-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NXDc8BNCTWwz8cZ6v9DesrlaI9wC2OB0ieSQB/jGuotH/CPbXUJ8gbQ0khSfaTP4 4J//RNt3FluCD16pElOgtA== 0001144204-06-020080.txt : 20060515 0001144204-06-020080.hdr.sgml : 20060515 20060515080014 ACCESSION NUMBER: 0001144204-06-020080 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060515 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060515 DATE AS OF CHANGE: 20060515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MODTECH HOLDINGS INC CENTRAL INDEX KEY: 0001075066 STANDARD INDUSTRIAL CLASSIFICATION: PREFABRICATED WOOD BLDGS & COMPONENTS [2452] IRS NUMBER: 330825386 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-25161 FILM NUMBER: 06836964 BUSINESS ADDRESS: STREET 1: 2830 BARRETT AVE STREET 2: PO BOX 1240 CITY: PERRIS STATE: CA ZIP: 92571 BUSINESS PHONE: 9099434014 MAIL ADDRESS: STREET 1: 4675 MACARTHUR CT., STREET 2: SUITE 710 CITY: NEWPORT STATE: CA ZIP: 92660 8-K 1 v042962_8k.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549


FORM 8-K


CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934


Date of report (Date of earliest event reported): May 15, 2006

Modtech Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

 
000-25161
33-0825386
(Commission File Number)
(IRS Employer Identification No.)
 
 
 
2830 Barrett Avenue, Perris, CA
92571
(Address of Principal Executive Offices)
(Zip Code)

(951) 943-4014
(Registrant’s Telephone Number, Including Area Code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




ITEM 2.02   Results of Operations and Financial Condition

On May 15, 2006, Modtech Holdings, Inc. announced its financial results for the three month period ended March 31, 2006, pursuant to a press release, a copy of which is attached as Exhibit 99.1.

This information and the attached Exhibit is being furnished pursuant to this Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act of 1933 or the Exchange Act.


ITEM 9.01   Financial Statements and Exhibits

(d) Exhibits

99.1   Press Release of Modtech Holdings, Inc., dated May 15, 2006. 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 15, 2006

 
Modtech Holdings, Inc.
   
   
 
by: /s/ Dennis L. Shogren
 
Dennis L. Shogren
 
Chief Financial Officer

 
EX-99.1 2 v042962_ex99-1.htm

David Buckley
Dennis Shogren
Dan Matsui/Gene Heller
Chief Executive Officer
Chief Financial Officer
Silverman Heller Associates
(951) 943-8889
(951) 943-8800
(310) 208-2550

MODTECH HOLDINGS INC.
REPORTS FIRST-QUARTER 2006 FINANCIAL RESULTS
Margins Improve; Operating, Net Losses Narrow

Perris, Calif.—May 15, 2006—Modtech Holdings, Inc. (Nasdaq: MODT) reported financial results for the first quarter ended March 31, 2006.

Revenues for the quarter were $36.9 million, compared to the record $50.5 million in first-quarter 2005. The comparative decline was attributed in part to unusually strong Florida classroom sales in first-quarter 2005 caused by rebuilding due to hurricane activity in late 2004. Classroom sales in California were also lower than first-quarter last year due to recent labor shortages.
 
Cost of sales declined to $34.6 million, or 93.8% of sales, from $48.2 million, or 95.4% of sales, in first-quarter 2005. Cost of sales declined due primarily to the elimination of major project cost overruns that were reported in first-quarter last year. Gross profit was $2.3 million, or 6.2% of sales, versus $2.3 million, or 4.6% of sales, in first-quarter a year ago.

Sales, general, and administrative (SG&A) expenses for the quarter declined to $3.3 million, including $163,000 in stock compensation, from $3.9 million, which did not account for stock compensation, in first-quarter 2005. The decline was due to reduced sales commissions and comparably higher costs in first-quarter last year that were primarily related to Sarbanes-Oxley compliance and legal expenses. Operating losses for the quarter narrowed to $1.0 million from $1.6 million in first-quarter 2005 as cost containment efforts helped to lessen the impact of lower sales.

Other expenses for the quarter were $2.9 million, compared to $2.6 million in first-quarter 2005. Interest expense was $100,000 lower than the prior year, but amortization of debt costs, including a write-off of $2.1 million associated with the new financing with Bank of America Business Credit, were $2.2 million higher than first-quarter 2005. For first-quarter 2006, there was a non-cash gain of $700,000 from warrant-related derivatives, compared to a non-cash loss of $1.1 million in first-quarter 2005.

Net loss for the quarter narrowed to $3.9 million, or 23 cents a share on 17.1 million weighted-average shares outstanding, from a net loss of $4.1 million, or 28 cents a share on 14.7 million weighted-average shares outstanding, in first-quarter 2005.
 
Modtech President and Chief Executive David Buckley commented: “We are pleased with the first-quarter's improving margins and narrower losses, not only because we achieved those improvements with lower sales volume but also because they reflect the combined and ongoing efforts of the management team to improve efficiencies at all levels of the organization.

"However, we are disappointed to report lower revenues compared to the record revenues in first-quarter last year," Buckley stated. "We anticipated greater demand in Texas and Florida related to the major hurricanes in the gulf region last year, but we have not yet seen any material increases as a result. Furthermore, first quarter historically tends to be more variable than other quarters and is traditionally one of the Company's lower-revenue quarters for the year, and we returned to that pattern this year.
 

 
“In California, newly restricted use of 'piggy-back' contracts and resulting policies requiring a lengthier public-bid process are expected to delay some expected business into later 2006 and may impact anticipated growth year-over-year," Buckley continued. "We are also addressing a labor-shortage issue in California with a very strong effort to recruit experienced factory workers and are currently staffing up at all of our locations. And with volume increasing to 2005-like levels as a result, we continue to project modest revenue growth for full-year 2006.
 
"From the perspective of management's turnaround strategy, we feel that, aside from revenues, first-quarter results offer positive indications that Modtech is now positioned to generate profits from future revenue growth," Buckley stated. "Backlog consists of a number of projects outside of education, and all projects were carefully reviewed during the bid and costing processes to avoid issues with cost overruns and project management.

"The risk of cost overruns have also been lessened by focusing on smaller and more standardized projects with less on-site construction work," Buckley said. "We are now also structured to take advantage of our experience and expertise in engineering and manufacturing "in factory" and "in field' set-up, and are subcontracting on-site construction to partners with better capabilities in that specific area, all of which are expected to yield further improvements in productivity and cost management."

Buckley added: "During the quarter we experienced fewer, and smaller, unanticipated issues compared to prior periods and feel that in subsequent periods this trend will continue. Necessary changes to personnel and processes have been made, and controls we have put in place appear to be working. While there is always a possibility that other new issues can arise, we feel that the majority of, and the most significant, issues of the past have been addressed and are now behind us, which now allows us to more completely focus on moving forward with growth and the profitability that we expect."

Modtech Chief Financial Officer Dennis Shogren remarked: “In addition to higher operating efficiencies and productivity, we were able improve our financial condition in several areas. The new $25 million credit facility through Bank of America will reduce interest expense and other loan costs significantly. Recently, $5.7 million of the outstanding $25.9 million convertible note was converted, which not only reduces the Company's debt level and related interest expense but also released $5 million in cash that was previously restricted as collateral against the note. The note holder is expected to convert another $2.7 million by early July 2006. Furthermore, the recent exercise of options and warrants generated another $5.6 million in cash. These financing and equity changes occurred after March 31, 2006, and will be reflected in our second-quarter financial reports.
 
"Cash flow from operations for the quarter was $511,000 despite the almost $14 million decline in revenues to $36.9 million, compared to $3.2 million operating cash flow from $50.5 million in revenues in first-quarter 2005," Shogren continued. "For the remainder of 2006, we expect to spend approximately $1.5 million for capital projects with an emphasis on productivity enhancements.

"We are adjusting slightly our revenue forecast for full-year 2006 in light of the lower-than-expected start to the year and now project revenue between $230 million and $250 million with gross margin of 12% to 14%," Shogren stated. "We expect year-over-year revenue growth in second and third quarters, which are also typically when we see the highest revenues for the year. Considering the Company's improved operating and financial structures, we also feel confident that we will return to quarterly profitability this year."

Teleconference Information:
At 8 a.m. PDT (11 a.m. EDT) today the company will hold a teleconference to discuss the financial results and outlook. To participate in the teleconference, please call toll-free 800-291-8929 (or 706-634-0478 for international callers) approximately 10 minutes prior to the start time. You may also listen to the teleconference live via the Internet at www.modtech.com., under the investor relations link, or at www.earnings.com. For those unable to attend, this website will host an archive of the call. A telephone replay will be available for 48 hours beginning at approximately 11 a.m. PDT today. The playback can be accessed by calling 800-642-1687 (or 706-645-9291 for international callers) and providing Conference ID 9293441.


About Modtech Holdings, Inc.
Modtech® is a leading national designer and manufacturer of modular buildings, both permanent and relocatable. In the school industry, the Company has advanced typical modular building technology to greater dimensions of flexibility and architectural integrity. Modtech® has substantial product and geographic diversification throughout the southwestern states and a growing presence in Florida and Texas. Modtech’s commercial and industrial buildings are sold to a diverse end-user market and may be leased through national, regional, and local dealers. The Company also designs and manufactures modular buildings to customer specifications for a wide variety of uses.

Some statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Refer to the Company’s filings with the U.S. Securities and Exchange Commission for further discussion of such factors. The forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update such statements.

[Financial data on following pages]

 
 
 

 



MODTECH HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
 
 
 
March 31,
2006
 
December 31,
2005
 
Assets
 
 
 
 
 
Current assets:
         
Cash and cash equivalents
 
$
4,530,000
 
$
3,263,000
 
Restricted cash - current portion
   
11,452,000
   
11,452,000
 
Contracts receivable, less contract adjustments of $616,000 in both 2006 and 2005
   
30,995,000
   
40,687,000
 
Costs and estimated earnings in excess of billings on contracts
   
11,660,000
   
16,050,000
 
Inventories
   
8,885,000
   
12,047,000
 
Prepaid assets
   
1,118,000
   
960,000
 
Income tax receivable
   
6,000
   
6,000
 
Other current assets
   
1,932,000
   
1,373,000
 
Total current assets
   
70,578,000
   
85,838,000
 
 
         
Property and equipment, net
   
14,655,000
   
14,518,000
 
Other assets
         
Restricted cash
   
5,000,000
   
5,000,000
 
Goodwill
   
71,903,000
   
71,903,000
 
Covenants not to compete, net
   
--
   
4,000
 
Debt issuance costs, net
   
1,625,000
   
3,993,000
 
Other assets
   
562,000
   
577,000
 
Total assets
 
$
164,323,000
 
$
181,833,000
 
               
Liabilities and Shareholders’ Equity
         
Current liabilities:
         
Accounts payable
 
$
14,569,000
 
$
5,687,000
 
Accrued liabilities
   
23,822,000
   
28,498,000
 
Billings in excess of costs
   
4,200,000
   
3,809,000
 
Current revolving credit line
   
7,846,000
   
4,819,000
 
Current maturities of long-term debt
   
18,251,000
   
19,831,000
 
Total current liabilities
   
68,688,000
   
82,644,000
 
Long-term debt, excluding current portion
   
14,812,000
   
14,628,000
 
Total liabilities
   
83,500,000
   
97,272,000
 
Shareholders’ equity:
         
Common stock, $.01 par value. Authorized 55,000,000 shares; issued and outstanding 17,062,219 and 17,062,219 in 2006 and 2005, respectively
   
170,000
   
170,000
 
Additional paid-in capital
   
96,803,000
   
96,640,000
 
Accumulated deficit
   
(16,150,000
)
 
(12,249,000
)
Total shareholders’ equity
   
80,823,000
   
84,561,000
 
 
 
$
164,323,000
 
$
181,833,000
 



MODTECH HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
 
 
 
Three Months Ended
March 31,
 
 
   
2006
   
2005
 
Net sales
 
$
36,904,000
 
$
50,538,000
 
Cost of goods sold
   
34,617,000
   
48,216,000
 
Gross profit
   
2,287,000
   
2,322,000
 
Selling, general and administrative expenses
   
3,298,000
   
3,887,000
 
Loss from operations
   
(1,011,000
)
 
(1,565,000
)
Other (expense) income:
         
Interest expense, net
   
(1,021,000
)
 
(1,137,000
)
Gain (loss) on warrant and embedded derivatives
   
737,000
   
(1,052,000
)
Amortization - debt costs and debt accretion discount
   
(2,640,000
)
 
(431,000
)
Other income, net
   
34,000
   
53,000
 
 
   
(2,890,000
)
 
(2,567,000
)
Loss before income taxes
   
(3,901,000
)
 
(4,132,000
)
Income tax benefit
   
   
 
Net loss
 
$
(3,901,000
)
$
(4,132,000
)
Basic and diluted loss per common share
 
$
(0.23
)
$
(0.28
)
Basic and diluted weighted-average common shares outstanding
   
17,062,219
   
14,665,185
 
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