Drew Reports Record Third Quarter Results
22 October 1998
Drew Reports Record Third Quarter Results
WHITE PLAINS, NY--October 22, 1998--Drew Industries Incorporated (AMEX: DW) today reported record third quarter results. Net income for the quarter ended September 30, 1998 increased 46 percent to $4.3 million, or $.38 per diluted share, from $2.9 million, or $.31 per diluted share in the third quarter last year.
Revenues for the quarter increased 75 percent to $88 million from last year's third quarter revenues of $50 million. On a pro forma basis, as if Lippert Components (acquired in October 1997) had been acquired at the beginning of 1997, net sales increased 14 percent. Our sales growth again exceeded the growth rates experienced by the industries the Company supplies, largely as a result of higher sales of vinyl windows, as well as sales of the Company's recreational vehicle chassis products to new accounts.
Net income for the nine months increased 31 percent to $11.7 million ($1.03 per share), on a 76 percent increase in revenues to $250 million.
"The higher profits during the third quarter were achieved despite the recent intensification of competitive pressures. Earnings gains resulted partially from increased sales of vinyl manufactured housing windows produced by the Company's Kinro subsidiary. Due to the continuing shift in demand to the higher quality vinyl window, Kinro has significantly expanded its capacity for such products and is now a leading supplier of vinyl windows to the manufactured housing industry," said Leigh J. Abrams, President and CEO.
Mr. Abrams further said, "As we expected, the operations of Lippert Components, acquired in October 1997, were again accretive to Drew's earnings. Lippert continues to expand its capacity for its RV chassis products with two new factories scheduled to be opened in early 1999. Lippert's two recently opened RV chassis facilities are profitable and rapidly becoming more efficient. Lippert also recently received new commitments for manufactured housing chassis business from one of the largest producers of manufactured homes. Shipments of these products are expected to begin in the second quarter of 1999."
These earnings gains have been partially offset by the effects of severe regional competitive pressures for certain of the Company's products. We expect the impact of this competition on operating results to be greater in the fourth quarter than it has been thus far in 1998, and the situation may continue into 1999.
We were gratified that the November 2, 1998 issue of Forbes Magazine, identifying the 200 "Best Small Companies" in the U.S., rated Drew as number 79. We congratulate the efforts of all of our employees and our management team in helping to attain these results.
Drew, through its wholly-owned subsidiaries, Kinro, Lippert and Shoals, supplies a broad array of components for manufactured homes and recreational vehicles. Manufactured products include windows, doors, chassis, chassis parts, galvanized steel roofing and new and refurbished axles. The Company also distributes new and refurbished tires. Approximately 80 percent of the Company's sales are for manufactured homes, 16 percent are for recreational vehicles, and 4 percent for other industries. The Company operates 32 plants in 16 states.
For more information about Drew, check our website at WWW.DREWINDUSTRIES.COM.
This press release contains certain statements, including the Company's plans regarding its operating strategy, its products and performance and its views of industry prospects, which could be construed to be forward looking statements within the meaning of the Securities and Exchange Act of 1934. These statements reflect the Company's current views with respect to future plans, events and financial performance. The Company has identified certain risk factors which could cause actual plans and results to differ substantially from those included in the forward looking statements. These factors include pricing pressures due to competition, raw material costs (particularly aluminum, steel, vinyl and glass), inventory adjustments by retailers and interest rates. In addition, general economic conditions and adverse weather conditions may affect the retail sale of manufactured homes and RV's.
DREW INDUSTRIES INCORPORATED OPERATING RESULTS(1)
(In thousands, except per share amounts)
Nine Months Ended Quarter Ended Last
September 30, September 30, Twelve
1998 1997 1998 1997 Months
Net sales $250,429 $142,011 $87,923 $50,182 $316,783
Cost of sales 199,475 109,678 69,975 39,094 251,881
Gross profit 50,954 32,333 17,948 11,088 64,902
Selling, general
and administrative
expenses 28,598 16,422 9,979 5,773 36,696
Operating profit 22,356 15,911 7,969 5,315 28,206
Interest expense 2,995 1,496 933 635 4,004
Income before
income taxes 19,361 14,415 7,036 4,680 24,202
Provision for
income taxes 7,650 5,449 2,756 1,741 9,463
Net income $11,711 $ 8,966 $ 4,280 $2,939 $14,739
Net income per
common share(2):
Basic $ 1.05 $ .95 $ .38 $ .32 $ 1.34
Diluted $ 1.03 $ .92 $ .38 $ .31 $ 1.32
Weighted average
common shares
outstanding(2):
Basic 11,140 9,468 11,142 9,156 10,979
Diluted 11,366 9,704 11,351 9,420 11,206
(1) Includes the operations of Pritt Axle and Tire from May 5,
1997, and Lippert Components, Inc. from October 7, 1997, the
date these assets and businesses were acquired by Drew.
(2) Adjusted for two-for-one stock split effective March 1997.
BALANCE SHEET INFORMATION
September 30,
(In thousands, except per share amounts and ratios)
1998 1997
Current assets
Cash and short term investments $1,531 $1,242
Accounts receivable, net 18,128 9,947
Inventories 31,371 22,293
Prepaid expenses and other current assets 3,997 3,913
Total current assets 55,027 37,395
Fixed assets, net 41,007 19,840
Goodwill, net 43,032 14,512
Other assets 6,151 1,549
Total assets $145,217 $73,296
Current liabilities
Current maturities of long-term obligations $ 754 $ 5,297
Accounts payable and accrued expenses 29,613 19,454
Total current liabilities 30,367 24,751
Long-term indebtedness 50,169 24,971
Other long-term obligations 1,370 368
Total liabilities 81,906 50,090
Total stockholders' equity 63,311 23,206
Total liabilities and
stockholders' equity $145,217 $73,296
Current ratio 1.8 1.5
Total debt to equity 0.8 1.3
Book value per share $ 5.72 $ 2.53