Drew Announces Record Fourth Quarter and Year-End Results
10 February 2000
Drew Announces Record Fourth Quarter and Year-End Results
WHITE PLAINS, N.Y.--Feb. 10, 2000--Drew Industries Incorporated (AMEX:DW) today reported net sales of $324 million for the year ended December 31, 1999, a decrease of 2 percent from sales of $331 million in 1998. However, as a result of efficiency improvements, significantly increased market share in the Company's recreational vehicle products ("RV") segment, and temporary material price reductions, net income for 1999 increased 13 percent to a record $17.2 million or $1.51 per share, from last year's net income of $15.2 million or $1.36 per share.For the fourth quarter ended December 31, 1999, net sales of $69.7 million were 13 percent lower than last year's fourth quarter sales of $80.2 million. However, primarily for the reasons stated above, net income increased 9 percent to a record $3.8 million or $.34 per share from last year's net income of $3.5 million or $.31 per share.
Operating profit of the Company's manufactured housing products segment for the fourth quarter decreased 5 percent to $6.2 million, on sales of $50.8 million, a 23 percent decrease from last year's fourth quarter sales of this segment.
Operating profit of the RV products segment increased 41 percent to $2.1 million for the fourth quarter, on a 31 percent increase in sales to $18.9 million, due largely to the rapid expansion of the Company's profitable RV chassis product line since its introduction in late 1997. In addition, margins at the Company's new recreational vehicle chassis facilities exceeded margins at older facilities.
"Drew is gratified by its fourth quarter and year-end results and its ability to overcome the sharp decline in the manufactured housing industry. Our operating management team, which has many years experience in both the manufactured housing and RV industries, has guided the Company through similar down turns in the past, and heeded the early signals of this down turn by cutting costs early in the year. The positive results of those actions are clearly apparent in our year-end results," said Leigh J. Abrams, President and CEO of Drew. Although the Company did benefit from periods of favorable material prices during 1999, key raw material prices, primarily aluminum, steel and vinyl, have recently increased and are expected to result in lower margins in 2000.
Mr. Abrams further said that, "Analysts project that industry-wide declines in wholesale shipments by the manufactured housing industry will continue for at least six to nine more months. This softness in our primary industry, coupled with rising raw material costs, will likely interrupt Drew's trend of increasing earnings and cash flow." The decline in manufactured housing shipments is the result of an excess inventory of new homes caused by high levels of production during the last several years to stock the excessive number of new retail dealerships. These high inventory levels have caused intense competition on the retail and wholesale level in the last several months. Demand for manufactured homes has also been adversely effected by the tightening of credit by mortgage lenders. Manufacturers and retail dealers have recently taken steps to reduce excess inventories by cutting production of new homes, which should allow the industry to increase production levels later this year.
According to Mr. Abrams, "The Company continues to take all appropriate steps to keep its costs low and to weather the current business conditions in the manufactured housing industry. We expect that our increased market share in the growing RV industry, as well as cost controls, will reduce the impact on our operations of lower demand for manufactured homes and higher material costs in 2000." In order to meet the increased demand for our RV products, the Company anticipates opening four new factories during 2000, increasing the total number of factories for both operating segments to 43. Also, several existing factories will be upgraded to accommodate anticipated increased demand.
Drew remains optimistic about the long-term growth of the manufactured housing and RV industries. The demographic trends are highly favorable for both industries over the next decade, as the baby boomers enter their 50's, peak buying years for RV's and manufactured homes. The Company is well positioned to meet this expected long-term growth in both industries.
Drew, through its wholly-owned Kinro and Lippert subsidiaries, 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 39 plants in 18 states.
Drew has announced a conference call on Thursday, February 10, 2000 at 4:00 p.m. Eastern time to discuss the results of the Company's fourth quarter earnings. The conference call will be limited for discussion to certain analysts, and open for "listen only" to all other interested parties on our web site, www.drewindustries.com. Replay of the conference call will also be available on our web site, beginning February 10, 2000 at 7:30 p.m.
This press release contains certain statements, including the Company's plans regarding its operating strategy, its products, costs, 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(1)
Quarter Ended Year Ended
December 31, December 31,
(In thousands, except per
share amounts) 1999 1998 1999 1998
---- ---- ---- ----
Net sales $ 69,656 $ 80,211 $324,455 $330,640
Cost of sales 52,691 63,266 249,129 262,741
-------- -------- -------- --------
Gross profit 16,965 16,945 75,326 67,899
Selling, general and
administrative expenses 9,942 10,359 43,392 38,957
-------- -------- -------- --------
Operating profit 7,023 6,586 31,934 28,942
Interest expense 724 895 3,368 3,890
-------- -------- -------- --------
Income before income taxes 6,299 5,691 28,566 25,052
Provision for income taxes 2,477 2,185 11,375 9,835
-------- -------- -------- --------
Net income $ 3,822 $ 3,506 $ 17,191 $ 15,217
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Net income per common share
(basic) $ .34 $ .31 $ 1.51 $ 1.36
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Weighted average basic common
shares outstanding 11,335 11,257 11,385 11,179
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Net income per common share
(diluted) $ .34 $ .31 $ 1.51 $ 1.34
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Weighted average diluted common
shares outstanding 11,345 11,418 11,420 11,386
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(1) Includes the operations of Coil Clip, Inc. from December 16,
1998, the date its assets and business were acquired by Drew.
DREW INDUSTRIES INCORPORATED
BALANCE SHEET INFORMATION
December 31,
(In thousands, except per share
amounts and ratios) 1999 1998
---- ----
Current assets
Cash and short term investments $ 5,110 $ 2,690
Accounts receivable, net 11,303 13,559
Inventories 33,382 35,400
Prepaid expenses and other current assets 4,390 6,032
--------- ---------
Total current assets 54,185 57,681
Fixed assets, net 51,028 43,139
Goodwill, net 46,087 47,887
Other assets 4,744 5,718
--------- ---------
Total assets $ 156,044 $ 154,425
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Current liabilities
Current maturities of long-term
obligations $ 1,717 $ 779
Accounts payable and accrued expenses 23,498 25,272
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Total current liabilities 25,215 26,051
Long-term indebtedness 44,630 57,947
Other long-term obligations 2,110 1,665
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Total liabilities 71,955 85,663
Total stockholders' equity 84,089 68,762
--------- ---------
Total liabilities and stockholders'
equity $ 156,044 $ 154,425
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Current ratio 2.1 2.2
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Total debt to equity .55 .85
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Book value per share $ 7.44 $ 6.06
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