ELKHART, Ind., Aug. 1,
2014 /PRNewswire/ -- Drew Industries Incorporated (NYSE: DW),
a leading supplier of components for recreational vehicles (RVs)
and manufactured homes, reported net income of $18.6 million, or $0.77 per diluted share, for the second quarter
ended June 30, 2014, compared to net
income of $15.9 million, or
$0.67 per diluted share, for the
second quarter ended June 30, 2013.
In connection with the sale of the aluminum extrusion-related
assets in April 2014, the Company
recorded an after-tax charge of $1.2
million. Excluding this charge, net income in the second
quarter of 2014 would have been $19.8
million, or $0.82 per diluted
share. Net income for the second quarter of 2013 was net of an
after-tax charge of $0.4 million in
connection with executive succession. Excluding this charge, net
income in the second quarter of 2013 would have been $16.3 million, or $0.69 per diluted share.
Net sales in the second quarter of 2014 increased to a quarterly
record of $322 million, 12 percent
higher than the 2013 second quarter. This sales growth was
primarily the result of a 15 percent sales increase by Drew's RV
Segment, which accounted for 90 percent of consolidated net sales
this quarter. RV Segment sales growth was primarily due to a 7
percent and 11 percent increase in industry-wide wholesale
shipments of travel trailer and fifth-wheel RVs and motorhome RVs,
respectively. In addition, recently completed acquisitions added
approximately $5 million in net sales
in the second quarter of 2014. Further, sales of new products for
RVs increased, as did sales to adjacent industries and the
aftermarket.
During the first six months of 2014, the RV industry produced
more RVs than the full year of 2009. "The ability for the RV
industry to more than double production capacity over the past
several years is a testament to the resourcefulness of our
customers and the tens of thousands of individuals employed by the
industry," said Jason Lippert,
Drew's Chief Executive Officer. "Staying ahead of the ever-changing
demands of our customers is a primary business focus."
"Towable RVs, and in particular lower-priced entry-level units,
led the recovery in RV production so far," continued Jason Lippert. "Although smaller entry units
typically contain fewer of our products, we consider every new RV
owner a long-term customer who in the future could purchase larger
RVs which contain more of our products, creating a healthier RV
industry over the long term. Motorhome RVs also experienced a
strong recovery over the last couple years, creating a more
significant opportunity for us to gain market share with our
motorhome products."
"As a result of the slower than expected start to 2014 due to
severe weather conditions, a Spring which was slow to arrive, and a
shortage of drivers to deliver finished goods, industry-wide
inventory seasonally accumulated – but recent trends appear to have
eased concerns surrounding dealer inventory," added Jason Lippert. "RV OEMs and dealers are now
reporting that retail sales have picked up in recent months, an
improvement from the relatively flat year-over-year retail sales
reported through May 2014, reportedly
in part due to the pent-up demand stemming from the prolonged
winter, and that inventories of RVs are in line with anticipated
retail demand. Future industry-wide wholesale production levels for
RVs will depend on the strength of retail sales, which are
sensitive to economic conditions and consumer confidence."
In July 2014, Drew's consolidated
net sales reached approximately $98
million – 17 percent higher than July
2013 – as a result of continued growth in the Company's RV
Segment. Excluding the impact of acquisitions, the Company's net
sales for July 2014 were up
approximately 13 percent.
The Company's operating profit margins in the second quarter of
2014, excluding the loss on sale of the aluminum extrusion-related
assets, were 9.7 percent, compared to 9.2 percent in the second
quarter of 2013, excluding executive succession. "Over the past
several years, we have made investments in our business, which are
continuing to benefit bottom-line results, and the results we
experienced in the 2014 second quarter were consistent with our
expectations," said Scott Mereness,
Drew's President. "We added capacity ahead of projected demand,
which enabled us to efficiently fulfill customer orders as demand
increased and leverage fixed costs over a larger sales base."
"In anticipation of future growth, we continue to expand and
improve production capacity, investing in personnel and facilities
in excess of current needs," continued Mereness. "As noted
previously, we have recently entered into two new leases which will
add more than 700,000 square feet of production and distribution
capacity. While these capacity expansion initiatives have a
short-term negative impact on margins, over the long term these
investments should allow us to improve our operating results, as
well as continue to improve our customer service and operating
efficiencies. In addition, we have bolstered our administrative
staff over the past several quarters, including the teams that were
acquired through acquisitions and new employees hired in
preparation for future growth and investment opportunities."
"During the second quarter of 2014 we completed the acquisition
of the RV business of Actuant Corporation, gaining the
well-respected Power Gear® and Kwikee® brands, and expanding our
product offerings in leveling systems, slideout mechanisms and
steps, primarily for motorhome RVs," said Jason Lippert.
Sales of the acquired business for the twelve months ended
May 31, 2014 were approximately
$28 million, consisting of sales to
OEMs, as well as significant aftermarket sales. The purchase price
was $35.5 million, and after funding
this acquisition, the Company remains well-positioned with both
financial capital and human resources to take advantage of
additional investment opportunities.
"We are thrilled to have the Power Gear and Kwikee business
units and its employees join the Lippert Components family,"
continued Jason Lippert. "The RV
industry growth over the past few years has increased the demand
for talented people, and we are confident that this team will help
us continue to grow as we move forward. This acquisition was
immediately accretive to Drew's earnings."
Conference Call & Webcast
Drew will provide an
online, real-time webcast of its second quarter 2014 earnings
conference call on the Company's website, www.drewindustries.com,
on Friday, August 1, 2014, at
11:00 a.m. Eastern time.
Institutional investors can access the call via the
password-protected site, StreetEvents (www.streetevents.com). A
replay of the call will be available by dialing (888) 286-8010 and
referencing access code 36406000. A replay of the webcast will also
be available on Drew's website.
About Drew Industries
From 35 factories located
throughout the United States, Drew
Industries, through its wholly-owned subsidiary, Lippert
Components®, supplies a full line of components for the
leading manufacturers of recreational vehicles and manufactured
homes. In addition, Drew manufactures components for adjacent
industries including buses; trailers used to haul boats, livestock,
equipment and other cargo; truck caps; modular housing; and
factory-built mobile office units. Drew's products include steel
chassis; vinyl and aluminum windows and screens; slide-out
mechanisms and solutions; axles and suspension solutions; furniture
and mattresses; thermoformed bath, kitchen and other products;
manual, electric and hydraulic stabilizer and lifting systems;
chassis components; entry, baggage, patio and ramp doors; entry
steps; awnings; electronics; and other accessories. Additional
information about Drew and its products can be found at
www.drewindustries.com.
Forward-Looking Statements
This press release contains
certain "forward-looking statements" with respect to our financial
condition, results of operations, business strategies, operating
efficiencies or synergies, competitive position, growth
opportunities, acquisitions, plans and objectives of management,
markets for the Company's Common Stock and other matters.
Statements in this press release that are not historical facts are
"forward-looking statements" for the purpose of the safe harbor
provided by Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended,
and involve a number of risks and uncertainties.
Forward-looking statements, including, without limitation, those
relating to our future business prospects, net sales, expenses and
income (loss), cash flow, and financial condition, whenever they
occur in this press release are necessarily estimates reflecting
the best judgment of our senior management at the time such
statements were made. There are a number of factors, many of which
are beyond the Company's control, which could cause actual results
and events to differ materially from those described in the
forward-looking statements. These factors include, in addition to
other matters described in this press release, pricing pressures
due to domestic and foreign competition, costs and availability of
raw materials (particularly steel, steel based components and
aluminum) and other components, availability of credit for
financing the retail and wholesale purchase of products for which
we sell our components, availability and costs of labor, employee
retention, inventory levels of retail dealers and manufacturers,
levels of repossessed products for which we sell our components,
seasonality and cyclicality in the industries to which we sell our
products, availability of transportation for products for which we
sell our components, the financial condition of our customers, the
financial condition of retail dealers of products for which we sell
our components, retention and concentration of significant
customers, the pace of and successful integration of acquisitions,
realization of efficiency improvements, the successful entry into
new markets, the costs of compliance with increased governmental
regulation, interest rates, oil and gasoline prices, the impact of
international, national and regional economic conditions and
consumer confidence on the retail sale of products for which we
sell our components, and other risks and uncertainties discussed
more fully under the caption "Risk Factors" in our Annual Report on
Form 10-K for the year ended December 31,
2013, and in our subsequent filings with the Securities and
Exchange Commission. We disclaim any obligation or undertaking to
update forward-looking statements to reflect circumstances or
events that occur after the date the forward-looking statements are
made, except as required by law.
DREW INDUSTRIES
INCORPORATED
|
OPERATING
RESULTS
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
Three Months
Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
Last
Twelve
|
(In thousands,
except per share amounts)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Months
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$ 607,160
|
|
$ 539,778
|
|
$ 321,783
|
|
$ 287,192
|
|
$ 1,082,958
|
Cost of
sales
|
|
471,948
|
|
430,754
|
|
249,771
|
|
225,759
|
|
843,661
|
Gross
profit
|
|
135,212
|
|
109,024
|
|
72,012
|
|
61,433
|
|
239,297
|
Selling, general and
administrative expenses
|
|
78,063
|
|
67,852
|
|
40,909
|
|
34,992
|
|
143,146
|
Sale of extrusion
assets
|
|
1,954
|
|
-
|
|
1,954
|
|
-
|
|
1,954
|
Executive
succession
|
|
-
|
|
1,876
|
|
-
|
|
733
|
|
-
|
Operating
profit
|
|
55,195
|
|
39,296
|
|
29,149
|
|
25,708
|
|
94,197
|
Interest expense,
net
|
|
194
|
|
203
|
|
74
|
|
85
|
|
342
|
Income
before income taxes
|
|
55,001
|
|
39,093
|
|
29,075
|
|
25,623
|
|
93,855
|
Provision for income
taxes
|
|
20,219
|
|
14,856
|
|
10,457
|
|
9,758
|
|
33,191
|
Net
income
|
|
$ 34,782
|
|
$ 24,237
|
|
$ 18,618
|
|
$ 15,865
|
|
$ 60,664
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
1.46
|
|
$
1.05
|
|
$
0.78
|
|
$
0.68
|
|
$
2.56
|
Diluted
|
|
$
1.43
|
|
$
1.03
|
|
$
0.77
|
|
$
0.67
|
|
$
2.52
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
23,842
|
|
23,139
|
|
23,931
|
|
23,261
|
|
23,678
|
Diluted
|
|
24,298
|
|
23,553
|
|
24,303
|
|
23,650
|
|
24,103
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
$ 14,920
|
|
$ 13,453
|
|
$ 7,680
|
|
$ 6,901
|
|
$ 28,967
|
Capital
expenditures
|
|
$ 17,912
|
|
$ 17,545
|
|
$ 11,088
|
|
$ 8,607
|
|
$ 32,962
|
DREW INDUSTRIES
INCORPORATED
|
SEGMENT
RESULTS
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
Three Months
Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
Last
Twelve
|
(In
thousands)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Months
|
|
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
RV
Segment:
|
|
|
|
|
|
|
|
|
|
|
RV
OEMs:
|
|
|
|
|
|
|
|
|
|
|
Travel
trailers and fifth-wheels
|
|
$ 447,416
|
|
$ 392,450
|
|
$ 235,286
|
|
$ 207,849
|
|
$ 782,749
|
Motorhomes
|
|
30,057
|
|
22,890
|
|
15,673
|
|
11,939
|
|
55,104
|
RV
aftermarket
|
|
16,762
|
|
12,881
|
|
9,668
|
|
7,152
|
|
29,215
|
Adjacent
industries
|
|
54,627
|
|
48,848
|
|
29,199
|
|
26,126
|
|
98,419
|
Total RV
Segment net sales
|
|
548,862
|
|
477,069
|
|
289,826
|
|
253,066
|
|
965,487
|
|
|
|
|
|
|
|
|
|
|
|
MH
Segment:
|
|
|
|
|
|
|
|
|
|
|
Manufactured housing
OEMs
|
|
37,281
|
|
40,370
|
|
20,764
|
|
22,591
|
|
77,156
|
Manufactured housing
aftermarket
|
|
7,172
|
|
7,239
|
|
3,705
|
|
3,587
|
|
13,652
|
Adjacent
industries
|
|
13,845
|
|
15,100
|
|
7,488
|
|
7,948
|
|
26,663
|
Total MH Segment net
sales
|
|
58,298
|
|
62,709
|
|
31,957
|
|
34,126
|
|
117,471
|
|
|
|
|
|
|
|
|
|
|
|
Total net
sales
|
|
$ 607,160
|
|
$ 539,778
|
|
$ 321,783
|
|
$ 287,192
|
|
$ 1,082,958
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit:
|
|
|
|
|
|
|
|
|
|
|
RV Segment
|
|
$ 51,761
|
|
$ 34,864
|
|
$ 28,032
|
|
$ 22,600
|
|
$ 85,145
|
MH Segment
|
|
5,388
|
|
6,308
|
|
3,071
|
|
3,841
|
|
11,006
|
Total segment
operating profit
|
|
57,149
|
|
41,172
|
|
31,103
|
|
26,441
|
|
96,151
|
Sale of extrusion
assets
|
|
(1,954)
|
|
-
|
|
(1,954)
|
|
-
|
|
(1,954)
|
Executive
succession
|
|
-
|
|
(1,876)
|
|
-
|
|
(733)
|
|
-
|
Total operating
profit
|
|
$ 55,195
|
|
$ 39,296
|
|
$ 29,149
|
|
$ 25,708
|
|
$ 94,197
|
DREW INDUSTRIES
INCORPORATED
|
BALANCE SHEET
INFORMATION
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
(In
thousands)
|
|
2014
|
|
2013
|
|
2013
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
4
|
|
$ 31,877
|
|
$ 66,280
|
Accounts receivable,
net
|
|
71,954
|
|
59,515
|
|
31,015
|
Inventories,
net
|
|
108,357
|
|
99,777
|
|
101,211
|
Deferred
taxes
|
|
12,557
|
|
10,073
|
|
12,557
|
Prepaid expenses and
other current assets
|
|
15,307
|
|
10,844
|
|
14,467
|
Total current
assets
|
|
208,179
|
|
212,086
|
|
225,530
|
Fixed assets,
net
|
|
126,523
|
|
117,419
|
|
125,982
|
Goodwill
|
|
61,930
|
|
21,552
|
|
21,545
|
Other intangible
assets, net
|
|
92,654
|
|
64,307
|
|
59,392
|
Other
assets
|
|
26,346
|
|
22,385
|
|
20,735
|
Total
assets
|
|
$ 515,632
|
|
$ 437,749
|
|
$ 453,184
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts payable,
trade
|
|
$ 50,379
|
|
$ 33,463
|
|
$ 24,063
|
Dividend
payable
|
|
-
|
|
-
|
|
46,706
|
Accrued expenses and
other current liabilities
|
|
58,376
|
|
57,405
|
|
47,422
|
Total current
liabilities
|
|
108,755
|
|
90,868
|
|
118,191
|
Long-term
indebtedness
|
|
22,288
|
|
-
|
|
-
|
Other long-term
liabilities
|
|
25,506
|
|
21,734
|
|
21,380
|
Total
liabilities
|
|
156,549
|
|
112,602
|
|
139,571
|
Total stockholders'
equity
|
|
359,083
|
|
325,147
|
|
313,613
|
Total liabilities and
stockholders' equity
|
|
$ 515,632
|
|
$ 437,749
|
|
$ 453,184
|
DREW INDUSTRIES
INCORPORATED
|
SUMMARY OF CASH
FLOWS
|
(unaudited)
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
June 30,
|
(In
thousands)
|
|
2014
|
|
2013
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
|
$ 34,782
|
|
$ 24,237
|
Adjustments to
reconcile net income to cash flows provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
14,920
|
|
13,453
|
Stock-based
compensation expense
|
|
5,277
|
|
5,844
|
Other non-cash
items
|
|
3,203
|
|
1,624
|
Changes in assets and
liabilities, net of acquisitions of businesses:
|
|
|
|
|
Accounts receivable,
net
|
|
(36,920)
|
|
(37,520)
|
Inventories,
net
|
|
(1,227)
|
|
(2,367)
|
Prepaid expenses and
other assets
|
|
(687)
|
|
3,573
|
Accounts payable,
trade
|
|
23,095
|
|
11,696
|
Accrued expenses and
other liabilities
|
|
13,352
|
|
12,499
|
Net cash flows
provided by operating activities
|
|
55,795
|
|
33,039
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
|
(17,912)
|
|
(17,545)
|
Acquisitions of
businesses
|
|
(82,157)
|
|
(1,451)
|
Proceeds from note
receivable
|
|
750
|
|
-
|
Proceeds from sales
of fixed assets
|
|
1,999
|
|
70
|
Other investing
activities
|
|
(49)
|
|
(48)
|
Net cash flows
used for investing activities
|
|
(97,369)
|
|
(18,974)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Exercise of stock
options and deferred stock units, net of shares tendered for
payment
|
|
3,425
|
|
10,686
|
Proceeds from line of
credit borrowings
|
|
182,315
|
|
135,452
|
Repayments under line
of credit borrowings
|
|
(160,027)
|
|
(135,452)
|
Payment of special
dividend
|
|
(46,706)
|
|
-
|
Payment of contingent
consideration related to acquisitions
|
|
(3,513)
|
|
(2,813)
|
Other financing
activities
|
|
(196)
|
|
-
|
Net cash flows
(used for) provided by financing activities
|
|
(24,702)
|
|
7,873
|
|
|
|
|
|
Net (decrease)
increase in cash
|
|
(66,276)
|
|
21,938
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
|
66,280
|
|
9,939
|
Cash and cash
equivalents at end of period
|
|
$
4
|
|
$ 31,877
|
DREW INDUSTRIES
INCORPORATED
|
SUPPLEMENTARY
INFORMATION
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
Three Months
Ended
|
|
|
|
|
|
June 30,
|
|
June 30,
|
|
Last
Twelve
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Months
|
|
Industry
Data(1)(in thousands of units):
|
|
|
|
|
|
|
|
|
|
|
|
Industry Wholesale
Production:
|
|
|
|
|
|
|
|
|
|
|
|
Travel trailer and
fifth-wheel RVs
|
|
161.1
|
|
146.6
|
|
85.7
|
|
79.9
|
|
282.5
|
|
Motorhome
RVs
|
|
23.3
|
|
19.5
|
|
12.2
|
|
11.0
|
|
42.1
|
|
Manufactured
homes
|
|
30.6
|
(3)
|
29.1
|
|
16.9
|
(3)
|
16.2
|
|
61.7
|
(3)
|
Industry Retail
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
Travel trailer and
fifth-wheel RVs
|
|
137.6
|
(2)
|
135.7
|
|
92.5
|
(2)
|
93.3
|
|
252.7
|
(2)
|
Impact on dealer
inventories
|
|
23.5
|
(2)
|
10.9
|
|
(6.8)
|
(2)
|
(13.4)
|
|
29.8
|
(2)
|
Motorhome
RVs
|
|
19.0
|
(2)
|
17.1
|
|
11.4
|
(2)
|
10.3
|
|
33.4
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
|
Drew Estimated
Content Per Industry Unit Produced:
|
|
|
|
|
|
|
|
|
|
|
|
Travel trailer and
fifth-wheel RV
|
|
|
|
|
|
$ 2,772
|
|
$ 2,700
|
|
|
|
Motorhome
RV
|
|
|
|
|
|
$ 1,309
|
|
$ 1,241
|
|
|
|
Manufactured
home
|
|
|
|
|
|
$ 1,251
|
(3)
|
$ 1,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
2013
|
|
Balance Sheet
Data:
|
|
|
|
|
|
|
|
|
|
|
|
Current
ratio
|
|
|
|
|
|
1.9
|
|
2.3
|
|
1.9
|
|
Total indebtedness to
stockholders' equity
|
|
|
|
|
|
0.1
|
|
-
|
|
-
|
|
Days sales in
accounts receivable
|
|
|
|
|
|
20.8
|
|
20.1
|
|
16.5
|
|
Inventory turns,
based on last twelve months
|
|
|
|
|
|
8.3
|
|
7.8
|
|
7.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
Estimated Full Year
Data:
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
|
|
|
$ 34 - $ 38
million
|
|
|
|
Depreciation and
amortization
|
|
|
|
|
|
$ 30 - $ 32
million
|
|
|
|
Stock-based
compensation expense
|
|
|
|
|
|
$ 11 - $ 13
million
|
|
|
|
Annual tax
rate
|
|
|
|
|
|
37% - 38%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Industry
wholesale production data for travel trailer and fifth-wheel RVs
and motorhome RVs provided by the Recreation Vehicle Industry
Association. Industry wholesale production data for manufactured
homes provided by the Institute for Building Technology and Safety.
Industry retail sales data provided by Statistical Surveys,
Inc.
|
(2) June 2014 retail
sales data for RVs has not been published yet, therefore 2014
retail data for RVs includes an estimate for June 2014 retail
units.
|
(3) June 2014
wholesale data for manufactured homes has not been published yet,
therefore 2014 manufactured housing wholesale data includes an
estimate for June 2014 wholesale units.
|
|
|
|
SOURCE Drew Industries Incorporated