DREW INDUSTRIES, INC. ELKHART, Ind., Nov. 3, 2015 /PRNewswire/ -- Drew Industries Incorporated (NYSE: DW), a leading supplier of components for recreational vehicles (RVs) and manufactured homes, today reported net income of $17.3 million, or $0.70 per diluted share, for the third quarter ended September 30, 2015, compared to net income of $15.5 million, or $0.64 per diluted share, for the third quarter ended September 30, 2014.
Consolidated net sales in the third quarter of 2015 increased to $345 million, 17 percent higher than the 2014 third quarter. This growth in consolidated net sales resulted primarily from a 19 percent increase in net sales of Drew's RV Segment for the 2015 third quarter compared to the 2014 third quarter. The acquisitions completed by the Company over the twelve months ended September 30, 2015, as well as the distribution and supply agreement with Furrion Limited entered into in July 2015, added $23 million in net sales in the third quarter of 2015. The five percent increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs, Drew's primary RV market, as well as increased content per unit through market share gains positively impacted the net sales growth in the 2015 third quarter. Further, the Company organically increased sales to adjacent industries and the aftermarket.
The Company's content per travel trailer and fifth-wheel RV for the twelve months ended September 30, 2015, increased $148, or 5.3 percent, to $2,952, compared to content per travel trailer and fifth-wheel RV for the twelve months ended September 30, 2014 of $2,804. The Company's content per motorhome RV for the twelve months ended September 30, 2015, increased by $307, or 20.5 percent, to $1,807, compared to content per motorhome RV for the twelve months ended September 30, 2014, of $1,500.
"Our net sales in the 2015 third quarter increased at double digit year-over-year rates, despite a modest increase in industry-wide wholesale shipments of RVs during the quarter," said Jason Lippert, Drew's Chief Executive Officer. "Strong organic growth from new products, product innovation and market share gains, coupled with recent acquisitions, allowed us to significantly exceed the industry-wide increase in wholesale shipments of RVs. Our focus on enhancing the RV user's experience and our extensive product offerings together contributed to our organic sales growth. In particular, our net sales attributable to adjacent industries and the aftermarket increased organically during the 2015 third quarter by a combined $12 million, or 22 percent. These markets will continue to be areas of focus for our teams as key drivers of future growth."
Over the past twelve months, the RV industry has produced units earlier in its annual cycle than in prior years, with a 14 percent increase in wholesale shipments of travel trailer and fifth-wheel RVs between October 2014 and March 2015, followed by a four percent increase in wholesale shipments of travel trailer and fifth-wheel RVs between April 2015 and September 2015. Over that same twelve month period, retail sales of travel trailer and fifth-wheel RVs increased an estimated 12 percent. Based on the strength of retail sales to date and projected economic conditions, most industry analysts continue to report that RV dealer inventory is in line with anticipated retail demand.
"The 2015 RV OEM Open House in Elkhart, Indiana in September was well attended by RV dealers and our RV OEM customers reported taking significant orders during this event. The majority of those orders will be filled over the next two quarters, and we are seeing strong demand in our factories as a result of another strong Open House," said Jason Lippert. "Over the past several months, the industry-wide wholesale production growth rate of towable RVs slowed to mid-single digit rates. This primarily affected larger units containing more of our content, which we believe is due to the pull forward of production in late 2014 and early 2015. Customers have reported that orders received after the RV OEM Open House indicate a more normalized travel trailer and fifth-wheel RV wholesale shipment level in the fourth quarter of 2015."
In October 2015, Drew's consolidated net sales reached approximately $129 million, 11 percent higher than October 2014. Excluding the impact of acquisitions, the Company's consolidated net sales for October 2015 were up 5 percent.
"Our operating profit margin in the third quarter of 2015 was 7.9 percent, compared to 7.8 percent in the third quarter of 2014," said Scott Mereness, Drew's President. "In 2014 and early 2015 in response to the strong growth in the RV industry and our market share gains, we made significant investments in manufacturing capacity, both facilities and personnel. As RV industry growth has slowed from its multi-year double digit growth pace, these higher fixed costs negatively impacted our operating margins in the 2015 third quarter. In response, we evaluated our labor requirements and initiated a focused program to reduce indirect labor costs by approximately $12 to $14 million annually. During October 2015, we took actions that will realize approximately 70 percent of our target."
In August 2015, Drew acquired the business and certain assets of Roehm Marine, LLC, also known as Signature Seating ("Signature"), a manufacturer of furniture solutions for fresh water boat manufacturers, primarily pontoon boats. Signature's net sales for the twelve months ended June 2015 were approximately $16 million. The purchase price was $16.0 million paid at closing, plus contingent consideration based on future sales of this operation.
Conference Call & Webcast
Drew will provide an online, real-time webcast of its third quarter 2015 earnings conference call on the Company's website, www.drewindustries.com. on Tuesday, November 3, 2015, 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 64342523. A replay of the webcast will also be available on Drew's website.
About Drew Industries
From 42 manufacturing facilities located throughout the United States and Canada, Drew Industries, through its wholly-owned subsidiary, Lippert Components(®), supplies a broad array of components for the leading manufacturers of recreational vehicles and manufactured homes, and to a lesser extent supplies components for adjacent industries including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; modular housing; and factory-built mobile office units. Drew's products include steel chassis; axles and suspension solutions; slide-out mechanisms and solutions; thermoformed bath, kitchen and other products; windows; manual, electric and hydraulic stabilizer and leveling systems; chassis components; furniture and mattresses; entry, luggage, patio and ramp doors; electric and manual entry steps; awnings and slide toppers; LED televisions and sound systems; navigation systems; wireless backup cameras; other accessories; and electronic components. 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 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 the Company's 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, seasonality and cyclicality in the industries to which we sell our products, availability of credit for financing the retail and wholesale purchase of products for which we sell our components, inventory levels of retail dealers and manufacturers, 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 costs, pace of and successful integration of acquisitions and other growth initiatives, availability and costs of labor, employee benefits, employee retention, realization and impact of efficiency improvements and cost reductions, the successful entry into new markets, the costs of compliance with environmental laws and increased governmental regulation and oversight, information technology performance and security, the ability to protect intellectual property, 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 the Company's Annual Report on Form 10-K for the year ended December 31, 2014, and in the Company's subsequent filings with the Securities and Exchange Commission. The Company disclaims 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)
Nine Months Ended Three Months Ended
September 30, September 30, Last Twelve
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(In thousands, except per share amounts) 2015 2014 2015 2014 Months
---- ---- ---- ---- ------
Net sales $1,068,838 $901,431 $345,296 $294,271 $1,358,189
Cost of sales 836,250 703,736 271,171 231,788 1,068,373
------- ------- ------- ------- ---------
Gross profit 232,588 197,695 74,125 62,483 289,816
Selling, general and administrative expenses 139,945 117,475 46,954 39,412 179,952
Sale of extrusion assets - 1,954 - - -
Operating profit 92,643 78,266 27,171 23,071 109,864
Interest expense, net 1,399 324 595 130 1,505
----- --- --- --- -----
Income before income taxes 91,244 77,942 26,576 22,941 108,359
Provision for income taxes 33,039 27,672 9,313 7,453 38,158
------ ------ ----- ----- ------
Net income $58,205 $50,270 $17,263 $15,488 $70,201
======= ======= ======= ======= =======
Net income per common share:
Basic $2.40 $2.11 $0.71 $0.65 $2.90
===== ===== ===== ===== =====
Diluted $2.36 $2.07 $0.70 $0.64 $2.86
===== ===== ===== ===== =====
Weighted average common shares outstanding:
Basic 24,261 23,870 24,289 23,935 24,193
====== ====== ====== ====== ======
Diluted 24,614 24,300 24,686 24,301 24,574
====== ====== ====== ====== ======
Depreciation and amortization $30,663 $23,475 $10,808 $8,555 $39,784
======= ======= ======= ====== =======
Capital expenditures $21,808 $30,032 $7,140 $12,120 $34,234
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DREW INDUSTRIES INCORPORATED
SEGMENT RESULTS
(unaudited)
Nine Months Ended Three Months Ended
September 30, September 30, Last Twelve
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(In thousands) 2015 2014 2015 2014 Months
---- ---- ---- ---- ------
Net sales: (1)
RV Segment:
RV OEMs:
Travel trailers and fifth-wheels $722,157 $643,629 $216,093 $196,213 $922,624
Motorhomes 64,085 51,664 23,539 21,607 80,195
RV aftermarket 64,896 32,777 26,203 16,015 81,689
Adjacent industries 128,169 84,396 47,295 29,769 156,781
------- ------ ------ ------ -------
Total RV Segment net sales 979,307 812,466 313,130 263,604 1,241,289
------- ------- ------- ------- ---------
MH Segment:
Manufactured housing OEMs 61,144 58,550 22,786 21,269 80,015
Manufactured housing aftermarket 12,010 10,849 3,880 3,677 15,347
Adjacent industries 16,377 19,566 5,500 5,721 21,538
Total MH Segment net sales 89,531 88,965 32,166 30,667 116,900
------ ------ ------ ------ -------
Total net sales $1,068,838 $901,431 $345,296 $294,271 $1,358,189
========== ======== ======== ======== ==========
Operating Profit:
RV Segment $82,961 $72,048 $23,720 $20,287 $97,484
MH Segment 9,682 8,172 3,451 2,784 12,380
----- ----- ----- ----- ------
Total segment operating profit 92,643 80,220 27,171 23,071 109,864
Sale of extrusion assets - (1,954) - - -
Total operating profit $92,643 $78,266 $27,171 $23,071 $109,864
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(1) In the third quarter of 2015, the Company refined the various sales categories within the RV Segment. This refinement had no impact on total RV Segment net sales or trends. Prior periods have been reclassified to conform to this presentation.
DREW INDUSTRIES INCORPORATED
BALANCE SHEET INFORMATION
(unaudited)
September 30, December 31,
-------------
(In thousands) 2015 2014 2014
---- ---- ----
ASSETS
Current assets
Cash and cash equivalents $7,252 $4 $4
Accounts receivable, net 84,381 64,543 37,987
Inventories, net 178,847 127,078 132,492
Prepaid expenses and other current
assets 35,738 30,967 37,153
------ ------ ------
Total current assets 306,218 222,592 207,636
Fixed assets, net 150,424 133,543 146,788
Goodwill 84,551 66,203 66,521
Other intangible assets, net 104,109 100,785 96,959
Other assets 24,087 26,286 25,937
------ ------ ------
Total assets $669,389 $549,409 $543,841
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable, trade $53,095 $44,541 $49,534
Accrued expenses and other current
liabilities 75,561 61,999 57,651
------ ------ ------
Total current liabilities 128,656 106,540 107,185
Long-term indebtedness 91,829 40,000 15,650
Other long-term liabilities 31,273 25,536 26,108
------ ------ ------
Total liabilities 251,758 172,076 148,943
Total stockholders' equity 417,631 377,333 394,898
------- ------- -------
Total liabilities and stockholders'
equity $669,389 $549,409 $543,841
======== ======== ========
DREW INDUSTRIES INCORPORATED
SUMMARY OF CASH FLOWS
(unaudited)
Nine Months Ended
September 30,
-------------
(In thousands) 2015 2014
---- ----
Cash flows from operating activities:
Net income $58,205 $50,270
Adjustments to reconcile net income to cash
flows provided by operating activities:
Depreciation and amortization 30,663 23,475
Stock-based compensation expense 10,984 7,909
Other non-cash items 854 2,837
Changes in assets and liabilities, net of
acquisitions of businesses:
Accounts receivable, net (40,761) (27,162)
Inventories, net (39,289) (16,526)
Prepaid expenses and other assets 1,976 (3,668)
Accounts payable, trade 1,612 16,276
Accrued expenses and other liabilities 20,507 13,553
Net cash flows provided by operating
activities 44,751 66,964
------ ------
Cash flows from investing activities:
Capital expenditures (21,808) (30,032)
Acquisitions of businesses (41,058) (100,157)
Proceeds from note receivable - 750
Proceeds from sales of fixed assets 2,141 3,344
Other investing activities (272) (66)
---- ---
Net cash flows used for investing activities (60,997) (126,161)
------- --------
Cash flows from financing activities:
Exercise of stock-based awards, net of shares
tendered for payment of taxes (275) 3,555
Proceeds from line of credit borrowings 563,325 330,346
Repayments under line of credit borrowings (537,146) (290,346)
Proceeds from shelf-loan borrowing 50,000 -
Payment of special dividend (48,227) (46,706)
Payment of contingent consideration related to
acquisitions (3,963) (3,732)
Other financing activities (220) (196)
Net cash flows provided by (used for)
financing activities 23,494 (7,079)
------ ------
Net increase (decrease) in cash 7,248 (66,276)
Cash and cash equivalents at beginning of
period 4 66,280
--- ------
Cash and cash equivalents at end of period $7,252 $4
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DREW INDUSTRIES INCORPORATED
SUPPLEMENTARY INFORMATION
(unaudited)
Nine Months Ended Three Months Ended
September 30, September 30, Last Twelve
------------- -------------
2015 2014 2015 2014 Months
---- ---- ---- ---- ------
Industry Data(1)(in thousands of units):
Industry Wholesale Production:
Travel trailer and fifth-wheel RVs 239.4 226.6 68.7 65.5 311.7
Motorhome RVs 35.9 34.0 11.2 10.7 45.8
Manufactured homes 51.6 48.2 18.3 17.5 67.8
Industry Retail Sales:
Travel trailer and fifth-wheel RVs 259.0 (2) 234.3 93.8 (2) 87.9 301.8 (2)
Impact on dealer inventories (19.6) (2) (7.7) (25.1) (2) (22.4) 9.9 (2)
Motorhome RVs 32.7 (2) 29.4 11.1 (2) 10.0 39.8 (2)
Twelve Months Ended
September 30,
-------------
2015 2014
---- ----
Drew Content Per Industry Unit Produced:
Travel trailer and fifth-wheel RV $2,952 (3) $2,804 (3)
Motorhome RV $1,807 (3) $1,500 (3)
Manufactured home $1,181 $1,202
September 30, December 31,
-------------
2015 2014 2014
---- ---- ----
Balance Sheet Data:
Current ratio 2.4 2.1 1.9
Total indebtedness to stockholders' equity 0.2 0.1 0.0
Days sales in accounts receivable 22.0 20.2 14.6
Inventory turns, based on last twelve months 7.2 8.2 8.2
2015
----
Estimated Full Year Data:
Capital expenditures $ 28 - $ 30 million
Depreciation and amortization $ 40 - $ 42 million
Stock-based compensation expense $ 15 - $ 16 million
Annual tax rate 36% - 37%
(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) September 2015 retail sales data for RVs has not been published yet, therefore 2015 retail data for RVs includes an estimate for September 2015 retail units.
(3) In the third quarter of 2015, the Company refined the calculation of RV content per unit. This refinement had no impact on total RV Segment net sales or trends of content per unit. Prior periods have been reclassified to conform to this presentation.
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SOURCE Drew Industries Incorporated
