Fleetwood Reports Record Q2 and First Half Earnings
24 November 1998
Fleetwood Reports Record Second Quarter and First Half Earnings
RIVERSIDE, Calif., Nov. 24 -- Fleetwood Enterprises, Inc.
, a leading producer of manufactured housing and recreational
vehicles, today announced record earnings for the second quarter and first
half of fiscal 1999 which ended October 25, 1998.
Net income for the second quarter increased 11 percent to $31.1 million
compared to $28.1 million last year, and diluted earnings per share rose nine
percent to 84 cents versus 77 cents a year ago. Fleetwood attributed the
earnings gain to improved recreational vehicle group operating results, mainly
from its motor home division.
Fleetwood President Nelson W. Potter commented on the quarterly results
saying, "Manufacturing operating margin improved dramatically because of a
69 percent gain in RV group operating profit. This primarily reflects a
strong performance by our motor home division, which was struggling a year ago
with a difficult plant production realignment initiative."
Earnings for the first six months of fiscal 1999 increased to
$61.3 million or $1.70 per diluted share compared to $59.1 million and
$1.61 per share last year. Last year's first half included a non-recurring
insurance gain of $10.4 million or 28 cents per share attributable to a change
in estimate of products liability insurance reserves. Without this gain,
earnings would have been $48.7 million or $1.33 per share for last year's
first half.
Potter stated that, "All of Fleetwood's manufacturing segments generated
higher profits in the first half which, excluding last year's insurance gain,
led to a 26 percent improvement in comparable earnings per share. However,
despite the strong profit performance, the ramping up of our manufactured
housing retail operations restrained our overall operating margin and earnings
per share somewhat in both the second quarter and first half. In addition,
second quarter and first half operating income for the manufactured housing
group was reduced $5.2 million due to the elimination of intercompany profit
on homes sold to Fleetwood retail stores that were in retail inventory at the
end of the reporting period," Potter said.
Record second quarter revenues for both manufactured housing and
recreational vehicles, along with the addition of retail housing sales, led to
a 17 percent increase in revenues to $897.8 million from $769.1 million last
year. Sales for the first six months of fiscal 1999 rose 16 percent to an
all-time high of $1.74 billion compared to $1.50 billion in last year's first
half.
Factory sales of manufactured homes, including sales of $42.6 million to
the Company's retail housing division, rose five percent in the second quarter
to $409.6 million. Factory shipments of 17,235 homes were virtually identical
to last year's volume. For the six months, factory sales of manufactured
housing were up seven percent to $810.0 million, including sales of
$44.1 million to the Company's retail housing division.
Fleetwood's new retail housing division, which was not in operation a year
ago, contributed $87.0 million to consolidated sales in the second quarter.
Sales of Fleetwood manufactured homes represented approximately 80 percent of
the retail volume. Potter said, "We are pleased with the progress to date
with our retail strategy. Several key acquisitions were completed during the
quarter and we are aggressively investing in new 'greenfield' retail sales
centers. Fleetwood now has 143 retail sales centers in operation with an
annualized sales volume approaching $500 million. Retail profits will
continue to be under pressure as we continue to grow our base of retail
operations, but we are optimistic about achieving excellent margins and
returns as these businesses mature and reach their full potential," Potter
concluded.
Paced by the motor home division, recreational vehicle sales increased
18 percent to $432.7 million. Motor home revenues jumped 23 percent to
$265.8 million, an all-time high for the second quarter, primarily on the
sales strength of Fleetwood's large Class A products. Motor home unit volume
rose 15 percent to 3,617 units, with Class A models outselling Class C's by a
margin of five to one. The Company also posted record second quarter sales of
towable RV products, with travel trailers rising 10 percent to $134.7 million
and folding trailers up 12 percent to $32.2 million. Unit volume increased
13 percent for travel trailers and eight percent for folding trailers to 9,428
and 5,899, respectively.
RV revenues for the first six months of fiscal 1999 were up 20 percent to
$861.5 million with all three RV divisions posting record first half sales.
Motor home sales increased 24 percent to $525.2 million. Travel trailer sales
rose 13 percent to $274.6 million and folding trailer sales of $61.7 million
were 17 percent ahead of the prior year.
The Company's supply group generated second quarter and first half
revenues of $11.2 million and $21.7 million, respectively. This compares with
$11.8 million and $22.9 million, respectively, for the similar periods last
year.
FLEETWOOD ENTERPRISES, INC.
Consolidated Summaries of Earnings
(Unaudited)
(Amounts in thousands except per share data)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
Oct. 25, Oct. 26, Oct. 25, Oct. 26,
1998 1997 1998 1997
Sales $897,840 $769,089 $1,737,995 $1,497,543
Income before provision
for income taxes $51,949 $45,862 $101,922 $96,206
Provision for income taxes (20,838) (17,738) (40,586) (37,140)
Net income for basic
earnings per share 31,111 28,124 61,336 59,066
Distribution on preferred
securities, net of
income taxes 2,780 -- 5,561 --
Net income for diluted
earnings per share $33,891 $28,124 $66,897 $59,066
Earnings per share:
Basic $92.00 $78.00 $187.00 $165.00
Diluted 84.00 77.00 170.00 161.00*
Weighted average Common shares:
Basic 33,896 35,948 32,759 35,896
Diluted 40,257 36,514 39,274 36,584
* Includes non-recurring insurance gain of $16.2 million (before taxes)
and $10.4 million (after taxes) or 28 cents per share.
Fleetwood Enterprises, Inc.
Business Segment and Unit Shipment Information
(Dollars in thousands)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
Oct. 25, Oct. 26, Oct. 25, Oct. 26,
1998 1997 1998 1997
OPERATING REVENUES:
Manufactured housing -
Manufacturing $409,608 $390,652 $810,020 $757,301
Retail 87,001 -- 88,879 --
Less intercompany (42,642) -- (44,126) --
453,967 390,652 854,773 757,301
Recreational vehicles 432,709 366,654 861,475 717,347
Supply operations 11,164 11,783 21,747 22,895
$897,840 $769,089 $1,737,995 $1,497,543
OPERATING INCOME:
Manufactured housing $20,834* $25,309 $46,330* $41,139
Housing - retail 2,960 -- 1,866 --
Recreational vehicles 30,253 17,944 56,890 34,057
Supply operations 4,113 3,860 7,696 7,252
Corporate and other (3,299) (2,663) (7,670) 11,076**
$54,861 $44,450 $105,112 $93,524**
UNITS SOLD:
Manufactured housing -
Factory shipments 17,235 17,248 34,433 33,607
Retail sales 2,260 -- 2,300 --
Less intercompany (1,808) -- (1,836) --
17,687 17,248 34,897 33,607
Recreational vehicles -
Motor homes 3,617 3,144 7,397 6,461
Travel trailers 9,428 8,319 19,581 16,873
Folding trailers 5,899 5,472 11,223 10,192
18,944 16,935 38,201 33,526
* After $5,173 deduction for intercompany profit elimination.
** Includes non-recurring insurance gain of $16.2 million.