Fleetwood Enterprises said it is better positioned to compete in most segments of the RV market than it was a year ago and considers its finished goods inventories healthier than some of its competitors in the Midwest.
Elden L. Smith, president and CEO of the Riverside, Calif.-based manufacturer of RVs and manufactured housing, expanded upon these and other topics in a conference call with analysts Thursday afternoon (July 13) following the release of its fourth-quarter and year-end results.
Fleetwood reported a slight profit on RV sales of $1.61 billion for the year ending April 30, down 3% from a year earlier. In the fourth quarter, RV sales rose 13% to $430 million and operating profit totaled $2.2 million.
Smith said Fleetwood and the rest of the RV industry continue to fight against a “headwind” that will push Fleetwood’s results back into the red for the current quarter ending this month.
Still, Smith pointed to a number of positive developments this summer that he considers encouraging as Fleetwood moves forward on its restructuring plan:
• The company is receiving good dealer response to lower-priced lightweight towables, such as the Nitrous toy hauler, which he said “hit the market at the right price and the right time.” This was one of several new products Fleetwood introduced to reach some growing markets it was missing in the travel trailer segment. As a result of this and other new products designed to target the broadest part of the market, the company’s travel trailer backlog as of July 9 stood at nearly 4,500 units, compared to 2,283 a year ago.
• In the fourth quarter, Fleetwood sold 2,201 motorhomes, which was down from 2,356 units a year earlier. But revenue from these sales totaled $249.5 million, up slightly from a year ago, and because of less discounting of these units the company realized operating income of $1.4 million versus a net loss of $5.2 million a year ago
• Fleetwood’s folding camping trailer division is “back on track” and has increased its market share to 44%. Three of its fold-downs were named “best buys” by Consumer Digest magazine. Most recently, the company wrote 2,100 orders this week at its Eastern dealers meeting, compared to 1,850 a year ago.
These positive developments come as the company hears of softening in the towable market in the last three to four weeks, he said.
Smith said he’s getting comments from Fleetwood dealers in the Midwest that the company’s competitors there are maintaining higher finished goods inventories than normal for this time of year.
“There is some discounting going on in towables,” he said. He said some plants in the Midwest also extended their July 4 shutdown by a week to get production more in line with demand.
Smith said Fleetwood dealers are maintaining “quite comfortable,” more conservative inventories and none are “over-inventoried.” He said Fleetwood “is finding some success in replacing competitors’ products in some areas.”
Smith and other Fleetwood management alluded to the company’s improving financial condition as an impetus to discuss possible mergers or acquisitions to broaden its product line.
“We have continued to talk with anybody who is interested in talking,” he said, “But I wouldn’t characterize it as being any more active than it was a year ago.”
In a similar vein, one analyst asked why Fleetwood didn’t consider spinning off its folding camping trailer division which, though it increased market share, still lost $6.2 million in the year just ended.
Smith replied that the division is growing and has great potential. It has added lighter products to its mix and there are “millions of tenters” who may move up to folddowns when they start having families.