RV Segment Lifts Drew to Record 2Q Revenue
The company reported net income of $18.6 million, or 77 cents per diluted share, for the second quarter compared to $15.9 million, or 67 cents per diluted share the year prior. In connection with the sale of the aluminum extrusion-related assets in April 2014, the company recorded an after-tax charge of $1.2 million. Excluding this charge, net income in the second quarter of 2014 would have been $19.8 million, or 82 cents per diluted share.
Second-quarter sales increased to a quarterly record of $322 million, 12% higher than the 2013 second quarter. This sales growth was primarily the result strong performance by Drew’s RV segment, which accounted for 90% of consolidated net sales this quarter. Drew said that recently completed acquisitions added approximately $5 million in net sales during the period.
For the six months, sales totaled $607 million versus $539.8 million the year prior while net income was $34.8 million, or $1.46 per share, compared to $24.2 million, or $1.03 per share.
During the first six months of 2014, the RV industry produced more RVs than the full year of 2009. “The ability for the RV industry to more than double production capacity over the past several years is a testament to the resourcefulness of our customers and the tens of thousands of individuals employed by the industry,” said Jason Lippert, Drew’s CEO. “Staying ahead of the ever-changing demands of our customers is a primary business focus.”
“Towable RVs, and in particular lower-priced entry-level units, led the recovery in RV production so far. Although smaller entry units typically contain fewer of our products, we consider every new RV owner a long-term customer who in the future could purchase larger RVs which contain more of our products, creating a healthier RV industry over the long term. Motorhome RVs also experienced a strong recovery over the last couple years, creating a more significant opportunity for us to gain market share with our motorhome products.”
During July, Drew’s consolidated net sales reached approximately $98 million – 17% higher than July 2013 – as a result of continued growth in the company’s RV Segment. Excluding the impact of acquisitions, the company’s net sales for July 2014 were up approximately 13%.
The company’s operating profit margins in the second quarter of 2014, excluding the loss on sale of the aluminum extrusion-related assets, were 9.7%, compared to 9.2% in the second quarter of 2013, excluding executive succession. “Over the past several years, we have made investments in our business, which are continuing to benefit bottom-line results, and the results we experienced in the 2014 second quarter were consistent with our expectations,” said Drew President Scott Mereness. “We added capacity ahead of projected demand, which enabled us to efficiently fulfill customer orders as demand increased and leverage fixed costs over a larger sales base.
“In anticipation of future growth, we continue to expand and improve production capacity, investing in personnel and facilities in excess of current needs. As noted previously, we have recently entered into two new leases which will add more than 700,000 square feet of production and distribution capacity. While these capacity expansion initiatives have a short-term negative impact on margins, over the long term these investments should allow us to improve our operating results, as well as continue to improve our customer service and operating efficiencies. In addition, we have bolstered our administrative staff over the past several quarters, including the teams that were acquired through acquisitions and new employees hired in preparation for future growth and investment opportunities.”
During the second quarter, Drew completed the acquisition of Actuant Corp., gaining the Power Gear and Kwikee brands, and expanding its product offerings in leveling systems, slideout mechanisms and steps, primarily for motorhome RVs.
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