Fleetwood (FLE) is going to be removed from the New York Stock Exchange.  Its stock has traded at an average price that falls below $1.00 for the last thirty days.

Fleetwood has some options.  They have until next Tuesday to file a plan to cure the situation.

One plan would be to reduce their outstanding shares in a reverse stock split.

Fleetwood is already under some strain as it tries to find more dollars to make payments on its outstanding debt.  Selling equity cannot solve all of the strain, though, as shareholders have not approved enough new shares to make up the shortcomings.

Today, Fleetwood’s shares are at 52 cents.  This is an increase from the lows of last week, where the stock briefly traded as low as 25 cents.

Last month, the SEC put more than 700 financial services firms on a list that gave them protection from short sellers.  The idea was to to thwart short-term short selling the exposed companies to runs on the value of their shares.  

It was not just banks, but also some builders, some insurance companies, and plenty of consumer finance firms.  There were a few odd exceptions (HSBC, GE), but the list was complete in its detail.  

Elsewhere, Congress extended huge loans to our automakers.  Now they are talking about more action.

But, what if you were in the business of making homes, financing them, and also providing vehicles for traveling?  

You would be out of luck.  Fleetwood (FLE) could use the help, as could just about anyone in the manufactured housing business.  Fleetwood makes homes and also vehicles (although they have exited finance) and their share prices are really low right now.  Their own access to credit is part of the problem — they have to pay off some notes by December at a time when their cash flows are not great.  

The same protections could be sorely needed at Champion (CHB) which has dropped from 13 to just 2.17 in the last twelve months.  

This is an industry that supplies a good percentage of America’s affordable housing.  

Now there

Don’t look, but Fleetwood (FLE) is tottering.  The company’s shares are trading for as low as 32 cents this morning.  Just one year ago, they were trading for $9.13.

In some ways, the credit crisis and energy costs are a perfect storm against a company like Fleetwood.  Remember that a good portion of their business comes from selling RVs.  RVs have a reputation as gas guzzlers.  They are, after all, mobile houses.  The classic RV vacation requires trips to the pump on any day of driving.  Even worse, most RVs are financed and a lot of that money comes out of home equity.  Its a logical way for an older couple to finance some fun during the golden years.  Refinance on a home that is largely paid off.  Unfortunately, home equity loans are getting to be harder and harder to come by.  Banks are nervous about taking a second position at a time when home values are shrinking.

A technical analysis says that Fleetwood has to pay off a large amount of debt by December 15th.  They are making an offer to exchange that debt through a refinance this week.  Their share prices have fallen off so much that they cannot tap new shares on their own. The new debt will be collateralized with real property, including their factories.

The latest round of earnings reports by some of the leading builders of manufactured homes shows that many are looking for new markets. The environment is tough right now: shipments of HUD-Code homes continue to be way below historical norms. Now, a larger crisis in lending is reducing the ability of buyers to finance new home purchases.

“It is now hard to imagine that the industry will surpass its 2007 shipment level of 95,800,” said William Griffiths, chair of Champion Enterprises, during the firm’s recent annual meeting.

That is bad, but what makes it worse is that there is an eery match between where the lending crisis is the worst and where manufactured housing typically makes its best sales. States like Florida, California, Nevada, and Arizona have witnessed the lending environment tighten this year. Those are places where manufactured housing is very popular, for a number of reasons. They are good places for retirees. They have expensive housing markets. And, they are popular places to live. A lot of people have been moving to these states.

Shipments at Champion, for example, are down by 30 percent in California, Arizona, and Florida. Industry wide, only shipments to the eight Southeastern states are increasing. The South (including Texas) now accounts for 46.5 per cent of new shipments!

For Champion, that is bad news, because they only have one plant in that region. Their firm has a much larger footprint (28 percent of capacity) in the three states mentioned at the top of this paragraph.

In the latest round of reports, though, manufacturers all seem to be hinting that they are looking beyond housing to keep afloat. Fleetwood is looking to expand the focus it has on selling to military bases. Champion is looking into two new segments – education and health care. Their modular business in England (known as ModularUK) will begin working on products for prisons.

Amid a week of dramatic and often challenging news from the housing industry, Fleetwood Homes reported its best operating quarter in a while.  Its a good story that reflects some opportunity for manufactured housing.  I emphasize operations because the company still lost 2 cents a share, but much of that was outside of the nuts and bolts of making manufactured housing.

FLE’s 10-k, released last week, shows that this progress is actually the product of some conflicting forces.  While sales of RV’s are struggling due to high fuel prices, housing actually did well for the company. RV’s are still the bulk of business at Fleetwood, accounting for about 70 percent of sales in the last year.

The housing news was all the more positive given that some of the best markets for manufactured housing (Florida, Arizona, California, Nevada) happen to be at the epicenter of the larger lending crisis.  It is hard to get a loan in these states right now.

How bad were the results for RV’s?  Well, FLE saw its shipments of RV’s fall off by about 12,000 units compared to 2007.  Almost all of that drop took place within travel trailers.  This make sense, though.  It is not just a credit challenged market, but also a time when gas prices have finally reached a point where people are changing their consumption of fuel.  Travel trailers are in a perfect storm.

FLE increased its shipments of single wide manufactured homes for the quarter.  Fleetwood attributes the new growth to some trends that they believe will be long standing.  For one, more people are getting older.  They like smaller homes, with less maintenance.  The seniors are joined in this lifestyle mindset by another group of young people, who have decided that 1200 (or even 600) square feet is often preferable to 3200.  Lastly, there is still the challenge of finding an affordable home, a fact that remains in spite of the recent drop in home prices.  With wages stagnant for many, there is ongoing appeal to a low monthly mortgage payment.

Fleetwood acknowledged some challenges in the near future.  The industry witnessed an 18.4 percent decline in shipments in 2007, according to the report.  The Gulf region is slowing.  Still, there is hope for more sales to military institutions.

Fleetwood is entering a period of some risk.  They decided to issue 12 million new shares of stock on June 25th, at $3.40 per share.  In the short period since then, their shares have dropped as low as $1.99 and are currently near $2.50.  They remain the second largest producer of HUD code manufactured homes in the country.