Fleetwood Enterprises Inc.’s stock price remains beaten down, although its share price improved dramatically last week (Aug. 12-16), which was the first week on the job for Edward Caudill, its new president and CEO.
The RV and manufactured home builder’s stock price fell as low as $2.37 a share on Aug. 12 but it closed at $3.92 on Friday (Aug. 16).
Fleetwood’s stock price fell below $3 a share during the week of Aug. 5-9 apparently because of report distributed by Dow Jones Newswires on Aug. 5 suggesting that Deutsche Financial Services (DFS) will leave the manufactured home dealer inventory finance business unless it can find a buyer for that business within 60 days. Dow Jones cited John Diffendal, analyst with BB&T Capital Markets, as its source for the report.
Germany’s Deutsche Bank AG, parent of DFS, declined to comment on the speculation.
Deutsche Bank’s North American finance operation “has been viewed as on the block for some time and is believed to be close to being sold,” Diffendal also told Dow Jones.
DFS’ departure from manufactured home dealer inventory finance “would be another massive shock to manufactured housing,” according to Diffendal.
Diffendal did not mention DFS’ RV dealer inventory finance business although he did tell Dow Jones that he believes Fleetwood’s RV business is “going gangbusters.”
However, despite that fact that Fleetwood’s motorhome sales revenue was up 63%, its travel trailer and fifth-wheel sales increased 13% and its folding camper revenue climbed 19% during the three months ended July 28, the company said it will report another net loss for the May-through-July period.
Fleetwood will report the amount of the net loss for its first fiscal quarter around Sept. 5.
In addition to the fact that Fleetwood now has a permanent president and CEO for the first time since last February, the company issued an announcement last week that helped boost its stock price.
Fleetwood announced last Tuesday (Aug. 13) that it would pay a cash dividend on its 9.5% convertible trust preferred securities. The cash was distributed on Thursday (Aug. 15).
Earlier, Fleetwood has said it would distribute shares of its common stock as the dividend to the holders of its 9.5% trust preferred securities.
“Cash is king and Fleetwood is paying it on $188 million of convertible preferreds,” wrote Barbara Allen, analyst with Arnold & S. Bleichroeder, who was quoted by Dow Jones. “We consider this a very positive development, drawing attention to what is a recovering company with a large cash position and increasing cash flow from its RV Group.”
Paying cash instead of stock to the holders of trust preferred securities also will keep more Fleetwood shares out of the hands of short-interest sellers, according to Dow Jones. Short-interest sellers, investors who are betting that Fleetwood’s stock price will fall, already control a relatively high percentage of the Fleetwood shares that are available for public trading, Dow Jones reported.
Fleetwood’s stock traded for almost $12 a share in April and its 52-week high is $17.25.
Caudill was an executive at truck manufacturer Paccar Inc. before joining Fleetwood. He replaces David Engelman, a retired financial services firm executive and Fleetwood Board member who served as president and CEO on an interim basis since the ouster of Nelson Potter in February.