Featherlite (NASDAQ:FTHR)
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Featherlite, Inc. (Nasdaq:FTHR), a leading manufacturer
and marketer of specialty aluminum trailers, transporters and luxury
motorcoaches, today reported record net income of $1.5 million, or 13
cents per diluted share, on net sales of $54.1 million for the second
quarter ended June 30, 2006. Net income increased 43.1 percent in the
second quarter of 2006, up from $1.1 million, or 9 cents per diluted
share, in the same period in 2005. On a consolidated basis, higher
second quarter net income in 2006 was primarily the result of
increased sales and gross margin improvements in the trailer division
compared to 2005.
Net income for the first six months of 2006 was $2.9 million
compared with $2.5 million for the same period in 2005. On a diluted
per share basis, the Company earned 25 cents in the first six months
of fiscal 2006 compared to 22 cents for the same period in 2005.
Second quarter net sales in 2006 rose by $2.0 million, or 3.8
percent, over the same period last year. Trailer segment sales
increased 25 percent in the second quarter of 2006 over the same
period last year. This increase resulted from greater trailer unit
sales in nearly all product categories as well as a significant
improvement in average revenue per unit as a result of the favorable
impact of the price increases and surcharges initiated in 2006 to
offset commodity price increases. Luxury coach segment sales decreased
by 37.6 percent in the second quarter of 2006 over the same quarter
last year with unit sales down in both new and pre-owned coaches.
Declines in coach unit sales were partially offset by higher net
revenues per unit sold in both new and pre-owned categories.
Net sales of $114.5 for the first six months of 2006 were up three
percent from $110.7 million reported in the same period last year as
increased trailers sales of 14.8 percent were substantially offset by
a 17.5 percent decrease in motorcoach sales.
"Despite softness in the luxury coach segment, Featherlite posted
its strongest second quarter earnings ever," President and CEO Conrad
Clement said. "We remain cautiously optimistic about sales through the
remainder of 2006. Though the trailer segment backlog is at $14.2
million compared with $16.3 million at the same period last year, we
are pleased that order levels have remained strong throughout 2006.
Motorcoach segment backlog has declined from $9.2 million at June 30,
2005 to $2.3 million at December 31, 2005 and $1.7 million at June 30,
2006. We expect demand for coaches in the third and fourth quarters of
2006 to improve as uncertainties related to Company's process of
exploring strategic alternatives have been removed, as discussed
below.
"This spring the Company launched the newest and most exclusive
luxury coach edition in the industry, the Featherlite Vantare Platinum
Plus. The early media attention has been the strongest of any we have
received for a coach product launch, and we look forward to
introducing it to audiences first hand at shows and events this
summer, fall and beyond," Clement said.
As previously announced, the Company has signed a definitive
agreement to merge with a subsidiary of Universal Trailer Holdings
Corp. Under the terms of the agreement, a subsidiary of Universal
Trailer will merge with and into the Company, the Company will become
a wholly-owned subsidiary of Universal Trailer, and Company
shareholders will receive $6.50 in cash for each outstanding share of
Company common stock. The aggregate consideration to be paid to
Company shareholders and option and warrant holders is approximately
$79.5 million, and Universal Trailer will assume approximately $29.1
million in debt obligations. In addition, as previously announced,
Featherlite Coaches, a newly-formed company controlled by Conrad
Clement, Tracy Clement, Featherlite's Executive Vice President, and
Bulk Resources, Inc., has entered into a definitive agreement with
Universal Trailer to purchase the assets and assume substantially all
of the liabilities of the Company's motorcoach division immediately
following the closing of the merger. The Company is not a party to
this agreement and does not own any equity of Featherlite Coaches. The
merger is expected to be completed by October 31, 2006 and is subject
to various conditions, including the continued effectiveness of the
agreement between Featherlite Coaches and Universal Trailer. The
Company expects to announce a special meeting of the Company's
shareholders following preparation and filing of proxy materials with
the Securities and Exchange Commission.
-0-
*T
Featherlite, Inc.
Condensed Balance Sheets
(Unaudited)
(In thousands)
June 30, Dec. 31,
ASSETS 2006 2005
--------- ---------
Current assets
Cash $140 $91
Receivables 9,249 7,178
Refundable income taxes 337 337
Inventories 59,695 55,714
Leased promotional trailers 1,496 1,550
Prepaid expenses 1,083 1,820
Deferred tax asset 1,329 1,329
--------- ---------
Total current assets 73,329 68,019
Property and equipment,net 16,320 16,583
Other assets 3,945 3,199
--------- ---------
$93,594 $87,801
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Wholesale financing and other notes payable $19,569 $18,923
Current maturities of long-term debt 1,868 1,791
Checks issued not yet presented 4,399 4,419
Accounts payable 5,613 4,384
Motorcoach shell costs payable 6,436 3,142
Accrued liabilities 9,980 8,194
Customer deposits 1,536 2,832
--------- ---------
Total current liabilities 49,401 43,685
Bank line of credit 183 2,418
Other long-term debt, net of current maturities 9,531 10,168
Deferred tax liabilities 1,259 1,259
Other long-term liabilities 28 35
Shareholders' equity 33,192 30,236
--------- ---------
$93,594 $87,801
========= =========
Featherlite, Inc
Condensed Statements of Income
(Unaudited)
(In Thousands, except for per share data)
Three months Ended Six months Ended
June 30, June 30,
------------------ -------------------
2006 2005 2006 2005
--------- -------- --------- ---------
Net Sales $54,096 $52,084 $114,529 $110,671
Cost of Sales 44,581 44,159 95,736 92,994
--------- -------- --------- ---------
Gross profit 9,515 7,925 18,793 17,677
Selling and administrative
expenses 6,366 5,510 12,783 12,291
--------- -------- --------- ---------
Income from operations 3,149 2,415 6,010 5,386
Other income(expense)
Interest (662) (704) (1,307) (1,335)
Other, net 36 13 71 41
--------- -------- --------- ---------
Total other expense (626) (691) (1,236) (1,294)
--------- -------- --------- ---------
Income before taxes 2,523 1,724 4,774 4,092
Minority interest in subsidiary
income - 11 - (1)
Provision for income taxes (984) (660) (1,862) (1,555)
--------- -------- --------- ---------
Net income $1,539 $1,075 $2,912 $2,536
========= ======== ========= =========
Net income per share-
Basic $0.14 $0.10 $0.26 $0.23
--------- -------- --------- ---------
Diluted $0.13 $0.09 $0.25 $0.22
--------- -------- --------- ---------
Weighted average shares
outstanding -
Basic 11,060 10,930 11,050 10,909
--------- -------- --------- ---------
Diluted 11,697 11,627 11,681 11,532
--------- -------- --------- ---------
*T
Important Additional Information will be filed with the SEC
The Company plans to file with the SEC and mail to shareholders a
proxy statement in connection with the merger referred to above. The
proxy statement will contain important information about the Company,
the merger and related matters. Shareholders are urged to read the
proxy statement, and any other relevant documents filed with the SEC,
carefully when they become available because they will contain
important information about the companies and the proposed
transaction.
The Company, the special committee of its board of directors, and
the Company's officers and directors may be deemed to be participants
in the solicitation of proxies from the shareholders of the Company
with respect to the transactions contemplated by the merger agreement
referred to above. Information regarding the Company's directors and
executive officers is contained in the Company's annual report on Form
10-K for the year ended December 31, 2005, which is filed with the
SEC.
Shareholders will be able to obtain free copies of the proxy
statement, Form 10-K and other documents filed by the Company with the
SEC through the website maintained by the SEC at www.sec.gov and
through the Company's website at www.fthr.com.
About Featherlite
With more that 75 percent of its business in the leisure,
recreation and entertainment categories, Featherlite(R), Inc. has
highly diversified product lines offering hundreds of standard model
and custom-designed aluminum specialty trailers, specialized
transporters, mobile marketing trailers and luxury motorcoaches. For
more information about the Company, please visit www.fthr.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act: Certain statements in this release are forward-looking in
nature and relate to trends and events that may affect the Company's
future financial position and operating results. Any statements that
are not based upon historical facts, including the outcome of events
that have not yet occurred and our expectations for future
performance, are forward-looking statements. Statements in this
release regarding expectations of the importance of sales leads on
future sales levels and the effectiveness of price increases and
surcharges on margins are forward-looking statements. In general,
words such as "believe," "estimate," "expect," "intend," "may,"
"could," "will," "plan," "anticipate," and similar words and
expressions identify forward-looking statements. These statements
speak only as of the date of this release, are based on current
expectations, are inherently uncertain, are subject to risks, and
should be viewed with caution. Actual results and experience may
differ materially from the forward-looking statements as a result of
many factors, including but not limited to: the health of the economy
and disposable income for recreational and leisure activities, product
demand and acceptance of products in each segment of the Company's
markets, the need for and impact of product sales price increases,
fluctuations in the price of aluminum, changes in our product sales
mixes, competition, facilities utilization, the availability of
additional capital as may be required to finance any future net
liquidity deficiency, and certain other unanticipated events and
conditions. In addition, the following factors relating to the
proposed merger could cause actual results to differ materially from
those described in the forward-looking statements: the risk that the
Featherlite and Universal Trailer businesses will not be integrated
successfully; costs related to the proposed merger; failure of the
Company's shareholders to approve the proposed merger; and other
economic, business, competitive and/or regulatory factors affecting
the Company's and Universal Trailer's businesses generally, including
those set forth in the Company's filings with the SEC, including its
Annual Report on Form 10-K for the most recent fiscal year, its most
recent Quarterly Report on Form 10-Q, and its Current Reports on Form
8-K. The risks and uncertainties listed are not the only ones we face.
Additional risks and uncertainties not presently known to us or that
we currently deem immaterial may also affect our business operations.
The Company makes no commitment to update any forward-looking
statement or to disclose any facts, events, or circumstances after the
date hereof that may affect the accuracy of any forward-looking
statement, other than as required by law.