- Company Generates Better-Than-Expected Operating Results;
Short-Term Outlook Is Cautious - RIVERSIDE, Calif., Dec. 6
/PRNewswire-FirstCall/ -- Fleetwood Enterprises, Inc. (NYSE:FLE)
announced today its results for the second quarter and first half
of fiscal 2008 ended October 28, 2007. Consolidated revenues for
the quarter were $490.1 million, down 7 percent from $526.6 million
in last year's second quarter. RV Group sales were off 9 percent,
while Housing Group sales improved 2 percent. The Company generated
operating income of $4.4 million in the current quarter, compared
to an operating loss of $15.2 million in the prior year. The net
loss for the quarter was reduced significantly to $1.2 million, or
$0.02 per share, from a net loss of $20.4 million, or $0.32 per
share, in the second quarter of fiscal 2007. Operating income for
the current quarter was negatively impacted by $3.1 million, or
$0.05 per share, consisting of impairment write downs on idle
facilities and restructuring costs, partially offset by gains from
the sale of idle properties. The operating loss in the second
quarter of fiscal 2007 included a net charge of $0.9 million, or
$0.01 per share, consisting of restructuring costs offset by gains
from selling idle properties. "Our much-improved operating results
despite lower revenues are encouraging," said Elden L. Smith,
Fleetwood's president and chief executive officer. "Except for the
revenue decline, virtually every other metric improved year over
year, with motor home results being particularly strong. Our
cost-cutting and capacity-consolidation initiatives are taking
hold, allowing us to make further progress. Each of our operating
divisions was profitable for the quarter except for the travel
trailer unit, and its loss was cut by 42 percent compared with the
prior year, despite a revenue decline of 54 percent." For the first
six months of fiscal 2008, consolidated revenues declined 5 percent
to $1.00 billion from $1.06 billion for the first half of fiscal
2007. RV Group sales were down 6 percent, while Housing Group sales
improved slightly. Operating income for the first six months of
fiscal 2008 was $10.4 million, compared to an operating loss of
$23.5 million in last year's corresponding period. The net loss for
the first half of fiscal 2008 was reduced to $3.6 million, or $0.06
per share, compared with a net loss of $20.8 million, or $0.33 per
share, last year. RV Group Results The RV Group posted operating
income of $1.0 million on revenues of $333.4 million for the
quarter, compared with an operating loss of $14.9 million on
revenues of $364.6 million for the same quarter of the prior year.
In the first six months of fiscal 2008, the Group reported
operating income of $2.9 million on revenues of $692.6 million,
versus an operating loss of $28.2 million on revenues of $735.8
million in the comparable period last year. Group operating results
for the quarter were improved due to higher motor home sales,
significantly lower labor costs in the motor home and travel
trailer divisions, and lower warranty and service costs. The motor
home division generated operating income of $9.1 million in the
second quarter, compared to an operating loss of $1.1 million in
fiscal 2007, and the travel trailer division cut its operating loss
to $8.3 million from $14.4 million in the prior year period.
Operating income for the folding trailer division was $0.3 million
versus $0.6 million a year ago. "The progress in the RV Group's
operating results, particularly in the motor home division, is
noteworthy," Smith said. "We shipped more units in both the Class A
and Class C categories than last year, and have successfully
introduced products in new markets for Fleetwood, including the
more affordable and more fuel-efficient motor home segments. The
downsizing in our travel trailer division over the past year has
given rise to improved labor and material costs, resulting in
higher gross margins despite lower revenues. At last week's
national RV trade show in Louisville, Kentucky, our dealers were
upbeat. We received positive feedback on our new products, and had
many dealers express interest in carrying our product lines. We
believe they are well positioned to withstand economic headwinds,
although they remain cautious." Housing Group Results The Housing
Group recorded a threefold increase in operating income for the
second quarter to $4.7 million on revenues of $149.7 million,
compared with operating income of $1.4 million on revenues of
$147.0 million for the same quarter of the prior year. For the
first half of the fiscal year, operating income for the Housing
Group advanced to $9.7 million on $293.9 million in revenues, up
from $3.5 million on revenues of $292.6 million for the first six
months of last year. "Considering that the manufactured housing
market continues to be quite weak in many areas of the country, our
results clearly demonstrate that the operating strategies we have
put in place are working," Smith said. "This quarter's performance
benefited from some modular business, most notably the military
barracks that we are building for Fort Bliss, Texas. While turmoil
persists in the conventional housing market, we are dealing with
increased competition from discounted housing prices, as well as
delayed sales of existing homes of those potential retirement
customers who are looking to move to manufactured home communities.
We believe that more disciplined lending criteria in the site-built
market will eventually be of considerable help to the manufactured
housing industry, which lost many customers because of attractive
site-built mortgages that are no longer available. We continue to
adjust our manufacturing capacity to better match demand. Our
plants in Oregon and Washington have been consolidated, and during
the third quarter our Gallatin, Tenn., plant will be relocated to
Lafayette, Tenn., where we expect to achieve lower costs and
greater efficiencies." Corporate Outlook "Our third quarter
includes three seasonally slow months, and the current environment
in both of our industries is characterized by consumer and dealer
caution, as well as very competitive pricing by manufacturers,'
Smith said. 'These factors will be most apparent in our motor home
business, which enjoyed double-digit growth year over year in the
first six months of the fiscal year. However, we continue to make
operational progress in the face of challenging market conditions.
We anticipate an operating loss in the third quarter that will be
meaningfully lower than that of the prior year because of the
aggressive steps we have taken to improve our cost structure and
because our products are meeting with greater approval from dealers
and retail customers alike. "We generated cash from operations
during the second quarter of $12.8 million, and ended the period
with $72.2 million in cash and investments, which is quite similar
to the level at this time last year," Smith concluded. "We have
ample liquidity for current operations and projected capital
expenditures, and we are well within the limits of the requirements
of our borrowing agreement." The Company will host a conference
call at 10:30 a.m. PST/1:30 p.m. EST on Thursday, December 6, 2007.
The call will be broadcast live over the Internet at
http://www.streetevents.com/, http://www.earnings.com/, and the
Company's website, http://www.fleetwood.com/ under Investor
Relations. About Fleetwood Fleetwood Enterprises, Inc., through its
subsidiaries, is a leading producer of recreational vehicles and
manufactured homes. 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, but not limited to, the Company's
ability to post consistently better results, the expectation that
tightened lending criteria in the site-built market will eventually
help the manufactured housing industry, and the belief that
industry recovery will lead to financial gains, 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 the
manufactured housing market and more recent weakness in the
recreational vehicle market; the effect of global tensions,
volatile fuel prices, interest rates, 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 the financing
we will need in the future to execute our business strategies; 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. Contact: Lyle Larkin Vice President -- Treasurer (951)
351-3535 Kathy A. Munson Director -- Investor Relations (951)
351-3650 Fleetwood Enterprises, Inc. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except
per share data) 13 Weeks Ended 26 Weeks Ended October October
October October 28, 29, 28, 29, 2007 2006 2007 2006 Net Sales: RV
Group $333,380 $364,591 $692,633 $735,817 Housing Group 149,696
146,981 293,904 292,645 Supply Group 7,059 15,001 13,840 27,882
490,135 526,573 1,000,377 1,056,344 Cost of products sold 405,844
453,058 839,511 909,575 Gross profit 84,291 73,515 160,866 146,769
Operating expenses 76,783 87,867 151,898 171,419 Other operating
(income) expenses, net 3,110 874 (1,454) (1,190) 79,893 88,741
150,444 170,229 Operating income (loss) 4,398 (15,226) 10,422
(23,460) Other income (expense): Investment income 1,222 1,292
2,539 3,432 Interest expense (6,669) (6,058) (12,185) (12,831)
Other, net - - - 18,530 (5,447) (4,766) (9,646) 9,131 Income (loss)
from continuing operations before income taxes (1,049) (19,992) 776
(14,329) Benefit (provision) for income taxes (96) 223 (3,901)
(4,771) Loss from continuing operations (1,145) (19,769) (3,125)
(19,100) Loss from discontinued operations, net (68) (658) (434)
(1,738) Net loss $(1,213) $(20,427) $(3,559) $(20,838) Basic and
diluted loss per common share: Loss from continuing operations
$(0.02) $(0.31) $(0.05) $(0.30) Loss from discontinued operations -
(0.01) (0.01) (0.03) Net loss per common share $(0.02) $(0.32)
$(0.06) $(0.33) Weighted average common shares 64,243 63,919 64,201
63,905 Fleetwood Enterprises, Inc. CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) (Amounts in thousands) October 28, July 29,
October 29, 2007 2007 2006 ASSETS Cash $ 47,477 $ 26,536 $ 55,172
Marketable investments 24,754 24,466 23,505 Receivables 121,678
133,193 136,306 Inventories 183,591 183,809 197,382 Deferred taxes,
net 7,239 7,239 13,197 Other current assets 9,499 12,806 15,941
Total current assets 394,238 388,049 441,503 Property, plant and
equipment, net 175,958 187,058 204,874 Deferred taxes, net 44,283
44,283 52,274 Cash value of Company-owned life insurance, net
20,215 19,853 29,722 Goodwill 6,316 6,316 6,316 Other assets 40,240
41,572 40,045 Total assets $681,250 $687,131 $774,734 LIABILITIES
& SHAREHOLDERS' EQUITY Accounts payable $ 41,293 $ 49,347 $
59,411 Employee compensation and benefits 46,040 49,077 45,023
Federal and state income taxes 2,212 3,326 2,211 Product warranty
reserves 41,453 44,244 44,997 Insurance reserves 20,149 19,324
17,588 Other short-term borrowings 10,056 4,884 20,661 Accrued
interest 5,428 3,242 6,356 Other current liabilities 68,175 63,962
70,887 Total current liabilities 234,806 237,406 267,134 Deferred
compensation and retirement benefits 25,840 28,240 34,637 Product
warranty reserves 21,816 22,685 21,510 Insurance reserves 35,990
35,292 34,232 5% convertible senior subordinated debentures 100,000
100,000 100,000 6% convertible subordinated debentures 160,142
160,142 160,142 Other long-term debt 18,811 20,131 4,360 Total
liabilities 597,405 603,896 622,015 Commitments and contingencies
Shareholders' equity: Common stock 64,250 64,241 63,969 Additional
paid-in capital 495,754 494,289 490,863 Accumulated deficit
(478,753) (477,540) (406,071) Accumulated other comprehensive
income 2,594 2,245 3,958 Total shareholders' equity 83,845 83,235
152,719 Total liabilities and shareholders' equity $681,250
$687,131 $774,734 Fleetwood Enterprises, Inc. BUSINESS SEGMENT AND
UNIT SHIPMENT INFORMATION (Unaudited) (Dollar amounts in thousands)
13 Weeks Ended 26 Weeks Ended October October October October 28,
29, 28, 29, 2007 2006 2007 2006 REVENUES: Motor homes $263,776
$230,645 $ 537,457 $ 455,873 Travel trailers 47,972 104,113 111,624
225,799 Folding trailers 21,632 29,833 43,552 54,145 RV Group
333,380 364,591 692,633 735,817 Housing Group 149,696 146,981
293,904 292,645 Supply Group 7,059 15,001 13,840 27,882 $490,135
$526,573 $1,000,377 $1,056,344 OPERATING INCOME (LOSS): Motor homes
$ 9,104 $ (1,141) $ 18,107 $ (4,619) Travel trailers (8,334)
(14,361) (15,759) (24,338) Folding trailers 269 604 600 806 RV
Group 1,039 (14,898) 2,948 (28,151) Housing Group 4,686 1,384 9,714
3,451 Supply Group 268 871 1,020 2,119 Corporate and other (1,595)
(2,583) (3,260) (879) $4,398 $(15,226) $ 10,422 $ (23,460) UNITS
SOLD: Recreational vehicles - Motor homes 2,125 2,074 4,558 4,272
Travel trailers 2,225 5,935 5,611 13,119 Folding trailers 2,374
3,301 4,604 6,031 6,724 11,310 14,773 23,422 Housing - HUD 3,619
3,672 7,184 7,373 MOD 307 - 555 - 3,926 3,672 7,739 7,373 Total
Company shipments 10,650 14,982 22,512 30,795 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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