Featherlite Reports Third Quarter Results
28 October 1998
Featherlite Reports Third Quarter Results
CRESCO, Iowa, Oct. 28 -- Featherlite, Inc. , a
leading manufacturer and marketer of specialty aluminum trailers and luxury
motorcoaches, today reported net sales for the third quarter ended Sept. 30,
1998, of $48.9 million, up 49.5 percent from net sales of $32.7 million in
last year's third quarter. Net income for the third quarter was $524,000, or
8 cents per diluted share, vs. net income of $889,000, or 14 cents per diluted
share, in the third quarter of last year. Both sales and net income are
slightly above the range estimated by the company in a news release on Oct. 8.
Conrad Clement, chairman and chief executive officer, said, "Our sales
growth in the third quarter continued to be led by strong increases in sales
of Vantare by Featherlite(R) luxury motorcoaches and the addition of the
Featherlite Vogue(R) line of luxury motorcoaches and bus conversion vehicles
acquired in May 1998. We also achieved a strong 47 percent increase in horse
trailer sales, and a 24 percent increase in sales of utility and recreational
trailers. Livestock trailer sales declined 8 percent in the third quarter,
reflecting the difficult economic conditions faced by our customers in
agribusiness. We also had an 11 percent decline in sales of car and race car
transporters, due to delays in completing a number of transporters which were
scheduled for delivery during the quarter. Those units will be completed and
delivered in the fourth quarter."
Gross margin declined in the third quarter to 15.4 percent of sales from
17.7 percent last year. The principal factor in the decline was lower gross
margin of Featherlite Vogue(R) products many of which were sold at prices set
before the May 1998 acquisition. Additionally, a slowdown in livestock
trailer sales and the delay in completing some race car transporters resulted
in reduced personnel efficiencies and lower-than-anticipated facilities
utilization in Featherlite's manufacturing plants during the quarter.
For the nine months ended Sept. 30, 1998, net sales were $139.9 million,
up 40.7 percent from net sales of $99.4 million in last year's comparable
nine-month period. Net income for the nine months ended Sept. 30, 1998, was
$2,670,000, or 41 cents per diluted share, up 18.1 percent from net income of
$2,259,000, or 36 cents per diluted share, last year.
Looking Forward
"Despite the softening in some of our trailer categories and a resulting
decline in third quarter net income, I continue to be optimistic about both
sales and net income for the fourth quarter and with the outlook for next
year," Clement said. "Transporter sales are expected to be particularly
strong and at record levels for the fourth quarter and remain strong into
1999, which should contribute to overcoming the loss of profits from lower
sales in other categories. Sales of both Vantare by Featherlite(R) and
Featherlite Vogue(R) motorcoaches are also expected to be strong in the fourth
quarter and in 1999, barring any unforeseen increase in economic uncertainty
or declines in consumer confidence.
"We anticipate improved gross margin in the fourth quarter resulting, in
part, from a 2-percent price increase that we initiated in September which
should be effective for a majority of the trailers delivered in the fourth
quarter. Additionally, staffing levels at certain plants have been reduced
through either layoffs or normal attrition. In addition to having our
aluminum purchases locked in for the remainder of this year, we have also
locked in prices for aluminum purchases through next year at about 5 percent
below our current cost, which adds to our optimism about Featherlite's
prospects for 1999," Clement said.
About Featherlite
Featherlite, Inc., is an innovative leader in designing, manufacturing and
marketing high quality aluminum specialty trailers, transporters and luxury
motorcoaches. With three-quarters of its business in the leisure, recreation
and entertainment categories, Featherlite has highly diversified product lines
offering standard model aluminum specialty trailers and custom-designed
trailers, transporters and motorcoaches. Featherlite is the "Official
Trailer" of NASCAR, Championship Auto Racing Teams (CART), Indy Race League
(IRL), SPORTSCAR, Automobile Racing Club of America (ARCA), American Speed
Association (ASA), World of Outlaws (W.O.O.) and NHRA. Through its Vantare by
Featherlite and Featherlite Vogue product lines, Featherlite is the "Official
Luxury Motorcoach" of NASCAR, IRL, SPORTSCAR, CART and NHRA. For more
information about the company, please visit Featherlite's website at
http://www.featherliteinc.com
Featherlite, Inc.
Condensed Statements of Income
(In thousands, except per share data)
(unaudited)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
1998 1997 1998 1997
Net sales $48,895 $32,728 $139,931 $99,414
Cost of sales 41,366 26,926 118,096 83,315
Gross profit 7,529 5,802 21,835 16,099
Selling and
administrative
expenses 5,899 4,215 15,835 11,632
Income from
operations 1,630 1,587 6,000 4,467
Other income
(expense)
Interest (863) (445) (2,124) (1,220)
Gain on aircraft
and property sales -- 275 140 269
Other, net 103 66 433 250
Total other expense (760) (104) (1,551) (701)
Income before taxes 870 1,483 4,449 3,766
Provision for income
taxes 346 594 1,779 1,507
Net income $524 $889 $2,670 $2,259
Net income per
common share:
Basic $0.08 $0.14 $0.42 $0.36
Diluted $0.08 $0.14 $0.41 $0.36
Weighted average
shares outstanding:
Basic 6,493 6,255 6,381 6,255
Diluted 6,643 6,305 6,512 6,309
Featherlite, Inc.
Condensed Balance Sheets
(In thousands)
Sept. 30, 1998 Dec. 31, 1997
ASSETS
(unaudited)
Current assets
Cash $1,782 $1,632
Trade receivables 10,426 7,050
Inventories 53,561 39,664
Prepaid expenses 1,269 1,110
Deferred taxes 824 824
Total current assets 67,862 50,280
Property and equipment, net 15,480 14,180
Goodwill and other assets 16,906 11,048
Total assets $100,248 $75,508
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of
long-term debt $1,027 $1,173
Short term notes 13,738 6,515
Accounts payable 18,845 11,984
Accrued liabilities 6,477 5,380
Customer deposits 2,150 3,585
Total current liabilities 42,237 28,637
Long-term debt, net of current maturities 28,419 22,075
Other long term liabilities 863 919
Shareholders' equity 28,729 23,877
Total liabilities and
shareholders' equity $100,248 $75,508
Safe Harbor Statement under the Private Securities Litigation Reform Act:
Statements in this release looking forward in time involve risks and
uncertainties discussed here and in the company filings with the Securities
and Exchange Commission, including product acceptance and demand in each
segment of the Company's markets, the price of aluminum, competition, and
facilities utilization.
For more information, contact Doug Ewing of Swenson NHB Investor
Relations, Minneapolis, 612-344-1036, for Featherlite or Jeffery A. Mason of
Featherlite, 319-547-6000.