Fleetwood Reports Second Quarter and First Half Earnings
1 December 1999
Fleetwood Reports Second Quarter and First Half Earnings
RIVERSIDE, Calif., Dec. 1 -- Fleetwood Enterprises, Inc.
, the nation's leading manufacturer of recreational vehicles and a
leading producer and retailer of manufactured housing, today announced
earnings for the second quarter and six months ended October 31, 1999.
Net income for the current quarter was $29.8 million compared to
$31.1 million a year ago. However, diluted earnings per share of 84 cents
equaled last year's record second quarter due to fewer outstanding shares
resulting from the Company's ongoing share repurchase program. Earnings for
the first six months of fiscal 2000 totaled $56.2 million or $1.56 per diluted
share. This compares with $61.3 million and $1.70 per share earned in last
year's first half. The current quarter and first half included 14 weeks and
27 weeks, respectively, versus 13 weeks and 26 weeks in the corresponding
periods last year.
Commenting on the quarterly results, Fleetwood President Nelson W. Potter
said, "We were pleased with the Company's overall operating performance,
especially in light of the slowdown in the manufactured housing market and the
structural changes in our manufactured housing business. The favorable impact
of higher sales, however, was offset by higher operating costs in our retail
housing and recreational vehicle businesses. RV profitability was affected by
costs associated with two product recalls. Also, while our new retail housing
business was profitable, it fell short of our expectations, largely because of
slowing sales and higher than expected operating costs."
Commenting further, Potter said, "Our entry into the manufactured housing
retail business has successfully added top line revenue growth. However, the
anticipated costs of ramping up a new business, the amortization of related
goodwill and the elimination of intercompany manufacturing profit in retail
inventories have constrained profitability."
Higher recreational vehicle sales and the continued expansion of the
Company's manufactured housing retail business led to record second quarter
and first half revenues. Second quarter revenues totaled $1.01 billion,
13 percent ahead of last year's $898 million. This was the first time in the
Company's history that quarterly revenues reached the billion dollar mark.
Six-month revenues were also up 13 percent to $1.97 billion compared to
$1.74 billion for last year's first half.
Recreational vehicle sales rose 15 percent to $498 million, an all-time
high for the second quarter, compared to $433 million a year ago. All RV
divisions posted record second quarter revenues, with the motor home division
setting the pace. Motor home revenues of $311 million were 17 percent ahead
of last year's second quarter on a nine percent rise in shipments to
3,954 units. In the towable RV categories, travel trailer sales increased
12 percent to $150 million and folding trailer sales climbed 14 percent to
$37 million. Second quarter unit shipments for travel trailers and folding
trailers were 10,466 and 6,507, respectively, representing increases of
11 percent and 10 percent.
Six-month RV sales reached a record $982 million, 14 percent ahead of last
year's $861 million. Motor home revenues of $617 million were 17 percent
higher, reflecting sales growth for both Class A and Class C products. Travel
trailer sales in the first six months rose nine percent to $299 million, while
folding trailer revenues increased seven percent to $66 million.
Sales growth in the Company's retail business led to a nine percent
increase in second quarter manufactured housing revenues. Housing revenues of
$497 million include wholesale sales of $335 million to independent retailers
and retail sales of $162 million generated through Company-owned retail
stores. The Company commenced retail operations a little over a year ago and
retail sales in last year's second quarter were only $87 million. Gross
manufacturing revenues, including intercompany sales of $75 million to
Company-owned retail stores, totaled $409 million in the second quarter,
virtually identical to last year's sales. Manufacturing unit volume declined
three percent to 16,752 homes. However, due to rising sales of multi-section
homes, which represented 63 percent of factory sales versus 56 percent last
year, the number of housing sections increased one percent to 27,760.
First half housing sales were $959 million, 12 percent ahead of last
year's $855 million. Housing revenues in the first six months of fiscal 2000
included $639 million from manufacturing operations and $320 million from
retail stores. Retail sales for the comparable period last year were
$89 million. Gross manufacturing revenues, including intercompany sales of
$156 million, were approximately $795 million compared to $810 million for
last year's first half.
Potter commented that, "We are encouraged by recent sales order activity
and the strength of our backlogs as we enter the seasonally slow third
quarter. We expect that the winter will be a challenging period for the
manufactured housing industry, which is struggling with a retail inventory
overhang, but we take comfort in the fact that we have a four-week backlog.
Also, we have a record order backlog in recreational vehicles for this time of
the year," Potter said.
Commenting on share repurchase activity, Potter said, "We were active in
buying shares of Fleetwood Common stock throughout the first half of the
fiscal year, having purchased and retired 2.8 million shares at a cost of
nearly $68 million. In addition, at our September Board meeting, the
Company's directors passed a resolution authorizing the purchase of an
additional 2.0 million shares. 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," Potter concluded.
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)
(Amounts in thousands except per share data)
14 Weeks 13 Weeks 27 Weeks 26 Weeks
Ended Ended Ended Ended
Oct. 31, Oct. 25, Oct. 31, Oct. 25,
1999 1998 1999 1998
Sales $1,010,103 $897,840 $1,966,817 $1,737,995
Income before provision
for income taxes $50,346 $51,949 $95,555 $101,922
Provision for
income taxes (20,554) (20,838) (39,403) (40,586)
Net income for basic
earnings per share 29,792 31,111 56,152 61,336
Distribution on
preferred securities,
net of income taxes 2,781 2,780 5,568 5,561
Net income for diluted
earnings per share $32,573 $33,891 $61,720 $66,897
Earnings per share:
Basic $.91 $.92 $1.67 $1.87
Diluted .84 .84 1.56 1.70
Weighted average
Common shares:
Basic 32,917 33,896 33,628 32,759
Diluted 38,851 40,257 39,587 39,274
Fleetwood Enterprises, Inc.
Business Segment and Unit Shipment Information
(Dollars in thousands)
14 Weeks 13 Weeks 27 Weeks 26 Weeks
Ended Ended Ended Ended
Oct. 31, Oct. 25, Oct. 31, Oct. 25,
1999, 1998, 1999, 1998
OPERATING REVENUES:
Manufactured housing -
Manufacturing $409,264 $409,608 $795,067 $810,020
Retail 162,253 87,001 319,969 88,879
Less intercompany (74,836) (42,642) (156,434) (44,126)
496,681 453,967 958,602 854,773
Recreational vehicles 497,965 432,709 981,699 861,475
Supply operations 15,457 11,164 26,516 21,747
$1,010,103 $897,840 $1,966,817 $1,737,995
OPERATING INCOME:
Manufactured housing* $24,266 $20,834 $41,382 $46,330
Housing - retail** 3,021 3,828 9,723 2,734
Recreational vehicles 29,061 30,315 60,028 57,014
Supply operations 6,506 4,113 11,369 7,696
Corporate and other (8,112) (4,229) (17,804) (8,662)
$54,742 $54,861 $104,698 $105,112
UNITS SOLD:
Manufactured housing -
Factory shipments 16,752 17,235 32,567 34,433
Retail sales 3,928 2,260 7,669 2,300
Less intercompany (2,953) (1,808) (5,921) (1,836)
17,727 17,687 34,315 34,897
Recreational vehicles -
Motor homes 3,954 3,617 8,426 7,397
Travel trailers 10,466 9,428 21,485 19,581
Folding trailers 6,507 5,899 11,526 11,223
20,927 18,944 41,437 38,201
*After deduction for intercompany profit in inventory as follows:
FY 2000: $2,463 QTD and $6,018 YTD; FY 1999:$5,173 QTD and
$5,173 YTD.
**Operating income before deduction of interest expense on inventory
floor plan financing as follows: FY 2000:$2,851 QTD and
$5,688 YTD; FY 1999:$1,642 QTD and $1,642 YTD.