Record Sales Drive Drew Industries
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowElkhart-based Drew Industries Inc. (NYSE: DW) is reporting first quarter net income of $20.1 million, compared to $16.2 million a year earlier. Chief Executive Officer Jason Lippert says the results were boosted by the highest sales for any quarter in the supplier's history. May 5, 2015
News Release
ELKHART, Ind. (May 5, 2015) – Drew Industries Incorporated (NYSE: DW), a leading supplier of components for recreational vehicles (RVs) and manufactured homes, today reported net income of $20.1 million, or $0.82 per diluted share, for the first quarter ended March 31, 2015, compared to net income of $16.2 million, or $0.67 per diluted share, for the first quarter ended March 31, 2014.
Consolidated net sales in the first quarter of 2015 increased to a quarterly record $361 million, 27 percent higher than the 2014 first quarter. This growth in net sales primarily resulted from a 29 percent increase in net sales of Drew's RV Segment, which accounted for 93 percent of consolidated net sales in the 2015 first quarter. RV Segment net 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, as well as increased content per unit through market share gains. The acquisitions completed by the Company in 2014 and the first quarter of 2015 also added $18 million in net sales in the first quarter of 2015, all of which related to Drew's RV Segment. Further, the Company organically increased sales to adjacent industries and the aftermarket.
The Company's content per travel trailer and fifth-wheel RV for the twelve months ended March 31, 2015, increased by $192, or 7 percent, to $2,923, compared to content per travel trailer and fifth-wheel RV for the twelve months ended March 31, 2014 of $2,731. This growth in content per travel trailer and fifth-wheel RV was primarily organic through new product introductions, product enhancements and market share gains. The Company's content per motorhome RV for the twelve months ended March 31, 2015, increased by $423, or 34 percent, to $1,679, compared to content per motorhome RV for the twelve months ended March 31, 2014 of $1,256, reflecting market share gains through both organic growth and acquisitions completed in 2014.
“With the strong underlying demand for our products in the first quarter of 2015, we achieved record net sales, the highest level for any quarter in Drew's history,” said Jason Lippert, Drew's Chief Executive Officer. “The industries we serve continue to grow, which, when coupled with our recent acquisitions, new products and market share gains, have led to the significant increase in our net sales for the first quarter of 2015. In particular, RV industry fundamentals show positive signs for 2015, including an estimated 13 percent increase in industry-wide retail sales of travel trailer and fifth-wheel RVs in the 2015 first quarter. As we stated in our year-end release, our RV OEM customers believe there is continued retail growth coming in 2015 and beyond, despite the RV industry approaching prior wholesale production peaks. Further, industry analysts report that dealer inventory is in line with anticipated retail demand.”
“As a result of their confidence in additional retail growth for the RV industry, many RV OEMs are adding significant capacity to meet the anticipated demand,” continued Jason Lippert. “As a result of the significant investments in capital expenditures, facility start-ups and personnel we made in 2014, we continue to believe we are well positioned to meet the increased demands expected for 2015 and the beginning of 2016.”
In April 2015, Drew's consolidated net sales reached approximately $129 million, 14 percent higher than April 2014, a record for the month of April. Excluding the impact of acquisitions, the Company's consolidated net sales for April 2015 were up 9 percent.
“Our operating profit margins in the first quarter of 2015 were 8.8 percent compared to 9.1 percent in the first quarter of 2014,” said Scott Mereness, Drew's President. “In the latter half of 2014 we made significant investments in capacity, both facilities and personnel, to prepare for the expected significant increase in net sales in 2015 and beyond. As expected, our year-over-year incremental margin in the 2015 first quarter was lower than our target incremental margin, largely as a result of these investments in fixed costs for capacity expansion and higher material costs, partially offset by improved operating efficiencies. We added capacity ahead of projected demand, which enabled us to fulfill customer orders efficiently as demand increased. While certain capacity expansion plans had a negative impact on margins, over the long term these investments should allow us to improve our operating results, as well as continue to improve our customer service.”
“Additionally, increases in raw material costs, in particular aluminum, impacted our 2015 first quarter operating results,” continued Mereness. “Aluminum rose nearly 20 percent during the second half of 2014, and despite a decline in recent months, remains higher than the beginning of 2014. To help mitigate the impact of higher raw material and other costs, we continue to improve product designs, make efficiency improvements and work with our vendors to identify opportunities to reduce input costs.”
“During the first four months of 2015 we completed two acquisitions, which add approximately $42 million of acquired annual sales, and represent significant sales growth and profit potential,” said Joseph Giordano, Drew's Chief Financial Officer and Treasurer. The two operations acquired by Drew were:
EA Technologies — A manufacturer of custom steel and aluminum parts and provider of electro-deposition ('e-coat') and powder coating services for RV, bus, medium-duty truck, automotive, recreational marine, specialty and utility trailer, and military applications. In connection with this acquisition, the Company also acquired a 250,000-square-foot facility, which provides room for capacity expansion; and
Spectal Industries — A Canada-based manufacturer of windows and doors primarily for school buses, as well as commercial buses, emergency vehicles, trucks, agricultural equipment and RVs.
“Based on our commitment to provide outstanding customer service and product quality, we are confident in our ability to gain market share in these new product lines and improve profitability,” added Jason Lippert.
Conference Call & Webcast
Drew will provide an online, real-time webcast of its first quarter 2015 earnings conference call on the Company's website, www.drewindustries.com, on Tuesday, May 5, 2015, 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 (888) 286-8010 and referencing access code 94842106. A replay of the webcast will also be available on Drew's website.
About Drew Industries
From 41 factories located throughout the United States and Canada, 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; modular housing; and factory-built mobile office units. Drew's products include steel chassis; axles and suspension solutions; slide-out mechanisms and solutions; thermoformed bath, kitchen and other products; windows; manual, electric and hydraulic stabilizer and leveling systems; chassis components; furniture and mattresses; entry, luggage, patio and ramp doors; electric and manual entry steps; awnings and slide toppers; other accessories; and electronic components. Additional information about