Following an announced restructuring plan that will close eight facilities corporatewide, including two trailer plants, Fleetwood Enterprises Inc. reported today (Nov. 25) steep declines in revenue and a $56.7 million net loss for its fiscal second quarter, ended Oct. 26.
“In view of the magnitude of the revenue declines and the current business outlook, we have implemented new cost-saving measures and announced significant additional changes to our manufacturing footprint,” said Elden Smith, president and CEO of the Riverside, Calif.-based recreational vehicle and manufactured housing builder. “We will also take other companywide cost-cutting actions in the current quarter.”
Sales for the quarter were $216.4 million, down 54% from $468.5 million in last year’s second quarter. RV Group sales declined 63% and Housing Group sales were off 33%. The net loss for the quarter totaled $56.7 million compared with a net loss of $1.2 million the previous year.
For the six months, revenue declined 47% to $506.3 million from $956.8 million for the first half of fiscal 2008. RV Group sales were down 57%, and Housing Group sales fell 24%. The net loss was $85.8 million compared with a net loss of $3.6 million in the year ago period.
The RV Group posted an operating loss of $42.0 million on revenue of $116.6 million for the quarter, versus operating income of $0.6 million on revenue of $318.7 million for the same quarter of the prior year. For the first six months, the group reported an operating loss of $65.8 million on revenues of $283.9 million, versus operating income of $2.5 million on revenues of $662.8 million in the comparable period last year.
“Motorhome revenues were one-third of what they were just last year, and aggressive pricing across the industry led to a much higher level of discounting in the division than in last year’s second quarter,” Smith said. “Travel trailer revenues and operating income also fell as a result of these factors. In addition, dealers continue to significantly lower their inventories.”
Fleetwood said that following the plant closures, the company will manufacture products in two motorhome factories, three travel trailer plants and 13 manufactured housing facilities. It expects capacity utilization to improve as a result, and fixed expenses should be reduced by at least $40 million on an annualized basis. Fleetwood said it will service all of its U.S. and Canadian travel trailer dealers from existing plants in Oregon and Ohio.
Fleetwood also restated its plan giving holders of the company’s 5% convertible senior subordinated debentures the right to require Fleetwood to repurchase the debentures at par on Dec. 15.
“We remain optimistic that the debenture holders will accept the exchange offer, which we believe is in their best interests as well as the company’s,” Smith said. “Resolution of this matter in combination with our aggressive restructuring plan will benefit everyone who has a vested interest in Fleetwood, including dealers, retail customers, suppliers, and shareholders, as well as our debt holders.”