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CAV - HUGE FEMA TIES! > Cavalier reports profits for 2004,

credits FEMA purchases
Manufactured home maker Cavalier Homes Inc. is reporting profits for both the fourth quarter and full year ended Dec. 31, 2004, due in large part to late-year shipments the Addison company provided the Federal Emergency Management Agency for hurricane-ravaged Florida.




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"We think these results demonstrate, to some extent, our efforts over the past several years to right-size our company for the tough conditions that we have experienced - and continue to experience - in the marketplace," Cavalier's president and chief executive David Roberson said in a written statement.

Fourth quarter revenue increased 36 percent to $76 million compared to $56 million in fourth quarter 2003. The boost is attributed to a 38 percent increase that quarter in manufactured home sales to $73.43 million from $53.18 million one year ago.

Meanwhile, shipments for the quarter increased 30 percent to 3,353 units from 2,576 the same period one year ago, indicating a 2 percent comparable increase excluding the 714 units shipped under the FEMA agreement.

Cavalier's total 2004 revenue declined 6 percent to $223.78 million from $237.22 million in 2003, mirroring a 6 percent decline in manufactured home sales. Likewise, shipments for 2004 declined 13 percent to 10,772 units compared with 12,411 in 2003. Excluding the 1,023 FEMA shipments, Cavalier's total shipments for the year declined 22 percent.

Yet gross profit for 2004 increased 7 percent to $41.74 million compared to $39.15 million in 2003 due in large part to the company boosting its average selling price.

Roberson said he is pleased Cavalier (NYSE: CAV) was able to build on the momentum established in the third fiscal quarter 2004 - the company's first profitable quarter since 1999 - via the FEMA agreement.

He said the company has worked diligently to "instill greater fiscal discipline" by closing underperfoming plants, improving margins and enhancing product offerings. The strides have sharpened Cavalier's competitive edge, but are less indicative of a positive trend than a temporary shot in the arm.

"Although we continue to see improvements in some issued facing the industry during 2004, most notably an ongoing reduction in the number of repossessed homes on the market, removing the stimulus of FEMA shipments in 2004 reveals an industry still in need of a catalyst to spur renewed growth," Roberson said. "The much-anticipated infusion of new and competitive lending capacity, which we think is essential to support demand at higher levels, just has not yet materialized."

Earlier this year, Cavalier helped supply 1,023 single-wide mobile homes to FEMA for relief efforts in the hurricane-battered Southeast. The single-wide mobile homes, also built by competitor Southern Energy Homes (Nasdaq: SEHI), were to serve as temporary housing for Florida's left homeless after the series of summer storms.