Hello -
Thank you for your question. If you choose to rate this answer, please
do so after asking for any clarification you may require. Thank you
for your understanding.
Please find the latest fiscal year warranty expenditure information
below for five of the respective top competitors in the manufactured
homes and site-built homes industries:
MANUFACTURED HOMES
??????????????????????????????????????????????????????????????????????????
Revenue Warranty Payments % of Revenue
???????????????????????????????????????????????????
Clayton Homes $1,188,411,000 $11,157,000 0.94
Champion Enterprises $1,140,714,000 $59,370,000 5.20
Fleetwood Enterprises $798,520,000 $38,917,000 4.87
Palm Harbor Homes $573,130,000 $13,895,000 2.42
Cavalier Homes $387,257,000 $24,465,000 6.32
Average: $29,560,800 3.95
Note: Revenue exclusive to business dealings concerning manufactured homes
(e.g., in the case of Fleetwood, recreational vehicle-related revenue
has been excluded). Clayton Homes' number is low relative to the
others for some unknown reason (see page 3 of 10K report; link below).
SITE-BUILT HOMES
??????????????????????????????????????????????????????????????????????????
Revenue Warranty Payments % of Revenue
???????????????????????????????????????????????????
Centex $9,492,865,000 $22,519,000 0.24
Pulte Homes $9,048,926,000 $74,426,000 0.82
Lennar $8,348,645,000 $97,202,000 1.16
DR Horton $8,334,122,000 $27,378,000 0.33
KB Home $5,850,554,000 $36,599,000 0.63
Average: $51,196,400 0.63
There is an excellent article on the topic at Warranty Week. It
addresses industry average numbers, along with additional data from
other companies (albeit over a shorter period of time):
http://www.warrantyweek.com/archive/ww20030616.html
Notes/Search Strategy:
(1) Oakwood Homes not included due to their (impending?) buyout by Clayton
Homes.
(2) Rankings are estimated based on the following resources:
Hoovers
www.hoovers.com
Better Investing
http://www.better-investing.org/articles/bits/205/2628
Top 100 Manufactured Homes
http://www.builderonline.com/content/builder100/manufactured.asp
877-322-2412
(3) Revenue and warranty expenditure data obtained from 10K (annual report)
filings at Securities Exchange Commission (SEC) website. Please see the
links below if you'd like to verify the information:
SEC 10K form filing links for manufactured housing:
Clayton: http://www.sec.gov/Archives/edgar/data/719547/000071954703000042/doc1.txt
Champion:
http://www.sec.gov/Archives/edgar/data/814068/000095012404000607/k82468e10vk.htm
Fleetwood: http://www.sec.gov/Archives/edgar/data/314132/000104746903024808/a2114878z10-k.htm
Palm Harbor Homes: http://www.sec.gov/Archives/edgar/data/923473/000095013403009023/d06557e10vk.txt
Cavalier Homes: http://www.sec.gov/Archives/edgar/data/789863/000078986303000007/a10k2002.txt
SEC form 10K filing links for site-built:
Centex: http://www.sec.gov/Archives/edgar/data/18532/000095013403008827/0000950134-03-008827-index.htm
Pulte: http://www.sec.gov/Archives/edgar/data/822416/000095012404000578/k82512e10vk.htm
DR Horton: http://www.sec.gov/Archives/edgar/data/882184/000095013403016601/d10877e10vk.htm
Lennar: http://www.sec.gov/Archives/edgar/data/920760/000119312504032317/d10k.htm
KB Home: http://www.sec.gov/Archives/edgar/data/795266/000095014804000446/v94862e10vk.htm
(4) Some of these companies have mortgaging/financing and related
functions as part of their business. Revenue totals used above
include these numbers. Centex had a separate breakout for
international warranties and revenues, which I added together for
aggregate figures.
(5) Fleetwood's warranty data for manufactured homes only (excludes RV
data) courtesy of Fleetwood corporate rep. |
Request for Answer Clarification by
query2-ga
on
19 Mar 2004 09:41 PST
Thank you for the detailed answer. You are on exactly the right
track. We are in the process of reviewing and will followup with you
as soon as possible with any clarification requests
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Clarification of Answer by
jbf777-ga
on
19 Mar 2004 10:00 PST
Sounds good! Thank you.
jbf777
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Request for Answer Clarification by
query2-ga
on
23 Mar 2004 23:12 PST
jbf777,
For manufactured housing, I need to be able to compare the warranty
costs to just the manufacturing sales (essentially the wholesale price
for the units sold). Some of the companies break this out more
clearly than others.
I noticed how resourceful you were in your reserach, especially in
getting the mh warranty costs. Can you split this out to refine the
percentages? By excluding revenues such as financing and retail
margin, we can get a good benchmark.
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Clarification of Answer by
jbf777-ga
on
24 Mar 2004 10:09 PST
query2 -
Thanks for your clarification request.
Sure, that would be no problem. Please give me about 24 hours.
Thanks,
jbf777
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Clarification of Answer by
jbf777-ga
on
24 Mar 2004 17:37 PST
Hello query2 -
One question: in cases where a firm differentiates between their
manufacturing and retail sales, what number would you like to me to
provide?
For example, with Clayton:
"Although sales of homes through retail and communities increased 2.7%
to $674 million from $656 million, manufacturing sales to independent
dealers decreased 18%, from $215 million to $175 million." - page 18
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Clarification of Answer by
jbf777-ga
on
24 Mar 2004 17:37 PST
...a combination?
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Request for Answer Clarification by
query2-ga
on
24 Mar 2004 22:03 PST
That's a good question. To get an apples to apples comparison, the
manfacturing sales would be the actual sales to independents plus the
sales to retail at wholesale value. If the average wholesale price
per home is $40k, then the manufacturing revenues would be $40k X
(units sold to independents + units sold to company owned retail).
Retail sales will be higher because they have to add their margin.
Without adjusting out retail margin, the manufacturers who also do a
lot of their own retail will look a lot better on service than they
really are.
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Clarification of Answer by
jbf777-ga
on
25 Mar 2004 12:51 PST
query2 -
Please find the revised numbers below. If you have any questions,
please feel free to ask before rating this answer. I have included
information on where you can find the data for verification.
Base Revenue Warranty Costs % of revenue Where data found
?????????????????????????????????????????????????????????????????????????????
Clayton $484,615,748 $11,157,000 2.30 10K: page 4, 18
Champion $981,254,000 $59,370,000 6.05 10K: page 19
Fleetwood $667,087,000 $38,917,000 5.83 10K: page 2
Palm Harbor $328,287,000 $13,895,000 4.23 press release
Cavalier $374,273,000 $24,465,000 6.54 see note
Average: $29,560,800 4.99
Clayton: I multipled the wholesale price of the homes to the total number
sold (on page 17 and 18) per Investor Relations instructions, as this
was the cleanest way to get the number.
Cavalier: "Home manufacturing net sales in 2002 increased $26,038, or
7.5%, to $374,273 net of intercompany eliminations of $6,160" (in
thousands) (pages in 10K not numbered)
Palm Harbor: Press release found at:
http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=PHHM&script=410&layout=-6&item_id=415043
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Clarification of Answer by
jbf777-ga
on
25 Mar 2004 12:52 PST
For Cavalier, "where data found" column should read:
10K: see note
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Request for Answer Clarification by
query2-ga
on
25 Mar 2004 22:21 PST
Where in the press release is the Palm Harbor data? I wasn't able to zone in on it.
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Clarification of Answer by
jbf777-ga
on
26 Mar 2004 06:17 PST
The actual warranty dollar amounts is from the 10K. The wholesale
price of each home along with the number of units sold is in the the
last section of the press release called "Quick Facts." Third column
-- "March 28, 2003 (Year ended)" -- 8007 (Total new homes) X $41,000
(Average sales price wholesale) = $328,287,000.
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Clarification of Answer by
jbf777-ga
on
26 Mar 2004 06:30 PST
The "Where data found" column relates to the new revenue numbers only.
The warranty information remains unchanged from the original
analysis.
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Request for Answer Clarification by
query2-ga
on
27 Mar 2004 01:13 PST
Thanks again for the detailed response. Using your sources, I've
developed a set of historical warranty costs for each company.
Fleetwood is tricky, though, since they don't clearly break out their
manufactured home warranty costs in their financials. The following
clarifications would be helpful:
1. Fleetwood - your # is 5.83% vs. the Warranty Week 3.6%. Can you
doublecheck this? Warranty Week's number is closer to my expectation.
2. Fleetwood - need cash warranty payments and ESPECIALLY accrual
warranty expense for fiscal 2001,2002, & 2003
Also, I do need Oakwood, as one of the major players - the merger was
announced after the last Clayton 10K, so a separate set of info should
be available through fiscal 2003.
1. Oakwood - need manufacturing revenues (wholesale value of units
delivered by manufacturing), cash warranty payments, and accrual
warranty expense for fiscal 2001, 2002, & 2003
Additional Companies: I need the same information for the companies
below, which is essentially changing the scope for manufactured
housing from the top 5 to the top 10. If this seems unfair to you to
include with this question, just say the word and I'll create a new
question.
1. Skyline Corp
2. Patriot
3. Southern Energy
4. Horton Homes (just the MH sub of D.R. Horton)
New Question
I'm also posting a new question related to number of manufacturing
facilities for each of the expanded list of MH builders over the past
three years. This should be much more straight-forward than the
service ratios and will leverage your already-identified resources, so
I wanted to give you a heads up.
Response Format Kudos
Your comments indicating page numbers and text from the source
documents have been very helpful as I proof the data. The
calculations are also very helpful, particularly where I can't
key-word search for the numbers to find in the source document.
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Clarification of Answer by
jbf777-ga
on
28 Mar 2004 13:00 PST
query2 -
1. Fleetwood - your # is 5.83% vs. the Warranty Week 3.6%. Can you
doublecheck this? Warranty Week's number is closer to my expectation.
The warranty settlements number of $78,078,000 on pg. 64 includes
warranties from the RV segment. I had to contact the company to get
the warranty breakout for just manufactured homes, which is
$38,917,000. 5.83% is the percentage yield from these two numbers.
Also, for Warranty Week, note the footnote: "# derived from nine month
data, estimated for the first quarter." In addition, they may have
(incorrectly) assumed the warranty numbers were exclusive to
manufactured homes. Feel free to call Fleetwood Homes investor
relations dept. at 909-351-3500 for further info/confirmation and for
additional warranty information for previous years. (I've already
called the company more than once, and wouldn't feel comfortable
calling again under the same issue.)
For the remaining information, ordinarily this would be done under a
separate question, since it extends the agreed upon scope of the
original answer. It probably makes the most sense for you to add
additional funds to this question in the form of a tip (which I
receive 100% of); you can do so upon rating it. I'll leave the amount
up to you.
Thanks,
jbf777
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Request for Answer Clarification by
query2-ga
on
29 Mar 2004 09:42 PST
Understood, I'll reflect the expanded scope in the tip. I can use the
information as quickly as possible. Thanks.
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Request for Answer Clarification by
query2-ga
on
29 Mar 2004 09:45 PST
Also, please do call the Fleetwood investor relations department back
if necessary to get the historical information. You can say that the
initial information they gave you was so helpful, you wanted to be
able to look at it in time series.
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Clarification of Answer by
jbf777-ga
on
29 Mar 2004 10:43 PST
With Fleetwood it turns out to be OK. Some of other companies have a
"can't be bothered" tonality when you start calling back multipled
times. As for the other companies, any bottlenecks will be in their
calling back.
Can you explicitly define "accrual," as it seemed to be shady when on
the phone with them? This is the same as "reserve," correct?
E.g.
Balance at beginning: 50,000
Cash payments: 30,000
Balance at end: 20,000 <-- "accrual?"
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Request for Answer Clarification by
query2-ga
on
29 Mar 2004 15:32 PST
Here is an example from your Champion 10K link (page F-29)
Reserves at December 30, 2000 $ 56,469
Warranty expense provided 64,863 This is the accrual (expense) amount
Cash warranty payments (72,292 ) This is the cash amount
Reserves at December 29, 2001 49,040
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Clarification of Answer by
jbf777-ga
on
29 Mar 2004 21:36 PST
OK -- thanks for the clarification.
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Clarification of Answer by
jbf777-ga
on
30 Mar 2004 08:36 PST
query2 -
Patriot is private, and Horton Homes is unaffiliated with DR Horton.
DR Horton doesn't do manufacturing homes, and Horton Homes -- although
a manufacturing homes provider -- is also private. Do you have 2
other companies you'd like info on?
jbf
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Request for Answer Clarification by
query2-ga
on
30 Mar 2004 09:59 PST
No other additions, you can just exclude as private.
Are you also tackling the plant and production questions? The answers
would come from the same sources you are reviewing.
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Clarification of Answer by
jbf777-ga
on
30 Mar 2004 14:17 PST
1. Fleetwood
The numbers are unavailable prior to last year's 10K (no breakout of
manufacturing vs. RV).
2. Skyline Corp
http://www.sec.gov/Archives/edgar/data/90896/000095013703004040/c78215e10vk.htm
Manufactured housing: $293,448,000 (p. 31)
Warranty settlements: $10,916,000 (p. 27)
Percentage: 3.72%
3. Southern Energy
http://www.soenergyhomes.com/Report2003.pdf
The company is no longer filing with the SEC. Annual reports are
available now on their website (latest one at link above).
Manufacturing Revenue: $121,145,000 (p. 39)
Less Intersegment: ($2,105,000) (p. 39)
Total Manufacturing: $119,040,000
Warranty settlements: $7,055,000
(courtesy of Jim Stahira, CFO)
Percentage: 5.93%
4. Oakwood
http://www.sec.gov/Archives/edgar/data/73609/000095014403000409/g79926e10vk.htm
Staff at Oakwood are unavailable to provide any historical numbers or
additional breakouts due to being "swamped" with the Clayton buyout.
Hence, no warranty payment data. The best that can be had is what's
available in the 10K's:
Manufacturing (from Note 24 ? Business Segment Information)
2002: $665,683,000
2001: $633,632,000
2000: $821,429,000
Manufacturing and warranty for 9 month period in 2003 (from form 10KT)
http://www.sec.gov/Archives/edgar/data/73609/000095014403011095/g85027e10vkt.htm
(from: Note 13 ? Accounts Payable and Accrued Liabilities)
Manufacturing: $352,270,000
Warranty settlements: $20,269,000
Percentage: 5.75%
Warranty settlements data for 2002 extracted from the same 2003 10KT:
http://www.sec.gov/Archives/edgar/data/73609/000095014403011095/g85027e10vkt.htm
9 month
transition
period ended
6/30/03 9/30/02
Balance at beginning of period: $12,521 $15,274
Provision for warranty expense: $15,705 $31,599
Payments of warranty obligations: $(20,269) $(34,352)
Balance at end of period: $7,957 $12,521
(----in thousands----)
Manufacturing: $665,683,000
Warranty settlements: $34,352,000
Percentage: 5.16%
Yes, I've started in on the other question but haven't had a lot of
time to devote to it. I plan on tackling it more seriously within the
next day or so.
On another note: I'm noticing the usage of "accrual" is not consistent
from one company to another. For instance, with Oakwood, "accrual" is
what's left over at the end of the year after cash warranty
settlements and warranty provisions are added together and then
subtracted from the existing reserve going into the year. The
"accrual" in this instance is what's left over, or "accrued" into the
outset of the next year (which is then turned into a "reserve"
semantically). See "Note 13 ? Accounts Payable and Accrued
Liabilities" on the Oakwood link:
Balance, year ended, Sept 30, 2002: $12,521,000
same as
Balance at beginning of period June 30, 2003: $12,521,000
which is the same as
Accrued warranty 2002 (in the set of columns above): $12,521,000
Oakwood calls what you're looking for as "Provision for warranty
expense" ("that which is added to the existing reserve"). Others
might do similarly. I wanted to mention this vis-a-vis the other
question you've posted.
jbf777
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