Featherlite Reports Third-Quarter Results Third Quarter Net Income
27 October 1999
Featherlite Reports Third-Quarter Results Third Quarter Net Income of 16 Cents Per Diluted Share Doubles Last Year's Level; Net Sales Up 10 Percent to $53.9 Million; Net Income for the Nine-Month Period Rises 34.8 Percent Over Last Year
CRESCO, Iowa, Oct. 27 -- 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,
1999, of $53.9 million, up 10.3 percent from net sales of $48.9 million in
last year's third quarter. Net income for the third quarter was $1,046,000, or
16 cents per diluted share, vs. $524,000, or 8 cents per diluted share, in the
third quarter of last year.
Conrad Clement, chairman and chief executive officer, said, "Third quarter
results were aided by strong gross margin performance in our specialty trailer
segment and continued sales growth in the Featherlite Luxury Coach Division,
which again led our growth in quarterly sales comparisons to last year. The
strong overall improvement in gross margin enabled us to achieve a 29-percent
increase in income from operations and was a key component in doubling last
year's third quarter net income.
"With our solid third quarter earnings gain, net income through the first
nine months of 1999 is nearly equal to our full-year net income for 1998. Our
objective for 1999 was to achieve strong bottom-line performance and we are
doing exactly that. We are on track to realize our full-year objectives for
1999," Clement said.
Featherlite's third quarter sales gain over last year was led by a
28-percent increase in sales of the Featherlite Luxury Coach Division,
including the Featherlite Vantare(TM) and Featherlite Vogue(R) brands. Sales
of Featherlite specialty trailers declined 6 percent in the third quarter,
reflecting a decline in livestock trailer sales which was partially offset by
strong sales gains of custom-designed specialized transporters, including car
trailers and race car transporters. Sales of horse trailers were modestly
below last year's third quarter level while commercial trailers, a category
being de-emphasized by Featherlite, and utility and recreational trailer sales
were also below last year's level.
Gross profit margin in the third quarter was 16.9 percent, compared with
15.4 percent in the third quarter of last year. Clement commented, "Gross
margin in our specialty trailer segment was particularly strong in the third
quarter. This was partially the result of our ongoing efforts to re-engineer
our manufacturing operations, including the addition of computer-controlled
fabrication tools and redesigning many of Featherlite's specialty trailer
production processes. We are now achieving greater manufacturing
efficiencies, better raw materials utilization and improved production flow.
We also benefited from lower raw material costs resulting from our early
purchase commitments on aluminum purchases for 1999."
Selling and administrative expenses were 13.0 percent of sales in the
quarter, compared with 12.1 percent last year. "During the third quarter we
added personnel at our new sales and service facility in Florida which opened
at the end of the quarter and therefore did not have an impact on sales,"
Clement said. "In addition, the expense efficiencies we expect over time from
the consolidation of our two luxury motorcoach lines into the Featherlite
Luxury Coach Division have not yet started to flow to the operating income
line."
For the nine months ended Sept. 30, 1999, net sales were $169.7 million,
up 21.2 percent from net sales of $139.9 million in last year's comparable
nine-month period. The year-to-date sales gain reflects, in part, the
addition of the Vogue line of luxury motorcoaches acquired in May 1998. On a
comparable basis, adjusting for the pre-acquisition sales of Vogue, overall
sales for the nine months increased 11 percent over last year, while sales of
the Featherlite Luxury Coach Division gained 25 percent over the nine-month
period of last year. Net income for the nine months was $3,600,000, or
55 cents per diluted share, an increase of 34.8 percent from $2,670,000, or
41 cents per diluted share, in the nine-month period of last year.
Looking Forward
Clement said, "With our improved manufacturing processes, the continuing
benefit of favorable aluminum cost and the development of new models,
amenities and features in Featherlite's specialty trailer segment, we are in
an excellent position to achieve strong margins and to capitalize on any
future strengthening in this sector. We remain solidly committed to this
important half of our business, and are confident in our ability to translate
our strong brand identity, product innovation and market leadership position
in specialty trailers into profitable market share growth in the future.
"We have introduced nine new models of horse trailers and car transporters
which are being very well received by our dealers and the retail customer, and
are very excited about the underlying strength of our specialty trailer
business.
"Our positioning in the luxury motorcoach business has been further
enhanced by the recent opening of our new Featherlite Luxury Coach Division
Sales and Service Center in Sanford, Fla., supporting both the Featherlite
Vantare and Featherlite Vogue lines. The new 39,000-square-foot facility is
already beginning to attract new potential customers, for both motorcoach
sales and for service. From its convenient and high visibility location on
Interstate-4, the new facility provides highly qualified sales associates, the
latest service equipment, professional service technicians and a full array of
conveniences for customers including hook-ups, internet and facsimile
connections, and a comfortable waiting area. We are very excited with what we
believe this new facility can do for our brand presence in the robust Florida
luxury motorcoach market.
"For the fourth quarter, we continue to be very positive about our
business opportunities in both segments of our business," Clement said. "In
addition to the growth we see in luxury motorcoach sales, we expect solid
horse trailer sales, a positive sales gain in livestock trailers and continued
strong sales of car and race car transporters.
"With all of the positive factors that have contributed to our strong
year-to-date profit performance remaining in place, we are confident in our
ability to meet current expectations for sales and net income in the fourth
quarter. Our total backlog at the beginning of the fourth quarter was in
excess of $39 million, up more than 35 percent from the same time last year.
We expect 1999 to be a record year for Featherlite in both sales and net
income, and look forward to another very strong year in fiscal 2000. We have
locked-in our aluminum purchases for fiscal year 2000 at costs that are
favorable to this year's levels, foresee additional gross margin benefits in
both business segments and expect to achieve leverage on SG&A expense both in
the Featherlite Luxury Coach Division and in our specialty trailer segment,"
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 80 percent of its business in the leisure, recreation and
entertainment categories, Featherlite has highly diversified product lines
offering 400 standard model and custom-designed aluminum specialty trailers,
specialized transporters and luxury 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 the National Hot Rod
Association (NHRA). Through its Featherlite Vantare 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 Nine Months Ended
Sept. 30, Sept. 30,
1999 1998 1999 1998
Net sales $53,939 $48,895 $169,656 $139,931
Cost of sales 44,808 41,366 142,008 118,096
Gross profit 9,131 7,529 27,648 21,835
Selling and
administrative expenses 7,029 5,899 20,113 15,835
Income from operations 2,102 1,630 7,535 6,000
Other income (expense)
Interest (893) (863) (2,665) (2,124)
Gain on aircraft and
property sales 179 -- 408 140
Other, net 143 103 529 433
Total other expense (571) (760) (1,728) (1,551)
Income before taxes 1,531 870 5,807 4,449
Provision for income taxes 485 346 2,207 1,779
Net income $1,046 $524 $3,600 $2,670
Net income per common and
common equivalent share:
Basic $0.16 $0.08 $0.55 $0.42
Diluted $0.16 $0.08 $0.55 $0.41
Weighted average shares
outstanding:
Basic 6,507 6,493 6,502 6,381
Diluted 6,531 6,643 6,520 6,512
Featherlite, Inc.
Condensed Balance Sheets
(In thousands)
Sept. 30, 1999 Dec. 31, 1998
ASSETS (unaudited)
Current assets
Cash $127 $188
Receivables 12,358 10,332
Inventories 67,409 61,373
Prepaid expenses 1,187 1,522
Deferred taxes 1,107 1,107
Total current assets 82,188 74,522
Property and equipment, net 19,343 15,868
Goodwill and other assets 16,310 16,398
Total assets $117,841 $106,788
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of
long-term debt $1,514 $1,241
Other notes payable 21,277 17,936
Accounts payable 20,019 18,221
Accrued liabilities 5,315 5,720
Customer deposits 3,666 2,241
Total current liabilities 51,791 45,359
Long-term debt, net of
current maturities 31,759 30,914
Other long term liabilities 938 972
Shareholders' equity 33,353 29,543
Total liabilities and
shareholders' equity $117,841 $106,788
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, please contact Doug Ewing of Swenson NHB Investor
Relations, 612-371-0000, for Featherlite, Inc., or Jeffery A. Mason, CFO of
Featherlite, Inc., 319-547-6000.