Fleetwood Enterprises Inc. may eventually trade as two separate stock-market issues, one representing the company’s RV business and the other its manufactured housing activities, officials said.
During a conference call with investment analysts last week in which Fleetwood executives made the revelation last week, one analyst told Fleetwood President and CEO Ed Caudill and CFO Boyd Plowman that if Fleetwood traded as separate stocks each would be worth about $24 a share.
Fleetwood stock closed Friday (July 16) at $12.72 a share in New York Stock Exchange trading. The company’s stock trades at its current level because its manufactured home business, particularly its manufactured home retail dealerships, have been generating losses that have basically offset the profits earned by its RV business, particuarly the motorhome segment.
Caudill replied that Fleetwood’s Board of Directors regularly looks at splitting the company’s stock in two.
Caudill said Fleetwood has cleaned up a lot of its debt and was dealing with the value of its housing operation. He noted that investor Warren Buffett invested in a competing manufactured home builder that didn’t make a lot of sense to him because the firm probably had a negative value.
”But now, our balance sheet is in better shape and there still are some other issues, but I can tell you that we and the board look at it consistently to see if that’s a better situation for the shareholders than our current situation,” he said.
Plowman, who also is Fleetwood’s executive vice president, said Fleetwood can use the manufactured housing group’s previous net operating losses to reduce the company’s future corporate income tax burden. But he said the potential tax benefit “could be jeopardized” by splitting the company into separate stocks at this time.
Fleetwood also has outstanding debt “that at least complicates that issue,” Plowman added. “It’s certainly something we’ve thought about. We’ve thought about the changes in Wall Street and Wall Street’s desire for more simple stories. All of those things play into our thinking and its something our board is very cognizant of.”
Otherwise, Fleetwood’s RV and manufactured home businesses are basically distinct, Plowman said.