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2014

Drew Industries Reports Fourth Quarter And 2012 Full-Year Results

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WHITE PLAINS, N.Y., Feb. 20, 2013 /PRNewswire/ -- Drew Industries Incorporated (NYSE: DW), a leading supplier of components for recreational vehicles (RVs) and manufactured homes, today reported net income of $4.7 million, or $0.21 per diluted share, for the fourth quarter ended December 31, 2012, net of a previously announced after-tax charge of $0.9 million in connection with executive succession. Excluding this charge, net income would have been $5.7 million, or $0.25 per diluted share, an increase of 39 percent compared to net income of $4.1 million, or $0.18 per diluted share, in the fourth quarter of 2011.

Net sales in the 2012 fourth quarter increased to $200 million, 25 percent higher than last year, as a result of a 31 percent sales increase by Drew's RV Segment. This segment accounted for 86 percent of consolidated net sales this quarter. RV Segment sales growth was largely due to a 21 percent increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs, Drew's primary RV market. Sales of recently introduced RV products and motorhome components also increased, as did sales to adjacent industries.

In January 2013, consolidated net sales reached approximately $85 million, 28 percent higher than in January 2012, as a result of continued solid growth in the Company's RV Segment. Drew estimates that industry-wide production of towable RVs increased about 20 percent in January 2013.

Retail demand for towable RVs has reportedly remained strong, as evidenced by favorable reports from recent retail RV trade shows. Most industry analysts report that dealer inventories of towable RVs are in-line with retail demand. Future RV industry-wide production levels will depend on the strength of retail sales. Drew estimates that January 2013 industry-wide production of manufactured homes was approximately the same as in January 2012.  

The Company's content per travel trailer and fifth-wheel RV in 2012 increased by $365 to $2,713, or 16 percent greater than in 2011. Content per motorhome RV reached $1,071 in 2012, an increase of 68 percent over 2011. The Company's content per manufactured home declined 2 percent from the year-earlier period. The change in content per unit is a measure of the change in Drew's overall market share across its existing product lines.

"Our solid sales gains, along with favorable RV industry fundamentals, are encouraging," said Fred Zinn, Drew's President and CEO. "In the 2012 fourth quarter our operating profit margin before executive succession charges, while higher than last year, did not improve enough. Labor efficiencies improved at several key production facilities. However, this improvement was offset by the cost of implementing facility consolidations and improving production processes, as well as refinements to the calculation of our warranty accrual, and other transitory cost increases. We are confident in our ability to achieve profit improvement, particularly in the second half of 2013, as these costs return to more normal levels, and as the bottom-line impact of the efficiency improvements that have been implemented gains momentum."

"The steps we have taken are enabling our production lines to be more efficient," said Jason Lippert, CEO of Drew's subsidiaries, Lippert Components and Kinro. "During the quarter we consolidated and realigned production of several key product lines, including furniture, manufactured housing and RV windows, chassis and thermoforming, and continued to benefit from and expand our lean manufacturing initiatives. While these efforts cost us $2 million in the 2012 fourth quarter, they are continuing to make us more efficient. Also, in the 2012 fourth quarter we retained more of our seasonal workforce than typical, ending the year with 5,200 employees. We spent the last 12 months building and training our workforce, so that we can minimize hiring and training costs as demand ramps up in early 2013."

"As previously announced, Fred Zinn will retire as CEO in May, and Jason Lippert will become Drew's CEO, and Scott Mereness will become President and COO," said Leigh Abrams, Chairman of Drew's Board of Directors. "Although Fred Zinn will be missed, we have prepared well and Jason and Scott have been essential to our growth and success for more than a decade, and they both have outstanding reputations in the RV and manufactured housing industries. As they assume these expanded roles, we are confident that they, and the great team they've built, will successfully lead Drew for years to come."

2012 Full-Year Results

Net sales for the year ended December 31, 2012 increased by $220 million, to a record $901 million. Acquisitions added approximately $60 million to 2012 net sales. Sales growth in new markets and new products were also key factors enabling Drew's sales to exceed industry growth rates. Key additions to the Company's RV product lines in recent years include advanced leveling devices, in-wall slide-out systems, and awnings. Together, net sales of these products reached $65 million in 2012.

In 2012, Drew continued to grow outside its core RV and manufactured housing markets, with aggregate net sales of components for adjacent industries increasing 68 percent, to $96 million, and aftermarket net sales increasing 14 percent to $35 million in 2012. Together, these markets now account for nearly 15 percent of consolidated net sales, an increase from 10 percent of consolidated net sales in 2010.

For the full year 2012, Drew's net income increased to $37.3 million, or $1.64 per diluted share. Excluding charges related to executive succession, net income would have been $38.3 million in 2012, or $1.68 per diluted share, up from net income of $30.1 million, or $1.34 per diluted share in 2011.

In December 2012, the Company paid a special dividend of $2.00 per share, aggregating $45 million. After the payment of that dividend, the Company had $10 million in cash and no debt at December 31, 2012, and had almost $200 million in unused credit lines. Return on equity for the 12 months ended December 31, 2012 improved to 12.7 percent, from 11.4 percent in the year-earlier period.

Conference Call & Webcast
Drew will provide an online, real-time webcast of its fourth quarter 2012 earnings conference call on the Company's website, www.drewindustries.com, on Wednesday, February 20, 2013 at 11:00 a.m. Eastern time. The call can also be accessed at www.companyboardroom.com.

Institutional investors can access the call via the password-protected site, StreetEvents (www.streetevents.com). A replay of the call will be available by telephone by dialing (888) 286-8010 and referencing access code 61963755. A replay of the webcast will also be available on Drew's website.

About Drew
Drew, through its wholly-owned subsidiaries, Kinro and Lippert Components, supplies a broad array of components for RVs, manufactured homes, modular housing, truck caps and buses, and trailers used to haul boats, livestock, equipment and other cargo. Currently, from 30 factories located throughout the United States, Drew serves most major national manufacturers of RVs and manufactured homes. 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" within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities for existing products, 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 (the "Exchange Act") and Section 27A of the Securities Act of 1933 (the "Securities Act").

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, and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by forward-looking statements. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. You should consider forward-looking statements, therefore, in light of various important factors, including those set forth in this press release, and in our subsequent filings with the Securities and Exchange Commission (the "SEC").

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, inventory levels of retail dealers and manufacturers, levels of repossessed manufactured homes and RVs, changes in zoning regulations for manufactured homes, sales declines in the industries to which we sell our products, 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 successful integration of acquisitions, realization of efficiency improvements, interest rates, oil and gasoline prices, and the outcome of litigation. In addition, international, national and regional economic conditions and consumer confidence affect the retail sale of products for which we sell our components.

DREW INDUSTRIES INCORPORATED

OPERATING RESULTS

(unaudited)












Twelve Months Ended


Three Months Ended



December 31,


December 31,

(In thousands, except per share amounts)

2012


2011


2012


2011










Net sales


$     901,123


$     681,166


$     200,234


$     159,596

Cost of sales


732,464


541,445


164,363


131,814

Gross profit


168,659


139,721


35,871


27,782

Selling, general and administrative expenses

109,071


91,173


27,572


21,890

Executive succession


1,456


-


1,456


-

Operating profit


58,132


48,548


6,843


5,892

Interest expense, net


330


292


84


95

Income before income taxes


57,802


48,256


6,759


5,797

Provision for income taxes


20,462


18,197


2,014


1,709

Net income


$       37,340


$       30,059


$         4,745


$         4,088










Net income per common share:









Basic


$          1.66


$          1.35


$          0.21


$          0.18

Diluted


$          1.64


$          1.34


$          0.21


$          0.18










Weighted average common shares outstanding:








Basic


22,558


22,267


22,712


22,309

Diluted


22,828


22,444


23,138


22,495










Depreciation and amortization


$       25,665


$       20,522


$         6,454


$         5,453

Capital expenditures


$       32,026


$       24,317


$       10,016


$         6,596



















DREW INDUSTRIES INCORPORATED

SEGMENT RESULTS

(unaudited)










Twelve Months Ended


Three Months Ended


December 31,


December 31,

(In thousands)

2012


2011


2012


2011









Net sales:








RV Segment:








RV OEMs:








Travel trailers and fifth-wheels

$     658,961


$     499,852


$     144,308


$     112,106

Motorhomes

30,196


15,828


7,628


3,584

RV aftermarket

19,119


14,660


4,405


2,491

Adjacent industries

72,649


40,303


15,641


12,806

Total RV Segment net sales

780,925


570,643


171,982


130,987









MH Segment:








Manufactured housing OEMs

80,392


77,087


18,714


20,975

Manufactured housing aftermarket

16,060


16,184


3,330


3,491

Adjacent industries

23,746


17,252


6,208


4,143

Total MH Segment net sales

120,198


110,523


28,252


28,609









Total net sales

$     901,123


$     681,166


$     200,234


$     159,596









Operating Profit:








RV Segment

$       55,120


$       45,715


$         7,911


$         5,345

MH Segment

13,335


11,980


2,393


3,017

Total segment operating profit

68,455


57,695


10,304


8,362

Corporate

(8,508)


(7,483)


(1,995)


(1,637)

Executive succession

(1,456)


-


(1,456)


-

Accretion related to contingent consideration

(1,756)


(1,886)


(406)


(492)

Other non-segment items

1,397


222


396


(341)

Total operating profit

$       58,132


$       48,548


$         6,843


$         5,892

















DREW INDUSTRIES INCORPORATED

BALANCE SHEET INFORMATION

(unaudited)






December 31,

(In thousands)

2012


2011





Current Assets




Cash and cash equivalents

$         9,939


$         6,584

Accounts receivable, net

21,846


22,620

Inventories

97,367


92,052

Deferred taxes

10,073


10,125

Prepaid expenses and other current assets

14,798


6,187

Total current assets

154,023


137,568

Fixed assets, net

107,936


95,050

Goodwill

21,177


20,499

Other intangible assets, net

69,218


79,059

Deferred taxes

14,993


14,496

Other assets

6,521


4,411

Total assets

$     373,868


$     351,083





Current liabilities




Accounts payable, trade

$       21,725


$       15,742

Accrued expenses and other current liabilities

48,055


36,169

Total current liabilities

69,780


51,911

Other long-term liabilities

19,843


21,876

Total liabilities

89,623


73,787

Total stockholders' equity

284,245


277,296

Total liabilities and stockholders' equity

$     373,868


$     351,083









DREW INDUSTRIES INCORPORATED

SUMMARY OF CASH FLOWS

(unaudited)






Twelve Months Ended


December 31,

(In thousands)

2012


2011





Cash flows from operating activities:




Net income

$       37,340


$       30,059

Adjustments to reconcile net income to cash flows provided by operating activities:




Depreciation and amortization

25,665


20,522

Stock-based compensation expense

6,318


4,587

Deferred taxes

(533)


821

Other non-cash items

654


1,570

Changes in assets and liabilities, net of acquisitions of businesses:




Accounts receivable, net

774


(5,007)

Inventories

(4,727)


(14,738)

Prepaid expenses and other assets

(10,738)


(1,848)

Accounts payable

5,983


4,391

Accrued expenses and other liabilities

11,953


(3,526)

Net cash flows provided by operating activities

72,689


36,831





Cash flows from investing activities:




Capital expenditures

(32,026)


(24,317)

Acquisitions of businesses

(1,473)


(50,302)

Proceeds from maturity of short-term investments

-


5,000

Proceeds from sales of fixed assets

5,420


1,338

Other investing activities

(119)


(843)

Net cash flows used for investing activities

(28,198)


(69,124)





Cash flows from financing activities:




Exercise of stock options and deferred stock units

8,217


1,188

Proceeds from line of credit borrowings

52,227


130,500

Repayments under line of credit borrowings

(52,227)


(130,500)

Payment of contingent consideration related to acquisitions

(4,315)


(402)

Payment of special dividend

(45,038)


-

Purchase of treasury stock

-


(626)

Other financing activities

-


(163)

Net cash flows used for financing activities

(41,136)


(3)





Net increase (decrease) in cash

3,355


(32,296)





Cash and cash equivalents at beginning of period

6,584


38,880

Cash and cash equivalents at end of period

$         9,939


$         6,584





DREW INDUSTRIES INCORPORATED

SUPPLEMENTARY INFORMATION

(unaudited)










Twelve Months Ended


Three Months Ended


December 31,


December 31,


2012


2011


2012


2011

Industry Data(1)(in thousands of units):








Industry Wholesale Production:








Travel trailer and fifth-wheel RVs

242.9


212.9


54.7


45.2

Motorhome RVs

28.2


24.8


6.9


4.8

Manufactured homes

54.9


51.6


13.0


14.5

Industry Retail Sales:








Travel trailer and fifth-wheel RVs

222.5

(2)

206.0


32.3

(2)

30.1

Impact on dealer inventories

20.4

(2)

6.9


22.4

(2)

15.1






























Twelve Months Ended






December 31,






2012


2011

Drew Content Per Industry Unit Produced:








Travel trailer and fifth-wheel RV


$         2,713


$         2,348

Motorhome RV


$         1,071


$           638

Manufactured home


$         1,465


$         1,493






















December 31,






2012


2011

Balance Sheet Data:








Current ratio


2.2


2.7

Total indebtedness to stockholders' equity


-


-

Days sales in accounts receivable


14.3


17.1

Inventory turns, based on last twelve months


7.8


6.3






















2013

Estimated Full Year Data:








Capital expenditures


$ 25 - 30 million

Depreciation and amortization


$ 24 - 26 million

Stock-based compensation expense


$ 7 - 8 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 ("RVIA").  Industry wholesale production data for manufactured homes provided by the Institute for Building Technology and Safety ("IBTS").  Industry retail sales data provided by Statistical Surveys, Inc.

(2) December retail sales data for RVs has not been published yet, therefore 2012 retail data for RVs includes an estimate for December 2012 retail units.

 

SOURCE Drew Industries Incorporated



RELATED LINKS
http://www.drewindustries.com

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