Fleetwood Reports Results for the Third Quarter and First Nine Months of Fiscal 2004
 Fleetwood Expedition |
Higher Sales and Substantial Production Efficiencies Drive Improvement Over Prior Year and Narrow Third Quarter Loss
RIVERSIDE, Calif., March 4 -- Fleetwood Enterprises, Inc. , the nation's leader in recreational vehicle sales and a leading producer and retailer of manufactured housing, today announced fiscal 2004 results for the third quarter and nine months ended January 25, 2004. The Company achieved improved results over the prior year's third quarter, reporting a third quarter net loss of $10.2 million or 26 cents per share, compared to a net loss of $18.4 million or 51 cents per share for the third quarter of fiscal 2003. Revenues for the third quarter rose to $597.8 million, 21 percent ahead of last year's $493.2 million.
"We had our best third quarter in four years," said Edward B. Caudill, president and CEO, "although we were still affected in the quarter by the usual seasonal challenges, compounded by the industry-wide weakness in manufactured housing. Nonetheless, our consolidations and cost-cutting initiatives continued to yield returns, and we saw the investments we have made in innovation, design and vertical integration begin to pay off in the form of higher revenues. While our motor home operations provided most of the lift, we also achieved financial progress throughout the Company, primarily as a result of top-line growth and production efficiencies."
For the first nine months of fiscal 2004, the Company incurred a net loss of $4.5 million or 12 cents per share, compared with a net loss of $15.3 million or 43 cents per share in the same period of the prior year. Revenues for the first nine months increased 10 percent to $1.92 billion from $1.75 billion for the same period last year.
The RV Group produced operating income of $9.5 million in the third quarter, compared to a loss of $7.6 million last year. Overall, the RV Group's quarterly revenues were up 32 percent to $410.0 million from $310.5 million last year. Motor home sales for the third quarter increased 28 percent over last year to $272 million. Travel trailer sales jumped 61 percent to $115 million, while folding trailer revenues were down 13 percent to $23 million.
Year to date, the RV Group generated operating income of $40.9 million, a 51 percent improvement compared with $27.1 million for the first nine months of fiscal 2003. Nine-month RV sales were up 20 percent to $1.30 billion compared with last year's $1.08 billion. Motor home revenues rose 20 percent over last year to $803 million. Travel trailer sales improved 34 percent to $416 million from a year ago, while folding trailer revenues declined 19 percent to $77 million.
"Our motor home division produced outstanding results, turning in its best third-quarter performance since 1985," Caudill said. "Operating income improved 72 percent from last year to $14.1 million. Our diesel motor homes continue to gain broad consumer acceptance and we are also encouraged by recent growth in our Class C market share. Over the next few quarters, we believe we will see similar trends in our travel trailer operations, which recovered significantly from last year's loss of $15.5 million to a loss of $4.5 million. Substantial improvements in gross margin and production efficiencies led to better results in this division, and our recent management realignment demonstrates our commitment to further progress. Folding trailer operations also improved despite a down market for that industry segment, registering a $109,000 loss versus last year's loss of $339,000."
The Housing Group reported a loss of $10.5 million for the third quarter, compared to a loss for the comparable period of the prior year of $15.4 million. The manufacturing division of the Housing Group incurred an operating loss of $2.7 million, while the retail division posted a loss of $7.8 million, compared with losses of $6.6 million and $8.8 million, respectively, for the same quarter last year.
Housing Group revenues in the third quarter improved on a quarter-over- quarter basis for the first time since October 1999, increasing 2 percent to $176.5 million from $173.3 million last year. Fiscal 2004 third quarter revenues included $109.6 million of wholesale factory sales to independent retailers and $66.9 million of retail sales from Company-operated sales centers. This compares with $114.6 million and $58.7 million, respectively, last year. Gross manufacturing revenues declined slightly from $144.3 million in the third quarter last year to $143.0 million, including $33.4 million of intercompany sales to Company-operated stores, this year. Unit sales from Fleetwood retail stores increased by 11 percent to 1,272 homes. Our HomeOne Credit finance subsidiary originated $10.2 million of loans in the quarter, compared to $7.9 million in the third quarter last year.
Year to date, the Housing Group's manufacturing division earned $5.3 million, a turnaround from last year's nine-month loss of $3.3 million. The retail division lost $24.7 million in the first nine months, an improvement of 7 percent compared with a $26.4 million loss for the same period last year.
For the first nine months of the fiscal year, Housing Group revenues were down 7 percent to $591.2 million from $638.0 million in the prior year. Revenues included $396.9 million of wholesale factory sales to independent retailers and $194.3 million of sales from Company-operated stores, down from $436.8 million and $201.2 million, respectively, last year. Gross manufacturing revenues, including intercompany sales, were $493.8 million this year compared with $531.3 million last year. Our HomeOne Credit finance subsidiary originated $26.5 million of loans during the first nine months, compared to $13.5 million in the corresponding period last year.
"We are encouraged that manufactured housing conditions are beginning to improve," Caudill said. "The inventory of repossessed homes appears to be on the decline, new lenders continue to enter the retail finance market, and a recent manufactured housing asset-backed securities offering was accepted by investors. There appears to be a growing consensus among industry observers that 2003 will represent the bottom of this prolonged down cycle. With a $75 million warehouse line of credit in place, our HomeOne Credit finance subsidiary is ramping up its lending to creditworthy customers who otherwise may have been shut out of the housing market or compelled to buy from a vertically integrated competitor.
"We believe we will be marginally profitable in the fourth quarter," Caudill concluded. "In general, each division in the Company is improving its performance, but we do not expect the manufactured housing industry's anticipated recovery, which has already begun by some measures, to take effect overnight. Accordingly, we believe that losses in our Housing Group, combined with other expenses, will offset much of the anticipated operating profit from our RV Group, and it is presently uncertain as to whether we will be profitable for the full fiscal year. However, the trends continue to be positive in both our industries and on a Company-specific basis, and we are well positioned for growth, giving us cause for confidence about our prospects in fiscal year 2005."
The Company has scheduled a conference call with analysts and investors to discuss quarterly results. The call is scheduled for 1:30 p.m. EST/10:30 a.m. PST on Thursday, March 4, 2004. It will be broadcast live over the Internet at www.streetevents.com and www.fulldisclosure.com, and will be accessible from the Company's Website, www.fleetwood.com.
About Fleetwood
Fleetwood Enterprises, Inc., a Fortune 1000 company headquartered in Riverside, Calif., is a leading manufacturer of a full range of recreational vehicles from motor homes to travel and folding trailers, and is a vertically integrated manufacturer, retailer and financier of manufactured housing. The Company is dedicated to providing quality, innovative products that offer a high value quotient to our customers. Fleetwood operates facilities strategically located throughout the nation, including recreational vehicle and manufactured housing plants, retail home centers, and supply subsidiary plants. For more information, visit the Company's Website at www.fleetwood.com.
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FLEETWOOD ENTERPRISES, INC.
Condensed Consolidated Summaries of Operations
(Unaudited)
(Amounts in thousands except per share data)
13 Weeks Ended 39 Weeks Ended
Jan. 25, Jan. 26, Jan. 25, Jan. 26,
2004 2003 2004 2003
Sales $597,750 $493,215 $1,918,624 $1,745,636
Operating income (loss) $1,414 $(23,123) $29,310 $1,165
Income (loss) before income
taxes and
minority interest $(1,572) $(21,803) $22,583 $622
(Provision) benefit for
income taxes (3,387) 8,505 (11,515) (717)
Minority interest in
Fleetwood Capital Trusts,
net of taxes (5,212) (5,107) (15,565) (15,229)
Net loss $(10,171) $(18,405) $(4,497) $(15,324)
Net loss per common share:
Basic and diluted $(.26) $(.51) $(.12) $(.43)
Weighted average common
shares:
Basic and diluted 38,871 35,935 36,977 35,847
FLEETWOOD ENTERPRISES, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
ASSETS
January 25, October 26, January 26,
2004 2003 2003
Cash and marketable investments $82,448 $76,639 $67,971
Receivables 198,645 177,346 151,131
Inventories 257,674 241,294 251,157
Property, plant and equipment, net 255,014 254,723 262,156
Other assets 236,203 228,965 225,741
Total assets $1,029,984 $978,967 $958,156
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $81,413 $83,721 $65,557
Employee compensation and benefits 126,183 132,977 126,503
Product warranty reserve 55,817 58,037 61,467
Retail flooring liability and short-
term debt 19,349 43,696 41,995
Long-term debt 102,211 2,354 2,480
Other liabilities 131,837 138,718 120,901
Total liabilities 516,810 459,503 418,903
Company-obligated optionally redeemable
convertible preferred securities 375,301 374,993 374,069
Shareholders' equity 137,873 144,471 165,184
$1,029,984 $978,967 $958,156
FLEETWOOD ENTERPRISES, INC.
Business Segment and Unit Shipment Information
(Amounts in thousands)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
Jan. 25, Jan. 26, Jan. 25, Jan. 26,
2004 2003 2004 2003
OPERATING REVENUES:
Recreational vehicles $410,006 $310,478 $1,296,557 $1,077,240
Housing
Manufacturing 143,017 144,325 493,826 531,279
Retail 66,937 58,748 194,272 201,183
Less intercompany (33,414) (29,724) (96,921) (94,475)
176,540 173,349 591,177 637,987
Supply operations 9,756 8,583 27,450 28,909
Financial services 1,448 805 3,440 1,500
$597,750 $493,215 $1,918,624 $1,745,636
OPERATING INCOME (LOSS):
Recreational vehicles $9,520 $(7,591) $40,913 $27,098
Housing - manufacturing (2,712) (6,570) 5,309 (3,330)
Housing - retail* (7,788) (8,826) (24,665) (26,395)
Supply operations 2,934 (225) 4,075 1,804
Corporate and other (850) (551) 3,874 (2,109)
Financial services (210) (602) (1,111) (1,277)
Intercompany profit 520 1,242 915 5,374
$1,414 $(23,123) $29,310 $1,165
UNITS SOLD:
Manufactured housing -
Factory shipments 4,628 4,607 15,509 17,703
Retail sales 1,272 1,149 3,809 4,124
Less intercompany (948) (968) (2,844) (3,102)
4,952 4,788 16,474 18,725
Recreational vehicles -
Motor homes 2,663 2,197 8,183 7,278
Travel trailers 6,925 4,791 25,314 21,780
Folding trailers 3,359 3,885 10,757 13,562
12,947 10,873 44,254 42,620
* Not including interest expense on inventory
floorplan financing as follows:
$473 $547 $1,483 $1,697
