Exhibit 99.1
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[LOGO]
Investor Day
October 29, 2004
[LOGO]
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 events and are subject to certain risks, uncertainties, and assumptions, including risk factors identified in Fleetwood’s Form 10-K and other SEC filings. These risk factors include, without limitation: the cyclical nature of both the manufactured housing and recreational vehicle industries; ongoing weakness in the manufactured housing market; continued acceptance of the Company’s products; the potential impact on demand for Fleetwood’s products as a result of changes in consumer confidence levels; the effect of global tensions on consumer confidence; expenses and uncertainties associated with the introduction and manufacturing of new products; the future availability of manufactured housing retail financing, as well as housing and RV wholesale financing; exposure to interest rate and market changes affecting certain of the Company’s assets and liabilities; availability and pricing of raw materials; changes in retail inventory levels in the manufactured housing and recreational vehicle industries; competitive pricing pressures; the ability to attract and retain quality dealers, executive officers and other personnel; and the Company’s ability to obtain financing needed in order to execute its business strategies. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Fleetwood undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
1
Corporate Overview
Ed Caudill
President & Chief Executive Officer
2
Fleetwood Enterprises, Inc.
Recreational Vehicle Manufacturer &
Manufactured Housing Builder/Retailer/Lender
[CHART]
* Percentage of fiscal year 2004 revenues
3
Leadership Position
[GRAPHIC]
Leading recreational vehicles producer
• Nation’s #2 largest producer of RVs overall*
• Gaining market share in higher-end motor homes*
[GRAPHIC]
Leading manufactured housing builder
• Growing market share in 2004**
• Now #1 in multi-section home retail*
* According to Statistical Surveys, Inc. (June 2004)
** Calendar year
4
Corporate Structure
Fleetwood Enterprises, Inc.
Housing Group |
| RV Group |
| Supply Subsidiaries |
|
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Wholesale Division |
| Motor Home Division |
| Lumber Operations |
|
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Retail Division |
| Towables Division |
| Continental Imports |
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HomeOne Credit Corp. |
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| Fiberglass Plants |
5
Fleetwood History
• More than 50 years in business
• Historical synergies between RV and manufactured home production
• Publicly traded since 1965
• Listed on NYSE in FY 1971
• Purchased Coleman Folding Trailers in FY 1990
• Corporate management restructuring in 2002
6
Deep Senior Management Team
• Tom Pitcher, Chairman
• Ed Caudill, President/CEO
• Boyd Plowman, EVP/CFO
• Chris Braun, EVP – RVs
• Roger Howsmon, EVP – Housing
• Scott Grafft, SVP – Strategic Planning
• Todd Inlander, SVP/Chief Information Officer
• Larry Mace, SVP – Supply/Materials
• Len McGill, SVP- Finance/CGO
• Forrest Theobald, SVP/General Counsel
7
Corporate Governance Excellence
• Independent chairman
• Diverse, strong Board
• Ten of 11 Board members are independent
• Regular executive sessions of Board
• New charters for Audit, Governance & Compensation committees
• Published procedures for director nominations and shareholder communications
• Appointed Len McGill Chief Governance Officer
8
Fleetwood Facts
• FORTUNE 1000 company - #634
• 14,000 employees
• 39 manufacturing operations in 15 states and one in Canada. FRC retail locations in 19 states
• 4th largest retail manufactured housing company
• Growing company – six consecutive quarters of revenue growth. Current estimates of full year profitability
• HomeOne finance company
9
Key Elements of Our Strategy
Culture of Performance
Recreational Vehicles
Innovation |
| Higher Margins |
•New product development |
| •Pricing surcharges. |
•New systems development |
| •Material cost reductions. |
Maximize Shareholder Value | ||
|
|
|
Leverage Capacity |
| Vertical Integration |
•2 shifts in Housing |
| Continue commitment to model |
•Eliminated shifts in TT – single footprint sufficient |
|
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| Expand Market |
|
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| •Communities |
|
| •Urban infill |
|
| •Developers |
|
Manufactured Homes
10
Progress
• Rebuilt financial strength
• High quality products – feedback from dealers
• Streamlined operations
• Strengthened management
• Regained momentum
11
LOOKING FORWARD
What makes Fleetwood optimistic about the future is the strong demographics strength behind both our businesses.
12
The RV Boom
• The RV industry had a record-breaking year in 2003 - 332,000 units. Projects another record year in 2004 – with 361,000 units
• Innovation and aging population are fueling growth
• RV shipments for the next 5 years forecasted to exceed last 5
• 2.1 Million: Total USA RV ship forecast 2005 – 2010
[CHART]
Source: RVIA shipment data 2004, 2005
13
Strong Demand for What RVs Deliver: Freedom
• Favorable demographic trends expected to drive strong demand for RVs
• Boomers are buying at higher rates than their parents; and there are more of them
• Opportunity lies in developing products that appeal to younger intenders
• Today’s 36 million households in the 45-64 age group – RV prime buying age – will grow to 45 million by 2010
Age Wave Population (millions)
Boomers 40 to 58 in 2004
[CHART]
Source: U.S. Census
14
RV Loyalty: A Stable Market
• Present owners plan to continue with the RV lifestyle
[CHART]
[GRAPHIC]
• The opportunity is to introduce more consumers to the lifestyle
QUICK GETAWAYS
8 in 10 RVers count camping among their favorite activities, while only 3 in 10 say the same of outlet mall shopping.
FAVORITE ACTIVITIES:
Camping |
| 80 | % |
Attending craft and harvest festivals |
| 47 | % |
Fishing |
| 46 | % |
Viewing foliage |
| 45 | % |
Hiking |
| 44 | % |
Biking |
| 36 | % |
Outlet mall shopping |
| 30 | % |
Source: Recreational Vehicle Industry Association, 2002
Source: Roper ASW 2003
15
Opportunities in Dealer Development
• There is opportunity to appeal to consumers with a better dealer experience
• Fleetwood has a major initiative under way to create the dealer of the future, along with the necessary service points future customers will need
Satisfied with Dealer
[CHART]
[GRAPHIC]
Source: Roper ASW 2003
16
Opportunities for Growth
• There is a significant opportunity to have an impact on the pre-owned market
• 70% of motor homes are purchased used
• 68% of travel trailers are purchased used
• New markets
• Fleetwood is appealing to new buyers with national marketing and product affiliations, such as NASCAR
[CHART]
[GRAPHIC]
Source: RVIA
17
RV Group Overview
• Investments in product development
• Focus on quality improvements
• Plant modernization
• Strategic alliances to reduce costs and enhance quality
18
• Motor Homes
• Higher margin products
• Improved designs
• Gas products that look like diesels
• Intense customer/dealer feedback and input
• Multiple slide-outs
• Full-body paint
[GRAPHIC]
19
• Towable Division
• Towable industry unit retails up 12% in 2004 YTD
• Travel Trailers up 12%
• Fifth wheels up 20%
• Folding trailers down 6%
• Continuing trend toward higher-end products
• Folding Trailers
• Aggressive actions to combat declining revenues & profits
• �� Reporting realignment
• Coleman legal issue
• Market decline slowing
[GRAPHIC]
20
The Housing Boom
• Housing had a record-breaking year in 2003.
• New peaks for housing construction for the next 10 years likely to exceed last 10
• Total homes built 2005 - 2015 est. at 18.5M – 19.M (16.4M in the 1990s)
HOUSING INDUSTRY GROWTH
[CHART]
•Mfg Housing Shipments hit 40-year low in 2003
•2004 to show improvement over 131,000 units shipped in 2003
[CHART]
Source:
Joint Center for Housing Studies
Harvard University: 2003
21
Strong Underlying Demand for Manufactured Housing
Favorable demographic trends expected to drive strong demand for affordable housing
• Immigration
•Hispanics
• Empty nesters
• First-time buyers
•Single women
• Low to middle income
Immigration to the United States
[CHART]
Source: Statistical Yearbook and U.S. Census Bureau
22
Single women are playing a larger role in housing markets
…because of:
• Delayed marriage
• Higher divorce rates
• Lower remarriage rates
• Greater longevity
• Greater workforce participation
Source: Joint Center for Housing Studies Harvard University: 2003
23
Impact of Immigrants and Minorities
• Immigrants have accounted for more than 1/3 of household growth since ’90s
• Minority share of homeownership
• 17% in 1980
• 26% in 2000
• 34% in 2020 (est.)
• Hispanics represent nearly half of the 23.5 million immigrants arriving in the U.S. since 1980
[GRAPHIC]
Source: Joint Center for Housing Studies Harvard University: 2003
24
Appeal of Manufactured Housing
• More Hispanic Americans (43%) than all Americans (32%) say a manufactured home is an appealing place to live
When projected to the full U.S. population, this represents 10.8 million adult Hispanics who find a manufactured home appealing
[CHART]
When projected to the full U.S. population, this represents 67.8 million adult Americans who find a manufactured home appealing
o = Significantly higher at the 95% level of confidence
Q1. “People live in many types of homes, such as apartments, condos, townhouses, and houses. One type of house is called a manufactured home. These are built in a factory and are typically made up of one, two, or three sections. The one-section homes are sometimes called mobile homes. In general, how appealing is a manufactured home to you as a place to live?”
25
Advantages of Manufactured Homes Versus Site-Built Homes
• Significantly lower cost per square foot
• Controlled manufacturing environment
• Time to completion is half that of site-built
Average Cost Per Square Foot of a Manufactured Home vs. Site-Built Home*
[CHART]
* Source: Manufactured Housing Institute
26
Housing Group Overview
• Wholesale/Manufacturing Division
• New product development
• Growing relationships with national community developers
• Urban infill
27
Housing Group Overview
• Wholesale/Manufacturing Division
• Reduced overhead
• Mothballed plants but left in place for upturn
• Decreased product expenses
• Improving productivity
• Recently re-opened plants
28
Housing Group Overview
• Retail Division
• Consolidated wholesale and retail sales, and financial organizations
• Strengthened margins
• Reduced expenses
• Strengthened vertical integration
• HomeOne Credit Corp.
• Retail division being strengthened by our in-house finance capability, which is growing monthly
29
Recreational Vehicle Review
Chris Braun
Executive V.P. – RV Group
1
Recreational Vehicles
• Towables
• Folding Trailers
• Travel Trailers
• Motor Homes
2
Full Line Manufacturer
3
Travel Trailer Price Points
[CHART]
4
Motor Home Price Points
[CHART]
5
Fleetwood Folding Trailers
6
FLEETWOOD FOLDING TRAILER
MARKET SHARE
[CHART]
7
Rationalization of Folding Trailers
• Announced in August
• Consolidation w/Travel Trailers
• Reduce Cost/Improve Efficiency
• Headcount Reduction
• Leverage Purchasing Power
8
Fleetwood Folding Trailers
Product Innovation
9
New Off-Road Folding Trailer Available in October 2004
• Heavy-duty suspension
• 6” steel tube frame rails
• Full front and rear diamond plate body panels
• Paint over galvanized steel side body panels
• Steel rimmed and recessed rear lights
• Impact resistant wheel well flairs
[GRAPHIC]
10
New ASV Folding Trailer
Available in November 2004
• Capable of carrying four ATVs
• Complements recent expansion of ASV into Pioneer/Mallard
• West Coast introduction at the Pomona Super Sand Sport Show September 17-19 in Orange County
[GRAPHIC]
11
Travel Trailers
12
FLEETWOOD TT MARKET SHARE
[CHART]
13
Travel Trailer Distribution Points
[CHART]
14
Dealer Development
[GRAPHIC]
15
Mid-West Markets
Registrations/Market Share 2003 CY
• |
| Minneapolis |
| 2880 / 3.8% |
|
• |
| Chicago |
| 2487 / 2.6% |
|
• |
| St. Louis |
| 1782 / 6.0% |
|
• |
| Grand Rapids |
| 1617 / 1.8% |
|
• |
| Saginaw Bay |
| 1364 / 6.4% |
|
• |
| Kansas City |
| 1345 / 7.0% |
|
• |
| Detroit |
| 1252 / 7.9% |
|
• |
| Milwaukee |
| 841 / 7.25% |
|
• |
| Total |
| 13658 / 4.8% |
|
16
Travel Trailer Cost Reduction
• Maximize Plant Capacity/Utilization
• Consolidate Processes
• Platform Rationalization
• Improved Plant Efficiency
• Less Surplus and Obsolete Material
• Improved Product Quality
17
Platform Rationalization Is Reducing Manufacturing Costs!
Platform Rationalization |
| Current |
| New Entry |
| Percent |
|
Doors and Drawers * |
| 290 |
| 85 |
| 71 | % |
Galley Cabinets |
| 18 |
| 8 |
| 56 | % |
Lavy Cabinets |
| 15 |
| 6 |
| 60 | % |
Total cabinets |
| 313 |
| 180 |
| 42 | % |
Sidewalls |
| 86 |
| 30 |
| 65 | % |
Floors |
| 43 |
| 15 |
| 65 | % |
Front walls |
| 8 |
| 3 |
| 63 | % |
Rear walls |
| 31 |
| 11 |
| 65 | % |
Ceilings |
| 43 |
| 15 |
| 65 | % |
Drawer Boxes |
| 40 |
| 10 |
| 75 | % |
Chassis |
| 44 |
| 21 |
| 52 | % |
Undercarriages |
| 10 |
| 5 |
| 50 | % |
Waste Holding Tanks |
| 45 |
| 3 |
| 93 | % |
18
Travel Trailer Product Introductions
• |
| 2005 Pioneer / Mallard 18T6 |
| 7/04 |
|
• |
| 2005 Pride and Triumph 385FKQS |
| 8/04 |
|
• |
| 2005 Pride and Triumph 395RL5S |
| 8/04 |
|
• |
| 2005 New Mallard 23T6, 25TS6, 27TB8 |
| 8/04 |
|
• |
| 2005 Entry Level ASV Ramp Trailers |
| 8/04 |
|
• |
| 2005 New Pegasus & Orbit Ultralites |
| 9/04 |
|
• |
| 2005 Redesigned Entry Level PWT |
| 11/04 |
|
• |
| 2005 Redesigned Pioneer and Mallard |
| 11/04 |
|
• |
| 2005 New Hybrid (Tent) Trailers |
| 12/04 |
|
19
Mallard Travel Trailer for $9,995
Mallard 18T6 Online Promotion:
Dealer request for trailer retailed under $10,000 Special on-line promotion for dealers committing to retail for $9,995 Customers invited to locate participating dealers
[GRAPHIC]
20
New Entry Level ASV
Also Available as Pioneer/Mallard
[GRAPHIC]
21
New Entry Level Pioneer/Mallard
Lower Cost / Increased Features
• $500 lower material cost
• 4 fewer assembly hours
• Platform rationalization adds features not found in current product
• 400 Lb. Lighter
• Increased dinette width from 40” to 45”
• Slide-out wall windows standard
[GRAPHIC]
Prototype Built with Hung Fiberglass
PRODUCTION PILOTS BEGIN IN NOVEMBER 2004
22
New 2005 Pegasus Ultralite
[GRAPHIC]
As Built Weight – 4,315 lb.
23
New 2005 Orbit Ultralite
[GRAPHIC]
Weight – 6,367 lb.
900 Lb. Lighter than Competition
24
Pegasus Premium Hybrid
[GRAPHIC]
Status: Debut at RVIA. Production Start Up Feb. 2005
25
Orbit Premium Hybrid
[GRAPHIC]
26
PWT Core Products
2006 Strategy
• Entry Product
• Reduced Cost
• New Decors
• Updated Exterior Graphics
• Simplified Cabinet Designs = Easy to Build
27
• Entry Plus Product
• Front Molded Cap Becomes Standard
• Enclosed Underbelly Becomes Standard
• New Decors
• New Exterior Graphic
• Reduced Cost
28
2006 Prowler Entry Plus
[GRAPHIC]
Production
May 2005
29
2006 Prowler Fifth Wheel
[GRAPHIC]
Production
May 2005
30
2006 Terry Entry Plus
[GRAPHIC]
31
2006 Terry Fifth Wheel
[GRAPHIC]
32
2006 Wilderness Entry Plus
[GRAPHIC]
33
2006 Wilderness Fifth Wheel
[GRAPHIC]
34
2006 Triumph with FBP??
[GRAPHIC]
Production
Aug 2005
35
Motor Homes
36
FLEETWOOD CLASS ‘A’ MARKET SHARE
[CHART]
37
FLEETWOOD CLASS ‘C’ MARKET SHARE
[CHART]
38
Paxinos Plant Expansion
• Class A & C production lines
• Independent continuous-moving chain conveyor
• Additional 148,000 sq. ft.; total 288,000 sq. ft.
• Estimated completion: May 2005
39
Cost Reduction Program
• Weekly Cost Reduction Meetings
• Started in June 2004
• Implemented Material Cost Savings Projects
• 8 Yielding $1,214,000 Annual Savings
• Active Material Cost Savings Projects
• 46 with $10,809,000 Savings Opportunity
40
New Paint Systems
• $25+ Million Capital Investment
• Plants:
• Riverside, CA
• Paxinos, PA
• Ability to Produce Class A Diesel on East and West Coast
41
Riverside New Paint System
[GRAPHIC]
42
[GRAPHIC]
43
[GRAPHIC]
44
Paxinos New Paint System
[GRAPHIC]
45
[GRAPHIC]
46
[GRAPHIC]
47
New Product Introductions
48
2005 Pace Arrow
Full-Body Paint
[GRAPHIC]
49
New Southwind
Introduced August 2005
[GRAPHIC]
50
New Revolution LE
Introduced August 2005
[GRAPHIC]
51
2005 American Eagle
[GRAPHIC]
New Front Upper Cap
Side-Hinged Luggage Doors
Additional Electrical Receptacles in Galley
Redesigned Front Overhead
Improved A/C Air Flow
Increased Sofa Length to 80”
Lighter Tone Exterior Graphics
Available in 8 Floor Plans
Introduction: March 2004
52
2005 American Heritage
[GRAPHIC]
Life cycle update
600 HP engine
84” floor-to-ceiling height
New Girard roof-mounted awning system
Available with (3) 32” plasma televisions
New side-hinged luggage doors
Introduction: April 2004
53
Sales & Marketing Partnerships
• NASCAR
• Athlon - Tailgate Theme
54
“NASCAR Special Edition” Package
• Bring RV products to our customers
• 3-year licensing agreement
• Package content:
• Exterior NASCAR Graphics
• Checkered Flag Awning
• Exterior RVQ (BBQ)
• Logo:
• Throw Pillows
• Blanket & Entry Mat
• Camp Chairs
• Flag
• 2-Way FRS Radios (X4) (GB)
• Satellite Radio (MH’s)
• Coupon for Discount on Scanner Purchase
• Launch at Charlotte Race and Pomona Show on 10/16
[GRAPHIC]
55
“Ultimate Tailgate Party” Promotion
• Fleetwood Brand as the “Ultimate Tailgate Vehicle”
• Leverage print media with Athlon Sports
• “Ultimate Tailgate” RV at highly ranked games in 10 major RV markets
• Tie in a national sweepstakes
[GRAPHIC]
56
PR Highlights
[GRAPHIC]
57
Manufactured Housing Review
Roger Howsmon
Executive V.P.– Housing Group
“You may not realize it when it happens, but a kick in the teeth may be the best thing in the world for you.”
- Walt Disney
Challenges Create Opportunities
[CHART]
The Fleetwood Housing Group
Excellent Market Position
• Reputation as high-value builder
• Growing market share in down market
• Consistent distribution network
• Looks like site-built; higher-end products
[GRAPHIC]
• FY 04 = $783M business – FY 05: $911M *
• FY 04 = 20,858 homes produced – FY 05: 22,864 *
• 23 manufacturing facilities
• 1,200+ dealers
• 126 Company-owned stores
• Significant share growth
• Brand awareness leader
• More than 1,250,000 homes sold
[GRAPHIC]
* FY 2005 Forecast
Growing Market Share
15 Months of Consecutive Growth
Wholesale Market Share Month By Month Comparison
[CHART]
Growing Market Share
YTD through July ‘04
RETAIL MARKET SHARE
(as of Dec ‘03)
Champion |
| 16.7 | % |
Fleetwood |
| 15.9 | % |
Clayton |
| 12.7 | % |
-Oakwood |
| 9.2 | % |
Palm Harbor |
| 5.6 | % |
RETAIL MARKET SHARE
(as of July ‘04)
Clayton/Oakwood |
| 21.5 | % |
Fleetwood |
| 17.7 | % |
Champion |
| 15.7 | % |
Palm Harbor |
| 5.6 | % |
Skyline |
| 5.4 | % |
Growing Backlogs
Up 158%
[CHART]
As of 10/17/04: ARC Backlog: 864 floors
Designing the Right Products
MHI Design Awards - April 2004
• Best Concept Home
Design under 1,400 sq.ft.
• Best Concept Home
Design over 1,400 sq.ft.
• Best Multi-Section Home
Design under 1,400 sq.ft.
[GRAPHIC]
[GRAPHIC]
* Model: Life Stages #4583L |
| * Price: $45,000 – $65,000 |
| * Size: 1120-1980 sq ft |
Optimizing Production
[GRAPHIC]
Developing National Accounts
• ARC
• Own 342 communities
• FLE has homes in 155 communities
• Purchased 1,700 homes in 2004
• Current ARC backlog is 864
• FEMA
• YTD orders for 1,860 homes
• Shipped 300+ homes per week
• 12 plants produced for FEMA
Leveraging Vertical Integration
[LOGO]
Restructuring Fleetwood Retail Corp.
[GRAPHIC]
FRC History / Evolution
|
| 1998 |
| 1999 |
| 2000 |
| 2001 |
| 2002 |
| 2003 |
| 2004 |
|
Retail |
| Entered |
| Initiated |
| Standardized |
| Completed |
| Right-Sized |
| Consolidated |
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|
|
|
Finance |
|
|
| Central |
| Standardized |
| Initiated |
| Launched |
| Established |
| Launched |
|
FRC Opportunities for Improvement
• Model homes poorly selected and improperly displayed
• Limited accountability for
• traffic or conversion ratios
• sales forecast vs. actual
• sales center overhead
• Administrative vs. sales culture
FRC Change Process
August 2003 |
| Change in FRC President |
August 2003 |
| Combine Wholesale and Retail Sales |
August 2003 |
| Initiate Housing Team Meetings |
September 2003 |
| Cancel Store Growth Plans |
September 2003 |
| Houston Layoffs |
October 2003 |
| Enforced Deal Compliance Policy |
October 2003 |
| New FRC EVP Leader |
October 2003 |
| Organization Restructure, Sales & Admin. |
November 2003 |
| First Complete Round of DM Meetings |
December 2003 |
| Elimination of RZVP Management Layer |
January 2004 |
| GM Compensation Change |
January 2004 |
| Store Ratings Presented to Op Comm. |
January 2004 |
| Zone & District Re-Alignment |
January 2004 |
| HomeOne Gets Warehouse Line |
Jan/Feb 2004 |
| 6 New DMs, 1 New ZVP |
February 2004 |
| First Ever National GM Conference |
Feb-May 2004 |
| FRC Sales Focused Incentive Contest |
March 2004 |
| HCC (BDRs) & FRC (DMs) Partnership |
March 2004 |
| Second Round of DM Evaluations |
April 2004 |
| Introduce FRC Exclusive Inspiration Home |
May 2004 |
| Combined National Sales Rally |
May 2004 |
| New DMs |
June 2004 |
| Aligned DM and BDRs performance goals |
June 2004 |
| Launch Storefront Concept |
July/August 2004 |
| New DMs |
August 2004 |
| One New ZVP and Named Storefront VP |
August 2004 |
| Legacy Cost Reduction Focus |
September 2004 |
| Commence Headquarters Facility Search |
FRC: Key Drivers of Improvement
• Storefront growth
• Reduce legacy expense
• Recruit and train quality GMs
• New management effectiveness
• Exclusive product
• Improve sales at all locations
FRC and HCC Partnership
[LOGO]
[LOGO]
Growing HomeOne Credit Corp.
• $60 million in receivables
• Delinquency rate of about ½ of 1%
• Warehouse lines of $100 million
The Future
• Changing Structure & Process
• Strategic direction driven by quantified opportunities
• Data-Driven product planning & marketing
• Product engineering for efficient manufacturability
• Quality through process measurement & improvement
Building 5-Year Strategic Plan
FOCUS
• Consumer research
• Data & competitive analysis
• Quantifying new biz Opportunities
• Developers
• Military
• Urban Infill
• Complementary Channels
Getting Focused
• HG 5-Year Plan will provide strategic direction
• Functional teams will align with strategic direction
[GRAPHIC]
Delivering Market-Driven Products
[GRAPHIC]
* Model: Life Stages #4583L |
| * Price: $45,000 — $65,000 |
| * Size: 1120-1980 sq ft |
Innovating to Meet the Demands of the Market…Profitably
[GRAPHIC]
Financial Review
Boyd Plowman
Executive V.P. & Chief Financial Officer
Improved Financial Performance/Position
• Profitability on the rise
• Positive guidance
• Eliminated $188 million in 9.5% convertible trust preferred debt
• Decreased interest expense
• Improved shareholders’ equity
• Negotiated renewed line of credit to provide greater capacity and flexibility at a lower cost
Solid Sales Growth
[CHART]
Decreasing Operating Expenses
[CHART]
Improving Operating/Net Income
[CHART]
Sales – Q1 FY ’05
[CHART]
Operating Expenses – Q1 FY ’05
[CHART]
Includes dealer support initiatives and higher product development costs
Operating/Net Income – Q1 FY ’05
[CHART]
Preliminary Sales – Q2 FY ’05
• Total sales grew 6%
• Manufactured homes increased 15%
• Wholesale up 26%
• Retail down 7%
• RV Group flat
• Motor homes up 10%
• Towables down 12%
Housing Financial Highlights
• Revenues increased year over year each of last four quarters, outperforming industry
• Wholesale division has been profitable in all but five quarters of the five-year downturn
• First profitable quarter since 2001 for the Housing Group as a whole in Q1 of FY ’05
RV Group Financial Highlights
• Revenue CAGR of 8% over the last seven quarters (1/03-7/04)
• Gross margin has steadily improved from 11.6% to 14.9% over same period
• Achieved profitability over the last six quarters
Maximizing Shareholder Value
• Potential creation of two “pure-play” entities
• NOL issue
• Outstanding debt securities
• Timing/valuation issue
• Ongoing Board/management consideration
• Opportunistic acquisitions
• Occasional supply divestitures
Net Operating Loss
• Carryforward
• Approximately $100 million, expires 2023
• Separate state NOL carryforwards
• Low income tax provision for FY ’05, FY ’06
Guidance Reiterated
• Generally optimistic, but slightly tempered
• Expect profitability Q2 FY ’05
• Year-over-year improvement
• Expect significant profitability FY ’05
• Further progress to come
Weighted Average Shares for EPS Calculation
2nd Quarter and Fiscal YTD - October 2004
|
| Shares in Thousands |
| ||
|
| Quarter |
| Fiscal YTD |
|
For Basic Calculation |
| 55,419 |
| 55,044 |
|
|
|
|
|
|
|
For Fully Diluted Calculation: |
|
|
|
|
|
Stock options |
| 1,063 |
| 1,089 |
|
If earnings > $0 but < than $8.3 mil./$16.5 mil. |
| 56,482 |
| 56,133 |
|
|
|
|
|
|
|
5% Debentures |
| 8,503 |
| 8,503 |
|
If earnings > than $8.3 mil./$16.5 mil. |
| 64,985 |
| 64,636 |
|
Balance Sheet
|
| July 25, 2004 |
| |
Assets ($000s) |
|
|
| |
|
|
|
| |
Cash and cash equivalents |
| $ | 59,852 |
|
Receivables |
| 203,031 |
| |
Inventories |
| 280,080 |
| |
Deferred taxes |
| 56,904 |
| |
|
|
|
| |
Property, plant and equipment, net |
| 262,983 |
| |
Other assets |
| 192,871 |
| |
Total assets |
| $ | 1.055,721 |
|
|
|
|
| |
Liabilities and stockholders’ equity |
|
|
| |
|
|
|
| |
Total liabilities |
| $ | 767,653 |
|
Total stockholders’ equity |
| 288,068 |
| |
Total liabilities and stockholders’ equity |
| $ | 1,055,721 |
|
Financing Our Growth
• Strengthened balance sheet
• Solid cash position, $59.9 million at end of Q1 FY ’05
• Deferring interest on 6% convertible subordinated debentures
• Improving financial results
• New $150 million secured credit facility
• $100 million warehouse credit facilities
Continuing Challenges/Opportunities
• Impact of interest rate fluctuations on RV and Housing demand and on HomeOne operations
• Business seasonal in both industries
• Towable division continues to be a particular management focus
• New lenders for manufactured housing have yet to fully ramp up
[GRAPHIC]
Summary
• A leader in both the growing RV and manufactured housing industries
• Housing Group vertical integration creating efficiencies and enhancing volume
• Upside potential as manufactured housing market turns
• Focus on RV product innovation
• Strengthened balance sheet
• Improving profitability
[GRAPHIC]
Questions?