-Net Loss Narrows Sharply Despite Lower Revenues- RIVERSIDE,
Calif., March 6 /PRNewswire-FirstCall/ -- Fleetwood Enterprises,
Inc. (NYSE:FLE) announced today the results for its fiscal 2008
third quarter and first nine months ended January 27, 2008.
Consolidated revenues for the quarter were down 20 percent to
$355.5 million from $443.2 million in last year's third quarter.
Despite the reduction in revenues, the Company's operating loss
narrowed to $11.2 million from an operating loss of $24.9 million
in the third quarter of the prior year. The net loss was reduced to
$16.4 million, or $0.25 per share, compared with a net loss of
$29.9 million, or $0.47 per share, in last year's third quarter.
Operating results for the third quarter included $5.4 million, or
$0.08 per share, related to gains from the sale of idle facilities
partially offset by severance costs. Last year's third quarter
financial results included $4.1 million of asset impairment and
severance charges, or $0.06 per share. "Considering the pressure on
revenues in the most recently completed quarter, the improvement to
our bottom-line results is noteworthy," said Elden L. Smith,
Fleetwood's president and chief executive officer. "Gross profit
margin was up, operating and warranty expenses were down, and labor
efficiencies improved. These results are a reflection of the
dedicated efforts of our experienced operating team and its ability
to manage our businesses during a seasonally slow period that was
made more challenging by difficult market conditions. All of our
businesses have been impacted by recent consumer uncertainty. Our
success in managing costs can be seen clearly in the 13 percent
reduction in year-to-date operating expenses compared with the
previous year and the 28 percent reduction from the same three
quarters of fiscal 2005." For the first nine months of fiscal 2008,
consolidated revenues were down 10 percent to $1.36 billion from
$1.50 billion in the same period last year. The operating loss for
the first three quarters was $0.8 million compared with $48.4
million in the same period of fiscal 2007. The net loss in the
first nine months of fiscal 2008 was $19.9 million, or $0.31 per
share, compared with a net loss of $50.7 million, or $0.79 per
share, for the same period last year. RV Group Results The RV Group
incurred a lower operating loss of $4.2 million for the third
quarter compared with a $15.8 million operating loss in the
comparable period of the prior year. The improved results stemmed
from an increase in gross profit and a decline in operating
expenses. Revenues were off 22 percent in the quarter to $254.2
million from $324.0 million in the same period of the prior year.
The motor home division sustained an operating loss of $1.2 million
in the quarter compared to operating income of $5.3 million in the
same quarter last year, primarily due to a 16 percent drop in
revenues. The travel trailer division recorded a $1.9 million
operating loss, a substantial improvement from the prior year's
operating loss of $17.5 million, on revenues that were down 44
percent. The results included $5.9 million in gains related to the
sale of idled properties, partially offset by severance costs of
$0.6 million. The operating loss for the folding trailer division
was reduced to $1.2 million from an operating loss of $3.5 million
in last year's third quarter, on revenues that were up 11 percent
to $15.9 million. The RV Group reported an operating loss of $1.3
million for the first nine months of fiscal 2008 on revenues of
$946.8 million, compared with an operating loss of $44.0 million on
revenues of $1.06 billion in the comparable period last year.
Improved travel trailer results were the largest contributor to
this turnaround but all of the businesses made progress from the
prior year. "Our product lineup has improved and been well
accepted, and we have exciting introductions planned for the new
model year," Smith said. "We also are enthusiastic about the
potential for Fleetwood Financial Services, a strategic alliance
with Bank of America to provide wholesale and retail financing.
This alliance, which was announced earlier this week, should enable
us to drive sales and increase market share of our RV products.
Although interest in the RV lifestyle continues to be high, sales
in our industry are highly dependent upon consumer confidence and,
with the current uncertainty in the economy, RV sales remain soft."
Housing Group Results Despite lower revenues, the Housing Group
reduced its third quarter operating loss to $2.6 million in the
current year third quarter from $7.8 million in the third quarter
of the prior year. Last year's results included asset impairment
charges of $2.8 million in connection with an idle plant. Quarterly
revenues were off 11 percent to $96.5 million from $108.7 million
in the prior-year third quarter. For the first nine months of the
fiscal year, the Housing Group generated $7.1 million in operating
income on revenues of $390.4 million, versus an operating loss of
$4.3 million on revenues of $401.3 million for the first nine
months of the prior fiscal year. "Home shipments in the
manufactured housing industry fell below 100,000 in 2007, creating
a low that very few industry followers predicted," Smith said. "The
sector is being adversely affected by widespread problems in the
lending environment for conventional housing and the resulting
slowdown in that market. Our industry experienced similar
circumstances eight years ago and has since been subject to
stricter lending standards. Growing conservatism in lending
criteria for site-built housing will eventually level the playing
field and may assist in a recovery of the manufactured housing
industry. Meanwhile, we have successfully adjusted our cost
structure to compete more profitably in this market and we are
pursuing growth through our relatively new modular division,
Trendsetter Homes. Our greatest success to date in this division
has been in building military base housing. Very little of this
business is reflected in our third quarter revenues, but at the end
of the third quarter we secured a contract to build the second
phase of living-space modules for barracks at Fort Bliss, and this
week we secured a contract to supply similar modules at Ft. Sill.
These contracts will positively affect sales in our fourth quarter
and beyond." Corporate Outlook On December 15, 2008, the holders of
the Company's 5% convertible senior subordinated debentures that
have a face value of $100 million have the right to require
Fleetwood to repurchase them at par with cash or by issuing common
stock. Anticipating that the rights will be exercised, the Company
plans to meet a sizable portion of the obligation with existing
cash, cash proceeds from the disposition of idle or excess
properties, and cash available from operations. The remaining
obligation is expected to be financed well before December with the
proceeds of debt and/or equity transactions without significant
incremental change over the current fully diluted share count
(which presently includes approximately 8.5 million shares that
underlie the 5% debentures). "We expect that market conditions,
which have deteriorated in the last several months, will continue
to be soft for both of our industries through the fourth fiscal
quarter," Smith said. "Because short-term economic signs are not
positive, we have slowed production and are prepared for a sluggish
spring, with fourth quarter revenues again expected to be down
significantly from last year. We expect that motor home sales will
be especially impacted as dealers match their orders to retail
sales and adjust their inventory levels. Given our more streamlined
cost structure, however, core operating expenses (before
considering any positive impact from ongoing real estate
dispositions or prior-year restructuring costs) are expected to be
significantly reduced from the prior year and be at similar levels
to the third quarter. Overall, results will be heavily influenced
by uncertain market conditions and dealer sentiment." Conference
Call The Company will host a conference call with interested
parties at 10:30 a.m. PST/1:30 p.m. EST on Thursday, March 6, 2008.
The call will be broadcast live on the Company's website,
http://www.fleetwood.com/ under Investor Relations, and over the
Internet at http://www.streetevents.com/ and
http://www.earnings.com/. About Fleetwood Fleetwood Enterprises,
Inc. is a leading producer of recreational vehicles and
manufactured homes through its subsidiaries. This Fortune 1000
company, headquartered in Riverside, Calif., is dedicated to
providing quality, innovative products that offer exceptional value
to its customers. Fleetwood operates facilities strategically
located throughout the nation, including recreational vehicle,
manufactured housing and supply subsidiary plants. For more
information, visit the Company's website at
http://www.fleetwood.com/. This press release contains certain
forward-looking statements and information based on the beliefs of
Fleetwood's management as well as assumptions made by, and
information currently available to, Fleetwood's management. Such
statements, including those regarding the potential for Fleetwood
Financial Services to drive sales, the potential for a recovery in
manufactured housing, and the projected fourth quarter results,
reflect the current views of Fleetwood with respect to future
events and are subject to certain risks, uncertainties, and
assumptions, including risk factors identified in Fleetwood's 10-K
and other SEC filings. These risks and uncertainties include,
without limitation, the lack of assurance that we will regain
sustainable profitability in the foreseeable future; the effect of
ongoing weakness in both the manufactured housing and recreational
vehicle markets; the effect of a decline in home equity values,
volatile fuel prices and interest rates, global tensions,
employment trends, stock market performance, availability of
financing generally, and other factors that can have a negative
impact on consumer confidence, which in turn may reduce demand for
our products, particularly recreational vehicles; the availability
and cost of wholesale and retail financing for both manufactured
housing and recreational vehicles; our ability to comply with
financial tests and covenants on existing debt obligations; our
ability to obtain, on reasonable terms if at all, the financing we
will need in the future to execute our business strategies and to
meet the repayment terms of our outstanding convertible debt
instruments, including the 5% convertible senior subordinated
debentures, which the company may have to repurchase in December
2008; potential dilution associated with equity financings we may
undertake to raise additional capital; the cyclical and seasonal
nature of both the manufactured housing and recreational vehicle
industries; expenses and uncertainties associated with the entry
into new business segments or the manufacturing, development, and
introduction of new products; the potential for excessive retail
inventory levels in the manufactured housing and recreational
vehicle industries; the volatility of our stock price; repurchase
agreements with floorplan lenders, which could result in increased
costs; potential increases in the frequency of product liability,
wrongful death, class action, and other legal actions; and the
highly competitive nature of our industries. (tables to follow)
Fleetwood Enterprises, Inc. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Amounts in thousands, except per share data)
(Unaudited) 13 Weeks Ended 39 Weeks Ended January 27, January 28,
January 27, January 28, 2008 2007 2008 2007 Net sales: RV Group
$254,156 $323,976 $946,789 $1,059,793 Housing Group 96,467 108,687
390,371 401,332 Supply Group 4,875 10,509 18,715 38,391 355,498
443,172 1,355,875 1,499,516 Cost of products sold 306,423 384,597
1,145,934 1,294,172 Gross profit 49,075 58,575 209,941 205,344
Operating expenses 65,676 79,439 217,574 250,858 Other operating
(income) expense, net (5,427) 4,063 (6,881) 2,873 60,249 83,502
210,693 253,731 Operating loss (11,174) (24,927) (752) (48,387)
Other income (expense): Investment income 1,187 1,269 3,726 4,701
Interest expense (6,161) (5,942) (18,346) (18,773) Other, net - - -
18,530 (4,974) (4,673) (14,620) 4,458 Loss from continuing
operations before income taxes (16,148) (29,600) (15,372) (43,929)
Provision for income taxes (122) (70) (4,023) (4,841) Loss from
continuing operations (16,270) (29,670) (19,395) (48,770) Loss from
discontinued operations, net (87) (235) (521) (1,973) Net loss
$(16,357) $(29,905) $(19,916) $(50,743) Basic and diluted loss per
common share: Loss from continuing operations $(.25) $(.46) $(.30)
$(.76) Loss from discontinued operations - (.01) (.01) (.03) Net
loss per common share $(.25) $(.47) $(.31) $(.79) Weighted average
common shares 64,255 63,937 64,219 63,933 Fleetwood Enterprises,
Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands)
(Unaudited) January 27, October 28, January 28, ASSETS 2008 2007
2007 Cash $20,089 $47,477 $9,722 Marketable investments 24,990
24,754 24,005 Receivables 118,717 121,678 139,131 Inventories
183,236 183,591 198,243 Deferred taxes, net 9,160 7,239 13,104
Other current assets 9,051 9,499 13,782 Total current assets
365,243 394,238 397,987 Property, plant and equipment, net 160,338
175,958 198,059 Deferred taxes, net 42,362 44,283 52,367 Cash value
of company-owned life insurance, net 15,227 20,215 23,113 Goodwill
6,316 6,316 6,316 Other assets 39,378 40,240 43,073 Total assets
$628,864 $681,250 $720,915 LIABILITIES & SHAREHOLDERS' EQUITY
Accounts payable $35,552 $41,293 $53,328 Employee compensation and
benefits 35,601 46,040 39,423 Federal and state income taxes 3,874
2,212 1,315 Product warranty reserves 38,723 41,453 45,015
Insurance reserves 20,326 20,149 17,616 Accrued interest 4,768
5,428 6,689 Other short-term borrowings 8,362 10,056 19,785 5%
convertible senior subordinated debentures 100,000 - - Other
current liabilities 61,885 68,175 64,959 Total current liabilities
309,091 234,806 248,130 Deferred compensation and retirement
benefits 21,646 25,840 28,703 Product warranty reserves 20,410
21,816 22,165 Insurance reserves 36,314 35,990 34,341 5%
convertible senior subordinated debentures - 100,000 100,000 6%
convertible subordinated debentures 160,142 160,142 160,142 Other
long-term debt 17,482 18,811 3,880 Total liabilities 565,085
597,405 597,361 Commitments and contingencies Shareholders' equity:
Common stock 64,257 64,250 64,041 Additional paid-in capital
496,533 495,754 492,034 Accumulated deficit (495,110) (478,753)
(435,976) Accumulated other comprehensive income (loss) (1,901)
2,594 3,455 Total shareholders' equity 63,779 83,845 123,554 Total
liabilities and shareholders' equity $628,864 $681,250 $720,915
Fleetwood Enterprises, Inc. BUSINESS SEGMENT AND UNIT SHIPMENT
INFORMATION (Dollar amounts in thousands) (Unaudited) 13 Weeks
Ended 39 Weeks Ended January 27, January 28, January 27, January
28, 2008 2007 2008 2007 REVENUES: Motor homes $192,259 $227,851
$729,716 $683,724 Travel trailers 46,007 81,786 157,631 307,585
Folding trailers 15,890 14,339 59,442 68,484 RV Group 254,156
323,976 946,789 1,059,793 Housing Group 96,467 108,687 390,371
401,332 Supply Group 4,875 10,509 18,715 38,391 $355,498 $443,172
$1,355,875 $1,499,516 OPERATING INCOME (LOSS): Motor homes $(1,164)
$5,252 $16,943 $633 Travel trailers (1,861) (17,543) (17,620)
(41,881) Folding trailers (1,206) (3,532) (606) (2,726) RV Group
(4,231) (15,823) (1,283) (43,974) Housing Group (2,588) (7,770)
7,126 (4,319) Supply Group (1,943) (727) (923) 1,392 Corporate and
other (2,412) (607) (5,672) (1,486) $(11,174) $(24,927) $(752)
$(48,387) UNITS SOLD: Recreational vehicles - Motor homes 1,530
1,838 6,088 6,110 Travel trailers 2,170 4,350 7,781 17,469 Folding
trailers 1,872 1,868 6,476 7,899 5,572 8,056 20,345 31,478 Housing
- HUD 2,522 2,827 9,706 10,200 MOD 5 - 560 - 2,527 2,827 10,266
10,200 Total Company shipments 8,099 10,883 30,611 41,678 Contact:
Lyle Larkin, Vice President - Treasurer (951) 351-3535 Kathy A.
Munson, Director - Investor Relations (951) 351-3650 DATASOURCE:
Fleetwood Enterprises, Inc. CONTACT: Lyle Larkin, Vice President -
Treasurer, +1-951-351-3535, or Kathy A. Munson, Director - Investor
Relations , +1-951-351-3650, both of Fleetwood Enterprises, Inc.
Web site: http://www.fleetwood.com/
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