Addison, AL, June 23, 2004--Cavalier Homes, Inc. today announced that, although its financial results for the second quarter of 2004 are expected to show improvement from the first quarter of 2004, the Company now anticipates that it will report a loss for the quarter ending June 26, 2004.
Previously, Cavalier had anticipated a return to profitability in the second quarter based on expectations that industry sales were beginning to rebound, in part due to the prospects of additional lending capacity entering the market. The change in the company's outlook on the second quarter reflects continued weak demand in the manufactured housing industry, and more particularly in the southeastern states that comprise the Company's major markets.
In the first quarter of 2004, Cavalier reported total revenue of $44.3 million together with a net loss of $1.9 million or $0.11 per share.
"Despite the more positive signals on the industry's direction that were evident as we came out of the winter months, which gave us reason for guarded optimism about the upcoming second quarter, we in fact continue to face a difficult operating environment," said David Roberson, President and Chief Executive Officer. "A number of issues contribute to this ongoing weakness, which can be seen by the slight drop in industry shipments for April after a promising upturn in March.
"The first of these is the recent withdrawal of Chase Financial, which previously had represented an important source of retail lending for manufactured housing customers, especially those seeking chattel financing," Roberson continued. "Cavalier focuses primarily on southeastern states where chattel financing remains a substantial part of manufactured home sales. Moreover, these states have not experienced a rebound in overall sales as have some states in other regions. In addition to retail finance conditions, wholesale or floor plan financing has remained tight, maintaining pressure on dealers and inhibiting the replenishment of dealer inventories. Lastly, as these factors constrain manufactured home sales, substantially higher commodity prices for steel, lumber and other materials have forced home prices higher, which further impedes sales growth and places additional pressure on margins as these price increases cannot be fully passed on to consumers."
