Skyline Champion Corp - FORM 8-K - EX-99.1

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8-K - 8-K - Skyline Champion Corp	d374823d8k.htm

Exhibit 99.1


		NEWS RELEASE
		Skyline Corporation 2520 By-Pass Road P.O. Box 743 Elkhart, Indiana 46515-0743 (574) 294-6521

Subject: THIRD QUARTER REPORT		Approved by: JON S. PILARSKI

ELKHART, INDIANA — APRIL 14, 2017

SKYLINE REPORTS THIRD QUARTER AND FIRST NINE MONTHS RESULTS

For the third quarter of fiscal 2017, Skyline Corporation (NYSE MKT: SKY) (“Skyline” or the “Corporation”) reported the following results:

•

Net sales from continuing operations of $51,640,000, an increase of 8.3% over net sales of $47,697,000 from continuing operations in the year ago quarter. In June 2016, Skyline commenced operation of a leased facility in Elkhart, Indiana which contributed $4,300,000 of net sales and incurred a loss of $323,000 in the current quarter.

•

Loss from continuing operations of $2,447,000 as compared to a loss of $514,000 from continuing operations in the third quarter of fiscal 2016. Operating results were adversely affected by increased manufacturing labor costs associated with hiring and training employees at facilities which are increasing production output. In addition, newly-hired, inexperienced employees contributed to an increase in higher workers’ compensation and warranty costs for the period.

•

No income or loss from discontinued operations as compared to a loss of $6,000 from discontinued operations in the third quarter of fiscal 2016.

•

Net loss of $2,447,000 or $0.29 per share as compared to a net loss of $520,000 or $0.06 per share in the third quarter of fiscal 2016.

For the first nine months of fiscal 2017, the Corporation reported the following results:

•

Net sales from continuing operations of $177,042,000, an increase of 14.1% over net sales of $155,123,000 from continuing operations in the year ago first three quarters. Net sales attributable to the Elkhart facility during this period were $10,554,000 while losses at the Elkhart operations were $1,605,000.

•

Losses from continuing operations of $2,298,000 as compared to income of $339,000 from continuing operations in the first nine months of fiscal 2016. Similar to the third quarter, operating results were adversely affected by increased manufacturing labor costs

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		NEWS RELEASE
		Skyline Corporation 2520 By-Pass Road P.O. Box 743 Elkhart, Indiana 46515-0743 (574) 294-6521

Subject: THIRD QUARTER REPORT		Approved by: JON S. PILARSKI

associated with hiring and training employees at facilities which are increasing production output. In addition, newly-hired, inexperienced employees contributed to an increase in higher workers’ compensation costs for the period. Net income in the year ago first three quarters included a $250,000 payment on an account that had been previously reserved.

•

No income or loss from discontinued operations as compared to income of $13,000 from discontinued operations in the first nine months of fiscal 2016.

•

Net loss of $2,298,000 or $0.27 per share as compared to a net income of $352,000 or $0.04 per share in the first three quarters of fiscal 2016.

“While we are disappointed with our performance in the third quarter, our recent decision to close two underperforming plants will eliminate the persistent losses that they have incurred” said Richard W. Florea, President and Chief Executive Officer. “The closure of these facilities will permit us to reallocate resources to focus on improving the profitability of our remaining plants.”

Forward-Looking Statements

Information contained in this press release contains “forward-looking statements,” including but not limited to statements related to the suspension of operations at the Elkhart and Mansfield facilities and the effects of such action, which are based on current expectations, forecasts, and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to, possible adverse consequences to the Corporation in connection with the suspension of operations at the facility, general business and economic conditions, and other factors, risks, and uncertainties contained in the Corporation’s other filings with the Securities and Exchange Commission. For a further list and description of such risks, see the reports and other filings made by the Corporation with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended May 31, 2016. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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Skyline Corporation and Subsidiary Companies

Consolidated Balance Sheets

(Dollars in thousands)


	February 28, 2017			May 31, 2016
	(Unaudited)
Current Assets:
Cash	$	5,232		$	7,659
Accounts receivable		14,857			15,153
Inventories		13,619			11,381
Workers’ compensation security deposit		690			1,294
Other current assets		776			331


Total Current Assets		35,174			35,818


Property, Plant and Equipment, at Cost:
Land		2,996			2,996
Buildings and improvements		37,279			36,624
Machinery and equipment		17,364			16,977

		57,639			56,597
Less accumulated depreciation		45,690			44,952

		11,949			11,645

Other Assets		7,241			7,515


Total Assets	$	54,364		$	54,978


Current Liabilities:
Accounts payable, trade	$	3,776		$	3,921
Accrued salaries and wages		2,555			3,557
Accrued marketing programs		3,090			1,767
Accrued warranty		5,686			4,817
Customer deposits		1,664			1,521
Other accrued liabilities		2,918			2,448


Total Current Liabilities		19,689			18,031


Long-Term Liabilities:
Deferred compensation expense		4,921			5,002
Accrued warranty		2,500			2,500
Life insurance loans		4,312			4,312

Total Long-Term Liabilities		11,733			11,814


Shareholders’ Equity:
Common stock, $.0277 par value, 15,000,000 shares authorized; issued 11,217,144 shares		312			312
Additional paid-in capital		5,117			5,010
Retained earnings		83,257			85,555
Treasury stock, at cost, 2,825,900 shares		(65,744	)		(65,744	)

Total Shareholders’ Equity		22,942			25,133


Total Liabilities and Shareholders’ Equity	$	54,364		$	54,978

Skyline Corporation and Subsidiary Companies

Consolidated Statements of Operations

For the Three-Months and Nine-Months Ended February 28, 2017 and February 29, 2016

(Dollars in thousands, except share and per share amounts)


	Three-Months Ended						Nine-Months Ended
	2017			2016			2017			2016
	(Unaudited)						(Unaudited)
OPERATIONS
Net sales	$	51,640		$	47,697		$	177,042		$	155,123
Cost of sales		48,421			42,887			162,013			138,443

Gross profit		3,219			4,810			15,029			16,680
Selling and administrative expenses		5,581			5,246			17,070			16,105

Operating (loss) income		(2,362	)		(436	)		(2,041	)		575
Interest expense		(85	)		(78	)		(257	)		(236	)

(Loss) income from continuing operations before income taxes		(2,447	)		(514	)		(2,298	)		339
Income tax expense		—			—			—			—

(Loss) income from continuing operations		(2,447	)		(514	)		(2,298	)		339
(Loss) income from discontinued operations,net of taxes		—			(6	)		—			13

Net (loss) income	$	(2,447	)	$	(520	)	$	(2,298	)	$	352

Basic and diluted (loss) income per share	$	(.29	)	$	(.06	)	$	(.27	)	$	.04

Basic and diluted (loss) income per share from continuing operations	$	(.29	)	$	(.06	)	$	(.27	)	$	.04

Basic and diluted (loss) income per share from discontinued operations	$	—		$	—		$	—		$	—


Weighted average number of common shares outstanding:
Basic		8,391,244			8,391,244			8,391,244			8,391,244

Diluted		8,391,244			8,391,244			8,391,244			8,391,244

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