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National Press Release
 | Drew Industries Reports 2009 First Quarter ResultsPublished 2009-05-04 20:06By Drew Industries Incorporated |
For the 2009 first quarter, Drew reported a net loss of
Excluding the impairment charge, the net loss for the 2009 first quarter was
In the 2009 first quarter, the Company also incurred
First quarter results were further reduced by approximately
Net sales in the first quarter of 2009 declined 55 percent to
"RV and manufactured housing sales are particularly dependant on the availability of credit for dealers and consumers, and credit has remained difficult to obtain throughout the last eight months," said
In recent weeks, the RV industry has experienced some seasonal increase in demand, although the Company cannot predict whether this increased demand will continue, as it is still very difficult for dealers and consumers to obtain financing. Historically, the RV and manufactured housing industries have been seasonal, with the first and fourth quarters normally the weakest, and second and third quarter results traditionally stronger.
During the first quarter of 2009, the Company generated solid cash flow, increasing cash by
"This was accomplished by reducing inventory by
The Company also continued to reduce expenses through facility consolidations, staff reductions, and synergies between its subsidiaries, Lippert Components and Kinro. These and earlier cost reduction measures benefitted first quarter 2009 results by
"Operating management has done an outstanding job in dealing with the unprecedented weakness in our markets," said Zinn. "In order to bring our capacity in line with current demand, we have been forced to make significant staff cuts, and I know this has been very difficult for everyone involved."
"On the bright side, we continue to provide jobs for about 2,000 dedicated employees. And because of our strong balance sheet and cash flow, we have the resources to aggressively pursue opportunities for further market share growth and new products, helping to ensure that our business can thrive and grow rapidly once industry conditions begin to improve."
"We are extremely encouraged by our market share gains in several of our recently-introduced products, in particular, our suspension products, jack stabilizers and RV entry doors," said
Recreational Vehicle Products Segment
Drew supplies the following components for RVs:
-- Towable RV steel chassis -- Aluminum windows
-- Towable RV axles and suspension solutions -- Chassis components
-- Slide-out mechanisms and solutions -- Furniture and mattresses
-- Thermoformed products -- Entry and baggage doors
-- Toy hauler ramp doors -- Entry steps
-- Manual, electric and hydraulic stabilizer -- Other towable accessories
and lifting systems
Drew's RV Segment also manufactures specialty trailers for hauling boats, personal watercraft, snowmobiles and equipment.
More than 90 percent of the Company's RV Segment net sales are components for travel trailer and fifth-wheel RVs, with the balance comprised of components for motorhomes, and specialty trailers. The RV Segment represented 74 percent of consolidated net sales in the 2009 first quarter.
Drew's RV Segment reported net sales of
During the quarter, industry-wide wholesale shipments of travel trailers and fifth-wheel RVs declined 61 percent, although trends improved slightly during the latter part of the quarter, with March wholesale shipments down 55 percent compared to last March. Fifth-wheel RVs, which typically contain more of the Company's products, declined 67% during the first quarter of 2009. In addition, many of the towable RVs produced by the industry over the last several months have included fewer of the features and options ordinarily provided by the Company. Industry-wide wholesale shipments of motorhomes, components for which represent 3 percent of Drew's RV segment sales, were down 78 percent in the first quarter of 2008.
In the first quarter of 2009 Drew's RV Segment reported an operating loss of
"This
"In addition, we would typically reduce our incentive compensation expense by about 20% of the decline in RV Segment operating results, but this quarter we could not reduce incentive compensation by that full 20 percent of the decline in operating results since we could not record a 'negative' incentive compensation expense on the RV Segment operating loss. The Company will record this additional benefit later this year if the RV Segment is profitable for the balance of 2009."
"Through acquisitions, new product introductions and our position as an increasingly important supplier to leading RV manufacturers, we increased our product content for travel trailers and fifth-wheel RVs to
"We are very pleased with these market share gains, as well as the opportunities we see for our new, patent-pending Tow-N-Stow," said
Manufactured Housing Products Segment
Drew supplies vinyl and aluminum windows and screens, chassis, chassis parts, and bath and shower units to the manufactured housing industry.
Drew reported first quarter 2009 net sales of
Because of the industry-wide production declines, Drew's manufactured housing segment reported an operating loss of
This adjusted decrease in segment operating results was about 22 percent of the "organic" sales decline, which is consistent with what the Company would typically expect. As in the RV Segment, the Company could not record the full benefit of a reduction in incentive compensation expense since it could not record a "negative" incentive compensation expense on the segment operating loss. The Company will record this additional benefit later this year if the MH Segment is profitable for the balance of 2009.
"Beginning in late 2008, the Federal Emergency Management Administration (FEMA) began to purchase emergency shelters for future use, including manufactured homes and park model units," said
Balance Sheet and Other Items
The Company reported that accounts receivable increased by
In connection with the non-cash goodwill impairment charge, the Company recorded deferred tax assets of nearly
Capital expenditures were only
In addition, non-cash stock-based compensation was
"We continue to be in compliance with all of our debt covenants," said Giordano. "Under our line of credit and shelf-loan facilities our maximum borrowings are limited to 1.25 times our trailing twelve month EBITDA, but due to our current cash position, and the cash we expect to generate over the balance of 2009, we do not anticipate that this restriction will affect the Company."
Recent Developments
Drew reported that net sales in
"While it's too soon to know whether this sequential improvement in sales will continue, it is encouraging that our reduced number of facilities are producing more and our employees are working more consistent hours," said
"Our immediate priorities are to maintain a solid balance sheet and to be as efficient and cost-conscious as possible," said Zinn. "However, if exceptional opportunities for product line expansion arise during the current economic challenges, our strong balance sheet and solid cash flow will allow us to move quickly."
"We continue to believe our long-term strategy of market share growth, new product introductions, acquisitions and operational efficiencies will yield positive results. Though we face short-term challenges now, we remain confident in our long-term strategy, as well as in the outstanding ability of our highly experienced operating management."
Conference Call
Drew will provide an online, real-time webcast of its first quarter 2009 earnings conference call on the Company's website, www.drewindustries.com on
Institutional investors can access the call via the password-protected event management site, StreetEvents (www.streetevents.com). A replay of the conference call will be available by telephone by dialing (888) 286-8010 and referencing access code 16863551. A replay of the webcast will also be available on Drew's website.
About Drew
Drew, through its wholly owned subsidiaries, Lippert Components and Kinro, supplies a broad array of components for RVs and manufactured homes, including windows, doors, chassis, chassis parts, bath and shower units, axles, and upholstered furniture. In addition, Drew manufactures slide-out mechanisms for RVs, and trailers primarily for hauling boats. Currently, from 28 factories located throughout
Forward-Looking Statements
This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities for existing products, plans and objectives of management, markets for the Company's common stock 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 and Section 27A of the Securities Act of 1933.
Forward-looking statements, including, without limitation, those relating to our future business prospects, revenues, expenses and income, whenever they occur in this press release, are necessarily estimates reflecting the best judgment of our senior management at the time such statements were made, and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by forward-looking statements. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. You should consider forward-looking statements, therefore, in light of various important factors as identified in this press release and in our Form 10-K for the year ended
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 the matters identified in this press release, pricing pressures due to domestic and foreign competition, costs and availability of raw materials (particularly steel and related components, vinyl, aluminum, glass and ABS resin), availability of credit for financing the retail and wholesale purchase of manufactured homes and recreational vehicles, availability and costs of labor, inventory levels of retailers and manufacturers, levels of repossessed manufactured homes and RVs, the disposition into the market by FEMA, by sale or otherwise, of RVs or manufactured homes purchased by FEMA in connection with natural disasters, changes in zoning regulations for manufactured homes, continuing sales decline in the RV and manufactured housing industries, the financial condition of our customers, the financial condition of retail dealers of RVs and manufactured homes, retention of significant customers, interest rates, oil and gasoline prices, the outcome of litigation, and adverse weather conditions impacting retail sales. In addition, national and regional economic conditions and consumer confidence may continue to affect the retail sale of recreational vehicles and manufactured homes.
DREW INDUSTRIES INCORPORATED
OPERATING RESULTS
(Unaudited)
Three Months Ended
March 31, Last Twelve
(In thousands, except per share amounts) 2009 2008 Months
Net sales $71,019 $159,148 $422,377
Cost of sales 65,193 122,569 345,624
Gross profit 5,826 36,579 76,753
Selling, general and administrative
expenses 17,250 22,248 75,131
Goodwill impairment 45,040 - 50,527
Executive retirement - - 2,667
Other (income) (200) (646) (229)
Operating (loss) profit (56,264) 14,977 (51,343)
Interest expense, net 200 82 995
(Loss) income before income taxes (56,464) 14,895 (52,338)
(Benefit) provision for income taxes (19,762) 5,790 (18,209)
Net (loss) income $(36,702) $9,105 $(34,129)
Net (loss) income per common share:
Basic $(1.70) $0.41 $(1.57)
Diluted $(1.70) $0.41 $(1.57)
Weighted average common shares
outstanding:
Basic 21,643 22,014 21,715
Diluted 21,643 22,179 21,783
Depreciation and amortization $5,070 $4,087 $18,061
Capital expenditures $530 $1,201 $3,528
DREW INDUSTRIES INCORPORATED
SEGMENT RESULTS
(Unaudited)
Three Months Ended March 31,
(In thousands) 2009 2008
Net sales:
RV Segment $52,280 $123,955
MH Segment 18,739 35,193
Total net sales $71,019 $159,148
Operating (loss) profit:
RV Segment $(4,662) $14,254
MH Segment (2,023) 2,510
Total segment operating (loss) profit (6,685) 16,764
Amortization of intangibles (1,389) (1,053)
Corporate (1,530) (1,950)
Goodwill impairment (45,040) -
Other items (1,620) 1,216
Total operating (loss) profit $(56,264) $14,977
DREW INDUSTRIES INCORPORATED
BALANCE SHEET INFORMATION
(Unaudited)
March 31, December 31,
(In thousands, except ratios) 2009 2008 2008
Current assets
Cash and cash equivalents $14,326 $50,414 $8,692
Accounts receivable, trade, less
allowances 17,141 33,739 7,913
Inventories 75,098 87,198 93,934
Prepaid expenses and other current
assets 18,470 11,061 16,556
Total current assets 125,035 182,412 127,095
Fixed assets, net 86,813 96,625 88,731
Goodwill - 39,591 44,113
Other intangible assets 41,430 31,577 42,787
Other assets 21,324 11,786 8,632
Total assets $274,602 $361,991 $311,358
Current liabilities
Notes payable, including current
maturities of long-term indebtedness $4,602 $8,750 $5,833
Accounts payable, accrued expenses and
other current liabilities 37,249 70,174 36,884
Total current liabilities 41,851 78,924 42,717
Long-term indebtedness 1,825 15,600 2,850
Other long-term obligations 7,387 5,896 6,913
Total liabilities 51,063 100,420 52,480
Total stockholders' equity 223,539 261,571 258,878
Total liabilities and stockholders'
equity $274,602 $361,991 $311,358
Current ratio 3.0 2.3 3.0
Total indebtedness to stockholders' equity 0.0 0.1 0.0
DREW INDUSTRIES INCORPORATED
SUMMARY OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
March 31,
2009 2008
Cash flows from operating activities:
Net (loss) income $(36,702) $9,105
Adjustments to reconcile net (loss)
income to cash flows provided by
(used for) operating activities:
Depreciation and amortization 5,070 4,087
Deferred taxes (15,660) -
Loss (gain) on disposal of fixed
assets, net 584 (1,040)
Stock-based compensation expense 1,363 945
Goodwill impairment 45,040 -
Changes in assets and liabilities, net
of business acquisitions:
Accounts receivable, net (9,228) (17,999)
Inventories 18,836 (10,919)
Prepaid expenses and other assets (847) 639
Accounts payable, accrued expenses
and other liabilities (82) 9,069
Net cash flows provided by (used
for) operating activities 8,374 (6,113)
Cash flows from investing activities:
Capital expenditures (530) (1,201)
Acquisition of businesses - (44)
Proceeds from sales of fixed assets 65 4,416
Other investments (2) (6)
Net cash flows (used for) provided by
investing activities (467) 3,165
Cash flows from financing activities:
Proceeds from line of credit and other
borrowings 5,775 -
Repayments under line of credit and other
borrowings (8,031) (2,912)
Exercise of stock options - 61
Other financing activities (17) -
Net cash flows used for financing
activities (2,273) (2,851)
Net increase (decrease) in cash 5,634 (5,799)
Cash and cash equivalents at beginning of
period 8,692 56,213
Cash and cash equivalents at end of period $14,326 $50,414
SOURCE Drew Industries Incorporated
