Drew Reports Record Third Quarter and Nine Months Results
21 October 1999
Drew Reports Record Third Quarter and Nine Months Results
WHITE PLAINS, N.Y.--Oct. 21, 1999--Drew Industries Incorporated (AMEX: DW) today reported that net income for the quarter ended September 30, 1999 was $4.3 million, a $50,000 increase from last year's third quarter despite a 9 percent decline in sales.Earnings per share (diluted) was $.38 per share for the third quarter of this year and last year. For the last twelve months, net income reached $16.9 million or $1.47 per share, on sales of $335 million.
Operating profit of the manufactured housing products segment for the third quarter decreased 12 percent to $6.9 million, on sales of $60 million, a 17 percent decrease from last year's third quarter sales.
Operating profit of the recreational vehicle ("RV") products segment increased 54 percent to $2.3 million for the third quarter, on a 24 percent increase in sales to $20.0 million, due largely to the rapid expansion of the RV chassis product line. Margins at the Company's new recreational vehicle chassis facilities exceeded margins at older facilities.
Net income for the nine months ended September 1999 increased 14 percent to $13.4 million or $1.17 per share, from $11.7 million or $1.03 per share last year. Net sales for the nine months increased 2 percent to $255 million.
On September 23, 1999, Drew announced that it did not expect to meet analyst expectations for the third and fourth quarters, and was not then able to estimate with confidence net income for the third or fourth quarter. "We are extremely pleased that our third quarter results equaled last year's third quarter, despite lower sales. These results were attained through the reduction of controllable expenses once the downward trend in the manufactured housing industry became apparent, improved operating efficiencies, and lower than anticipated start-up costs for new facilities," said Leigh J. Abrams, President and CEO of Drew.
Drew's customers, the producers of manufactured homes, have recently closed factories and cut back manufacturing schedules, due to the combination of excessive inventory of manufactured homes at both manufacturers and retailers, and declining retail sales due to tightening of mortgage credit. This, in turn, has affected Drew's sales of manufactured housing products, which represented 75 percent of consolidated third quarter sales.
Industry analysts have estimated that the excess inventory situation should be resolved within six months to one year. "We believe that when the excess inventory of homes is resolved, the industry will resume its long-term growth trend. We will continue to invest our resources in order to increase market share for our manufactured housing products," said Mr. Abrams.
Drew's RV business has remained extremely strong, as industry-wide shipments of RV's increased more than 8 percent in the first eight months of 1999. Of significance, Drew's RV sales have increased at a greater rate than the industry as a result of increased market share.
Drew, through its wholly-owned subsidiaries, Kinro, Lippert and Shoals, supplies a wide variety of components for manufactured homes and recreational vehicles. Manufactured products include windows, doors, chassis, chassis parts, roofs and new and refurbished axles. The Company also distributes new and refurbished tires. The Company operates 37 plants in 17 states.
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 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 are described in the Company's most recent Form 10-Q.
DREW INDUSTRIES INCORPORATED
OPERATING RESULTS
Nine Months Ended Quarter Ended
September 30, September 30, Last
(In thousands, except Twelve
per share amounts) 1999 1998 1999 1998 Months
---- ---- ---- ---- ------
Net sales $254,799 $250,429 $79,703 $87,923 $335,010
Cost of sales 196,438 199,475 60,964 69,975 259,704
--------- --------- -------- -------- --------
Gross profit 58,361 50,954 18,739 17,948 75,306
Selling, general
and administrative
expenses 33,450 28,598 10,788 9,979 43,809
--------- --------- -------- -------- --------
Operating
profit 24,911 22,356 7,951 7,969 31,497
Interest expense 2,644 2,995 784 933 3,539
--------- --------- -------- -------- --------
Income before
income taxes 22,267 19,361 7,167 7,036 27,958
Provision for
income taxes 8,898 7,650 2,837 2,756 11,083
--------- --------- -------- -------- --------
Net income $ 13,369 $ 11,711 $ 4,330 $ 4,280 $ 16,875
========= ========= ======== ======== ========
Net income per
common share:
Basic $ 1.17 $ 1.05 $ .38 $ .38 $ 1.49
========= ========= ======== ======== ========
Diluted $ 1.17 $ 1.03 $ .38 $ .38 $ 1.47
========= ========= ======== ======== ========
Weighted
average common
shares
outstanding:
Basic 11,402 11,140 11,376 11,142 11,362
========= ========= ======== ======== ========
Diluted 11,438 11,366 11,389 11,351 11,452
========= ========= ======== ======== ========
Depreciation and
amortization $ 6,029 $ 4,819 $ 2,075 $ 1,708 $ 8,046
========= ========= ======== ======== ========
BALANCE SHEET INFORMATION
September 30,
(In thousands, except per share
amounts and ratios) 1999 1998
---- ---- ---- ----
Current assets
Cash and short term investments......... $ 5,262 $ 1,531
Accounts receivable, net................ 19,391 18,128
Inventories ........................... 31,483 31,371
Prepaid expenses and other
current assets......... 4,755 3,997
---------- ----------
Total current assets................ 60,891 55,027
Fixed assets, net ........................... 46,926 41,007
Goodwill, net ........................... 46,537 43,032
Other assets ........................... 4,964 6,151
---------- ----------
Total assets........................ $ 159,318 $ 145,217
========== ==========
Current liabilities
Current maturities of long-term
obligations....... $ 802 $ 754
Accounts payable and accrued expenses... 30,830 29,613
---------- ----------
Total current liabilities........... 31,632 30,367
Long-term indebtedness....................... 45,344 50,169
Other long-term obligations.................. 1,665 1,370
---------- ----------
Total liabilities................... 78,641 81,906
Total stockholders' equity.......... 80,677 63,311
---------- ----------
Total liabilities and
stockholders' equity.... $ 159,318 $ 145,217
========== ==========
Current ratio ........................... 1.9 1.8
Total debt to equity......................... 0.6 0.8
Book value per share......................... $ 7.11 $ 5.58