Fleetwood Enterprises — Investor Presentation (May 2008)
44 slides from Fleetwood Enterprises's investor presentation, May 19, 2008
Slide 1: 2008 Investor Presentation: Home Away From Home
0 2008 Investor Presentation HOME AWAY FROM HOME
Slide 2: Safe Harbor Statement
1 This presentation contains certain forward-looking statements and information based on the beliefs of Fleetwood’s management as well as assumptions made by, and information currently available to, Fleetwood’s management. Such statements reflect the current views of Fleetwood with respect to future
Slide 3: Table of Contents
2 Table of Contents COMPANY OVERVIEW Background and History 4 Revenue Distribution 5 Map of Facilities 6 Historical Perspective 7 Operating Strategy 8 Restructuring Actions 9–10 Current Status 11 RV GROUP Overview 13 RV Industry Trends 14-15 Market Position 16 Motor Homes: Overview and Market Positi
Slide 4: Company Overview
3 Company Overview Factory-Built Housing Recreational Vehicles
Slide 5: Background and History
4 Background and History Recognized leader in both recreational vehicle (RV) and factory-built housing industries #1 market share in Class A motor homes, #2 share in motor homes overall and #2 market share in manufactured housing More than 55 years of successful operating history in core manufacturi
Slide 6: Leading Producer of Recreational Vehicles & Manufactured Housing
5 Leading Producer of Recreational Vehicles & Manufactured Housing Supply 1% Motor Homes 56% Travel Trailers 13% Mfd. Hsg. 28% Modular 2% Lumber less than 1% Revenue Distribution Fiscal Year ’08 Sales: $1.7 billion
Slide 7: Facilities Are Strategically Located
6 Plants Producing Affordable Housing 17 Manufactured Housing, 2 Modular Plants Producing Recreational Vehicles 5 Travel Trailer, 3 Motor Home Plants Producing Components 1 Facility Corporate Office Approximately 7,500 employees Mexicali, Mexico Facilities Are Strategically Located
Slide 8: Historical Perspective
7 Historical Perspective In 1999 and 2000, a prolonged manufactured housing slump began, and the RV market experienced a sharp but brief downturn Prior management adopted centralized, functional operational structure The combination set off several years of net losses These results led to a series o
Slide 9: Operating Strategy
8 Operating Strategy Concentrate on core businesses Manufacturing high-quality, high-value RVs & homes Decentralize operations Empowering those closest to the customer Increase market share Targeting areas of greatest sales & profit potential Reduce costs/improve efficiencies Match manufacturing cap
Slide 10: Three Years of Restructuring Actions
9 Three Years of Restructuring Actions Sold or closed non-core businesses Stemmed losses and/or eliminated distractions Housing retail & finance; certain supply operations; folding trailers Closed or consolidated plant locations; realigned product mix Improved capacity utilization and labor efficien
Slide 11: Three Years of Restructuring Actions, cont'd.
10 Three Years of Restructuring Actions, cont’d. Reorganized sales force RV sales aligned by brand; Housing sales aligned by plant-specific products Decentralized service and warranty Pushed authority for product development down Decisions made closer to customers at division, regional or plant leve
Slide 12: Current Status
11 Current Status Major turnaround initiatives are largely in place Expect to see full annual impact of reductions in cost structure throughout fiscal 2009 Other changes will be ongoing Continued improvements in products, sales, manufacturing, service, with sustained positive financial impact expect
Slide 13: RV Group
RV Group 2 = FLEETWOOD
Slide 14: RV Group Overview
13 RV Group Overview Fleetwood is a leading producer of recreational vehicles in North America The business is organized into two primary divisions: motor homes and travel trailers FY 2008 sales of $1.40 billion; 18,100 units shipped More than 1.7 million Fleetwood RVs sold since Company’s inception
Slide 15: Favorable Long-Term Industry Trends
14 Favorable Long-Term Industry Trends Travel data continues to be positive RVing remains relatively inexpensive mode of vacation travel However, fuel prices are short-term financial factor Lower consumer confidence affecting sales Source: Recreation Vehicle Industry Association (www.RVIA.org) and R
Slide 16: Favorable Long-Term Industry Trends, Cont'd.
15 Favorable Long-Term Industry Trends, Cont’d. Demographics support promising long-term outlook Baby boomers entering prime age range for purchase of RVs Expanding market People living longer; entering RV market at younger age 0 20000 40000 60000 80000 100000 120000 1997 2005 2010 2015 2020 2025 20
Slide 17: Industry-Leading Position
16 Industry-Leading Position #2 motor home manufacturer overall (16.9% retail market share) #1 Class A motor home manufacturer (20.4% retail market share) #4 Class C motor home manufacturer (10.9% retail market share) #4 travel trailer manufacturer (4.6% retail market share) Statistical Surveys, Inc
Slide 18: Motor Homes
Motor Homes = FLEETWOOD
Slide 19: Motor Homes
18 Motor Homes Cyclical downturn began in 2005 Rising fuel prices and uncertainty about interest rates led to lower consumer confidence Early CY 2007 shipments rebounded; subprime woes halted progress by fall FY 2008 Fleetwood sales of $922 million (79% of RV Group sales) Increased product offerings
Slide 20: Motor Home Leaders Retail Market Share (Class C)
19 Motor Home Leaders Retail Market Share (Class C) Source: Statistical Surveys, Inc. Data Through March 2008 22.1% 14.8% 13.9% 10.9% 10.8% 0% 5% 10% 15% 20% 25% WGO COA THO FLE Jayco Up from 9.4% this time 2007
Slide 21: Motor Home Leaders Retail Market Share (Class A)
20 Motor Home Leaders Retail Market Share (Class A) Source: Statistical Surveys, Inc. Data Through March 2008 20.4% 16.4% 14.7% 12.9% 12.1% 0% 5% 10% 15% 20% 25% FLE MNC WGO THO Tiffin Up from 20.1% this time 2007
Slide 22: Travel Trailers
21 Travel Trailers
Slide 23: Travel Trailers
22 Travel Trailers FY 2008 sales of $218 million (19% of RV Group) Industry downturn began in late fall 2006 Challenging competitive market environment Fleetwood has lost market share in core products Closed plants, discontinued product lines, dealers lowered inventory by 5,000+ units
Slide 24: Travel Trailer Turnaround Actions
23 Travel Trailer Turnaround Actions Ongoing product innovation to provide improved, more competitive products New models to be introduced Spring ’08 Restructuring initiatives in process Closed five underperforming plants; redistributed product manufacturing throughout country to increase efficienci
Slide 25: Travel Trailer Leaders Retail Market Share
24 Travel Trailer Leaders Retail Market Share Source: Statistical Surveys, Inc. Data Through February 2008 31.8% 15.2% 9.5% 4.7% 3.8% 0% 5% 10% 15% 20% 25% 30% 35% THO Forest River Jayco FLE MNC
Slide 26: Recent Accomplishments — RV Group
25 Recent Accomplishments — RV Group Successful product introductions Motor home market share has held steady Minimal discounting in a competitive environment Introduced new motor home brands to fill gaps in Class C market and entry-level Class A’s Travel trailer market share decline has stabilized
Slide 27: Housing Group
26 Housing Group Single-Section Multi-Section Modular/Military Designer Interiors
Slide 28: Housing Group Overview
27 Housing Group Overview Single and multi-section homes built at plants nationwide Building in a factory provides advantages in cost, speed, labor efficiency and use of materials Manufactured housing unit builds residential homes to the HUD code Homes are primarily distributed through traditional i
Slide 29: Advantages of Building in Factories
28 Advantages of Building in Factories Lower cost per square foot for similar home compared to site-built Speed of delivery Averages half the time from decision to completion Availability of labor Controlled manufacturing environment More environmentally friendly Positive demographics in key segment
Slide 30: Manufactured Housing Industry Conditions
29 Manufactured Housing Industry Conditions Retail demand is highly correlated to availability of competitive financing Industry experienced its “subprime crisis” in late ’90s Result was fewer lenders with tighter underwriting standards Lenders require high FICO scores, as well as higher interest ra
Slide 31: Manufactured Housing Shipments
30 295 295 283 245 233 218 198 188 171 211 254 304 340 373 348 250 193 168 131 131 146 118 96 96 353 363 0 50 100 150 200 250 300 350 400 Manufactured Housing Shipments Source: Manufactured Housing Institute; Company estimate for 2008 Total Homes Shipped (000’s) 1983 2008*
Slide 32: Manufactured Housing Industry Outlook
31 Manufactured Housing Industry Outlook Constant, growing demand in U.S. for affordable housing Glut of site-built foreclosures and developer inventories is likely to delay growth opportunity Improved competitive position Tightening lending policies on site-built homes will help factory-built housi
Slide 33: Manufactured Housing Division
32 Manufactured Housing Division Second largest manufactured housing builder Sales of $502 million in FY ’08 12,810 Fleetwood manufactured homes built in calendar 2007 More than 1.3 million Fleetwood homes sold since Company’s inception Dramatically improving customer satisfaction indices 19 strateg
Slide 34: Manufactured Housing Leaders
33 30.0% 14.4% 10.0% 5.1% 4.2% 0% 5% 10% 15% 20% 25% 30% Clayton FLE CHB SKY CAV Manufactured Housing Leaders Source: Statistical Surveys, Inc. through February 2008 2008 YTD Retail Market Share Up from 14.3% this time 2007
Slide 35: Modular Division
34 Modular Division Modular home and condominium projects Fleetwood is pursuing business with developers and builders One condominium project finished; completed 36 units in another Fleetwood has completed three barracks projects Bidding process is proceeding on several others Military barracks and
Slide 36: Current Initiatives
35 Current Initiatives Priority on increasing market share, with accompanying higher volumes and improved labor efficiency Regional product development Local handling of service and warranty Closer relationships with distribution network Improved oversight of home set-up through “Welcome Home” initi
Slide 37: Financial Overview
Financial Overview v= FLEETWOOD
Slide 38: Revenues and Operating Income
37 Revenues and Operating Income (Not Adjusted for Discontinued Operations) Operating Income $0.0 $1.0 $2.0 $3.0 $4.0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 ($250) ($200) ($150) ($100) ($50) $0 $50 $100 $150 $200 $250 Total Revenue (left axis) Operating
Slide 39: Financial Progress
38 Financial Progress Improved balance sheet Disposition of Housing retail and finance operations Disposition of 13 idle facilities since end of FY 2007 Disposition of folding trailer division Payment of $58.8 million accrued interest on 6% CTPS Reduction in borrowing levels on revolving credit faci
Slide 40: Financial Progress, Cont'd.
39 Financial Progress, Cont’d. Restructuring initiatives yielding improvements Operating costs reduced by $33 million and $55 million during FY ’06 and FY ’07, respectively Focus on labor efficiencies, SG&A expenses and inventory controls Additional reduction of approximately $10M per quarter throug
Slide 41: December 2008 Put (5% Convertible Debentures)
40 December 2008 Put (5% Convertible Debentures) Holders of $100M 5% convertible debentures likely to exercise put in December 2008 Can satisfy in cash and/or with stock Generated approximately $60M of proceeds from real estate transactions in FY’08 ($33.5M in fourth quarter) Potential for additiona
Slide 42: Condensed Balance Sheets
41 Condensed Balance Sheets (Amounts in thousands) Note: not updated for recent sale of folding trailer division Jan 27, 2008 Apr 29, 2007 ASSETS Cash and Investments 45,079 $ 76,289 $ Receivables 118,717 123,535 Inventories 183,236 174,910 Other Assets 281,832 328,437 TOTAL ASSETS 628,864 $ 703,171
Slide 43: Recent Results by Segment
42 Recent Results by Segment (Amounts in millions) FY ENDED FY ENDED Q3 FY08 Q3 FY07 4/27/08 4/29/07 1/27/08 1/28/07 preliminary REVENUES RV Group 1,164.0 $ 1,400.9 $ 243.0 $ 320.1 $ Housing Group 502.0 518.4 96.7 108.7 TOTAL REVENUES 1,666.0 $ 1,919.3 $ 339.7 $ 428.8 $ OPERATING INCOME (LOSS) RV Gr
Slide 44: Summary
43 Summary A leader in both the RV and factory-built housing industries Market expansion opportunities in both industries Primary businesses have favorable demographic trends Focus on product innovation; quality manufacturing Improving prospects for consistent profitability Strong brand recognition
Fleetwood Enterprises — Investor Presentation (May 2008) on 6ix