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Fleetwood Again Swings to Profit

The firm benefited from trailer sales to FEMA as well as cost cutting, CEO says. Earnings still fall short of expectations.

July 14, 2006|Ronald D. White | Times Staff Writer

Riverside-based Fleetwood Enterprises Inc. rolled out its second consecutive quarter of profit Thursday that contrasted with losses in the year-earlier period, but the results fell short of Wall Street expectations.

Fleetwood builds recreational vehicles, including motor homes, travel trailers, folding trailers and slide-in truck campers. The company also produces manufactured homes in single and multiple sections.

Both businesses face serious challenges, analysts said, in a time of high fuel costs and rising interest rates.

For the fiscal fourth quarter that ended April 30, Fleetwood posted net income, including discontinued operations, of $1.7 million, or 3 cents a share, contrasted with a year-earlier loss of $120.5 million, or $2.16 a share.

But earnings from continuing operations of $2.8 million, or 4 cents a share, was 2 cents a share below what analysts surveyed by Thomson Financial had predicted. In the same quarter last year, Fleetwood recorded a $55.8-million loss from continuing operations, or $1 a share.

Fleetwood also warned that it expected to post an operating loss in the fiscal first quarter because a shortage of parts had forced shipment delays.

Fleetwood's shares fell 18 cents, or 2.6%, to $6.71 on a day when crude oil prices closed at $76.70 a barrel, dragging stock markets lower.

Fleetwood Chief Executive Elden L. Smith attributed the company's improved results to a corporate restructuring and cost-cutting campaign as well as to higher sales, including trailers purchased by the Federal Emergency Management Agency for post-hurricane housing in Gulf Coast states.

The company's revenue rose 8% to $602.6 million from $560.2 million in the year-earlier quarter. Its biggest gains came from recreational vehicle sales, which amounted to $430.2 million in revenue for the quarter, up almost 13% from $381.3 million during the same period last year.

"We have industry headwinds working against us and we have the FEMA orders working for us," Smith said in a conference call with analysts and investors.

Smith said the company's cost-cutting efforts have been effective, reducing operating expenses by 27% during the quarter. He added that product redesigns, such as lighter-weight and lower-priced trailers, should help sales.

But some analysts noted Fleetwood's continuing struggles.

"Results were weak across all business lines, particularly in manufactured housing, which continues to be in a soft patch despite a slowdown in repossessions and signs of accelerating rebuilding efforts in the gulf," Oppenheimer & Co. analysts Ian A. Zaffino and William L. Peters said in a note to investors Thursday. "A turnaround could take longer than expected."

For the fiscal year, Fleetwood reported a net loss of $28.4 million, or 48 cents a share. That compared with a net loss in the previous fiscal year of $161.5 million, or $2.92 a share. Sales for the year rose slightly to $2.43 billion from just under $2.37 billion.

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