Orders for Post-Storm Housing Help Fleetwood Swing to Profit

From Reuters

Riverside-based Fleetwood Enterprises Inc. on Thursday posted a stronger-than-expected fiscal third-quarter profit, boosted by orders for manufactured housing for hurricane victims on the Gulf Coast.

However, shares fell 86 cents, or 7.3%, to $11.01 after the nation's No. 2 maker of recreational vehicles said it did not expect results in the current quarter to change significantly from the just-completed period. The company cited soft markets for motor homes and housing.

Fleetwood reported net income of $1.4 million, or 2 cents a share, including discontinued operations, for its quarter ended Jan. 29, contrasted with a year-earlier net loss of $54.7 million, or 99 cents.

Earnings from continuing operations were 8 cents a share, double what analysts expected, according to Reuters Estimates. Fleetwood's third quarter is typically a weaker period.

Sales rose 15% to $583.9 million, topping the $580 million that analysts had expected.

Fleetwood Chief Executive Elden Smith said he remained "somewhat cautious" in the short term about the company's housing unit, which saw third-quarter sales rise 14%.

Its manufacturing plants, which normally are less used in its third quarter, had sustained production runs because of demand for homes in the Gulf Coast region, Smith said. However, the company has completed its contractual commitment for disaster relief units.

Smith added that the need for replacement homes in that region would offer a strong sales opportunity, but the timing remained uncertain.

He said that although areas of the Southwest U.S. were seeing strong demand and the Southeast was relatively stable, there was general weakness elsewhere.

RV Group sales rose 7% largely on a strong increase in the sales of trailers to the Federal Emergency Management Agency, which used them as emergency housing for Gulf Coast hurricane victims.

The strong trailer demand was partly offset by losses in the motor home and folding trailer divisions, the company said. Smith said that Fleetwood would build about 2,500 more FEMA trailers in the fourth quarter, but that lower volumes were expected.

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