Addison, AL, February 14--Cavalier Homes will close an under-performing home manufacturing plant in Fort Worth, Texas.
The plant, Cavalier's only facility in that state, accounted for about 10% of Cavalier's total revenue and 11% of floor shipments in 2004.
Cavalier noted that the plant has been hurt by ongoing weakness in the Texas market, where floor shipments are down approximately 50% from the 2001 level - considerably worse than the overall decline seen in floor shipments nationwide during the same period. The plant has consistently incurred operating losses over the past five years, with net losses of approximately $2.5 million in each of the last two years. Furthermore, it was Cavalier's only unprofitable home manufacturing facility in 2004.
The company's Fort Worth plant currently services approximately 60 dealer locations in Texas and three other states, representing approximately 15% of the company's total network of independent dealers. Cavalier will continue to provide comparable products to some of this market, where delivery costs are practical, using available capacity at its plants in Alabama.
In connection with the plant closing, although evaluation is ongoing, Cavalier currently expects to record asset impairment charges ranging from $200,000-$300,000 in the fourth quarter ended December 31, 2004. The company also expects to incur employee termination costs related to the plant's current workforce of approximately 150 people. These termination costs, which are expected to range from $800,000-$900,000, will be recorded primarily in the first quarter of 2005.
Despite the additional costs recorded due to the plant's closing, Cavalier currently expects to report a profit for both the fourth quarter and full year ended December 31, 2004. The company plans to report results for these periods later this month.
Cavalier Homes, Inc. and its subsidiaries produce, sell, and finance manufactured housing. The company markets its homes primarily through independent dealers, including exclusive dealers that carry only Cavalier products, and provides financial services primarily to retail purchasers of manufactured homes.
