An upbeat interview with Walter Young on NBR. Here's a copy of the transcript:
One On One With Walter Young Of Champion Enterprises
SUSIE GHARIB: Well, we won't get earnings from Champion Enterprises (NYSE:CHB), one of the biggest builders of manufactured homes, for another four weeks. But estimates from First Call predict another strong quarter. Up 33 percent. And here to talk more about the company is Champion's chairman and chief executive, Walter Young. Mr. Young, pleasure to have you with us.
WALTER YOUNG, CHAIRMAN & CEO, CHAMPION ENTERPRISES: Great to be here, Susie.
GHARIB: Well, it looks like from those estimates, that business has been very good to Champion Enterprises. What are your assumptions about consumer demand, going forward?
YOUNG: We see record consumer confidence and job creation still out there. Very positive environment for housing, in general, and for us, in particular.
GHARIB: I understand, actually, there's been an acceleration of shipments of manufactured homes for the industry. They were up something like a growth rate of 7 percent in June, 7 percent in July. Do you see that continuing?
YOUNG: Yes. It looks very strong. For the year, it looks like our total square footage for the industry, homes will be up about 7 percent. Much stronger than the housing industry in total.
GHARIB: Why is that?
YOUNG: Again, our homes give better quality and value to a broader group of customers. We're giving now in factory built housing, benefits and cosmetic appeal and structural safety that they could never before in our 50-year industry. That's why we're supplying over 370,000 homes this year as an industry. And we're supplying 70,000 of those.
GHARIB: What are your order trends and your backlogs? Can you tell us?
YOUNG: The orders continue to come in at record paces. Our backlogs are about three times what they were a year ago. Again, the consumer demand from a wide range of consumers for, not only Champion Enterprises, but the industry, continues very strong.
GHARIB: Mr. Young, Champion's been making lots of acquisitions this year. It's kind of hard to keep track of how many you've made. But by my count, something like over 200 retail outlets you have made acquisitions of, since the beginning of 1998 at a price of something like $300 million. Do you see this pace continuing?
YOUNG: We are, have been very aggressive. We became the world's largest manufacturer here in the last five years, through acquisition and internal acquisition. A year ago, we said we'd build another growth platform, retailing. And in the last eight months, as you pointed out, we've become the number three retailer in the country.
GHARIB: Do you think that you can continue to find the quality of these retail outlets as you go forward?
YOUNG: Like what we did on manufacturing, we buy the best companies with the best managers and people, and then let them expand. Over our past eight years of rapid high profit growth, only one-third of our growth has been through acquisition. Two-thirds is from internal expansion. And we see the same pattern going with our retail. Already this year, 40 of those outlets we've opened up ourselves this year with the companies that we've purchased.
GHARIB: Let's talk a little bit about your stock. Here, you're talking about strong orders, good earnings, and yet, your stock has been a little bit volatile. Looking at a chart of the last 52 weeks, the stock was as low as 16. It, then, doubled. And now, it's around $22. What can you tell investors who are wondering whether or not to buy?
YOUNG: You know, it's been very frustrating for our organization, our own people, who are the major shareholders also in the company. Here, we have record growth, record prospects for high growth, high profits, building this retail platform and looking for other platforms. And here, our multiple is only about 11 time multiple, less than half of the S&P 500. It's hard for us to explain, as well, Susie.
GHARIB: What do you think the investor concerns are?
YOUNG: Some of the general concerns are, you know, the housing cycle has been strong for the last seven years. But manufactured housing at Champion Enterprises continues to take a bigger share of the pie. We're only about 4 percent of all housing in the U.S. now. So we've got a long way to go, is the way we see it. Also, the new platform of retailing gives us a much bigger growth platform. That it's been a more, we're more of a special situation within the housing industry. And the concerns for that, interest rates up or down now, or the consumer confidence, have taken a worry in housing, in general. Where we, at Champion Enterprises, see opportunity of all types within housing.
GHARIB: Well, good luck to you as the year goes forward. Thank you very much for coming and talking to us on NIGHTLY BUSINESS REPORT. We've been speaking with Walter Young.
YOUNG: Thank you.
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