Fleetwood Sales Rise, but Net Falls

By Karen Robinson-Jacobs

Dec. 9, 2003 12 AM PT

Times Staff Writer

Fleetwood Enterprises Inc. said its fiscal second-quarter net income dropped 17%, largely because last year’s results included a sizable profit from a real estate sale.

The Riverside-based company, the nation’s largest maker of recreational vehicles, said net income for the quarter ended Oct. 26 was $3.8 million, or 10 cents a share, compared with $4.6 million, or 13 cents a share, a year earlier. Last year, profit was boosted by a one-time gain of $2.6 million from a real estate sale.

For the first time since 2000, Fleetwood posted its second consecutive profitable quarter. But Fleetwood also warned that the traditionally slow fall and winter months would bring a loss for the current quarter.

Despite the profit decline, the earnings report gave analysts reason to believe that a company that saw back-to-back losses was starting to gain traction.

“This is a company that lost $516.7 million over the past three years, so let’s keep it in perspective,” said William Gibson, a senior investment analyst with San Francisco-based Nollenberger Capital Partners. “It is pretty clear that they’ve turned the business around.”

Second-quarter revenue rose 5%, to $674.7 million from $641.1 million, boosted by a 14% sales gain in the company’s RV group. Fleetwood sold 2,826 motor homes in the most recent quarter, up from 2,599 a year earlier. The company also sells prefabricated houses.

While RV sales rose, profitability slipped largely because the company continues to post disappointing results in the “travel trailer” division, which includes trailers hitched to the back of a vehicle or fit over the back of a pickup truck.

Lyle Larkin, the company’s treasurer, said in January that Fleetwood revamped the travel trailer unit, replacing 60% of the product line with new offerings.

“We have continued to struggle with production inefficiencies resulting from the introduction of so much new product,” he said.

Fleetwood fell 34 cents to $10.26 on the New York Stock Exchange. The stock has climbed 31% so far this year.