Fleetwood Posts Loss, To Sell Retail Business to C
Riverside, CA, July 8--Manufactured housing maker Fleetwood Enterprises Inc. reported a loss for the fourth quarter and the full year, predicted another loss in its first quarter, and reached an agreement to sell its retail business as part of a focus on its core manufacturing operations.
The company said it plans to sell its retail business and its retail loan portfolio to Clayton Homes Inc., a subsidiary of Berkshire.
Fleetwood said it lost $55.8 million from continuing operations, or $1 per share, in its fiscal fourth quarter, compared with a loss of $5.4 million, or 13 cents, a year ago.
The net loss for the quarter totaled $120.5 million, or $2.16 per share, which includes a loss of $64.6 million from discontinued operations.
The discontinued operations in the most recent quarter included asset impairment charges of $51.1 million related to the sale of the retail businesses.
It was Fleetwood's second consecutive quarterly loss. It cited overproduction in the previous six months, higher labor costs and an overall slowdown in the motor home industry. It sees a "probable" loss in its fiscal first quarter.
Revenues from continuing operations fell 12 percent to $560 million during the quarter.
Analysts, on average, had expected Fleetwood to lose 30 cents per share in the quarter on sales of $603 million, according to Reuters Estimates.
As part of a restructuring the company said it has eliminated 11 corporate vice president positions, and cut 1,200 jobs, or 9 percent of its workforce, since the end of the third quarter.
"Implementing a lot of change is always difficult and usually costly," President and Chief Executive Officer Elden Smith said on a conference call with analysts.
Smith, who was named CEO in March, said he was optimistic about improving performance in 2006, and said Fleetwood's exit from its manufactured home retail and financing businesses was the major factor behind poor results.
Clayton Homes agreed to pay $74 million for Fleetwood Retail Corp's inventory, fixed assets, and prepaid rent. But Fleetwood will retain ownership of other assets with an estimated value of $41.7 million, including 22 stores sublet to an independent dealer.
Fleetwood also said it expects to sell the retail loan portfolio of HomeOne Credit Corp. for about $70 million to Vanderbilt Mortgage, a Clayton affiliate. Both transactions are expected to close in the first half of the 2006 fiscal year.
"While this quarter was certainly a messy one, it was not unexpected. More importantly, we are encouraged by how aggressive(ly) Smith has implemented his turnaround plan," Oppenheimer & Co. analyst Ian Zaffino wrote in a research note. Zaffino is mainitaining a buy rating on the stock.
For the full year, the company posted a loss from continuing operations of $72.6 million, or $1.31 per share, compared with a profit of $17.4 million, or 44 cents per share, in 2004.
Counting discontinued operations, Fleetwood recorded a 2005 net loss of $161 million, or $2.92 per share, compared with a loss of $22.3 million, or 58 cents per share, in 2004.
Sales for the year were $2.37 billion up from 2.36 billion a year earlier.
