of $180 million of 2.75% convertible notes not callable
before late 2012 and with no restrictive covenants, Champion's
operating flexibility will be substantially enhanced upon
successful completion of these asset sales," concluded Knight.
First Quarter 2009 Conference Call Champion Enterprises will host a
conference call on Friday, April 24, 2009 at 10:30 a.m. EDT to
discuss these results and current business trends. To listen to the
call, please call (877) 719-9788 for domestic callers or (719)
325-4807 for international callers. The passcode is 9809407. The
call may also be heard live over the Internet at
http://www.championhomes.com/ under the "Investors" link. A
telephone replay of the call will be available approximately two
hours after the call's conclusion through Friday, May 1, 2009. To
access the telephone replay, please call (888) 203-1112 for
domestic callers or (719) 457-0820 for international callers. The
passcode is 9809407. A webcast replay will be available on the
Company's Web site for at least 90 days under the "Investors" link.
About Champion Troy, Michigan-based Champion Enterprises, Inc., a
leader in factory-built construction, operates 30 manufacturing
facilities in North America and the United Kingdom working with
independent retailers, builders and developers. The Champion family
of builders produces manufactured and modular homes, as well as
modular buildings for government and commercial applications. For
more information, please visit http://www.championhomes.com/.
Forward-Looking Statements This news release contains certain
statements, including statements regarding the outlook for U.K.
profitability and cash from operations, results for the remainder
of 2009, backlogs and pending orders, compliance with first quarter
2010 debt covenants, targeted asset sales, retirement or
substantial reduction of senior debt and the Company's
participation in a recovery, each of which could be construed to be
forward-looking statements within the meaning of the Securities
Exchange Act of 1934. These statements reflect the Company's views
with respect to future plans, events and financial performance. The
Company does not undertake any obligation to update the information
contained herein, which speaks only as of the date of this press
release. The Company has identified certain risk factors which
could cause actual results and plans to differ substantially from
those included in the forward-looking statements. These factors are
discussed in the Company's most recently filed Form 10-K and other
filings with the Securities and Exchange Commission, in each case
under the section entitled "Forward-Looking Statements," and those
discussions regarding risk factors are incorporated herein by
reference. CHAMPION ENTERPRISES, INC. CONSOLIDATED FINANCIAL
SUMMARY (Dollars and weighted shares in thousands, except per share
amounts) (UNAUDITED) Three Months Ended ------------------- April
4, March 29, % 2009 2008 Change ---- ---- ------ Net sales:
Manufacturing segment $77,677 $181,485 (57.2%) International
segment 21,743 110,366 (80.3%) Retail segment 7,406 9,047 (18.1%)
Less: intercompany (1,600) (4,200) ------ ------ Total net sales
105,226 296,698 (64.5%) Cost of sales 99,695 260,130 (61.7%) ------
------- Gross margin 5,531 36,568 (84.9%) Selling, general and
administrative expenses 21,295 39,303 (45.8%) Insurance gain
(4,295) - Restructuring charges 138 9,471 Foreign currency
transaction losses 642 2,351 Amortization of intangible assets
1,859 2,469 (24.7%) ----- ----- Operating loss (14,108) (17,026)
(17.1%) Interest expense, net 4,519 3,873 16.7% ----- ----- Loss
before income taxes (18,627) (20,899) (10.9%) Income tax benefit
(989) (415) ---- ---- Net loss $(17,638) $(20,484) (13.9%) ========
======== Basic loss per share $(0.23) $(0.26) (11.5%) ====== ======
Weighted shares for basic EPS 77,698 77,472 ====== ====== Diluted
loss per share $(0.23) $(0.26) (11.5%) ====== ====== Weighted
shares for diluted EPS 77,698 77,472 ====== ====== See accompanying
Notes to Consolidated Financial Information. CHAMPION ENTERPRISES,
INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands)
(UNAUDITED) April 4, January 3, 2009 2009 ---- ---- Assets: Cash
and cash equivalents $47,849 $52,787 Accounts receivable 28,096
33,935 Inventories 44,217 52,960 Deferred tax assets 665 673 Other
current assets 6,428 9,839 ----- ----- Total current assets 127,255
150,194 ------- ------- Property, plant and equipment, net 94,199
96,863 Goodwill and other intangible assets, net 374,766 375,692
Other non-current assets 20,208 22,260 ------ ------ Total assets
$616,428 $645,009 ======== ======== Liabilities and Shareholders'
Equity: Short-term debt $130,248 $12,229 Accounts payable 59,424
70,050 Other accrued liabilities 95,049 105,353 ------ -------
Total current liabilities 284,721 187,632 ------- ------- Long-term
debt 193,659 300,851 Deferred tax liabilities 37,011 36,592 Other
long-term liabilities 31,393 33,111 Shareholders' equity 69,644
86,823 ------ ------ Total liabilities and shareholders' equity
$616,428 $645,009 ======== ======== See accompanying Notes to
Consolidated Financial Information. CHAMPION ENTERPRISES, INC.
CONSOLIDATED CONDENSED CASH FLOW STATEMENTS (In thousands)
(UNAUDITED) Three Months Ended ------------------ April 4, March
29, 2009 2008 ----- ------ (Restated) Net loss $(17,638) $(20,484)
Adjustments: Depreciation and amortization 4,603 6,107 Stock-based
compensation 195 560 Change in deferred taxes 389 (3,780) Gain on
disposal of fixed assets (249) (98) Gain on insurance settlement
(4,295) - Foreign currency transaction losses 642 2,351 Fixed asset
impairment charges - 7,000 LCM inventory charge - 1,800 Insurance
proceeds 3,161 2,500 Increase/decrease: Accounts receivable 3,171
(32,963) Inventories 8,669 (5,184) Accounts payable (11,316) 14,297
Accrued liabilities (8,066) 463 Other, net 2,227 (245) ----- ----
Cash used for operating activities (18,507) (27,676) -------
------- Additions to property, plant and equipment (307) (2,275)
Insurance proceeds on PP&E 4,052 - Acquisitions and related
payments - (2,323) Purchase of short-term investments - (9,975)
Proceeds on disposal of fixed assets 574 2,475 Cash provided by
(used for) investing activities ----- ------- 4,319 (12,098) -----
------- Payments on debt (537) (49) Proceeds from Revolver debt
10,000 - Increase in deferred financing costs (178) - Common stock
issued, net - 65 --- --- Cash provided by financing activities
9,285 16 ----- -- Cash used for discontinued operations (57) (22)
Effect of exchange rate changes on cash and cash equivalents 22
(223) --- ---- Decrease in cash and cash equivalents (4,938)
(40,003) Cash and cash equivalents at beginning of period 52,787
135,408 ------ ------- Cash and cash equivalents at end of period
$47,849 $95,405 ======= ======= See accompanying Notes to
Consolidated Financial Information. CHAMPION ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) (1) The
Company evaluates the performance of its manufacturing,
international and retail segments based on income before
amortization of intangible assets, interest, income taxes, foreign
currency transaction gains and losses on intercompany indebtedness,
losses on debt retirements and general corporate expenses. A
reconciliation of loss before income taxes for the three months
ended is as follows (dollars in thousands): Three months ended: As
a % of As a % of ------------------- April 4, Related March 29,
Related 2009 Sales 2008 Sales ----- ----- ------ -----
Manufacturing segment loss $(6,106) (7.9)% $(9,023) (5.0)%
International segment income 64 0.3% 8,389 7.6% Retail segment loss
(158) (2.1)% (2,764) (30.6)% General corporate expenses (5,807)
(8,608) Amortization of intangible assets (1,859) (2,469)
Intercompany eliminations 400 (200) Foreign currency transaction
losses (642) (2,351) Interest expense, net (4,519) (3,873) ------
------ Loss before income taxes $(18,627) (17.7%) $(20,899) (7.0%)
======== ======== (2) During the first quarter of 2009, the Company
recognized a $4.3 million gain from the settlement of its property
and business interruption insurance claims related to the
manufacturing facility in Tennessee that was destroyed by fire in
February 2008. This gain was recorded in the manufacturing segment.
The Company received insurance proceeds of $7.5 million throughout
2008 and $7.2 million in the first quarter of 2009. (3) During the
quarter ended April 4, 2009, the Company further reduced its
corporate staff incurring $0.1 million of restructuring charges.
During the same period in 2008, the Company incurred $9.8 million
of restructuring and other plant closing charges in connection with
the Company's decision to close two manufacturing facilities and
reduce the number of North American regional offices. Charges
totaling $9.3 million were recorded in the manufacturing segment
with the remaining $0.5 million included in general corporate
expenses. A portion of the 2008 charges, totaling $0.3 million,
were recorded in cost of sales with the balance reported as
restructuring charges. (4) For the three month period ended March
29, 2008, the Company's retail segment recorded a $1.8 million
charge to reduce inventory values to estimated market value. This
charge is included in cost of sales. (5) The Company borrowed $10.0
million under its revolving line of credit during the quarter ended
April 4, 2009. (6) As of April 4, 2009, the Company reclassified
the outstanding debt under its senior credit facility, totaling
$123.0 million, from long-term to current because, absent a
significant recovery, the successful completion of certain targeted
asset sales or a successful renegotiation with its senior lenders,
it is not likely that the Company will be in compliance with its
debt covenants in effect for the first fiscal quarter of 2010. (7)
Proceeds and gains on disposal of fixed assets resulted primarily
from the sale of miscellaneous assets in the first quarter of 2009
and one closed plant in the first quarter of 2008. CHAMPION
ENTERPRISES, INC. OTHER STATISTICAL INFORMATION (UNAUDITED) Three
months ended ------------------ April 4, March 29, % 2009 2008
Change ----- ------ ------ MANUFACTURING SEGMENT Units sold:
HUD-Code 674 1,561 (56.8%) Modular 302 669 (54.9%) Canadian 202 564
(64.2%) Other 5 27 (81.5%) --- --- Total units sold 1,183 2,821
(58.1%) Less: intercompany (13) (63) (79.4%) --- --- Units sold to
independent retailers / builders 1,170 2,758 (57.6%) Floors sold
2,209 4,988 (55.7%) Multi-section mix 70% 66% Average unit prices,
excluding delivery Total $56,700 $56,600 0.2% HUD-Code $45,400
$45,500 (0.2%) Modular $81,700 $69,100 18.2% DATASOURCE: Champion
Enterprises, Inc. CONTACT: Laurie Van Raemdonck, Vice President,
Investor Relations, +1-248-614-8267, , or Phyllis Knight, Executive
Vice President and CFO, +1-248-614-8200, both of Champion
Enterprises, Inc. Web Site: http://www.championhomes.com/
Copyright
Champion Enterprises (NYSE:CHB)
Historical Stock Chart
Von Aug 2024 bis Sep 2024
Champion Enterprises (NYSE:CHB)
Historical Stock Chart
Von Sep 2023 bis Sep 2024