Drew Announces First Quarter Results

    WHITE PLAINS, N.Y.--April 25, 2001--Drew Industries Incorporated (AMEX: DW) today reported net sales of $58.9 million in the first quarter of 2001, a decrease of 21 percent from sales of $74.7 million in 2000. Net income for the quarter decreased 69 percent to $.9 million, while earnings per share decreased 64 percent to $.09. The first and fourth quarters are typically the slowest time of year for the industries that Drew serves.
    Sales by Drew's manufactured housing products segment decreased 33 percent to $33.7 million in 2001. This compares to industry wide sales decreases averaging 41 percent for January and February 2001. Industry statistics for March 2001 are not yet available, however Drew's sales were somewhat stronger in March than in January or February. Drew outperformed the industry because of market share gains, primarily from sales of its window products. The decline in sales, coupled with competitive pricing pressures and the effect of fixed costs, caused the operating profit of this segment to decline 51 percent, to $2.2 million.
    While there has been some reduction in industry-wide inventories of manufactured homes, and mortgage interest rates have reportedly declined, we do not anticipate a significant increase in industry-wide production of manufactured homes until (i) inventory levels are further reduced, (ii) repossessions return to more normal levels, (iii) credit availability improves, and (iv) manufactured housing mortgage interest rates decline further.
    Our tire and axle operations, part of our manufactured housing products segment, continued to report poor results. Accordingly, we closed two tire and axle factories in January 2001. Although results for March 2001 showed some improvement, this business is being closely monitored. At December 31, Drew wrote off $6.9 million ($4.4 million after taxes) of goodwill applicable to this operation.
    Drew's recreational vehicle products segment achieved a 5 percent sales increase in the first quarter of 2001, despite a 24 percent industry-wide decline in shipments of RV's during this period. Increased market share resulted partly from the opening of five new factories since early 2000. While start-up costs and lower operating efficiencies at new factories, along with competitive pricing pressures, caused the first quarter operating profit of this segment to decline 20 percent to $1.7 million, production efficiencies are continuing to improve.
    Industry-wide sales of RV's have been historically closely tied to consumer confidence levels, which declined in recent months. Some analysts believe the recent decline in sales by RV producers has also been partly the result of efforts by retailers to reduce inventory and thus lower their interest costs. This view is supported by industry retail shipment statistics which are down somewhat less than production. Again, recent interest rate cuts by the Federal Reserve Board should help alleviate this problem.
    Because of the continued industry-wide declines in sales of manufactured homes and RV's, the Company's operating results for the second quarter of 2001, while expected to be profitable, are not anticipated to reach year-ago levels. The Company eliminated more than 500 jobs since last March, and will continue its efforts to reduce costs wherever practicable. In addition, we believe that operating efficiencies at our new facilities will continue to improve throughout the year. Finally, we have carefully managed our inventory levels which are $6.5 million lower than last year, despite more operating factories. This inventory reduction has helped to lower debt and reduce interest costs.
DREW INDUSTRIES INCORPORATED OPERATING RESULTS Quarter Ended March 31, Last Twelve (In thousands, except 2001 2000 Months per share amounts) ---- ---- ------ Net sales $ 58,894 $ 74,660 $ 271,999 Cost of sales 47,029 58,572 219,057 --------- --------- --------- Gross profit 11,865 16,088 52,942 Selling, general and administrative expenses 9,090 10,587 41,236 Writedown of goodwill 6,897 --------- --------- --------- Operating profit 2,775 5,501 4,809 Interest expense 1,193 869 4,283 --------- --------- --------- Income before income taxes 1,582 4,632 526 Provision for income taxes 715 1,872 872 --------- --------- --------- Net income (loss) $ 867 $ 2,760 $ (346)(1) ========= ========= ========= Net income (loss) per common share: Basic $ .09 $ .25 $ (.03)(1) ========= ========= ========= Diluted $ .09 $ .25 $ (.03)(1) ========= ========= ========= Weighted average common shares outstanding: Basic 9,656 11,189 9,928 ========= ========= ========= Diluted 9,657 11,192 9,928 ========= ========= ========= Depreciation and amortization $ 2,177 $ 2,105 $ 9,026 ========= ========= ========= (1) Includes the writedown, at December 31, 2000, of goodwill of $6,897,000 ($4,421,000 after tax, or $.41 per diluted share). BALANCE SHEET INFORMATION March 31, ---------------------- (In thousands, except per 2001 2000 share amounts and ratios) ---- ---- Current assets Cash and cash equivalents $ 3,832 $ 3,507 Accounts receivable, net 17,249 19,730 Inventories 28,249 34,767 Prepaid expenses and other current assets 4,059 4,179 --------- --------- Total current assets 53,389 62,183 Fixed assets, net 65,735 55,796 Goodwill, net 36,860 45,637 Other assets 3,928 4,525 --------- --------- Total assets $ 159,912 $ 168,141 ========= ========= Current liabilities Current maturities of long-term obligations $ 8,657 $ 9,279 Accounts payable and accrued expenses 21,849 28,362 --------- --------- Total current liabilities 30,506 37,641 Long-term indebtedness 56,130 43,219 Other long-term obligations 245 2,110 --------- --------- Total liabilities 86,881 82,970 Total stockholders' equity 73,031(1) 85,171 --------- --------- Total liabilities and stockholders' equity $ 159,912 $ 168,141 ========= ========= Current ratio 1.8 1.7 Total debt to equity 0.9 0.6 Book value per share $ 7.56(1) $ 7.67 (1) Reflects the purchase of 1,640,000 shares of Treasury Stock at an aggregate cost of $13,472,000.