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Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

 

Contact: Joe Giordano, CFO & Treasurer

 

Phone:(574) 535-1125

 

E Mail: drew@drewindustries.com

 

 

 

DREW INDUSTRIES REPORTS THIRD QUARTER 2013 RESULTS

 

Elkhart, Indiana – November 1, 2013 – Drew Industries Incorporated (NYSE: DW), a leading supplier of components for recreational vehicles (RVs) and manufactured homes, today reported net income of $14.8 million, or $0.62 per diluted share, for the third quarter ended September 30, 2013, an increase of 52 percent compared to net income of $9.8 million, or $0.43 per diluted share, in the third quarter of 2012.

 

Net sales in the third quarter of 2013 increased to $251 million, 11 percent higher than the 2012 third quarter. This sales growth was primarily the result of a 12 percent sales increase by Drew’s RV Segment, which accounted for 87 percent of consolidated net sales this quarter. RV Segment sales growth was primarily due to an 8 percent increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs, Drew’s primary RV market. In addition, sales of recently introduced components for towable and motorhome RVs increased, as did sales to adjacent industries and the aftermarket.

 

The Company’s content per motorhome RV and travel trailer and fifth-wheel RV for the twelve months ended September 2013 increased 4 percent to $1,137 per unit and 2 percent to $2,719 per unit, respectively, from the year-earlier period as a result of recent product introductions, product improvements and market share gains. The change in content per RV is a measure of the change in Drew’s overall market share across its existing product lines.

 

Retail demand for travel trailer and fifth-wheel RVs increased 12 percent in the first eight months of 2013, following an 8 percent increase in retail demand for the full year 2012. September 2013 retail data is not yet available. Dealer inventories of these types of towable RVs increased by about 15,800 units during the 12 months ended August 2013, compared to an approximately 24,700 unit increase in retail sales for the same period. Industry analysts report that dealer inventories of towable RVs are in line with anticipated retail demand. Future RV industry-wide production levels will depend on the strength of future retail sales.

 

“Our Company-wide focus on our customers as our first priority has enabled us to gain market share and increase sales,” said Jason Lippert, Drew’s Chief Executive Officer. “In addition, we have been successful by staying ahead of the market through innovation. We continue to invest in customer service and research and development resources to maintain our position as a leading supplier to the industries we serve.”

 

“Our operating profit margins in the third quarter of 2013 were 9.1 percent compared to 6.6 percent in the third quarter of 2012,” added Jason Lippert. “The 2013 third quarter operating profit margins were consistent with the second quarter of 2013 largely due to management’s recently implemented efficiency improvements gaining momentum, partially offset by the anticipated impact of spreading fixed costs over a seasonally smaller sales base. Many of the production improvements resulted in larger than anticipated efficiency gains, including the benefits realized from our new glass tempering equipment.”

 

“Our labor as a percent of net sales in the third quarter of 2013 was consistent with the second quarter of 2013, despite the seasonal decline in net sales,” said Scott Mereness, Drew’s President. “The labor efficiencies we have realized over the past several quarters, while introducing new products and adjusting to industry and market share growth, have been significant. These improvements in labor during the first three quarters of 2013 were also primarily due to completed production efficiency improvement projects, as well as declines in the costs of implementing facility consolidations and realignments. We will continue to implement additional efficiency improvements as we identify them.”

 

 

 
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In October 2013, Drew’s consolidated net sales reached approximately $95 million – 12 percent higher than in October 2012 – as a result of continued solid growth in the Company’s RV Segment. Drew estimates that industry-wide wholesale shipments of travel trailer and fifth-wheel RVs increased 8 percent to 10 percent in October 2013 compared to October 2012. Drew also estimates that October 2013 industry-wide production of manufactured homes increased approximately 5 percent compared to October 2012.

 

“Our consolidated net sales for the trailing twelve months ended October 31, 2013 exceeded $1 billion,” added Mereness. “Achieving this milestone is quite an accomplishment for the Company. In anticipation of future growth, we continue to expand and improve production capacity, investing in personnel and facilities in excess of current needs. Although certain of these capacity expansion plans may 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 our industry-leading customer service. We are encouraged by the benefits we have seen from many of our initiatives, and we will continually evaluate our human resource and facility requirements.”

 

“Our operating cash flow in the third quarter of 2013 remained strong,” said Joe Giordano, Drew’s Chief Financial Officer and Treasurer. “As a result, our cash balances, which typically increase in the fourth quarter due to seasonal reductions in working capital requirements, will likely experience a smaller seasonal change. We remain well positioned to take advantage of attractive investment opportunities that can further improve our results.”

 

The effective tax rate for the 2013 third quarter was 34.9 percent, benefitting from federal and state tax credits, as well as the reversal of federal and state tax reserves, due to the closure of federal and state tax years.

 

Return on equity for the twelve months ended September 30, 2013 improved to 13.9 percent, from 12.5 percent in the year-earlier period.

 

Jason Lippert concluded, “Having completed our first full quarter since the executive transition, we believe that the process has been seamless, and we are pleased to report the 52 percent increase in year-over-year quarterly earnings. As we develop our strategic plans for the future, we expect to continue along the same path which has historically brought us success – profitable growth in our core RV and manufactured housing markets, diversification into adjacent industries, and cost control and production efficiencies. We believe the keys to accomplishing these goals are continuing to invest in new product development and customer service, as well as identifying areas where additional savings can be realized. I am confident that our management team has the ability to execute our strategic goals for the long-term growth of the Company.”

 

 

 
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Conference Call & Webcast

Drew will provide an online, real-time webcast of its third quarter 2013 earnings conference call on the Company’s website, www.drewindustries.com on Friday, November 1, 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 dialing (888) 286-8010 and referencing access code 74159229. A replay of the webcast will also be available on Drew’s website.

 

About Drew Industries

From 31 factories located throughout the United States, Drew Industries, through its wholly-owned subsidiaries, Kinro® and Lippert ComponentsTM, 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; aluminum extrusions; 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” 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 under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, 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 products for which we sell our components, changes in zoning regulations for manufactured homes, seasonality and cyclicality 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, the successful entry into new markets, interest rates, oil and gasoline prices, and the successful implementation of management succession. 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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DREW INDUSTRIES INCORPORATED

OPERATING RESULTS

(unaudited)

 

   

Nine Months Ended

   

Three Months Ended

         
   

September 30,

   

September 30,

   

Last Twelve

 

(In thousands, except per share amounts)

 

2013

   

2012

   

2013

   

2012

   

Months

 
                                         

Net sales

  $ 790,629     $ 700,889     $ 250,851     $ 226,323     $ 990,863  

Cost of sales

    625,479       568,101       194,725       184,781       789,842  

Gross profit

    165,150       132,788       56,126       41,542       201,021  

Selling, general and administrative expenses

    101,148       81,499       33,296       26,594       128,720  

Executive succession

    1,876       -       -       -       3,332  

Operating profit

    62,126       51,289       22,830       14,948       68,969  

Interest expense, net

    279       246       76       116       363  

Income before income taxes

    61,847       51,043       22,754       14,832       68,606  

Provision for income taxes

    22,805       18,448       7,949       5,061       24,819  

Net income

  $ 39,042     $ 32,595     $ 14,805     $ 9,771     $ 43,787  
                                         

Net income per common share:

                                       

Basic

  $ 1.68     $ 1.45     $ 0.63     $ 0.43     $ 1.89  

Diluted

  $ 1.65     $ 1.43     $ 0.62     $ 0.43     $ 1.86  
                                         

Weighted average common shares outstanding:

                                       

Basic

    23,243       22,507       23,451       22,563       23,111  

Diluted

    23,644       22,724       23,838       22,800       23,518  
                                         

Depreciation and amortization

  $ 20,388     $ 19,211     $ 6,935     $ 6,850     $ 26,842  

Capital expenditures

  $ 26,080     $ 22,010     $ 8,535     $ 8,856     $ 36,096  

 

 
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DREW INDUSTRIES INCORPORATED

SEGMENT RESULTS

(unaudited)

 

   

Nine Months Ended

   

Three Months Ended

         
   

September 30,

   

September 30,

   

Last Twelve

 

(In thousands)

 

2013

   

2012

   

2013

   

2012

   

Months

 
                                         

Net sales:

                                       

RV Segment:

                                       

RV original equipment manufacturers:

                                       

Travel trailers and fifth-wheels

  $ 570,404     $ 512,307     $ 175,892     $ 161,959     $ 714,014  

Motorhomes

    32,509       24,500       11,234       8,998       40,706  

RV aftermarket

    19,785       14,714       6,904       5,355       24,190  

Adjacent industries

    72,334       57,422       23,933       18,645       88,104  

Total RV Segment net sales

    695,032       608,943       217,963       194,957       867,014  
                                         

MH Segment:

                                       

Manufactured housing original equipment manufacturers

    62,941       61,678       22,571       21,188       81,655  

Manufactured housing aftermarket

    10,377       10,322       3,138       3,134       13,165  

Adjacent industries

    22,279       19,946       7,179       7,044       29,029  

Total MH Segment net sales

    95,597       91,946       32,888       31,366       123,849  
                                         

Total net sales

  $ 790,629     $ 700,889     $ 250,851     $ 226,323     $ 990,863  
                                         

Operating Profit: (1)

                                       

RV Segment

  $ 54,098     $ 40,936     $ 19,234     $ 11,587     $ 60,334  

MH Segment

    9,904       10,353       3,596       3,361       11,967  

Total segment operating profit

    64,002       51,289       22,830       14,948       72,301  

Executive succession

    (1,876 )     -       -       -       (3,332 )

Total operating profit

  $ 62,126     $ 51,289     $ 22,830     $ 14,948     $ 68,969  

 

(1) Effective with the second quarter of 2013, in connection with the management succession and relocation of the corporate office from New York to Indiana, corporate expenses, accretion related to contingent consideration and other non-segment items, which were previously reported on separate lines, have been included as part of segment operating profit. Corporate expenses are allocated between the segments based upon net sales. Accretion related to contingent consideration and other non-segment items are included in the segment to which they relate. The segment disclosures from prior years have been reclassified to conform to the current year presentation.

 

 
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DREW INDUSTRIES INCORPORATED

BALANCE SHEET INFORMATION

(unaudited)

 

   

September 30,

   

December 31,

 

(In thousands)

 

2013

   

2012

   

2012

 
                         

Current Assets

                       

Cash and cash equivalents

  $ 52,873     $ 32,584     $ 9,939  

Accounts receivable, net

    54,824       50,421       21,846  

Inventories

    96,164       98,393       97,367  

Deferred taxes

    10,073       10,125       10,073  

Prepaid expenses and other current assets

    8,396       11,165       14,798  

Total current assets

    222,330       202,688       154,023  

Fixed assets, net

    120,723       101,931       107,936  

Goodwill

    21,552       21,177       21,177  

Other intangible assets, net

    61,861       71,755       69,218  

Deferred taxes

    14,993       14,496       14,993  

Other assets

    8,237       6,422       6,521  

Total assets

  $ 449,696     $ 418,469     $ 373,868  
                         

Current liabilities

                       

Accounts payable, trade

  $ 31,809     $ 33,392     $ 21,725  

Accrued expenses and other current liabilities

    53,333       47,074       48,055  

Total current liabilities

    85,142       80,466       69,780  

Other long-term liabilities

    21,091       20,369       19,843  

Total liabilities

    106,233       100,835       89,623  

Total stockholders' equity

    343,463       317,634       284,245  

Total liabilities and stockholders' equity

  $ 449,696     $ 418,469     $ 373,868  

 

 

 
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DREW INDUSTRIES INCORPORATED

SUMMARY OF CASH FLOWS

(unaudited)

 

   

Nine Months Ended

 
   

September 30,

 

(In thousands)

 

2013

   

2012

 
                 

Cash flows from operating activities:

               

Net income

  $ 39,042     $ 32,595  

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

         

Depreciation and amortization

    20,388       19,211  

Stock-based compensation expense

    8,224       4,703  

Other non-cash items

    1,787       889  

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

               

Accounts receivable, net

    (32,829 )     (27,801 )

Inventories

    1,246       (5,753 )

Prepaid expenses and other assets

    4,090       (6,993 )

Accounts payable

    10,042       17,650  

Accrued expenses and other liabilities

    9,681       10,086  

Net cash flows provided by operating activities

    61,671       44,587  
                 

Cash flows from investing activities:

               

Capital expenditures

    (26,080 )     (22,010 )

Acquisitions of businesses

    (1,451 )     (1,473 )

Proceeds from sales of fixed assets

    1,381       5,397  

Other investing activities

    (117 )     (88 )

Net cash flows used for investing activities

    (26,267 )     (18,174 )
                 

Cash flows from financing activities:

               

Proceeds from exercise of stock options

    11,817       2,840  

Proceeds from line of credit borrowings

    135,452       37,702  

Repayments under line of credit borrowings

    (135,452 )     (37,702 )

Payment of contingent consideration related to acquisitions

    (4,287 )     (3,253 )

Net cash flows provided by (used for) financing activities

    7,530       (413 )
                 

Net increase in cash

    42,934       26,000  
                 

Cash and cash equivalents at beginning of period

    9,939       6,584  

Cash and cash equivalents at end of period

  $ 52,873     $ 32,584  

 

 
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DREW INDUSTRIES INCORPORATED

SUPPLEMENTARY INFORMATION

(unaudited)

 

   

Nine Months Ended

   

Three Months Ended

           
   

September 30,

   

September 30,

   

Last Twelve

   
   

2013

     

2012

   

2013

     

2012

   

Months

   

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

                                             

Industry Wholesale Production:

                                             

Travel trailer and fifth-wheel RVs

    207.9         188.2       61.3         56.7       262.6    

Motorhome RVs

    28.9         21.3       9.4         6.8       35.8    

Manufactured homes

    44.4   (3)     41.9       15.2   (3)     14.2       57.3   (3)

Industry Retail Sales:

                                             

Travel trailer and fifth-wheel RVs

    214.1   (2)     190.4       77.2   (2)     67.4       246.6   (2)

Impact on dealer inventories

    (6.2 ) (2)     (2.2 )     (15.9 ) (2)     (10.7 )     16.0   (2)

Motorhome RVs

    25.1   (2)     19.4       8.1   (2)     6.4       29.6   (2)

   

Twelve Months Ended

 
   

September 30,

 
   

2013

     

2012

 

Drew Content Per Industry Unit Produced:

                 

Travel trailer and fifth-wheel RV

  $ 2,719       $ 2,673  

Motorhome RV

  $ 1,137       $ 1,092  

Manufactured home

  $ 1,423   (3)   $ 1,464  

   

September 30,

   

December 31,

 
   

2013

   

2012

   

2012

 

Balance Sheet Data:

                       

Current ratio

    2.6       2.5       2.2  

Total indebtedness to stockholders' equity

    -       -       -  

Days sales in accounts receivable

 

20.1

      22.6       14.3  

Inventory turns, based on last twelve months

    7.8       7.5       7.8  

 

   

2013

 

Estimated Full Year Data:

   

 

 

Capital expenditures

   

$ 33 - $ 35 million

 

Depreciation and amortization

   

$ 26 - $ 28 million

 

Stock-based compensation expense

   

$ 10 - $ 11 million

 

Annual tax rate

   

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 retail sales data for RVs has not been published yet, therefore 2013 retail data for RVs includes an estimate for September 2013 retail units.

(3) September wholesale data for manufactured homes has not been published yet, therefore 2013 manufactured housing wholesale data includes an estimate for September 2013 wholesale units.

 

 

 

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