Fleetwood Reports First Quarter Earnings
25 August 1999
Fleetwood Reports First Quarter Earnings
RIVERSIDE, Calif., Aug. 25 -- Fleetwood Enterprises, Inc.
, the nation's largest producer of recreational vehicles and a
leading builder and retailer of manufactured housing, today announced earnings
for the first quarter of fiscal 2000 which ended July 25, 1999.
Net income was $26.4 million or 72 cents per share on a diluted basis
compared to $30.2 million and 86 cents per share in last year's July quarter.
The 13% year-over-year decline was less than the Company had anticipated when
it announced its record first quarter sales results on July 28. At that time,
earnings were expected to decline approximately 20% to 30%.
Fleetwood attributed the first quarter earnings decline primarily to a
slowdown in manufactured housing sales and the effect of eliminating
intercompany profits on retail inventory. On the plus side for the quarter
was the positive performance of Fleetwood's relatively new manufactured
housing retail business, which was profitable during the July quarter.
"Our recreational vehicle group posted a solid increase in first quarter
profits," commented Fleetwood President Nelson W. Potter. "This strong RV
performance was offset by a four percent falloff in manufactured housing
volume, combined with a $3.6 million profit elimination on intercompany sales
resulting from shipments to Fleetwood-owned retail stores. However, results
from both housing and recreational vehicles came in a little better than we
expected and the intercompany profit elimination was less than our July 28
estimate."
"We were pleased that our housing retail division operated profitably in
the first quarter, despite the impact of startup costs related to new store
openings and corporate infrastructure," continued Mr. Potter. "We now have
182 retail sales centers in operation compared to just two revenue producing
stores in last year's first quarter. In addition to investing in new stores,
we are continuing to make long-term investments in systems and training, and
acquiring existing retail stores when it makes sense to do so. In light of
relatively high industry retail inventory levels and softening wholesale
shipments to retailers, we are slowing down planned new store additions until
the manufactured housing market strengthens," Potter said.
Higher recreational vehicle sales and the additional volume from the
Company's new retail business led to record first quarter sales of
$956.7 million, a 14 percent increase over last year's $840.2 million.
Recreational vehicle revenues rose 13 percent in the July quarter to
$483.7 million, the highest first quarter sales on record, primarily on the
strength of higher motor home sales. Robust sales of both Class A and Class C
products drove motor home revenues up 18 percent to a first quarter high of
$306.0 million on a comparable increase in unit volume to 4,472 units. Travel
trailer sales rose six percent to a first quarter record $148.5 million on a
nine percent rise in shipments to 11,019 units. Folding trailer revenues
reached $29.2 million, slightly below last year's first quarter sales, on a
six percent decline in unit volume to 5,019 units.
Sales growth in the Company's retail business led to a 15 percent increase
in manufactured housing revenues to $461.9 million. Housing revenues include
wholesale sales of $304.2 million to independent retailers and retail sales of
$157.7 million generated through Company-owned retail stores. The Company
commenced retail operations approximately one year ago and retail sales in
last year's first quarter were only $1.9 million. Gross manufacturing
revenues, including intercompany sales of $81.6 million to Company-owned
retail stores, totaled $385.8 million in the first quarter, four percent below
last year's sales, on an eight percent decline in units to 15,815 homes. Due
to rising sales of multi-section homes, which represented 62 percent of
factory sales versus 56 percent last year, the number of housing sections fell
just four percent.
Potter said, "The combination of a healthy RV market and softening
manufactured housing demand leaves our near-term business outlook somewhat
mixed. We are entering the second quarter with a record RV sales backlog for
this time of year. At the same time, we have concerns about the short-term
outlook for manufactured housing. The current level of industry retail
inventories makes it likely that industry wholesale shipments will lag behind
the prior year as the inventory adjustment process continues over the next
several months."
Commenting on share repurchase activity, Potter said, "We were very active
in buying shares of Fleetwood Common stock during the first quarter, having
purchased and retired 2.04 million shares at a cost of approximately
$52.4 million. We believe our shares are significantly undervalued, and that
their repurchase represents an excellent use of a portion of the Company's
excess cash. We expect to continue this program in the future."
This press release contains certain forward-looking statements and
information based on the beliefs of the Company's management as well as
assumptions made by, and information currently available to, the Company's
management. Such statements reflect the current views of the Company with
respect to future events and are subject to certain risks, uncertainties, and
assumptions, including risk factors identified in the Company's SEC filings.
Actual results, events and performance may differ materially. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof.
FLEETWOOD ENTERPRISES, INC.
Consolidated Summaries of Earnings
(Unaudited)
13 Weeks 13 Weeks
Ended Ended
(Amounts in thousands except per share data) July 25, 1999 July 26, 1998
Sales $956,714 $840,155
Income before provision for income taxes $45,209 $49,973
Provision for income taxes (18,849) (19,748)
Net income for basic earnings per share 26,360 30,225
Distribution on preferred securities, net
of income taxes 2,787 2,781
Net income for diluted earnings per share $29,147 $33,006
Earnings per share:
Basic $.77 $.96
Diluted .72 .86
Weighted average Common shares:
Basic 34,383 31,621
Diluted 40,364 38,242
FLEETWOOD ENTERPRISES, INC.
Business Segment and Unit Shipment Information
(Dollars in thousands)
13 Weeks Ended
July 25, 1999 July 26, 1998
OPERATING REVENUES:
Manufactured housing -
Manufacturing $385,803 $400,412
Retail 157,716 1,878
Less intercompany (81,598) (1,484)
461,921 400,806
Recreational vehicles 483,734 428,766
Supply operations 11,059 10,583
$956,714 $840,155
OPERATING INCOME:
Manufactured housing $17,116 * $25,496
Housing - retail 6,702 ** (1,094)
Recreational vehicles 30,967 26,699
Supply operations 4,863 3,583
Corporate and other (9,692) (4,433)
$49,956 $50,251
UNITS SOLD:
Manufactured housing -
Factory shipments 15,815 17,198
Retail sales 3,741 40
Less intercompany (2,968) (28)
16,588 17,210
Recreational vehicles -
Motor homes 4,472 3,780
Travel trailers 11,019 10,153
Folding trailers 5,019 5,324
20,510 19,257
* After deduction for intercompany profit in inventory of $3,555 .
** Operating income before deduction of $2,837 of interest expense on
inventory floor plan financing.