Attached files
| file | filename |
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| 8-K - FORM 8-K - LCI INDUSTRIES | drew_8k-022013.htm |
Exhibit 99.1
|
FOR IMMEDIATE RELEASE
Contact: Fred Zinn, President and CEO
Phone: (914) 428-9098 Fax: (914) 428-4581
E Mail: Drew@drewindustries.com
|
 |
DREW INDUSTRIES REPORTS FOURTH QUARTER
AND 2012 FULL-YEAR RESULTS
White Plains, New York – February 20, 2013 – 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.”
Page 1 of 8
Exhibit 99.1
“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.
Page 2 of 8
Exhibit 99.1
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.
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Page 3 of 8
Exhibit 99.1
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DREW INDUSTRIES INCORPORATED
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OPERATING RESULTS
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(unaudited)
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Twelve Months Ended
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Three Months Ended
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December 31,
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December 31,
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(In thousands, except per share amounts)
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2012
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2011
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2012
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2011
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Net sales
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$ | 901,123 | $ | 681,166 | $ | 200,234 | $ | 159,596 | ||||||||
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Cost of sales
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732,464 | 541,445 | 164,363 | 131,814 | ||||||||||||
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Gross profit
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168,659 | 139,721 | 35,871 | 27,782 | ||||||||||||
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Selling, general and administrative expenses
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109,071 | 91,173 | 27,572 | 21,890 | ||||||||||||
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Executive succession
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1,456 | - | 1,456 | - | ||||||||||||
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Operating profit
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58,132 | 48,548 | 6,843 | 5,892 | ||||||||||||
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Interest expense, net
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330 | 292 | 84 | 95 | ||||||||||||
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Income before income taxes
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57,802 | 48,256 | 6,759 | 5,797 | ||||||||||||
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Provision for income taxes
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20,462 | 18,197 | 2,014 | 1,709 | ||||||||||||
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Net income
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$ | 37,340 | $ | 30,059 | $ | 4,745 | $ | 4,088 | ||||||||
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Net income per common share:
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Basic
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$ | 1.66 | $ | 1.35 | $ | 0.21 | $ | 0.18 | ||||||||
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Diluted
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$ | 1.64 | $ | 1.34 | $ | 0.21 | $ | 0.18 | ||||||||
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Weighted average common shares outstanding:
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Basic
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22,558 | 22,267 | 22,712 | 22,309 | ||||||||||||
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Diluted
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22,828 | 22,444 | 23,138 | 22,495 | ||||||||||||
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Depreciation and amortization
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$ | 25,665 | $ | 20,522 | $ | 6,454 | $ | 5,453 | ||||||||
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Capital expenditures
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$ | 32,026 | $ | 24,317 | $ | 10,016 | $ | 6,596 | ||||||||
Page 4 of 8
Exhibit 99.1
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DREW INDUSTRIES INCORPORATED
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SEGMENT RESULTS
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(unaudited)
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Twelve Months Ended
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Three Months Ended
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December 31,
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December 31,
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(In thousands)
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2012
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2011
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2012
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2011
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Net sales:
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RV Segment:
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RV OEMs:
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Travel trailers and fifth-wheels
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$ | 658,961 | $ | 499,852 | $ | 144,308 | $ | 112,106 | ||||||||
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Motorhomes
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30,196 | 15,828 | 7,628 | 3,584 | ||||||||||||
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RV aftermarket
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19,119 | 14,660 | 4,405 | 2,491 | ||||||||||||
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Adjacent industries
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72,649 | 40,303 | 15,641 | 12,806 | ||||||||||||
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Total RV Segment net sales
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780,925 | 570,643 | 171,982 | 130,987 | ||||||||||||
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MH Segment:
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Manufactured housing OEMs
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80,392 | 77,087 | 18,714 | 20,975 | ||||||||||||
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Manufactured housing aftermarket
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16,060 | 16,184 | 3,330 | 3,491 | ||||||||||||
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Adjacent industries
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23,746 | 17,252 | 6,208 | 4,143 | ||||||||||||
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Total MH Segment net sales
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120,198 | 110,523 | 28,252 | 28,609 | ||||||||||||
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Total net sales
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$ | 901,123 | $ | 681,166 | $ | 200,234 | $ | 159,596 | ||||||||
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Operating Profit:
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RV Segment
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$ | 55,120 | $ | 45,715 | $ | 7,911 | $ | 5,345 | ||||||||
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MH Segment
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13,335 | 11,980 | 2,393 | 3,017 | ||||||||||||
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Total segment operating profit
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68,455 | 57,695 | 10,304 | 8,362 | ||||||||||||
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Corporate
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(8,508 | ) | (7,483 | ) | (1,995 | ) | (1,637 | ) | ||||||||
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Executive succession
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(1,456 | ) | - | (1,456 | ) | - | ||||||||||
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Accretion related to contingent consideration
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(1,756 | ) | (1,886 | ) | (406 | ) | (492 | ) | ||||||||
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Other non-segment items
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1,397 | 222 | 396 | (341 | ) | |||||||||||
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Total operating profit
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$ | 58,132 | $ | 48,548 | $ | 6,843 | $ | 5,892 | ||||||||
Page 5 of 8
Exhibit 99.1
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DREW INDUSTRIES INCORPORATED
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BALANCE SHEET INFORMATION
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(unaudited)
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December 31,
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(In thousands)
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2012
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2011
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Current Assets
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Cash and cash equivalents
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$ | 9,939 | $ | 6,584 | ||||
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Accounts receivable, net
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21,846 | 22,620 | ||||||
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Inventories
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97,367 | 92,052 | ||||||
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Deferred taxes
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10,073 | 10,125 | ||||||
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Prepaid expenses and other current assets
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14,798 | 6,187 | ||||||
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Total current assets
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154,023 | 137,568 | ||||||
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Fixed assets, net
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107,936 | 95,050 | ||||||
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Goodwill
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21,177 | 20,499 | ||||||
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Other intangible assets, net
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69,218 | 79,059 | ||||||
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Deferred taxes
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14,993 | 14,496 | ||||||
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Other assets
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6,521 | 4,411 | ||||||
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Total assets
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$ | 373,868 | $ | 351,083 | ||||
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Current liabilities
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||||||||
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Accounts payable, trade
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$ | 21,725 | $ | 15,742 | ||||
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Accrued expenses and other current liabilities
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48,055 | 36,169 | ||||||
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Total current liabilities
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69,780 | 51,911 | ||||||
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Other long-term liabilities
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19,843 | 21,876 | ||||||
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Total liabilities
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89,623 | 73,787 | ||||||
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Total stockholders' equity
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284,245 | 277,296 | ||||||
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Total liabilities and stockholders' equity
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$ | 373,868 | $ | 351,083 | ||||
Page 6 of 8
Exhibit 99.1
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DREW INDUSTRIES INCORPORATED
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SUMMARY OF CASH FLOWS
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(unaudited)
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Twelve Months Ended
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December 31,
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(In thousands)
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2012
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2011
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Cash flows from operating activities:
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Net income
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$ | 37,340 | $ | 30,059 | ||||
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Adjustments to reconcile net income to cash flows provided by operating activities:
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Depreciation and amortization
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25,665 | 20,522 | ||||||
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Stock-based compensation expense
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6,318 | 4,587 | ||||||
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Deferred taxes
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(533 | ) | 821 | |||||
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Other non-cash items
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654 | 1,570 | ||||||
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Changes in assets and liabilities, net of acquisitions of businesses:
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||||||||
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Accounts receivable, net
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774 | (5,007 | ) | |||||
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Inventories
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(4,727 | ) | (14,738 | ) | ||||
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Prepaid expenses and other assets
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(10,738 | ) | (1,848 | ) | ||||
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Accounts payable
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5,983 | 4,391 | ||||||
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Accrued expenses and other liabilities
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11,953 | (3,526 | ) | |||||
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Net cash flows provided by operating activities
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72,689 | 36,831 | ||||||
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Cash flows from investing activities:
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||||||||
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Capital expenditures
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(32,026 | ) | (24,317 | ) | ||||
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Acquisitions of businesses
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(1,473 | ) | (50,302 | ) | ||||
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Proceeds from maturity of short-term investments
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- | 5,000 | ||||||
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Proceeds from sales of fixed assets
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5,420 | 1,338 | ||||||
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Other investing activities
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(119 | ) | (843 | ) | ||||
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Net cash flows used for investing activities
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(28,198 | ) | (69,124 | ) | ||||
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Cash flows from financing activities:
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||||||||
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Exercise of stock options and deferred stock units
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8,217 | 1,188 | ||||||
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Proceeds from line of credit borrowings
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52,227 | 130,500 | ||||||
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Repayments under line of credit borrowings
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(52,227 | ) | (130,500 | ) | ||||
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Payment of contingent consideration related to acquisitions
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(4,315 | ) | (402 | ) | ||||
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Payment of special dividend
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(45,038 | ) | - | |||||
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Purchase of treasury stock
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- | (626 | ) | |||||
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Other financing activities
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- | (163 | ) | |||||
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Net cash flows used for financing activities
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(41,136 | ) | (3 | ) | ||||
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Net increase (decrease) in cash
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3,355 | (32,296 | ) | |||||
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Cash and cash equivalents at beginning of period
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6,584 | 38,880 | ||||||
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Cash and cash equivalents at end of period
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$ | 9,939 | $ | 6,584 | ||||
Page 7 of 8
Exhibit 99.1
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DREW INDUSTRIES INCORPORATED
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SUPPLEMENTARY INFORMATION
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(unaudited)
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||||||||||||||||
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Twelve Months Ended
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Three Months Ended
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December 31,
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December 31,
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2012
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2011
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2012
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2011
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Industry Data(1) (in thousands of units):
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Industry Wholesale Production:
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Travel trailer and fifth-wheel RVs
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242.9 | 212.9 | 54.7 | 45.2 | ||||||||||||
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Motorhome RVs
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28.2 | 24.8 | 6.9 | 4.8 | ||||||||||||
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Manufactured homes
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54.9 | 51.6 | 13.0 | 14.5 | ||||||||||||
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Industry Retail Sales:
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Travel trailer and fifth-wheel RVs
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222.5 | 206.0 | 32.3 | (2) | 30.1 | |||||||||||
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Impact on dealer inventories
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20.4 | (2) | 6.9 | 22.4 | (2) | 15.1 | ||||||||||
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Twelve Months Ended
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December 31,
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| 2012 | 2011 | |||||||||||||||
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Drew Content Per Industry Unit Produced:
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Travel trailer and fifth-wheel RV
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$ | 2,713 | $ | 2,348 | ||||||||||||
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Motorhome RV
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$ | 1,071 | $ | 638 | ||||||||||||
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Manufactured home
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$ | 1,465 | $ | 1,493 | ||||||||||||
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December 31,
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| 2012 | 2011 | |||||||||||||||
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Balance Sheet Data:
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||||||||||||||||
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Current ratio
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2.2 | 2.7 | ||||||||||||||
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Total indebtedness to stockholders' equity
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- | - | ||||||||||||||
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Days sales in accounts receivable
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14.3 | 17.1 | ||||||||||||||
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Inventory turns, based on last twelve months
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7.8 | 6.3 | ||||||||||||||
| 2013 | ||||||||||||||||
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Estimated Full Year Data:
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Capital expenditures
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$ 25 - 30 million
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Depreciation and amortization
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$ 24 - 26 million
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Stock-based compensation expense
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$ 7 - 8 million
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|||||||||||||||
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Annual tax rate
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37% - 38% | |||||||||||||||
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(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.
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(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.
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Page 8 of 8