WHITE PLAINS, N.Y., Nov. 2 /PRNewswire-FirstCall/ -- Drew
Industries Incorporated (NYSE:DW), a leading supplier of components
for recreational vehicles (RV) and manufactured homes, today
reported net income of $7.2 million, or $0.33 per diluted share,
for the third quarter ended September 30, 2009. Net income for the
third quarter of 2008 was $2.6 million, or $0.12 per diluted share.
The marked increase in 2009 third quarter net income was achieved
despite a 2 percent decline in net sales, to $122 million. Market
share gains enabled the Company to increase net sales in its RV
Segment by 10 percent in the third quarter, better than the 5
percent increase in industry-wide wholesale shipments of travel
trailers and fifth-wheel RVs, as compared to the third quarter of
2008. The Company's Manufactured Housing Segment also gained market
share, although net sales declined by 29 percent, due to an
estimated 39 percent decrease in industry-wide production of
manufactured homes. "Continued market share gains, effective cost
control programs, and our focus on profitable expansion
opportunities, were key elements that enabled us to achieve this
very gratifying profit improvement," said Fred Zinn, Drew's
President and CEO. "Compared to the second quarter of 2009, our net
income increased $4.6 million on a $21 million increase in net
sales. While our profits have not yet recovered to the record pace
of earnings we achieved in 2007, we have made critical strides in
controlling costs and increasing our content per RV and
manufactured home." "We are proud of the accomplishments of our
management teams in both segments of our business," said Jason
Lippert, President and CEO of Drew's subsidiaries, Lippert
Components and Kinro. "They have taken advantage of numerous
opportunities to improve profitability during very difficult times
in both industries. The strength of our management team is what
truly allows us to continue to out-perform our end markets." "RV
industry production levels during the last several months have
continued to exceed expectations, reportedly due to both a
restocking of inventory by dealers, and improvement in retail
demand," added Lippert. "While recent retail industry data is not
available, we believe that dealers would likely not be restocking
inventory so late in the season unless retail demand had improved.
Further, many of our RV customers are expecting higher fourth
quarter production levels than they did in the fourth quarter of
2008." "We're also very pleased with recent developments in our
Manufactured Housing Segment," continued Lippert. "Over the summer,
a supplier of manufactured housing windows and doors exited the
market. Since then we have gained new window business of more than
$7 million annually, and growing. In addition, with our recent
purchase of door production equipment and inventory, we expect to
be a significant supplier in the $25 million to $30 million market
for manufactured housing doors. Half of this new potential is in
aftermarket replacement doors for manufactured homes, and we will
be aggressively pursuing new aftermarket business for both doors
and windows." "Our raw material costs continue to be volatile,"
said Joe Giordano, Drew's Chief Financial Officer and Treasurer.
"Last years' third quarter net income was reduced by $0.06 to $0.08
per diluted share due to high material costs which impacts the
comparison to the 2009 third quarter. Then, earlier this year, raw
material costs declined, but have risen 10 to 30 percent in the
last few months, depending upon the type of raw material. We
anticipate that these recent cost increases will likely have a
modest impact on our profit margins going forward." The Company
continues to benefit from reductions in fixed expenses achieved
through facility consolidations, staff reductions, and synergies
between its two subsidiaries. Cost reduction measures benefited
third quarter 2009 results by over $2 million compared to the same
period in 2008, and are expected to benefit full year 2009 results
by more than $9 million. The cost reduction measures taken in 2009
will benefit 2010 by an additional $2.5 million. The Company
further strengthened its balance sheet during the third quarter,
increasing cash and short-term investments by $20 million, to $47
million. The cash is in FDIC insured accounts, while the $2 million
of short-term investments are US Treasuries. The Company now has no
debt after repaying the last $1 million of its debt during the
third quarter of 2009. "We expect our cash flow to continue strong
over the next several quarters," said Giordano. "Management of our
working capital continues to be a priority. This strong balance
sheet and solid cash flow will allow us to continue to pursue
acquisitions and other expansion opportunities, which should help
us achieve sustained growth over the long term." For the first nine
months of 2009, the Company reported a net loss of $27.0 million,
or $1.24 per diluted share, due to the first quarter 2009 goodwill
impairment charge of $29.4 million, net of taxes. Excluding the
first quarter 2009 goodwill impairment charge, and $3.0 million,
net of taxes, of extra expenses in the first quarter of 2009
related to plant consolidations, staff reductions, increased bad
debts, and obsolete inventory and tooling, due to the unprecedented
conditions in the RV and manufactured housing industries, net
income for the current nine-month period was $5.4 million, or $.25
per diluted share Because of the seasonality of the RV and
manufactured housing industries, the Company's results in the
second and third quarter are traditionally stronger, while the
first and fourth quarters are typically the weakest. "Historically,
the RV industry has been a leading indicator of broader economic
recoveries," said Zinn. "Therefore, the recent improvements in this
market are encouraging. A prolonged recovery in the RV market
depends on the strength of retail demand, so we are pleased that
the popularity of RVing remains high. As evidence, many campgrounds
and RV parks have reported that occupancies this year have kept
pace with 2008. The Recreation Vehicle Industry Association has
projected a 29 percent increase in wholesale shipments of travel
trailers and fifth-wheel RVs in 2010, and we continue to be
"bullish" on the long-term future of the RV industry." Recreational
Vehicle Products Segment Drew supplies the following components for
RVs: -- Towable RV steel chassis -- Towable RV axles and suspension
solutions -- Slide-out mechanisms and solutions -- Thermoformed
products -- Toy hauler ramp doors -- Manual, electric and hydraulic
stabilizer and lifting systems -- Aluminum windows -- Chassis
components -- Furniture and mattresses -- Entry and baggage doors
-- Entry steps -- Other towable accessories Drew's RV Segment also
manufactures specialty trailers for hauling boats, personal
watercraft, snowmobiles and equipment. For the nine months ended
September 30, 2009, over 90 percent of the Company's RV Segment net
sales were components for travel trailer and fifth-wheel RVs, with
the balance primarily comprised of components for motorhomes, and
specialty trailers. The RV Segment represented 78 percent of the
Company's consolidated net sales in the third quarter of 2009.
Drew's RV Segment reported operating profit of $11.1 million, on
net sales of $94 million in the 2009 third quarter, compared to
operating profit of $4.6 million on net sales of $86 million in the
comparable period in 2008. The "organic" increase in RV Segment net
sales was $9 million, or 10 percent, better than the 5 percent
increase in industry-wide wholesale shipments of travel trailers
and fifth wheel RVs during the quarter. "RV Segment operating
profit increased $6.5 million in the 2009 third quarter compared to
the same period in 2008, which was more than we would typically
expect on the increase in segment net sales," said Giordano. "The
increased profitability was partly due to the fixed cost reductions
in this segment, as well as other decreases in group insurance and
warranty costs, partially offset by higher overtime costs and
equipment write-downs. In addition, higher raw material costs in
the 2008 third quarter impacted quarter-to-quarter comparisons."
For the first nine months of 2009, the RV Segment reported net
sales of $226 million, a decrease of 30 percent from the same
period in 2008. RV Segment operating profit was $12.8 million for
the first nine months of 2009, including $2.9 million of extra
expenses in the first quarter of 2009 related to plant
consolidations, staff reductions, increased bad debts, and obsolete
inventory and tooling. Excluding these extra expenses, the
Company's RV Segment had an operating profit of $15.7 million in
the first nine months of 2009, a decrease of 51 percent from the
$31.8 million during the same period of 2008. "Acquisitions, new
product introductions and market share growth have enabled us to
increase our product content for travel trailers and fifth-wheel
RVs by 12 percent to $2,088 per unit for the last 12 months,
compared to $1,870 per unit in the prior 12 month period," said
Jason Lippert. "We plan to continue to pursue profitable growth
opportunities." "Notably, we have recently seen some improvement in
RV industry-wide wholesale shipments trends, with travel trailer
and fifth-wheel RVs up 14 percent in August and 21 percent in
September, compared to the same periods in the prior year. These
were the first year-over-year increases in more than a year and a
half." Manufactured Housing Products Segment Drew supplies vinyl
and aluminum windows and screens chassis, chassis parts, and bath
and shower units to the manufactured housing industry, and recently
introduced entry doors. Drew reported third quarter 2009 net sales
of $27 million for its Manufactured Housing Segment, or 22 percent
of consolidated net sales. This represented a 29 percent decline
from the $39 million in net sales reported in the comparable period
in 2008. Industry-wide production of manufactured homes declined an
estimated 39 percent for the quarter. Because of the industry-wide
production declines, the operating profit of Drew's Manufactured
Housing Segment declined 28 percent, to $2.8 million, from $3.9
million in the comparable period last year. "This decrease in
segment operating profit was about 10 percent of the "organic"
decline in net sales, better than what we would typically expect,
primarily because of fixed cost reductions and lower group
insurance costs," said Giordano. For the first nine months of 2009,
the Manufactured Housing Segment reported net sales of $68 million,
down 40 percent from the same period in 2008. Despite difficult
industry conditions, the Company's Manufactured Housing Segment
reported operating profit of $2.6 million for the first nine months
of 2009, including $0.6 million of extra expenses in the first
quarter of 2009 related to plant consolidations, staff reductions
and obsolete inventory. Excluding these extra expenses, the
Company's MH Segment had an operating profit of $3.2 million in the
first nine months of 2009, a decrease of 71 percent from the $11.0
million during the same period of 2008. Despite the more than 85
percent decline in industry-wide production of manufactured homes
since 1998, the Company's Manufactured Housing Segment continues to
be profitable. Balance Sheet and Other Items Accounts receivable,
other than the balances specifically reserved, remain current, with
only 20 days sales outstanding at the end of the quarter. "During
the third quarter, we did not incur any significant bad debt
expenses," added Giordano. "Our credit team continues to do an
outstanding job of minimizing our losses, and we will remain
cautious as we head into the seasonally slower winter months."
Capital expenditures were only $0.8 million this quarter, $1.9
million for the year-to-date, and are anticipated to aggregate less
than $3 million for the full year. Depreciation and amortization
was $5.0 million in the third quarter of 2009, $14.3 million for
the year-to-date, and are expected to aggregate about $18 million
in 2009. Preliminary estimates for 2010 are that capital
expenditures will be $5 million to $7 million, and that
depreciation and amortization will be approximately $16 million.
Non-cash stock-based compensation was $0.9 million in the 2009
third quarter, $3.0 million for the year-to date, and is expected
to be nearly $4 million for the full year. Recent Developments Drew
reported that net sales in October 2009 were up approximately 7 to
9 percent year-over-year, even though October 2009 had one less
shipping day than October 2008. "While some of this improvement is
due to easier 'comps,' the health of the RV industry has clearly
improved over the last few months," said Zinn. "Further
improvements in the wholesale and retail credit markets, along with
sustained increases in retail demand are still needed to enable a
prolonged recovery in the RV industry." "While there has yet to be
any sign of recovery in the manufactured housing industry, there is
an expectation that demand for affordable housing, including
manufactured housing, may increase during the next few years, as
home-buyers reduce their housing budgets compared to the excesses
of the past decade." "So far this year we have acquired several new
products, including the QuickBite(TM) coupler, a slide-out storage
box for pick-up trucks, and most recently entry doors for
manufactured homes," added Lippert. "These types of product line
expansions are consistent with our long-standing growth strategy,
and are keys to our success." "The depth of our management team
along with our financial capability provides the foundation for
future growth in our current markets, while at the same time
enabling us to cautiously explore opportunities to utilize our
skills and expertise in related or similar markets," concluded
Zinn. Conference Call Drew will provide an online, real-time
webcast of its third quarter 2009 earnings conference call on the
Company's website, http://www.drewindustries.com/ on Tuesday,
November 3, 2009 at 11:00 a.m. Eastern time. Individual investors
can also listen to the call at http://www.companyboardroom.com/.
Institutional investors can access the call via the
password-protected event management site, StreetEvents
(http://www.streetevents.com/). A replay of the conference call
will be available by telephone by dialing (888) 286-8010 and
referencing access code 60063402. 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 and manufactured homes, including
windows, doors, chassis, chassis parts, bath and shower units,
axles, and upholstered furniture. In addition, Drew manufactures
slide-out mechanisms for RVs, and trailers primarily for hauling
boats. Currently, from 27 factories located throughout the United
States, Drew serves most major national manufacturers of RVs and
manufactured homes in an efficient and cost-effective manner.
Additional information about Drew and its products can be found at
http://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,
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 and Section 27A of the Securities
Act of 1933. Forward-looking statements, including, without
limitation, those relating to our future business prospects,
revenues, expenses and income (loss), 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. 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 and related
components, vinyl, aluminum, glass and ABS resin), availability of
credit for financing the retail and wholesale purchase of
manufactured homes and recreational vehicles, availability and
costs of labor, inventory levels of retailers and manufacturers,
levels of repossessed manufactured homes and RVs, the disposition
into the market by the Federal Emergency Management Agency
("FEMA"), by sale or otherwise, of RVs or manufactured homes
purchased by FEMA, changes in zoning regulations for manufactured
homes, sales declines in the RV or manufactured housing industries,
the financial condition of our customers, the financial condition
of retail dealers of RVs and manufactured homes, retention of
significant customers, interest rates, oil and gasoline prices, and
the outcome of litigation. In addition, national and regional
economic conditions and consumer confidence may affect the retail
sale of RVs and manufactured homes. DREW INDUSTRIES INCORPORATED
OPERATING RESULTS (Unaudited) Nine Months Three Months Ended Ended
September 30, September 30, Last Twelve 2009 2008 2009 2008 Months
(In thousands except per share amounts) Net sales $293,248 $433,945
$121,666 $124,274 $369,809 Cost of sales 238,895 335,580 93,692
99,292 306,315 Gross profit 54,353 98,365 27,974 24,982 63,494
Selling, general and administrative expenses 50,331 64,026 16,721
20,481 66,434 Goodwill impairment 45,040 - - - 50,527 Executive
retirement - - - - 2,667 Other (income) (260) (675) (60) (29) (260)
Operating (loss) profit (40,758) 35,014 11,313 4,530 (55,874)
Interest expense, net 614 602 179 323 889 (Loss) income before
income taxes (41,372) 34,412 11,134 4,207 (56,763) (Benefit)
provision for income taxes (14,415) 13,524 3,945 1,614 (20,596) Net
(loss) income $(26,957) $20,888 $7,189 $2,593 $(36,167) Net (loss)
income per common share: Basic $(1.24) $0.95 $0.33 $0.12 $(1.67)
Diluted $(1.24) $0.95 $0.33 $0.12 $(1.67) Weighted average common
shares outstanding: Basic 21,724 21,879 21,847 21,702 21,692
Diluted 21,724 22,023 21,994 21,815 21,692 Depreciation and
amortization $14,337 $12,534 $5,025 $4,485 $18,881 Capital
expenditures $1,915 $3,274 $822 $924 $2,840 DREW INDUSTRIES
INCORPORATED SEGMENT RESULTS (Unaudited) Nine Months Ended Three
Months Ended September 30, September 30, (In thousands) 2009 2008
2009 2008 Net sales RV Segment $225,621 $320,941 $94,460 $85,694 MH
Segment 67,627 113,004 27,206 38,580 Total net sales $293,248
$433,945 $121,666 $124,274 Operating profit RV Segment $12,814
$31,848 $11,130 $4,598 MH Segment 2,559 10,989 2,831 3,913 Total
segment operating profit 15,373 42,837 13,961 8,511 Amortization of
intangibles (4,185) (3,670) (1,410) (1,547) Corporate (4,819)
(5,714) (1,701) (1,747) Goodwill impairment (45,040) - - - Other
items (2,087) 1,561 463 (687) Total operating (loss) profit
$(40,758) $35,014 $11,313 $4,530 DREW INDUSTRIES INCORPORATED
BALANCE SHEET INFORMATION (Unaudited) September 30, December 31,
(In thousands, except ratios) 2009 2008 2008 Current assets Cash
and cash equivalents $44,932 $9,185 $8,692 Short-term investments
1,999 - - Accounts receivable, trade, less allowance 27,728 23,874
7,913 Inventories 57,184 107,272 93,934 Prepaid expenses and other
current assets 15,647 11,924 16,556 Total current assets 147,490
152,255 127,095 Fixed assets, net 83,263 93,957 88,731 Goodwill -
49,864 44,113 Other intangible assets 40,518 43,099 42,787 Other
assets 17,994 6,386 8,632 Total assets $289,265 $345,561 $311,358
Current liabilities Notes payable, including current maturities of
long-term indebtedness $- $11,797 $5,833 Accounts payable, accrued
expenses and other current liabilities 41,088 55,858 36,884 Total
current liabilities 41,088 67,655 42,717 Long-term indebtedness -
5,315 2,850 Other long-term obligations 8,659 5,660 6,913 Total
liabilities 49,747 78,630 52,480 Total stockholders' equity 239,518
266,931 258,878 Total liabilities and stockholders' equity $289,265
$345,561 $311,358 Current ratio 3.6 2.3 3.0 Total indebtedness to
stockholders' equity - 0.1 - DREW INDUSTRIES INCORPORATED SUMMARY
OF CASH FLOWS (Unaudited) (In thousands) Nine Months Ended
September 30, 2009 2008 Cash flows from operating activities: Net
(loss) income $(26,957) $20,888 Adjustments to reconcile net (loss)
income to cash flows provided by (used for) operating activities:
Depreciation and amortization 14,337 12,534 Deferred taxes (15,660)
- Loss (gain) on disposal of fixed assets and other non-cash items
1,549 (2,410) Stock-based compensation expense 3,043 2,809 Goodwill
impairment 45,040 - Changes in assets and liabilities, net of
business acquisitions: Accounts receivable, net (19,815) (6,384)
Inventories 38,108 (26,357) Prepaid expenses and other assets 1,830
115 Accounts payable, accrued expenses and other liabilities 3,600
(4,703) Net cash flows provided by (used for) operating activities
45,075 (3,508) Cash flows from investing activities: Capital
expenditures (1,915) (3,274) Acquisition of businesses (1,709)
(28,442) Proceeds from sales of fixed assets 959 9,800 Purchase of
short-term investments (1,999) - Other investments (25) (3,195) Net
cash flows used for investing activities (4,689) (25,111) Cash
flows from financing activities: Proceeds from line of credit and
other borrowings 5,775 14,600 Repayments under line of credit and
other borrowings (14,458) (24,750) Purchase of treasury stock -
(8,333) Exercise of stock options 4,554 74 Other financing
activities (17) - Net cash flows used for financing activities
(4,146) (18,409) Net increase (decrease) in cash 36,240 (47,028)
Cash and cash equivalents at beginning of period 8,692 56,213 Cash
and cash equivalents at end of period $44,932 $9,185 DATASOURCE:
Drew Industries Incorporated CONTACT: Fred Zinn, President and CEO
of Drew Industries Incorporated, +1-914-428-9098, Fax:
+1-914-428-4581, Web Site: http://www.drewindustries.com/
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