WHITE PLAINS, N.Y., July 30 /PRNewswire-FirstCall/ -- Drew
Industries Incorporated (NYSE:DW), a leading supplier of components
for recreational vehicles (RV) and manufactured homes, today
reported net income of $2.6 million, or $0.12 per diluted share,
for the second quarter ended June 30, 2009. Net income for the
second quarter of 2008 was $9.2 million, or $0.42 per diluted
share. The 2009 second quarter decline in net income as compared to
the 2008 second quarter was attributed to a $50 million decrease in
net sales to $101 million, 33 percent below the $151 million
reported in the 2008 second quarter. This decline in net sales
resulted from a 44 percent drop in industry-wide wholesale
shipments of travel trailers and fifth-wheel RVs, and an estimated
43 percent decrease in industry-wide production of manufactured
homes, as compared to the 2008 second quarter. In connection with
facility consolidations, during the 2009 second quarter the Company
recorded facility write-downs of $0.9 million, or $0.03 per diluted
share, as compared to a net gain on facility disposals of $1.4
million, or $0.04 per diluted share, in the 2008 second quarter.
"We are very pleased with the substantial improvement in our
operating results during the second quarter," said Fred Zinn,
Drew's President and CEO. "We continued to gain market share in
many of our product categories, introduced several new products,
and further strengthened our balance sheet. At the same time, our
cost control programs have been expanded and are ahead of
schedule." "Industry-wide shipments of travel trailers and
fifth-wheel RVs for the month of June 2009 reached a seasonally
adjusted annual rate of about 148,000 units, greater than any other
month this year," said Jason Lippert, President and CEO of Drew's
subsidiaries, Lippert Components and Kinro. "Industry production
levels during the last several months have far exceeded our
expectations, and we hope this is related to increased retail
demand. Although we cannot predict whether this production level
will be maintained, the RV industry is currently in a much better
position than anyone expected a few months ago. "Last year at this
time many of our customers began to significantly cut back
production schedules in response to lower demand from dealers.
While there are uncertainties, it appears that many of our
customers will continue to produce five days a week for the next
couple of months. Beyond that it is difficult to anticipate demand,
particularly during the winter months." The Company continued to
strengthen its balance sheet during the quarter, increasing cash
and short-term investments by $13 million, to $27 million, and
reducing total debt by more than $5 million to just $1 million.
"Our strong cash flow was accomplished by reducing inventory by $16
million during the quarter, which more than offset the $5 million
seasonal increase in accounts receivable," said Joe Giordano,
Drew's Chief Financial Officer and Treasurer. "We expect our cash
flow to continue strong over the next several quarters, as we
reduce inventory levels by an additional $8 million to $10 million,
on top of the $35 million reduction that operating management
accomplished in the first half of 2009. Because our priorities for
cash are liquidity and security, we have invested our cash in FDIC
insured accounts and US Treasuries." The Company also continues to
reduce expenses through facility consolidations, staff reductions,
and synergies between its subsidiaries, Lippert Components and
Kinro. Cost reduction measures benefited second quarter 2009
results by over $2 million compared to the same period in 2008, and
are expected to benefit full year 2009 results by nearly $10
million. "Operating management has done an extraordinary job
dealing with the unprecedented weakness in our markets," said Zinn.
"In addition, because of our strong balance sheet and cash flow, we
have the resources to aggressively pursue opportunities for further
market share growth and new products, helping make it possible for
our business to thrive and grow rapidly once industry conditions
improve." "We continued to gain market share and introduce new
products in the second quarter," said Jason Lippert. "New products
included the debut of the Tow-N-Stow(TM) convertible storage unit,
and the introduction of the innovative QuickBite(TM) coupler. We
are currently considering several other new products, and we will
take every prudent step to ensure that we increase our opportunity
for growth, while maintaining outstanding customer service and
product quality." Net loss for the current six-month period was
$34.1 million, or $1.57 per diluted share. Excluding the first
quarter 2009 goodwill impairment charge of $29.4 million, net of
taxes, 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, the net loss for the current six-month period
was $1.7 million, or $.08 per diluted share. Due to the seasonality
of the RV and manufactured housing industries, the Company's
results in the first and fourth quarters are typically the weakest,
while second and third quarter results are traditionally stronger.
"The economy, while somewhat better than during the 2008-2009
winter, remains weak," said Zinn. "In addition, many RV and
manufactured housing dealers and consumers continue to have
difficulty obtaining credit, which could make it tough for some
dealers during the traditional seasonal slowdowns starting later
this year. Therefore, our industries are likely to face additional
challenges in the latter part of 2009 and the beginning of 2010.
Further, our raw material costs continue to be volatile, declining
modestly during the 2009 second quarter, but recently rising by 5
to 15 percent, depending upon the type of raw material." On the
other hand, the Recreation Vehicle Industry Association is
projecting a 25 percent increase in wholesale shipments of travel
trailers and fifth-wheel RVs in 2010. Additionally, with our
expanded product line, increased market share, lower fixed costs
and improved operating efficiencies, we expect to continue to
out-perform the markets we serve." 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. More than 90 percent of the Company's RV
Segment net sales are components for travel trailer and fifth-wheel
RVs, with the balance comprised of components for motorhomes, and
specialty trailers. The RV Segment represented 78 percent of
consolidated net sales in the second quarter of 2009. Drew's RV
Segment reported operating profit of $6.3 million, on net sales of
$79 million in the 2009 second quarter, compared to operating
profit of $13.0 million on net sales of $111 million in the
comparable period in 2008. Excluding sales price changes and
acquisitions, the "organic" decline in RV Segment net sales was $43
million, or 39 percent, due to the sharp decline in industry
shipments. "The $6.7 million decline in RV Segment operating profit
in the 2009 second quarter, compared to the same period in 2008,
was 16 percent of the 'organic' decline in net sales," said
Giordano. "This decrease in profit was less than what we would
typically expect due to fixed cost reductions, as well as lower
group insurance and warranty costs, partially offset by higher
labor costs as a percent of sales." During the 2009 second quarter,
industry-wide wholesale shipments of travel trailers and
fifth-wheel RVs declined 44 percent compared to the same period in
2008. In addition, many of the towable RVs produced by the industry
over the last several months have included fewer of the features
and options ordinarily provided by the Company. For the first six
months of 2009, the RV Segment reported net sales of $131 million,
a decrease of 44 percent from the same period in 2008. RV Segment
operating profit was $1.7 million for the first six 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
$4.6 million in the first six months of 2009. "Through
acquisitions, new product introductions and our position as an
increasingly important supplier to leading RV manufacturers, we
increased our product content for travel trailers and fifth-wheel
RVs to $2,071 per unit for the last 12 months, compared to $1,891
per unit in the prior 12 month period," said Jason Lippert. "Our
success over the years has been a direct result of our ability to
gain market share, introduce new products and improve operational
efficiency, as well as our financial strength. We are striving for
continued success in each of these areas." 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. Drew reported second quarter 2009
net sales of $22 million for its MH Segment, or 22 percent of
consolidated net sales. This represented a 45 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 43 percent for the quarter, as compared to the 2008
second quarter. Because of the industry-wide production declines,
Drew's MH Segment operating profit declined 62 percent, to $1.8
million, from $4.6 million in the comparable period last year.
"This decrease in segment operating profit was about 15 percent of
the "organic" decline in net sales, less than what we would
typically expect, primarily because of fixed cost reductions,
partially offset by higher labor costs as a percent of sales," said
Giordano. For the first six months of 2009, the MH Segment reported
sales of $40 million, down 46 percent from the same period in 2008.
The MH Segment reported an operating loss of $0.3 million for the
first six 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 $0.3 million in
the first six months of 2009. "The continued weakness in the
manufactured housing market and this difficult economic environment
continues to create opportunities for us," said Jason Lippert. "For
example, a competitor of ours announced it was ceasing production
of windows and most doors for manufactured homes. As a result, we
have received requests for quotes from many of their former
manufactured housing window and door customers, and believe this
presents the potential for Kinro to add $10 million or more in
annual sales, even in this weak market." Balance Sheet and Other
Items Accounts receivable, other than the balances specifically
reserved, remain current, with only 18 days sales outstanding at
the end of the quarter. "During the second 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, while making every effort to work with our customers."
Capital expenditures were only $0.6 million this quarter, $1.1
million for the year-to-date, and are anticipated to aggregate less
than $3 million for the full year. Depreciation and amortization
was $4.2 million in the 2009 second quarter, $9.3 million for the
year-to-date, and are expected to aggregate $17 million to $18
million in 2009. Non-cash stock-based compensation was $0.8 million
in the 2009 second quarter, $2.1 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 July 2009 are expected
to be down approximately 11 to 14 percent year-over-year, an
improvement over the 33 percent net sales decline in the 2009
second quarter. July 2009 has one more shipping day than July 2008.
"While some of this improvement is due to easier 'comps,' as
declines worsened last July in RV industry-wide wholesale
shipments, the health of the RV industry has clearly improved over
the last few months," said Zinn. "We are still waiting for
much-needed improvements in the wholesale and retail credit
markets, which would provide a real boost for both the RV and
manufactured housing industries. "Our top priorities remain the
same - to maintain a solid balance sheet and to be as efficient and
cost-conscious as possible. However, as exceptional opportunities
for market share and product line expansion arise due to current
economic conditions, our experienced operating management team,
strong balance sheet and solid cash flow will allow us to respond
quickly to maximize our growth." Conference Call Drew will provide
an online, real-time webcast of its second quarter 2009 earnings
conference call on the Company's website,
http://www.drewindustries.com/ on Friday, July 31, 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 49814837. A replay of the
webcast will also be available on Drew's website. About Drew Drew,
through its wholly owned subsidiaries, Lippert Components and
Kinro, 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, the Company 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 may contain 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, 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 as identified in this press
release and in our Form 10-K for the year ended December 31, 2008,
and in our subsequent Form 10-Qs filed with 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 the matters identified 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 FEMA, by sale or otherwise, of
RVs or manufactured homes purchased by FEMA in connection with
natural disasters, changes in zoning regulations for manufactured
homes, continuing sales declines in the RV and 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, the outcome of litigation, and adverse weather
conditions impacting retail sales. In addition, national and
regional economic conditions and consumer confidence may continue
to affect the retail sale of recreational vehicles and manufactured
homes. DREW INDUSTRIES INCORPORATED OPERATING RESULTS (Unaudited)
(In thousands, except per share amounts) Six Months Ended Three
Months Ended June 30, June 30, -------- -------- Last Twelve 2009
2008 2009 2008 Months ---- ---- ---- ---- ------ Net sales $171,582
$309,671 $100,563 $150,523 $372,417 Cost of sales 145,203 236,288
80,010 113,719 311,915 ------- ------- ------ ------- ------- Gross
profit 26,379 73,383 20,553 36,804 60,502 Selling, general and
administrative expenses 33,610 43,545 16,360 21,297 70,194 Goodwill
impairment 45,040 - - - 50,527 Executive retirement - - - - 2,667
Other (income) (200) (646) - - (229) ---- ---- -- -- ---- Operating
(loss) profit (52,071) 30,484 4,193 15,507 (62,657) Interest
expense, net 435 279 235 197 1,033 --- --- --- --- ----- (Loss)
income before income taxes (52,506) 30,205 3,958 15,310 (63,690)
(Benefit) provision for income taxes (18,360) 11,910 1,402 6,120
(22,927) ------- ------ ----- ----- ------- Net (loss) income
$(34,146) $18,295 $2,556 $9,190 $(40,763) ======== ======= ======
====== ========= Net (loss) income per common share: Basic $(1.58)
$0.83 $0.12 $0.42 $(1.88) ====== ===== ===== ===== ===== Diluted
$(1.57) $0.83 $0.12 $0.42 $(1.88) ======= ===== ===== ===== ======
Weighted average common shares outstanding: Basic 21,662 21,967
21,682 21,920 21,656 ====== ====== ====== ====== ====== Diluted
21,690 22,126 21,738 22,074 21,699 ====== ====== ====== ======
====== Depreciation and amortization $9,312 $8,049 $4,242 $3,962
$18,341 ====== ====== ====== ====== ======= Capital expenditures
$1,093 $2,350 $563 $1,149 $2,942 ====== ====== ==== ====== ======
DREW INDUSTRIES INCORPORATED SEGMENT RESULTS (Unaudited) (In
thousands) Six Months Ended Three Months Ended June 30, June 30,
-------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- Net sales
RV Segment $131,161 $235,247 $78,881 $111,292 MH Segment 40,421
74,424 21,682 39,231 ------ ------ ------ ------ Total net sales
$171,582 $309,671 $100,563 $150,523 ======== ======== ========
======== Operating (loss) profit RV Segment $1,684 $27,250 $6,346
$12,996 MH Segment (272) 7,076 1,751 4,566 ---- ----- ----- -----
Total segment operating profit 1,412 34,326 8,097 17,562
Amortization of intangibles (2,775) (2,123) (1,386) (1,070)
Corporate (3,118) (3,967) (1,588) (2,017) Goodwill impairment
(45,040) - - - Other items (2,550) 2,248 (930) 1,032 ------ -----
---- ----- Total operating (loss) profit $(52,071) $30,484 $4,193
$15,507 ======== ======= ====== ======= DREW INDUSTRIES
INCORPORATED BALANCE SHEET INFORMATION (Unaudited) (In thousands,
except ratios) June 30, December 31, -------- ------------ 2009
2008 2008 ---- ---- ---- Current assets Cash and cash equivalents
$24,919 $43,397 $8,692 Short-term investments 1,997 - - Accounts
receivable, trade, less allowance 22,165 23,641 7,913 Inventories
58,833 99,836 93,934 Prepaid expenses and other current assets
16,667 12,105 16,556 ------ ------ ------ Total current assets
124,581 178,979 127,095 Fixed assets, net 86,087 94,603 88,731
Goodwill - 39,641 44,113 Other intangible assets 41,417 30,584
42,787 Other assets 18,443 7,710 8,632 ------ ----- ----- Total
assets $270,528 $351,517 $311,358 ======== ======== ========
Current liabilities Notes payable, including current maturities of
long-term indebtedness $388 $12,940 $5,833 Accounts payable,
accrued expenses and other current liabilities 33,111 58,532 36,884
------ ------ ------ Total current liabilities 33,499 71,472 42,717
Long-term indebtedness 800 6,918 2,850 Other long-term obligations
9,260 5,870 6,913 ----- ----- ----- Total liabilities 43,559 84,260
52,480 Total stockholders' equity 226,969 267,257 258,878 -------
------- ------- Total liabilities and stockholders' equity $270,528
$351,517 $311,358 ======== ======== ======== Current ratio 3.7 2.5
3.0 Total indebtedness to stockholders' equity 0.0 0.1 0.0 DREW
INDUSTRIES INCORPORATED SUMMARY OF CASH FLOWS (Unaudited) (In
thousands) Six Months Ended June 30, -------- 2009 2008 ---- ----
Cash flows from operating activities: Net (loss) income $(34,146)
$18,295 Adjustments to reconcile net (loss) income to cash flows
provided by (used for) operating activities: Depreciation and
amortization 9,312 8,049 Deferred taxes (15,660) - Loss (gain) on
disposal of fixed assets 1,420 (2,703) Stock-based compensation
expense 2,143 1,875 Goodwill impairment 45,040 - Changes in assets
and liabilities, net of business acquisitions: Accounts receivable,
net (14,252) (7,901) Inventories 35,290 (23,557) Prepaid expenses
and other assets 672 (9) Accounts payable, accrued expenses and
other liabilities (3,481) (669) ------ ---- Net cash flows provided
by (used for) operating activities 26,338 (6,620) ------ ------
Cash flows from investing activities: Capital expenditures (1,093)
(2,350) Acquisition of businesses (339) (94) Proceeds from sales of
fixed assets 751 8,091 Purchase of short-term investments (1,997) -
Other investments (15) (39) --- --- Net cash flows (used for)
provided by investing activities (2,693) 5,608 ------ ----- Cash
flows from financing activities: Proceeds from line of credit and
other borrowings 5,775 - Repayments under line of credit and other
borrowings (13,270) (7,404) Purchase of treasury stock - (4,474)
Exercise of stock options 94 74 Other financing activities (17) -
--- -- Net cash flows used for financing activities (7,418)
(11,804) ------ ------- Net increase (decrease) in cash 16,227
(12,816) Cash and cash equivalents at beginning of period 8,692
56,213 ----- ------ Cash and cash equivalents at end of period
$24,919 $43,397 ======= ======= 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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