Riverside, Calif., July 12, 2007
— Fleetwood Enterprises, Inc. (NYSE:FLE) announced today financial
results for the fiscal 2007 fourth quarter and full year ended April
29, 2007.
Consolidated Results
Consolidated
revenues for the fourth quarter of fiscal 2007 declined 16 percent
to $508.4 million from $602.6 million in the same period of the
prior year. Fleetwood’s consolidated operating loss was
$18.6 million versus operating income of $8.3 million in the fourth
quarter of the prior year. The Company’s net loss, which included
results from discontinued operations, was $39.2 million, or $0.61
per share, compared to net income of $1.7 million, or $0.03 per
share, in the fourth quarter last year. The current quarter loss
included one-time severance costs of $10.2 million, or $0.16 per
share, associated with the closure of five travel trailer plants and
a non-cash adjustment to the Company’s deferred tax asset of $11.1
million, or $0.17 per share. In total, these costs were $21.3
million, or $0.33 per share.
For fiscal
year 2007, consolidated revenues fell 17 percent to $2.01 billion
from $2.43 billion in the prior year. Fleetwood’s consolidated
operating loss was $67.0 million versus operating income of
$29.5 million in the prior year. The net loss totaled $90.0 million,
or $1.41 per share, compared to a net loss of $28.4 million, or
$0.48 per share, in fiscal 2006. The fiscal 2007 loss included
severance costs of $14.0 million, or $0.22 per share, and
adjustments to the Company’s deferred tax asset of $14.7 million, or
$0.23 per share.
“Despite the
significant restructuring costs from plant closures, the fourth
quarter operating loss was, as expected, narrower than the third
quarter,” said Elden L. Smith, president and chief executive
officer. “The difficult market environment was particularly evident
in our travel trailer division, where poor operating results
prompted us to reduce manufacturing capacity by closing five smaller
or underperforming travel trailer plants. We have also made
significant improvements to our model year 2008 travel trailers and
streamlined our product offering. We have been gratified by the
reaction to the early shipments of our ‘08 travel trailer products.
We believe that our company-wide efforts to eliminate
inefficiencies, curtail costs, and increase revenues through
enhanced products will provide a foundation for Fleetwood’s
consistent operational improvement. These factors combined with more
efficient operations are expected to yield considerably better
financial results in the next year.”
Fourth Quarter Results by Business Segment
Recreational
vehicle sales were down 11 percent to $382.0 million from
$430.2 million in the fourth quarter of the prior year. The RV Group
incurred a quarterly operating loss of $18.4 million compared to the
prior-year fourth quarter operating profit of $2.2 million, which
was aided by $33 million in sales of emergency living units provided
by the travel trailer division in support of FEMA’s disaster relief
effort. Motor home sales for the quarter increased by 12 percent,
and the division generated operating income of $11.5 million, its
best performance in more than two years. These results were
encouraging, but were overshadowed by losses in the travel and
folding trailer divisions, including the restructuring costs.
Revenues for
the Housing Group dropped 26 percent to $116.9 million from
$157.5 million in the fourth quarter of the prior year. Despite the
sharp decline in revenues, the Housing Group generated operating
income of $1.7 million, compared with $6.6 million in last year’s
fourth quarter.
Fiscal Year Results by Business Segment
Recreational
vehicle sales for the full fiscal year declined 11 percent to
$1.44 billion from $1.61 billion in the prior year. The RV Group’s
operating loss was $62.4 million, compared to operating income of
$0.2 million last year. The travel trailer division’s results were
responsible for the swing, as the division lost $65.3 million in
fiscal 2007 but earned $1.1 million in the previous year.
Fleetwood’s
Housing Group revenues fell 35 percent to $518.3 million from
$795.6 million in the prior year, or by 27 percent excluding FEMA
sales of $86.8 million in fiscal 2006. The Group posted a loss of
$2.6 million, compared to the prior year’s operating income of
$38.8 million. In addition to the steep decline in revenues, the
comparison was also impacted by higher labor efficiencies associated
with FEMA unit production in the prior year.
Balance Sheet Changes
As a result of
the net loss for the year and the redemption of $50 million in debt
securities, cash and marketable securities on Fleetwood’s balance
sheet declined by almost $70 million year over year. At the same
time, total debt, including the credit facility, dropped by almost
$56 million. Despite the reduction in cash, the year-end balance
sheet reflects more than $70 million in liquid assets; and
liquidity, as defined under the Company’s secured credit facility
(bank cash balances plus unused borrowing availability), stood at
$117.4 million, well in excess of the $50 million benchmark set in
the credit agreement for testing financial covenants. Over the
course of the year, the Company sold six idle facilities, generating
more than $10 million in proceeds and $4 million in gains. Fleetwood
will continue to aggressively market idle real estate properties in
fiscal 2008 as part of its strategy to deploy capital as effectively
as possible.
“The recent
three-year renewal of the bank credit agreement on favorable terms,
along with the amendment finalized shortly after fiscal year end,
affords the Company good financial flexibility and resets covenant
requirements that reflect recent restructuring decisions and
management’s expectations of financial results,” Smith said. “We
anticipate that current cash balances, borrowing capacity under the
credit facility and improved cash flow from operations will provide
the resources needed to execute our business strategies as we move
forward.
First Quarter Outlook
“A successful
turnaround of our travel trailer business will be key to the extent
and timing of our financial improvement in fiscal 2008,” Smith said.
“In all other areas of our business, we believe we are positioned
well for the current markets, as evidenced by backlogs that are
improved and healthy in motor homes and improving in housing (up 36
percent and 58 percent respectively from the prior year as of the
end of the quarter). The strength of the manufactured housing market
continues to vary widely by geographic area, but despite the
uncertain environment, we are increasingly optimistic about our
Housing Group’s prospects.
“Although
market conditions in all of our businesses remain flat or worse than
last year at this time, we expect improved operating results for the
first quarter of fiscal 2008 compared to the prior year,” Smith
concluded. “We have created a more cost-efficient structure and
believe that we are gaining market share in some key segments. As a
result, operating results (before interest and taxes) for the first
quarter of fiscal 2008 should be close to the breakeven level.”
Conference Call Information
On Thursday,
July 12, 2007, the Company will host a conference call beginning at
1:30 p.m. EDT to review the results of operations for the fiscal
2007 fourth quarter and full year. The conference call will be
broadcast live over the Internet at www.streetevents.com and
www.earnings.com. It also will be accessible from the Company’s
website, www.fleetwood.com, in the Investor Relations section. An
archive of the call will be available at all three websites shortly
after the call concludes.
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 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, such as those regarding
improved efficiency, adequate liquidity, market share gains, and
improving operating results, 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, fuel prices, interest rates, and
other factors 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.
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