WHITE PLAINS, N.Y. July 31 /PRNewswire-FirstCall/ -- Drew Industries Incorporated (NYSE: DW) today reported increased net income for the six months and quarter ended June 30, 2007 .
Drew, a leading supplier of components for recreational vehicles (RV) and
manufactured homes, reported a 23 percent increase in net income to
Net sales in the second quarter of 2007 declined 9 percent to
Drew added that due to the seasonality of the RV and manufactured housing industries, the Company's results in the first and fourth quarters are usually the weakest, while second and third quarter results are traditionally stronger.
Net income for the current six-month period increased 8 percent to
"We believe our improved results this quarter, despite the current weakness in both the RV and manufactured housing industries, is the direct result of our long-standing strategy of pursuing new product introductions, market share growth, and acquisitions. In addition, our ability to reduce costs and make our operations even more efficient was a significant factor in our improved results," said Leigh J. Abrams, Drew's President and CEO.
"Our aggressive cost-cutting program included closing and consolidating 10
facilities over the last 12 months, eliminating more than 90 salaried
positions, and closing our Indiana-based specialty trailer operation in
September 2006 , which reported an operating loss of
In addition to the 10 facilities closed over the last 12 months, Drew plans to close approximately five more in the coming months, integrating these operations into other existing facilities.
In January 2007 , Drew completed the acquisition of Trailair and its
affiliate Equa-Flex, which sell several patented products, including
innovative suspension systems used primarily for towable RVs, with sales of
In May 2007 , the Company completed the acquisition of Coach Step, a
manufacturer of patented electric steps for motorhomes, with annual sales of
On July 6, 2007 , LCI acquired the business of Extreme Engineering and its
Pivit Hitch affiliate, manufacturers of specialty trailers and related
components for high-end boats, for
"All three acquisitions in 2007 will be immediately accretive to earnings and have added new products and markets to Drew's portfolio, furthering our ability to outperform our core markets," said Abrams.
"These are the latest in a series of acquisitions we've completed over the years that have been key factors in our growth, and we continue to be focused on finding and successfully integrating acquisitions into the Drew family of companies."
Recreational Vehicle Products Segment
Drew's RV segment supplies windows, doors, chassis, slide-out mechanisms and power units, axles, bed lifts, bath products, electric stabilizer jacks, suspension systems, steps, exterior panels and ramp doors for RVs, as well as specialty trailers for hauling equipment, boats, personal watercraft and snowmobiles.
Approximately 90 percent of Drew's RV segment sales are components for towable RVs, with the balance representing components for motorhomes and specialty trailers. In the second quarter of 2007, Drew's RV segment represented 73 percent of consolidated net sales, and 82 percent of total segment operating profit.
Drew's RV segment reported sales of
"Retail sales of towable RVs began to decline in the summer of 2006, caused by a combination of factors, including rapidly increasing fuel prices, higher interest rates and continued conflict in the Middle East which threatened fuel supplies," said Abrams. "In response to reduced retail demand and the resulting higher dealer inventory levels, dealers reduced their orders for new RVs, and manufacturers lowered production levels."
For the first half of 2007, the RVIA reported that industry-wide wholesale shipments of travel trailers and fifth-wheel RVs, the Company's primary RV market, had declined 16 percent, while Statistical Surveys reported that retail shipments of these RVs through May 2007 (the last month for which industry information is available) increased approximately 2 percent, including a 6 percent increase in May 2007 .
"Recent dealer surveys indicate inventories of towable RVs are now more in line with dealer targets, and with fewer towable RVs on their lots, dealers should be in a better position to increase their orders in response to any improvement in retail demand," said Abrams. "However, we are concerned about the potential impact that the recent volatility in the real estate and mortgage markets may have on consumer spending."
Despite the year-over-year decline in sales, Drew's RV segment operating
profit for the quarter increased 43 percent to
Through new product introductions, market share growth, and acquisitions, Drew has consistently outperformed the RV industry. Drew's new product lines introduced over the last several years include slide-out mechanisms, leveling devices and steps for motorhomes; axles for towable RVs and specialty trailers; and entry steps, bed lifts, bath and kitchen products, exterior parts, ramp doors and suspension systems, primarily for towable RVs.
Drew estimates the market potential of these product lines exceeds
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's manufactured housing segment accounted for approximately 27 percent of consolidated net sales and 18 percent of total segment operating profit in the second quarter of 2007.
Drew reported second quarter sales of
"The second quarter profitability of the MH segment was reduced by more
According to industry analysts, wholesale shipments of manufactured homes through May 2007 (the last month for which industry information is available) declined by nearly 30 percent, to about 39,000 homes, from about 55,000 homes in the prior year. While comparisons of the first quarters of 2006 and 2007 are difficult because of the hurricane-related shipments in early 2006, wholesale shipments in April and May 2007 were nearly 20 percent below the same period last year, with little or no hurricane-related sales in either year period.
"However, several economic and industry indicators, including increased backlog levels reported by several producers of manufactured homes, along with an increase in loan applications and the tightening of credit on mortgages for site-built homes, point to the potential for modest increases in wholesale shipments of manufactured homes. To date, we have seen little impact from these events, and as a result, we will continue to be cautious until we see how consumer demand develops over the next few months," Abrams added.
Balance Sheet and Other Items
Drew reported that the book value of the 15 facilities it plans to sell
were written down to estimated realizable value, which aggregates
The Company also holds a
A concerted effort by Drew's operating management reduced inventories by
Because of strong cash flow and asset management, Drew reduced debt, net
Drew reported that its sales in July 2007 were about 5 percent below last July, however, July 2007 had one more business day than July 2006 . This sales decline reflects the continued weakness in both the RV and manufactured housing industries, which is offsetting the positive effects of the Company's acquisitions and market share gains.
"As we've said before, the real driver in both our markets is underlying consumer demand, and we've seen mixed signals over the last few months. During this down market, we can and will continue to strive to maximize our results through new product introductions, market share growth, acquisitions, cost-cutting, and efficiency improvements," concluded Abrams.
Drew will provide an online, real-time webcast and rebroadcast of its second quarter 2007 earnings conference call on the Company's website, www.drewindustries.com on Wednesday, August 1, 2007 at 11:00 a.m. Eastern time . Individual investors can also listen to the call at www.companyboardroom.com.
Institutional investors can access the call via the password-protected event management site, StreetEvents (www.streetevents.com). A replay of the conference call will be available by telephone by dialing (888) 286-8010 and referencing access code 51679408. A replay will also be available on Drew's website.
Drew, through its wholly owned subsidiaries, Kinro and Lippert Components, supplies a broad array of components for RVs and manufactured homes. Drew's products include vinyl and aluminum windows and screens, doors, chassis, chassis parts, RV slide-out mechanisms and power units, leveling devices, bath and shower units, axles, bed lifts, steps, electric stabilizer jacks, ramp doors, exterior panels, and suspension systems, as well as trailers for hauling equipment, boats, personal watercraft and snowmobiles, and chassis and windows for modular homes and offices. Currently, from 41 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 www.drewindustries.com.
The 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 the press release that are not historical facts are "forward-looking statements" for the purpose of the safe harbor provided by Section 21E of the Exchange Act and Section 27A of the Securities Act. Forward-looking statements, including, without limitation, those relating to the Company's future business prospects, revenues and income are necessarily estimates reflecting the best judgment of the Company's 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. Forward-looking statements, therefore, should be considered in light of various important factors.
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 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 retail and wholesale financing for manufactured homes, availability and costs of labor, inventory levels of retailers and manufacturers, levels of repossessed manufactured homes, 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, the decline in the manufactured housing industry, the financial condition of our customers, 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 affect the retail sale of recreational vehicles and manufactured homes.
SOURCE Drew Industries Incorporated