Market Overview

Drew Industries Reports 2016 Third Quarter Results

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ELKHART, Ind., Nov. 3, 2016 /PRNewswire/ -- Drew Industries Incorporated (NYSE: DW), a supplier of components for the leading original equipment manufacturers ("OEMS") of recreational vehicles ("RVs") and adjacent industries, and the related aftermarkets of those industries, today reported consolidated net sales in the third quarter of 2016 increased to $412 million, 19 percent higher than the 2015 third quarter. Net income was $29.8 million, or $1.19 per diluted share, for the third quarter ended September 30, 2016, compared to net income of $17.3 million, or $0.70 per diluted share, for the third quarter ended September 30, 2015.

The increase in year-over-year net sales reflects industry-wide growth in wholesale shipments of towable RVs by OEMs, which contributed 14 percent of the net sales increase in the third quarter of 2016, enhanced by acquisitions completed by the Company over the twelve months ended September 30, 2016, which added $13 million in net sales in the third quarter of 2016. Through continued focus on aftermarket channels for the Company's products, the Company increased net sales to the aftermarket in the third quarter of 2016 by more than 21 percent to $36 million.

The Company's content per travel trailer and fifth-wheel RV for the twelve months ended September 30, 2016, increased $73 to $3,025, compared to the twelve months ended September 30, 2015, of $2,952. The Company's content per motorhome RV for the twelve months ended September 30, 2016, increased $150 to $1,957, compared to the twelve months ended September 30, 2015, of $1,807. The content increases are a combined result of market share gains, acquisitions, new product introductions and changes in the types of RVs produced industry-wide.

"RV industry volume continues to out-pace 2015, as 2016 third quarter wholesale travel trailers are up nearly 21 percent and fifth-wheels are up over 17 percent," stated Jason Lippert, Drew's Chief Executive Officer. "Travel trailer sales momentum has continued as the industry attracts a new generation of RV enthusiasts. We are also pleased to see fifth-wheel wholesale units up approximately 2,500 units and 3,500 units over the third quarter and the first nine months of 2015, respectively. A 14 percent increase in wholesale shipments of motorhome RVs also contributed to the third quarter growth."

Over the twelve-month period ending September 2016, retail sales of travel trailer and fifth-wheel RVs increased an estimated eight percent to over 337,000 units. Wholesale and retail unit sales during this period were closely aligned. Based on the retail sales strength experienced through the first nine months of 2016 and the current outlook from several RV OEMs and their dealer networks, most industry analysts continue to report RV dealer inventory is in line with anticipated retail demand.

"Our operating profit in the third quarter of 2016 improved to $45.1 million, compared to $27.2 million in the third quarter of 2015," said Scott Mereness, Drew's President. "Strong industry growth, lower costs for certain key commodities, accretive acquisitions completed over the last 12 months and a focus on cost management, lean initiatives and other operational efficiencies, continue to contribute to profit improvement."

As of September 30, 2016, the Company had a net cash position of $45 million, an improvement of $83 million from a net debt position of $38 million at the beginning of the year, even after $34 million of acquisitions, $22 million for capital expenditures and $22 million of dividend payments in the first nine months of 2016. This cash generation was primarily the result of the Company's operational performance, aided by inventory reductions of $10 million.

The fourth quarter of 2016 started with October consolidated net sales of approximately $144 million, 11 percent higher than October 2015, with one less shipping day in 2016.

Jason Lippert concluded, "We have built an organization with the best people and created a culture with core values that focus on meeting the challenge of providing value to our customers every day. We will continue our efforts to develop, engineer and build great products, as well as improving our service to all customer channels, so that each day we are the supplier of choice for the industries we serve. Additionally, we will continue to seek expansion with new and innovative products, new customers, new markets and new geographies."

Conference Call & Webcast

Drew will provide an online, real-time webcast of its third quarter 2016 earnings conference call on the Company's website, www.drewindustries.com, on Thursday, November 3, 2016, 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 (855) 859-2056 and referencing access code 4479261. A replay of the webcast will also be available on Drew's website.

About Drew Industries

From 45 manufacturing and distribution facilities located throughout the United States and in Canada and Italy, Drew Industries, through its wholly-owned subsidiary, Lippert Components®, supplies a broad array of components for the leading original equipment manufacturers of recreational vehicles and adjacent industries including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; manufactured homes; modular housing; and factory-built mobile office units. The Company also supplies components to the related aftermarkets of these industries, primarily by selling to retail dealers, wholesale distributors and service centers. Drew's products include steel chassis and related components; axles and suspension solutions; slide-out mechanisms and solutions; thermoformed bath, kitchen and other products; vinyl, aluminum and frameless windows; manual, electric and hydraulic stabilizer and leveling systems; furniture and mattresses; entry, luggage, patio and ramp doors; electric and manual entry steps; awnings and awning accessories; electronic components; appliances; LED televisions and sound systems; navigation systems; wireless backup cameras; and other accessories. Additional information about Drew and its products can be found at www.drewindustries.com.

Forward-Looking Statements

This press release contains certain "forward-looking statements" with respect to our financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities, acquisitions, plans and objectives of management 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, as amended, and Section 27A of the Securities Act of 1933, as amended, and involve a number of risks and uncertainties.

Forward-looking statements, including, without limitation, those relating to our future business prospects, net sales, expenses and income (loss), cash flow, and financial condition, whenever they occur in this press release are necessarily estimates reflecting the best judgment of the Company's senior management at the time such statements were made. 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, steel based components and aluminum) and other components, seasonality and cyclicality in the industries to which we sell our products, availability of credit for financing the retail and wholesale purchase of products for which we sell our components, inventory levels of retail dealers and manufacturers, availability of transportation for products for which we sell our components, the financial condition of our customers, the financial condition of retail dealers of products for which we sell our components, retention and concentration of significant customers, the costs, pace of and successful integration of acquisitions and other growth initiatives, availability and costs of labor, employee benefits, employee retention, realization and impact of efficiency improvements and cost reductions, the successful entry into new markets, the costs of compliance with environmental laws and increased governmental regulation and oversight, information technology performance and security, the ability to protect intellectual property, interest rates, oil and gasoline prices, the impact of international, national and regional economic conditions and consumer confidence on the retail sale of products for which we sell our components, and other risks and uncertainties discussed more fully under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, and in the Company's subsequent filings with the Securities and Exchange Commission. The Company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

 

 

DREW INDUSTRIES INCORPORATED
OPERATING RESULTS
(unaudited)



Nine Months Ended
 September 30,


Three Months Ended
 September 30,


Last Twelve


2016


2015


2016


2015


Months

(In thousands, except per share amounts)




















Net sales

$

1,275,999



$

1,068,838



$

412,370



$

345,296



$

1,610,227


Cost of sales

945,104



836,250



306,820



271,171



1,205,918


Gross profit

330,895



232,588



105,550



74,125



404,309


Selling, general and administrative expenses

170,641



139,945



60,412



46,954



216,728


Severance









3,716


Operating profit

160,254



92,643



45,138



27,171



183,865


Interest expense, net

1,285



1,399



396



595



1,771


Income before income taxes

158,969



91,244



44,742



26,576



182,094


Provision for income taxes

55,597



33,039



14,898



9,313



62,582


Net income

$

103,372



$

58,205



$

29,844



$

17,263



$

119,512












Net income per common share:










Basic

$

4.20



$

2.40



$

1.21



$

0.71



$

4.86


Diluted

$

4.15



$

2.36



$

1.19



$

0.70



$

4.80












Weighted average common shares outstanding:










Basic

24,587



24,261



24,724



24,289



24,580


Diluted

24,882



24,614



25,060



24,686



24,875












Depreciation and amortization

$

33,720



$

30,663



$

11,530



$

10,808



$

44,681


Capital expenditures

$

21,927



$

21,808



$

8,956



$

7,140



$

29,108


 

 

DREW INDUSTRIES INCORPORATED
SEGMENT RESULTS
(unaudited)



Nine Months Ended
 September 30,


Three Months Ended
 September 30,


Last Twelve


2016


2015


2016


2015


Months

(In thousands)




















Net sales: (1)










OEM Segment:










RV OEMs:










Travel trailers and fifth-wheels

$

836,634



$

722,157



$

263,579



$

216,093



$

1,053,264


Motorhomes

85,761



64,085



29,372



23,539



108,189


Adjacent industries OEMs

253,088



205,690



82,963



75,581



322,158


Total OEM Segment net sales

1,175,483



991,932



375,914



315,213



1,483,611


Aftermarket Segment:










Total Aftermarket Segment net sales

100,516



76,906



36,456



30,083



126,616


Total net sales

$

1,275,999



$

1,068,838



$

412,370



$

345,296



$

1,610,227












Operating profit:










OEM Segment

$

144,076



$

81,671



$

39,023



$

22,468



$

167,629


Aftermarket Segment

16,178



10,972



6,115



4,703



19,952


Total segment operating profit

160,254



92,643



45,138



27,171



187,581


Severance









(3,716)


Total operating profit

$

160,254



$

92,643



$

45,138



$

27,171



$

183,865



(1) Subsequent to March 31, 2016, the Company modified its internal reporting structure, reflecting a change in how its chief operating decision maker assesses the performance of the Company's operating results and makes decisions about resource allocations. The Company's new reportable segments are the OEM Segment and the Aftermarket Segment. Prior periods have been reclassified to conform to this presentation.

 

 

DREW INDUSTRIES INCORPORATED
BALANCE SHEET INFORMATION
(unaudited)



September 30,


December 31,


2016


2015


2015

(In thousands)












ASSETS






Current assets






Cash and cash equivalents

$

95,060



$

7,252



$

12,305


Accounts receivable, net

89,626



84,381



41,509


Inventories, net

161,312



178,847



170,834


Prepaid expenses and other current assets

28,572



17,029



21,178


Total current assets

374,570



287,509



245,826


Fixed assets, net

153,167



150,424



150,600


Goodwill

93,925



84,551



83,619


Other intangible assets, net

109,553



104,109



100,935


Deferred taxes

29,208



28,414



29,391


Other assets

14,095



14,282



12,485


Total assets

$

774,518



$

669,289



$

622,856








LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities






Accounts payable, trade

$

55,681



$

53,095



$

29,700


Accrued expenses and other current liabilities

97,733



75,561



69,162


Total current liabilities

153,414



128,656



98,862


Long-term indebtedness

49,940



91,729



49,910


Other long-term liabilities

39,796



31,273



35,509


Total liabilities

243,150



251,658



184,281


Total stockholders' equity

531,368



417,631



438,575


Total liabilities and stockholders' equity

$

774,518



$

669,289



$

622,856


 

 

DREW INDUSTRIES INCORPORATED
SUMMARY OF CASH FLOWS
(unaudited)



Nine Months Ended
 September 30,


2016


2015

(In thousands)








Cash flows from operating activities:




Net income

$

103,372



$

58,205


Adjustments to reconcile net income to cash flows provided by operating activities:




Depreciation and amortization

33,720



30,663


Stock-based compensation expense

11,421



10,984


Deferred taxes

183




Other non-cash items

1,728



854


Changes in assets and liabilities, net of acquisitions of businesses:




Accounts receivable, net

(46,028)



(40,761)


Inventories, net

13,451



(39,289)


Prepaid expenses and other assets

(7,659)



1,976


Accounts payable, trade

23,827



1,612


Accrued expenses and other liabilities

30,093



20,507


Net cash flows provided by operating activities

164,108



44,751






Cash flows from investing activities:




Capital expenditures

(21,927)



(21,808)


Acquisitions of businesses, net of cash acquired

(34,237)



(41,058)


Proceeds from sales of fixed assets

533



2,141


Other investing activities

(316)



(272)


Net cash flows used for investing activities

(55,947)



(60,997)






Cash flows from financing activities:




Exercise of stock-based awards, net of shares tendered for payment of taxes

409



(275)


Proceeds from line of credit borrowings

81,458



563,325


Repayments under line of credit borrowings

(81,458)



(537,146)


Proceeds from shelf-loan borrowing



50,000


Payment of dividends

(22,078)



(48,227)


Payment of contingent consideration related to acquisitions

(2,719)



(3,963)


Other financing activities

(1,018)



(220)


Net cash flows (used for) provided by financing activities

(25,406)



23,494






Net increase in cash and cash equivalents

82,755



7,248






Cash and cash equivalents at beginning of period

12,305



4


Cash and cash equivalents at end of period

$

95,060



$

7,252


 

 

DREW INDUSTRIES INCORPORATED
SUPPLEMENTARY INFORMATION
(unaudited)



Nine Months Ended


Three Months Ended





September 30,


September 30,


Last Twelve



2016


2015


2016


2015


Months


Industry Data(1) (in thousands of units):











Industry Wholesale Production:











Travel trailer and fifth-wheel RVs

272.4



239.4



82.4



68.7



347.4



Motorhome RVs

41.6



35.9



12.8



11.2



53.0



Industry Retail Sales:











Travel trailer and fifth-wheel RVs

288.0


(2)

267.2



103.5


(2)

99.5



337.9


(2)

Impact on dealer inventories

(15.6)


(2)

(27.8)



(21.1)


(2)

(30.8)



9.5


(2)

Motorhome RVs

36.6


(2)

33.8



12.3


(2)

11.6



44.8


(2)


























Twelve Months Ended







September 30,









2016


2015




Drew Estimated Content Per Industry Unit Produced:









Travel trailer and fifth-wheel RV





$

3,025



$

2,952





Motorhome RV





$

1,957



$

1,807






























September 30,


December 31,







2016


2015


2015


Balance Sheet Data:











Current ratio





2.4



2.2



2.5



Total indebtedness to stockholders' equity




0.1



0.2


0.1


Days sales in accounts receivable





19.4



22.0



14.2



Inventory turns, based on last twelve months




7.3



7.2



6.9




























2016




Estimated Full Year Data:











Capital expenditures



$ 28 - $ 32 million




Depreciation and amortization



$ 42 - $ 47 million




Stock-based compensation expense



$ 15 - $ 17 million




Annual tax rate



35% - 36%


























(1) Industry wholesale production data for travel trailer and fifth-wheel RVs and motorhome RVs provided by the Recreation Vehicle Industry Association. Industry retail sales data provided by Statistical Surveys, Inc.


(2) September 2016 retail sales data for RVs has not been published yet, therefore 2016 retail data for RVs includes an estimate for September 2016 retail units.


 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/drew-industries-reports-2016-third-quarter-results-300356347.html

SOURCE Drew Industries Incorporated

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