Drew Reports Record 2Q Sales, Improved Profits
Drew Industries Inc., parent to RV and MH suppliers Lippert Components Inc. (LCI) and Kinro Inc., today (Aug. 6) reported improved earnings, driven by higher margins, along with record sales for its second quarter, ended June 30.
Net income for the period was $15.9 million, or 67 cents per diluted share, compared to $11.7 million, or 52 cents per share, the previous year.
“Our operating profit margins improved sequentially in the second quarter of 2013 primarily due to efficiency improvements implemented by management, as well as the benefits of spreading fixed costs over a seasonally larger sales base and seasonally lower payroll taxes,” said Jason Lippert, Drew’s CEO. “This sequential margin gain was greater than originally expected, as many of the improvements implemented by management resulted in efficiency gains sooner than anticipated. We were confident that the steps we had taken to meet anticipated customer demand and improve profitability were correct, and it was reassuring to see the results of these efforts in the 2013 second quarter.”
Net sales in the second quarter increased to a record $287 million, 14% higher than $251 million in the same period last year. The growth was a result of a 16% sales increase by Drew’s RV segment, which accounted for 88% of consolidated net sales this quarter. Sales of recently introduced components for towable and motorhome RVs also contributed to the revenue increase, as did sales to adjacent industries and the aftermarket.
The company reported that its content per towable RV and motorhome for the 12 months ended June 2013 increased 5% and 23%, respectively, from the year-earlier period as a result of recent product introductions, product improvements and market share gains.
For the six months, Drew posted net income of $24.2 million, or $1.03 per share, versus $22.8 million, or $1.01 per share, a year ago while sales rose to $539.8 million from $474.56 million.
“Our labor efficiencies continued to improve, with labor costs as a percent of sales declining in the second quarter of 2013,” continued Jason Lippert. “This improvement followed a sequential reduction of labor as a percent of sales of more than 1%t in the first quarter of 2013. These reductions during the first two quarters of 2013 were primarily due to improved production processes, as well as expected declines in the costs of implementing facility consolidations and realignments. Nonetheless, we are continuing to implement additional efficiency improvements as we identify them. However, the benefits of such improvements on our operating margins in the latter half of 2013 will likely be offset by the spreading of fixed costs over a seasonally smaller sales base.”
In July 2013, Drew’s consolidated net sales reached approximately $83 million – 13% higher than in July 2012 – as a result of continued solid growth in the company’s RV segment.
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