Fleetwood Enterprises — Investor Presentation (September 2007)
48 slides from Fleetwood Enterprises's investor presentation, Sep 20, 2007
Slide 1: 2007 Investor Presentation: Home Away From Home
2007 Investor Presentation HOME AWAY FROM HOME
Slide 2: Safe Harbor Statement
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 e
Slide 3: Table of Contents
Table of Contents COMPANY OVERVIEW Background and History 4 Revenue Distribution 5 Map of Facilities 6 Historical Perspective 7 Operating Strategy 8–9 Restructuring Actions 10 Current Status 11 RV GROUP Overview 13 RV Industry Conditions and Trends 14-16 Market Position 17 Motor Homes: Overview and
Slide 4: Company Overview
Company Overview Manufactured Housing Recreational Vehicles Supply Subsidiaries
Slide 5: Background and History
Background and History Recognized leader in both recreational vehicle (RV) and factory-built housing industries #1 or #2 market share in motor homes, folding trailers, and manufactured housing More than 55 years of successful operating history in core manufacturing businesses Experienced management
Slide 6: Revenue Distribution
Leading Producer of Recreational Vehicles & Manufactured Housing Revenue Distribution Fiscal Year ’07 Sales: $2.0 billion Motor Homes 48% Travel Trailers 20% Mfd. Hsg. 26% Folding Trailers 4% Supply 2%
Slide 7: Facilities Are Strategically Located
Plants Producing Affordable Housing 17 Manufactured Housing, 2 Modular Plants Producing Recreational Vehicles 5 Travel Trailer, 3 Motor Home, 1 Folding Trailer Plants Producing Components 2 Facilities Corporate Office Approximately 9,000 employees Mexicali, Mexico Facilities Are Strategically Locate
Slide 8: Historical Perspective
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 of
Slide 9: Basic Operating Disciplines
Basic Operating Disciplines Enter only those fields of activity where we possess adequate competence and skills to excel Enter only the areas of greatest sales and profit potential within our chosen fields Maintain a competitive edge in our products, services and cost structure Require decision-maki
Slide 10: Operating Strategy
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 capac
Slide 11: Restructuring Actions
Restructuring Actions Reduced corporate officers: 24 to 10 Divested non-core businesses to stem losses and/or eliminate distractions Housing retail & finance; RV parts; chassis program Closed or consolidated plant locations and realigned product mix where necessary to improve capacity utilization an
Slide 12: Current Status
Current Status Major turnaround initiatives are largely in place Expect to see full annual impact of reductions in cost structure in fiscal 2008 Other changes will be ongoing Continued improvements in products, sales, manufacturing, service, etc. We expect positive financial impact to follow Immedia
Slide 13: RV Group
=> FLEETWOOD
Slide 14: RV Group Overview
RV Group Overview Fleetwood is a leading producer of recreational vehicles in North America The business is organized into three divisions: motor homes, travel trailers and folding trailers FY 2007 sales of $1.44 billion; 40,754 units shipped (third largest manufacturer overall) More than 1.7 millio
Slide 15: RV Industry Conditions
RV Industry Conditions Cyclical, seasonal industry Retail demand is highly correlated to leading economic indicators Consumer confidence, interest rates, fuel prices, etc. Wholesale shipment trends generally track retail demand, but are often exaggerated by changes in dealer inventory levels Levels
Slide 16: Favorable Industry Trends
Favorable Industry Trends Travel data continues to be positive RVing remains relatively inexpensive mode of vacation travel Fuel prices stabilizing and, overall, not a significant factor in total cost of RVing Source: Recreation Vehicle Industry Association (www.RVIA.org) and RV Rental Association S
Slide 17: Favorable Industry Trends, Cont'd
Favorable 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 People Over Age of 55 RV Ownership by Age Groups Source: University of Michigan 2005 S
Slide 18: Industry-Leading Position
Industry-Leading Position #1 Class A motor home manufacturer (20.6% retail market share) #6 Class C motor home manufacturer (9.7% retail market share) #4 travel trailer manufacturer (6.3% retail market share) #1 folding trailer manufacturer (37.1% retail market share) Statistical Surveys, Inc. Data
Slide 19: Motor Homes
Motor Homes => FLEETWOOD
Slide 20: Motor Homes
Motor Homes Industry experienced cyclical downturn in calendar 2005 and 2006 Rising fuel prices and uncertainty about interest rates led to lower consumer confidence Slight increase in 2007 shipments expected FY 2007 Fleetwood sales of $962 million (67% of RV Group sales) Number 1 market share posit
Slide 21: Motor Home Leaders Retail Market Share (Class C)
Motor Home Leaders Retail Market Share (Class C) Source: Statistical Surveys, Inc. Data Through July 2007 FLE up to 10.3% for past 3 months 25.2% 15.3% 12.7% 10.7% 10.0% 9.7% 0% 5% 10% 15% 20% 25% 30% WGO THO COA Gulf-stream Forest River FLE
Slide 22: Motor Home Leaders Retail Market Share (Class A)
Motor Home Leaders Retail Market Share (Class A) Source: Statistical Surveys, Inc. Data Through July 2007 Up from 20.1% this time 2006 20.6% 16.2% 15.1% 12.8% 10.0% 0% 5% 10% 15% 20% 25% FLE MNC WGO THO Tiffin
Slide 23: Travel Trailers
Travel Trailers
Slide 24: Travel Trailers
Travel Trailers Industry had strong year through most of calendar 2006 Continued demand for living units in Gulf Coast area Steep rise in demand for “toy hauler” products Originally a West Coast, limited-use product New uses and floor plans have expanded the market Industry downturn began in late fa
Slide 25: Travel Trailers Division in Turnaround Mode
Travel Trailers Division in turnaround mode Challenging competitive market environment Ongoing product innovation to provide improved, more competitive products New models introduced Spring ’07 New features Refreshed décors Bolder, more contemporary graphics Restructuring initiatives in process Redi
Slide 26: Travel Trailer Leaders Retail Market Share
Travel Trailer Leaders Retail Market Share Source: Statistical Surveys, Inc. Data Through June 2007 30.9% 16.3% 9.7% 6.3% 4.3% 0% 5% 10% 15% 20% 25% 30% 35% THO Forest River Jayco FLE MNC
Slide 27: Folding Trailers
Folding Trailers * => FLEETWOOD
Slide 28: Folding Trailers
Folding Trailers Relatively small entry-level niche #1 market share position with 37% through June 2007* FY 2007 sales of $89 million (6% of RV sales) New product innovations Additional features and options More competitively priced products, focusing on camping market Rationalized manufacturing pro
Slide 29: Recent Accomplishments – RV Group
Recent Accomplishments – RV Group Successful product introductions in most categories The Bounder brand has regained its position as the #1 Class A motor home brand in the country Motor home market share has held steady with minimal discounting in a competitive environment Introduced new motor home
Slide 30: Recent Accomplishments – RV Group (Cont'd)
Recent Accomplishments – RV Group Backlogs up significantly since end of Q1 in all 3 divisions after successful national dealer meeting Product planning and development process significantly improved Sales force responsible for fewer product lines with greater accountability Service and warranty exp
Slide 31: Housing Group
Housing Group Single-Section Multi-Section Modular Designer Interiors
Slide 32: Housing Group Overview
Housing Group Overview Constructs factory-built single and multi-family homes Building in a factory provides advantages in cost, speed, labor efficiency and use of materials Manufactured housing business builds residential homes to the HUD code Homes are primarily distributed through traditional ind
Slide 33: Advantages of Factory Building
Advantages of Factory Building 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 stable pricing More environmentally friendly Positive demographics
Slide 34: Industry-Leading Position
Industry-Leading Position 14.6% retail market share through June 2007 Sales of $518 million, representing shipments of 13,257 Fleetwood homes, in FY ’07 More than 1.3 million Fleetwood homes sold since Company’s inception #2 Manufactured Housing Builder
Slide 35: Fleetwood's Strengths
Fleetwood’s Strengths Long-standing reputation for excellence 20 strategically located facilities Efficient labor force and procurement operations Ample capacity 1,200 strong, independent retailers Market diversification Strong in both multi-section and single-section markets Expanding modular prese
Slide 36: Manufactured Housing Leaders
Manufactured Housing Leaders Source: Statistical Surveys, Inc. through June 2007 2007 YTD Retail Market Share 30.6% 14.6% 10.4% 5.0% 4.8% 0% 5% 10% 15% 20% 25% 30% 35% Clayton FLE CHB SKY PHHM
Slide 37: Manufactured Housing Shipments
Manufactured Housing Shipments Source: Manufactured Housing Institute Total Homes Shipped (000’s) Defaults and repossessions became problem in early 2000s Lenders left the market or downsized operations; two prominent lenders went bankrupt Number of dealers halved; manufacturers have downsized Lende
Slide 38: Industry Conditions
Industry Conditions Manufactured housing loans still difficult to obtain Public information indicates that chattel, or personal property, lenders demand significantly higher FICO scores, higher interest rates, and higher down payments than mortgage lenders Land/home loan terms more competitive, but
Slide 39: Industry Outlook
Industry Outlook Constant, growing demand in U.S. for affordable housing, bolstered by need for replacement housing in Gulf Coast region Gulf Region has higher-than-average proportion of manufactured housing Reduced competition from repossessed manufactured homes Repossession inventories peaked in 2
Slide 40: Modular and Military Housing Opportunities
Modular and Military Housing Opportunities Gulf Coast rebuilding Tens of thousands of homes must be replaced Factory-built housing is quick and cost-effective Labor availability favors factory-built housing Local builders, developers and government agencies favor a modular solution Fleetwood’s capac
Slide 41: Current Initiatives
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 Improved quality and service Cu
Slide 42: Recent Accomplishments – Housing Group
Recent Accomplishments – Housing Group Renewed focus on core manufacturing Sold unprofitable retail housing business as well as finance subsidiary in August 2005 Sale resulted in reduced market share Cost-cutting initiatives have been successful Three regional management teams consolidated into two
Slide 43: Financial Overview
Financial Overview = FLEETWOOD
Slide 44: Revenues and Operating Income
Revenues and Operating Income (Adjusted for Discontinued Operations) Operating Income ($ in millions) Revenue ($ in billions) $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 ($250) ($200) ($150) ($100) ($50) $0 $50 $100 $150 $200 $250 Total Re
Slide 45: Financial Progress
Financial Progress Restructuring initiatives yielding improvements Operating costs reduced by $33 million during fiscal 2006 Focus on labor efficiencies, SG&A expenses and inventory controls In fiscal 2007, operating costs were reduced by an additional $55 million Improved balance sheet Disposition
Slide 46: Condensed Balance Sheet
Condensed Balance Sheet (Amounts in thousands) Jul 29, 2007 Apr 29, 2007 ASSETS Cash and Investments 51,002 $ 76,289 $ Receivables 133,193 123,535 Inventories 183,809 174,910 Other Assets 319,127 328,437 TOTAL ASSETS 687,131 $ 703,171 $ LIABILITIES AND SHAREHOLDERS' EQUITY Short-Term Borrowings 4,88
Slide 47: Recent Results by Segment
Recent Results by Segment (Amounts in millions) FY ENDED FY ENDED Q1 FY08 Q1 FY07 4/29/07 4/30/06 7/29/07 7/30/06 (unaudited) (unaudited) REVENUES RV Group 1,441.8 $ 1,612.2 $ 359.3 $ 371.2 $ Housing Group 518.3 795.6 144.2 145.7 Supply 47.9 50.2 6.8 12.9 Interco. Hsg. Gp. Sales - (25.6) - - TOTAL R
Slide 48: Summary
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 All segments profitable in 1
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