Company reports diluted EPS of $0.42 on net sales of $151 million for second quarter
'The impact of the current economic environment is more of a challenge
than we anticipated just three months ago. The real estate industry and the
mortgage markets continue to deteriorate, credit terms are tight, fuel prices
remain unstable and consumer confidence is at its lowest level since 1992,'
said
'We continue to face highly volatile raw material costs, particularly
steel and aluminum,' said
'Management is making every effort to offset these higher costs through improved product designs, efficiency improvements and sales price increases. However, because of continued volatility in raw material costs, as well as our on-going efforts to work with our customers during this difficult industry environment, we currently are not able to estimate the extent to which these adverse factors will impact our operating results in the second half of 2008.'
Net sales in the second quarter of 2008 fell 18 percent to
Net income for the current six-month period fell 17 percent to
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. However, because of the significant reduction in industry production levels, the Company's second quarter 2008 net sales were below its first quarter 2008 net sales.
Results this quarter included a
'Though we were profitable in the quarter, we are also cautiously monitoring conditions in our core markets, as well as raw material costs and national economic trends,' said Abrams. 'All these conditions are shaping up for a very tough second half of the year. However, we have a very solid balance sheet and remain focused on our long-standing strategy based on market share growth, new product introductions, acquisitions and operational efficiencies.'
Recreational Vehicle Products Segment
Drew supplies windows, doors, chassis, slide-out mechanisms and power units, axles, bed lifts, bath products, upholstered furniture and bedding, electric stabilizer jacks, suspension systems, leveling systems, steps, exterior panels and ramp doors for RVs, as well as specialty trailers for hauling boats, personal watercraft, snowmobiles and equipment.
More than 90 percent of Drew's RV segment sales are components for travel
trailer and fifth wheel RVs, with the balance comprised of specialty trailers
and components for motorhomes. In the second quarter of 2008, Drew's RV
segment represented 74 percent of both consolidated net sales and total
segment operating profit. Drew's RV segment reported net sales of
'With the continuing economic downturn affecting consumer discretionary
purchases, we expect that the soft conditions in the RV market will not
improve in the coming months,' said Abrams. 'While we often compare our
results to industry production levels, we also believe the real health of the
RV industry is determined by retail demand. Retail sales have been weak in
recent months, with
For the second quarter of 2008, industry wholesale shipments of travel trailers and fifth wheel RVs, Drew's primary RV market, declined 18 percent year-over-year. Wholesale shipments of motorhomes, components for which represent about 5 percent of Drew's RV segment net sales, were down 41 percent during this same period. Drew's RV segment sales were also adversely impacted by sharp declines in industry shipments of small and medium size boats on the West Coast, for which the Company supplies trailers.
'Despite these difficult conditions, we see opportunities. We have
continued our expansion program, including new products and acquisitions, such
as our
Through acquisitions, new product introductions and its position as an
increasingly important supplier to leading RV manufacturers, Drew increased
its product content for travel trailers and fifth wheel RVs to
On
'The upholstered furniture and bedding manufactured by Seating Technology
have an outstanding reputation in the RV industry,' said
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 26 percent of both consolidated net sales and total segment operating profit in the second quarter of 2008.
'It appears that concerns about the economy are hurting all facets of the
residential housing market,' said
Drew reported second quarter net sales of
Second quarter manufactured housing segment operating profit declined 12
percent to
'We are encouraged by the legislation, which the President signed today,
to increase FHA lending limits for chattel mortgages for manufactured homes
from less than
Balance Sheet and Other Items
Total debt at
Subsequent to the end of the quarter, the Company used approximately
Accounts receivable remain current, with only 17 days sales outstanding at
the end of the quarter. Capital expenditures, which were limited to
In the first six months of 2008, the Company collected nearly
Recent Developments
Drew reported that its net sales in
'Though we face challenging times resulting from economic and industry conditions, Drew continues to be well-positioned for the eventual economic recovery, particularly because of our increasing market share within our core markets and because of our strong balance sheet,' said Abrams. 'We also continue to have extremely high confidence in our operating management, whose track-record of creating growth despite challenging markets has been exceptional in the past.'
Conference Call
Drew will provide an online, real-time webcast and rebroadcast of its
second quarter 2008 earnings conference call on the Company's website,
www.drewindustries.com on
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 71124902. A replay 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 36 factories
located throughout
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
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 and recreational vehicles, 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, a sales decline in either the RV or the manufactured housing industries, 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.
DREW INDUSTRIES INCORPORATED
OPERATING RESULTS
(Unaudited)
(In thousands, except Six Months Ended Three Months Ended
per share amounts) June 30, June 30, Last Twelve
2008 2007 2008 2007 Months
Net sales $309,671 $357,400 $150,523 $184,456 $620,896
Cost of sales 233,460 272,455 111,940 138,683 471,205
Gross profit 76,211 84,945 38,583 45,773 149,691
Selling, general and
administrative
expenses 46,373 48,063 23,076 24,789 91,483
Other income 646 656 - - 697
Operating profit 30,484 37,538 15,507 20,984 58,905
Interest expense, net 279 1,552 197 640 1,342
Income from
continuing operations
before income taxes 30,205 35,986 15,310 20,344 57,563
Provision for income
taxes 11,910 13,835 6,120 7,782 21,652
Net income $18,295 $22,151 $9,190 $12,562 $35,911
Net income per common
share:
Basic $.83 $1.02 $.42 $.57 $1.63
Diluted $.83 $1.01 $.42 $.57 $1.62
Weighted average common
shares outstanding:
Basic 21,967 21,817 21,920 21,852 21,968
Diluted 22,126 22,025 22,074 22,091 22,177
Depreciation and
amortization $8,049 $8,941 $3,962 $4,476 $16,665
Capital expenditures $2,350 $5,425 $1,149 $2,870 $5,695
DREW INDUSTRIES INCORPORATED
SEGMENT RESULTS
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
(In thousands) 2008 2007 2008 2007
Net sales
RV Segment $235,247 $263,037 $111,292 $133,905
MH Segment 74,424 94,363 39,231 50,551
Total $309,671 $357,400 $150,523 $184,456
Operating Profit
RV Segment $27,250 $36,121 $12,996 $19,941
MH Segment 7,076 8,106 4,566 5,174
Total segment
operating profit 34,326 44,227 17,562 25,115
Amortization of
intangibles (2,123) (1,903) (1,070) (1,022)
Corporate (3,967) (3,917) (2,017) (2,030)
Other items 2,248 (869) 1,032 (1,079)
Operating profit $30,484 $37,538 $15,507 $20,984
DREW INDUSTRIES INCORPORATED
BALANCE SHEET INFORMATION
(Unaudited)
June 30, December 31,
(In thousands, except ratios) 2008 2007 2007
Current assets
Cash and cash equivalents $43,397 $38,561 $56,213
Accounts receivable, trade,
less allowance 23,641 36,521 15,740
Inventories 99,836 75,053 76,279
Prepaid expenses and other
current assets 12,105 9,830 12,702
Total current assets 178,979 159,965 160,934
Fixed assets, net 94,603 115,080 100,616
Goodwill 39,641 35,868 39,547
Other intangible assets 30,584 28,858 32,578
Other assets 7,710 7,218 12,062
Total assets $351,517 $346,989 $345,737
Current liabilities
Notes payable, including
current maturities of
long-term indebtedness $12,940 $10,478 $8,881
Accounts payable, accrued
expenses and other current
liabilities 58,532 64,968 62,192
Total current liabilities 71,472 75,446 71,073
Long-term indebtedness 6,918 37,295 18,381
Other long-term obligations 5,870 3,816 4,747
Total liabilities 84,260 116,557 94,201
Total stockholders' equity 267,257 230,432 251,536
Total liabilities and
stockholders' equity $351,517 $346,989 $345,737
Current ratio 2.5 2.1 2.3
Total indebtedness to
stockholders' equity 0.1 0.2 0.1
DREW INDUSTRIES INCORPORATED
SUMMARY OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
June 30,
2008 2007
Cash flows from operating activities:
Net income $18,295 $22,151
Adjustments to reconcile net income
to cash flows (used for) provided by
operating activities:
Depreciation and amortization 8,049 8,941
Deferred taxes - (310)
(Gain)/loss on disposal of fixed assets (2,703) 1,631
Stock-based compensation expense 1,875 1,214
Changes in assets and liabilities,
net of business acquisitions:
Accounts receivable, net (7,901) (18,069)
Inventories (23,557) 8,849
Prepaid expenses and other assets (9) 741
Accounts payable, accrued expenses
and other liabilities (669) 18,360
Net cash flows (used for)
provided by operating
activities (6,620) 43,508
Cash flows from investing activities:
Capital expenditures (2,350) (5,425)
Acquisition of businesses (94) (6,594)
Proceeds from sales of fixed assets 8,091 6,072
Other investments (39) (16)
Net cash flows provided by
(used for) investing activities 5,608 (5,963)
Cash flows from financing activities:
Proceeds from line of credit and
other borrowings - 23,792
Repayments under line of credit and
other borrowings (7,404) (31,699)
Purchase of treasury stock (4,474) -
Exercise of stock options 74 2,138
Net cash flows used for
financing activities (11,804) (5,769)
Net (decrease) increase
in cash (12,816) 31,776
Cash and cash equivalents at beginning
of period 56,213 6,785
Cash and cash equivalents at end of period $43,397 $38,561
SOURCE Drew Industries Incorporated