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Drew Industries Reports 2016 First Quarter Results

05/09/2016

ELKHART, Ind., May 9, 2016 /PRNewswire/ -- Drew Industries Incorporated (NYSE: DW), a leading supplier of components for recreational vehicles (RVs) and manufactured homes, today reported net income of $36.0 million, or $1.45 per diluted share, for the first quarter ended March 31, 2016, compared to net income of $20.1 million, or $0.82 per diluted share, for the first quarter ended March 31, 2015.

Consolidated net sales in the first quarter of 2016 increased to $423 million, 17 percent higher than the 2015 first quarter. The increase in year over year sales reflects industry-wide growth in wholesale shipments of towable RV's, which increased by 11 percent in the first quarter of 2016, enhanced by acquisitions completed by the Company over the twelve months ended March 31, 2016, as well as the July 2015 distribution and supply agreement for premium electronics with Furrion, which together added $25 million in net sales in the first quarter of 2016. Through continued focus on serving the aftermarket, the Company also increased aftermarket sales in the first quarter of 2016 by more than 40 percent. In April 2016, Drew's consolidated net sales reached approximately $145 million, 11 percent higher than April 2015.

The Company's content per travel trailer and fifth-wheel RV for the twelve months ended March 31, 2016, increased $64 to $2,978, compared to content per travel trailer and fifth-wheel RV for the twelve months ended March 31, 2015 of $2,914. The Company's content per motorhome RV for the twelve months ended March 31, 2016, increased by $122, to $1,858, compared to content per motorhome RV for the twelve months ended March 31, 2015, of $1,736.

"Our net sales in the 2016 first quarter increased at a double digit year-over-year rate of 17 percent and by over $60 million over the first quarter of 2015," said Jason Lippert, Drew's Chief Executive Officer. "This growth reflects the current strength of our industry, as well as the continued execution of our plan to drive growth in our primary areas of focus. This includes growth from acquisitions, focusing on the needs of the aftermarket customer, new markets for core products and organic growth from innovative new products, enhancements to existing products and market share gains. Of particular note, our net sales attributable to the aftermarket and adjacent industries increased during the 2016 first quarter by a combined $28 million, or 46 percent."

"Thus far in 2016 we completed three acquisitions, adding approximately $57 million of expected annual sales with further sales and profit growth potential. Notably, this includes our second acquisition in the marine space and our first acquisition in Europe," said David Smith, Drew's Chief Financial Officer. The three operations acquired by Drew so far during 2016 are:

  • Project 2000 S.r.l. -- An Italian manufacturer of innovative, space-saving bed lifts and retractable steps for RVs, with estimated annual sales of €10 million (US$12 million);
  • Flair Interiors -- A Goshen, Indiana manufacturer of RV furniture, with estimated annual sales of $25 million; and
  • Highwater Marine Furniture -- An Elkhart, Indiana marine furniture operation providing furniture solutions for Highwater Marine, LLC, a manufacturer of pontoon boats. Estimated annual sales for the marine furniture operation were $20 million.

Over the twelve month period through March 2016, retail sales of travel trailer and fifth-wheel RVs increased an estimated 12 percent. Wholesale unit sales during this time nearly matched retail sales. Based on the strength of retail sales and the current outlook from several RV OEMs and their dealer networks, most industry analysts continue to report that RV dealer inventory is in line with anticipated retail demand.

"Our operating profit in the first quarter of 2016 improved to $56 million, compared to $32 million in the first quarter of 2015," said Scott Mereness, Drew's President. "Accretive acquisitions completed over the last 12 months, significant growth in aftermarket sales and a focus on cost management and operational efficiencies, combined with strong industry growth and lower costs for certain key commodities, all contributed to our profit improvement. Starting in the second half of 2015, commodity prices for both aluminum and steel began to trend lower, resulting in favorable material costs compared to the first half of 2015. These commodity prices have historically been volatile and recently experienced some increases." Mereness continued, "We believe these first quarter results reflect the effective execution of the strategy we have set to profitably grow sales in key areas of our business and exercise disciplined cost management."

Jason Lippert concluded, "We have completed ten acquisitions since the beginning of 2014 and a significant amount of structural work inside our business to be in a position to deliver these results. We plan to continue our focus on developing, engineering and building products that create value for our customers, as well as to continue improving our service delivery through customer support, so that each day we are the supplier of choice for the industries we serve. We are excited by what the future holds as we continue to innovate and expand with new products, new customers, new markets and new geographies."

Conference Call & Webcast
Drew will provide an online, real-time webcast of its first quarter 2016 earnings conference call on the Company's website, www.drewindustries.com, on Monday, May 9, 2016, 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 (855) 859-2056 and referencing access code 1648926. A replay of the webcast will also be available on Drew's website.

About Drew Industries
From 45 manufacturing and distribution facilities located throughout the United States and in Canada and Italy, 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 and chassis components; axles and suspension solutions; slide-out mechanisms and solutions; thermoformed bath, kitchen and other products; windows; manual, electric and hydraulic stabilizer and leveling systems; 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, 2015, 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)










Three Months Ended





March 31,


Last Twelve



2016


2015


Months

(In thousands, except per share amounts)














Net sales


$     422,798


$     361,457


$   1,464,407

Cost of sales


314,357


285,054


1,126,367

   Gross profit


108,441


76,403


338,040

Selling, general and administrative expenses


52,713


44,565


194,180

Severance


-


-


3,716

   Operating profit


55,728


31,838


140,144

Interest expense, net


476


189


2,172

   Income before income taxes


55,252


31,649


137,972

Provision for income taxes


19,293


11,576


47,741

   Net income


$       35,959


$       20,073


$       90,231








Net income per common share:







   Basic


$          1.46


$          0.83


$          3.70

   Diluted


$          1.45


$          0.82


$          3.65








Weighted average common shares outstanding:







   Basic


24,567


24,215


24,386

   Diluted


24,794


24,541


24,716








Depreciation and amortization


$       10,943


$         9,802


$       42,765

Capital expenditures


$         6,271


$         8,593


$       26,667

 

 

DREW INDUSTRIES INCORPORATED

SEGMENT RESULTS

(unaudited)










Three Months Ended





March 31,


Last Twelve



2016


2015


Months

(In thousands)














Net sales: (1)







RV Segment:







   RV OEMs:







   Travel trailers and fifth-wheels


$     283,369


$     259,695


$     962,461

   Motorhomes


28,523


22,309


92,727

   RV aftermarket


24,968


17,209


95,206

   Adjacent industries


54,819


35,358


191,642

   Total RV Segment net sales


391,679


334,571


1,342,036








MH Segment:







   Manufactured housing OEMs


21,229


17,823


85,438

   Manufactured housing aftermarket


4,649


3,829


16,379

   Adjacent industries


5,241


5,234


20,554

   Total MH Segment net sales


31,119


26,886


122,371








   Total net sales


$     422,798


$     361,457


$   1,464,407








Operating Profit:







RV Segment


$       51,281


$       29,133


$     129,633

MH Segment


4,447


2,705


14,227

   Total segment operating profit


55,728


31,838


143,860

Severance


-


-


(3,716)

   Total operating profit


$       55,728


$       31,838


$     140,144








(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)










March 31,


December 31,



2016


2015


2015

(In thousands)














ASSETS







Current assets







Cash and cash equivalents


$       27,917


$       27,927


$        12,305

Accounts receivable, net


104,695


89,798


41,509

Inventories, net


165,184


138,276


170,834

Prepaid expenses and other current assets


23,408


19,897


21,178

Total current assets


321,204


275,898


245,826

Fixed assets, net


150,378


149,087


150,600

Goodwill


86,112


66,521


83,619

Other intangible assets, net


109,347


93,898


100,935

Deferred taxes


29,391


30,453


29,391

Other assets


12,610


13,272


12,485

Total assets


$     709,042


$     629,129


$       622,856








LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities







Accounts payable, trade


$       48,392


$       63,212


$        29,700

Dividend payable


7,344


48,227


-

Accrued expenses and other current liabilities


99,654


69,499


69,162

Total current liabilities


155,390


180,938


98,862

Long-term indebtedness


49,920


49,955


49,910

Other long-term liabilities


36,334


28,230


35,509

Total liabilities


241,644


259,123


184,281

Total stockholders' equity


467,398


370,006


438,575

Total liabilities and stockholders' equity


$     709,042


$     629,129


$       622,856

 

 

DREW INDUSTRIES INCORPORATED

SUMMARY OF CASH FLOWS

(unaudited)








Three Months Ended



March 31,



2016


2015

(In thousands)










Cash flows from operating activities:





Net income


$       35,959


$       20,073

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





Depreciation and amortization


10,943


9,802

Stock-based compensation expense


3,140


3,063

Other non-cash items


(166)


153

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





Accounts receivable, net


(63,286)


(51,811)

Inventories, net


8,497


(3,505)

Prepaid expenses and other assets


(2,197)


(344)

Accounts payable, trade


18,692


13,678

Accrued expenses and other liabilities


31,929


16,024

Net cash flows provided by operating activities


43,511


7,133






Cash flows from investing activities:





Capital expenditures


(6,271)


(8,593)

Acquisitions of businesses


(18,100)


(2,723)

Proceeds from sales of fixed assets


234


68

Other investing activities


(151)


(177)

Net cash flows used for investing activities


(24,288)


(11,425)






Cash flows from financing activities:





Exercise of stock-based awards, net of shares tendered for payment of taxes


(3,196)


(1,847)

Proceeds from line of credit borrowings


81,458


175,350

Repayments under line of credit borrowings


(81,458)


(191,000)

Proceeds from shelf-loan borrowing


-


50,000

Payment of contingent consideration related to acquisitions


(415)


(127)

Other financing activities


-


(161)

Net cash flows (used for) provided by financing activities


(3,611)


32,215






Net increase in cash


15,612


27,923






Cash and cash equivalents at beginning of period


12,305


4

Cash and cash equivalents at end of period


$       27,917


$       27,927

 

 

DREW INDUSTRIES INCORPORATED

SUPPLEMENTARY INFORMATION

(unaudited)











Three Months Ended






March 31,


Last Twelve




2016


2015


Months


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








Industry Wholesale Production:








Travel trailer and fifth-wheel RVs


90.7


81.8


323.3


Motorhome RVs


14.0


11.9


49.4


Manufactured homes


19.1


15.4


74.3


Industry Retail Sales:








Travel trailer and fifth-wheel RVs


58.8

(2)

55.1


320.3

(2)

Impact on dealer inventories


31.9

(2)

26.7


3.0

(2)

Motorhome RVs


9.1

(2)

8.6


42.5

(2)



















Twelve Months Ended






March 31,






2016


2015




Drew Content Per Industry Unit Produced:








Travel trailer and fifth-wheel RV


$         2,978

(3)

$         2,914

(3)



Motorhome RV


$         1,858

(3)

$         1,736

(3)



Manufactured home


$         1,150


$         1,192






















March 31,


December 31,




2016


2015


2015


Balance Sheet Data:








Current ratio


2.1


1.5


2.5


Total indebtedness to stockholders' equity


0.1


0.1


0.1


Days sales in accounts receivable


20.7


21.2


14.2


Inventory turns, based on last twelve months


6.8


8.2


6.9




















2016




Estimated Full Year Data:








Capital expenditures


$ 20 - $ 26 million




Depreciation and amortization


$ 42 - $ 47 million




Stock-based compensation expense


$ 15 - $ 17 million




Annual tax rate


35% - 36%













(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) March 2016 retail sales data for RVs has not been published yet, therefore 2016 retail data for RVs includes an estimate for March 2016 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.

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/drew-industries-reports-2016-first-quarter-results-300264787.html

SOURCE Drew Industries Incorporated

David Smith, CFO, Phone: (574) 535-1125, E Mail: drew@drewindustries.com

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