Drew Industries Inc., parent to industry suppliers Lippert Components Inc. and Kinro Inc., today (Feb. 20) reported record revenue for its full year, ended Dec. 31, boosted by a 25% increase in fourth-quarter sales and strong performance from its RV segment.
The White Plains, N.Y-based company, which recently announced a realignment in upper management and the relocation of its headquarters to Elkhart, Ind., reported net income of $4.7 million, or $0.21 per diluted share, in its fourth quarter compared to $4.1 million the year prior. The company noted that earnings included a previously announced after-tax charge of $0.9 million in connection with executive succession.
Sales in the fourth quarter increased to $200 million, 25% higher than last year, as a result of a 31% sales increase by the RV segment. This segment accounted for 86% of consolidated net sales in the quarter. RV segment sales growth was largely due to a 21% increase in industrywide wholesale shipments of travel trailers and fifth-wheels, Drew’s primary RV market. Sales of recently introduced RV products and motorhome components also increased, as did sales to adjacent industries.
Drew reported that in January 2013, consolidated net sales reached approximately $85 million, 28% higher than in January 2012, as a result of continued solid growth in the company’s RV segment. Drew estimates that industrywide production of towable RVs increased about 20% in January 2013.
Net sales for the year increased by $220 million to a record $901 million. Acquisitions added approximately $60 million to 2012 net sales. Sales growth in new markets and new products were also key factors enabling Drew’s sales to exceed industry growth rates. Key additions to the company’s RV product lines in recent years include advanced leveling devices, in-wall slide-out systems and awnings. Together, net sales of these products reached $65 million in 2012.
For the full year, Drew’s net income increased to $37.3 million, or $1.64 per diluted share, up from net income of $30.1 million, or $1.34 per diluted share, in 2011. Excluding charges related to executive succession, net income would have been $38.3 million in 2012, or $1.68 per diluted share.
The company’s content per travel trailer and fifth-wheel in 2012 increased by $365 to $2,713, or 16% greater than in 2011. Content per motorhome RV reached $1,071 in 2012, an increase of 68% over 2011.
“Our solid sales gains, along with favorable RV industry fundamentals, are encouraging,” said Fred Zinn, Drew’s president and CEO. “In the 2012 fourth quarter our operating profit margin before executive succession charges, while higher than last year, did not improve enough. Labor efficiencies improved at several key production facilities. However, this improvement was offset by the cost of implementing facility consolidations and improving production processes, as well as refinements to the calculation of our warranty accrual, and other transitory cost increases. We are confident in our ability to achieve profit improvement, particularly in the second half of 2013, as these costs return to more normal levels, and as the bottom-line impact of the efficiency improvements that have been implemented gains momentum.”
“The steps we have taken are enabling our production lines to be more efficient,” said Jason Lippert, currently CEO of Lippert Components and Kinro who will will take over as CEO of Drew in May while Scott Mereness will serve as president. “During the quarter we consolidated and realigned production of several key product lines, including furniture, manufactured housing and RV windows, chassis and thermoforming, and continued to benefit from and expand our lean manufacturing initiatives. While these efforts cost us $2 million in the 2012 fourth quarter, they are continuing to make us more efficient. Also, in the 2012 fourth quarter we retained more of our seasonal workforce than typical, ending the year with 5,200 employees. We spent the last 12 months building and training our workforce, so that we can minimize hiring and training costs as demand ramps up in early 2013.”
Drew will provide an online, real-time webcast of its fourth quarter 2012 earnings conference call on the company’s website, www.drewindustries.com, today at 11 a.m. Eastern. The call can also be accessed at www.companyboardroom.com.
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Drew Industries Inc. announced today (Feb. 12) that President and CEO Fred Zinn will retire, effective May 10. Jason Lippert, who currently serves as chairman and CEO of subsidiaries Lippert Components Inc. and Kinro Inc., will take over as CEO of Drew while Scott Mereness will serve as president and COO.
According to a news release, this transition is the result of a comprehensive succession process initiated by Drew’s board in 2011.
Drew also announced the relocation of its corporate headquarters from White Plains, N.Y., to Elkhart County, Ind. – the location of the corporate headquarters for Lippert and Kinro, and where more than 80% of all RVs produced in the U.S. are manufactured.
The company said that consolidating Drew’s corporate functions with its Indiana-based manufacturing operations will be “both cost-effective and result in an even greater exchange of ideas and expertise between Drew’s management team and executives across the RV and manufactured housing industries.”
Zinn, who will turn 62 in March, has been an executive officer since 1986, serving as president and a director since 2008 and as CEO since 2009. While Zinn will not stand for re-election as a director, he will serve as a consultant to Drew through 2013.
Lippert, 40, has served as chairman and CEO of Lippert Components and Kinro, and as a director of Drew, for the past six years, and will continue in these positions. Lippert has held various executive positions at Lippert Components and Kinro since 1998.
Mereness, 41, will continue to serve as president of Lippert and Kinro, as he has since 2010, while assuming his new duties with Drew. He has held various executive positions at Lippert and Kinro since 2001.
Chairman Leigh J. Abrams stated, “Fred has been Drew’s CEO through very challenging times, including the ‘Great Recession,’ and he has helped guide our strong growth that followed. In the past four years, Drew has generated over $200 million in operating cash flow, enabling the company to complete 13 acquisitions, pay nearly $80 million in special dividends to stockholders, and still close 2012 with no debt. The board is grateful for the substantial contributions Fred has made to Drew for more than 30 years, first as CFO and then during his distinguished tenure as CEO and a director.”
Abrams continued, “This carefully conceived leadership transition brings Jason Lippert and Scott Mereness to Drew’s top executive positions. Both these executives are highly experienced, and they have the vision, energy and ability to lead the company through its next phase of growth.”
Zinn stated, “I have been privileged and proud to work for this vibrant company. After more than three decades with Drew Industries, it’s time to transfer Drew’s executive responsibilities to a new generation. Jason is an exceptionally talented leader, and he has been key to the company’s success. Since he assumed an executive role more than a decade ago, Drew’s market share has grown consistently and significantly. Jason has gained the respect of business executives throughout the industries we serve. He has developed an outstanding team of executives with proven leadership capabilities and extensive experience in our industries.”
Lippert noted, “We will continue our strategic initiatives to enhance Drew’s cash flow and profitability. We intend to accomplish this by providing the highest quality products and superior service, both to our existing customers, and to new customers in the adjacent markets we have been developing in accordance with our ongoing strategic planning process. We have always provided our customers with products that add value and offer innovative solutions to their business needs. It is essential that we maintain our outstanding reputation among both our customers and the investment community.”
He added, “Scott Mereness has provided Drew with exceptional operational leadership for more than a decade. Scott and I have worked closely together for over 15 years, with an emphasis on attracting and developing the best possible talent for every aspect of the company. Together with our extraordinary management team and dedicated employees, Scott and I will continue to develop strategic plans to benefit Drew, including our stockholders, employees and customers.”
Other moves include:
• Joseph S. Giordano III, 44, CFO and treasurer of Drew since 2008 and corporate controller from 2003 to 2008, will relocate to Indiana and continue to serve in his current positions. “For the past decade, Joe has played a crucial role in our success,” said Abrams, “and we are delighted that we can continue to rely on his broad knowledge and experience.”
• Harvey F. Milman, 71, who has served as general counsel then chief legal officer of Drew since 1969, will retire, effective July 31. Milman will continue to serve as a consultant to Drew through 2014. “On behalf of the board, we are most grateful for the advice and counsel Harvey has provided us over the years,” stated Abrams. Milman will be succeeded by Robert A. Kuhns, 47. For the past 13 years Kuhns was a partner in the corporate group at the Minneapolis offices of Dorsey & Whitney, a full-service global law firm. Kuhns has extensive experience with a broad range of corporate, acquisition and securities matters.
As a result of Drew’s leadership transition and corporate relocation, the company will record a pre-tax charge of approximately $3.3 million, including $1.5 million in the fourth quarter of 2012, and the balance in the first and second quarters of 2013, related to contractual obligations for severance and the acceleration of equity awards. Upon completion of the transition, the company will save an estimated $2 million annually in general and administrative costs.
Drew Industries Inc., parent to industry suppliers Lippert Component Inc. and Kinro Inc., will release its fourth quarter 2012 financial results before the market opens on Feb. 20.
White Plains, N.Y.-based Drew also will host a conference call on Feb. 20 at 11 a.m. ET to discuss its results and other business matters.
Participation in the question-and-answer session of the call will be limited to institutional investors and analysts. Individual investors, retail brokers and the media are invited to listen to a live webcast of the call on Drew Industries’ website at www.drewindustries.com .
Drew Industries Inc., a leading supplier of components for recreational vehicles and manufactured homes, announced Monday (Nov. 26) that its board of directors has approved a special cash dividend of $2.00 per share of common stock.
The dividend is payable on Dec. 20 to stockholders of record at the close of business on Dec. 10, according to a news release.
“This special dividend reflects the board’s confidence in the financial strength of the Company, as well as the Company’s positive long-term outlook,” said Fred Zinn, Drew’s president and CEO. “Our significant cash balance and consistent cash flow provide us the opportunity and resources to take this tangible step in demonstrating our commitment to returning value to our stockholders.”
“Our strong balance sheet will enable us to continue our long-term strategy of growth through acquisitions, market share gains, and new product introductions,” added Joe Giordano, Drew’s CFO and treasurer.
Drew Industries Inc., parent to suppliers Lippert Components Inc. and Kinro Inc., reported a 70% increase in net income for its third quarter, ended Sept. 30, boosted by strong performance from the RV segment and recent acquisitions.
Earnings during the period totaled $9.8 million, or 43 cents per diluted share, compared to $5.6 million, or 25 cents per diluted share, in the third quarter of 2011. Net sales in the 2012 third quarter grew 36% to $226 million from $166.7 million a year ago, including a 43% increase in RV revenue. The RV segment accounted for 86% of Drew’s consolidated sales.
RV sales growth was largely due to a 19% increase in industrywide wholesale shipments of travel trailers and fifth-wheels, Drew’s primary RV market, as well as market share gains, acquisitions and increased sales to adjacent industries. Excluding the impact of acquisitions, sales increased 27%.
“Sales in the 2012 third quarter increased nearly $60 million compared to the year-earlier quarter, on which the company achieved incremental operating profit of $5.7 million. This is an improvement from the year-over-year incremental margin we achieved in the second quarter of 2012, and in the first quarter of 2012,” said Fred Zinn, Drew’s president and CEO. “Greater-than-expected demand continued to reduce production efficiencies during the 2012 third quarter; however, we expect production efficiencies to further improve before the 2013 selling season.”
For the nine months Drew reported sales of $700.9 million compared to $521.6 million a year ago while net income rose to $32.6 million from nearly $26 million.
Drew reported that its strong performance continued in October as sales increased 35% to $85 million, lifted by the 2012 annual RV open house in Elkhart, Ind., in late September.
“We are no longer ‘looking uphill,’ so to speak,” said Jason Lippert, CEO of Lippert Components and Kinro. “In certain product lines we’ve begun to realize the benefits of resource planning and lean manufacturing initiatives, as well as the investments we’re making to expand capacity. The continued strong demand for our products throughout the third quarter is very encouraging. As a result, our production levels remained very high.
“Implementing our plans to improve production efficiencies has taken longer than expected because it’s very difficult to re-organize production flow while still operating near capacity at several key plants. In the seasonally slower months ahead, we plan to retain more production employees than typical in the slow winter season in order to level out production by building to stock certain high volume products. Retaining employees will also enable us to minimize hiring and training costs when demand ramps up in early 2013. In the fourth quarter of 2012, we also expect to incur costs related to facility re-alignment, and process improvement, as we did in the third quarter. We’re targeting our efforts to help ensure that we achieve stronger production efficiencies next year and beyond.”
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Drew Industries Inc., parent to RV and MH suppliers Lippert Components Inc. and Kinro Inc., will release its third quarter 2012 financial results before the market opens on Oct. 31.
The White Plains, N.Y.-based company will also host a conference call on Oct. 31 at 11 a.m. (Eastern) to discuss its results and other business matters.
Participation in the question-and-answer session of the call will be limited to institutional investors and analysts. Individual investors, retail brokers and the media are invited to listen to a live webcast of the call on Drew Industries’ website at www.drewindustries.com.
It was tough not to notice the recreational vehicle group over the past week, according to a report by Investors.com
Drew Industries Inc. jumped 7% for the week. Patrick Industries Inc. settled 13% higher, after spiking 20% on Monday (Oct. 1). Group leader Thor Industries Inc. coasted home with a 1% gain but has a three- month advance under its belt, including a 15% gain for September.
The entire group lagged in the rankings, ranked No. 134 at the start of August. It broad-jumped into the Top 20 this week to end Friday at No. 18.
The annual RV show in Hershey, Pa., billed as “America’s Largest RV Show,” ran from Sept. 19-23.
Thor reported “record retail sales for units sold” at the annual show. RV maker and Berkshire Hathaway subsidiary Forest River Inc. said it sold “virtually hundreds of units” at the show.
Although this industry group is listed in the building sector, the top stocks are really leisure sector plays. Thor and Drew see more than three-quarters and Patrick more than half their revenue from RV sales.
Snowmobile and off-road vehicle sales have gone great guns for the past two years, sending Polaris sales to record highs last year. The stock soared 233% since a March 2010 breakout.
RV makers have been a different bag of nuts, but they service very similar audiences. And they have also seen an accelerating recovery in sales beginning last year.
Drew Industries Inc., parent to Lippert Components Inc. and Kinro Inc., will ring the closing bell at the New York Stock Exchange (NYSE) on Oct. 5 to commemorate Drew’s 50th year as a publicly owned company.
According to a press release, members of Drew’s board along with executive officers from Drew, Lippert and Kinro will join in the ceremony.
Drew’s initial public offering was completed in 1962, at which time it was engaged primarily in real estate financing, ownership and management. During the ensuing years, as a result of management’s focus on creating shareholder value, Drew entered new markets while completing over 35 acquisitions.
Today, from 31 factories located throughout the U.S. and with a work force of 5,000 employees, Drew is the largest supplier of components to major national manufacturers of recreational vehicles and manufactured homes and has annual revenues in excess of $800 million.
Drew Chairman Leigh J. Abrams noted, “We are extremely pleased with the success of our first 50 years, and our young and dynamic operating executives that have risen to top management positions with us over the past decade. They have the capability, enthusiasm and experience to continue to propel the company forward.”
Lippert Components Inc. (LCI) announced today (Sept. 5) that Tim Meade has been appointed sales manager of its seating technologies division, Seat-Tech.
Meade will be in charge of account procurement and retention for Seat-Tech. Meade brings over 20 years of experience in seating sales, design and manufacturing, having worked for some of the best known brands in the seating industry segment, according to a news release.
“As a seating industry veteran, Tim Meade will be instrumental in helping LCI’s Seating Technologies division open new markets, continue our current market growth and expand our product development in the industries we serve,” stated Vice President of Sales for Seat-Tech Ryan Smith. “Meade brings us great value in field sales with his extensive existing customer relationships.”
About Lippert Components
Lippert Components, established in 1956, and Kinro Inc., its sister company, subsidiaries of Drew Industries Inc., are industry leaders producing a broad line of products dedicated to improving the mobile lifestyle. Lippert Components and Kinro supply a wide variety of components for RVs, manufactured homes, modular housing, truck caps and buses, as well as for trailers used to haul boats, livestock, equipment and other cargo, including chassis, fabricated steel chassis parts, slide-out mechanisms, axles, upholstered furniture, mattresses, windows, doors, leveling and stabilization equipment, suspension enhancement products, electronics and thermoformed products.
Drew Industries Inc., parent to RV and manufactured housing suppliers Kinro Inc. and Lippert Components Inc., today (Aug. 2) reported net income of $11.7 million, or $0.52 per diluted share, for its second quarter ended June 30 compared to net income of $11.0 million, or $0.49 per diluted share, in the second quarter of 2011.
Net sales in the quarter increased to $251 million, a record for any quarter and 35% higher than the same period a year ago. This sales growth was primarily the result of a 39% sales increase by Drew’s RV segment, which accounted for 87% of Drew’s consolidated net sales. RV segment sales growth was largely due to acquisitions, market share gains, and an 8% increase in industrywide wholesale shipments of travel trailer and fifth-wheel RVs, Drew’s primary RV market. In addition, sales to adjacent markets more than doubled this quarter, largely as a result of acquisitions and an increase in sales of axles to non-RV markets. Drew’s MH Segment also reported strong sales growth in the second quarter of 2012, due to an estimated 13% increase in industrywide production of manufactured homes. Excluding the impact of acquisitions, consolidated sales were up 23%.
Drew’s sales growth continued in July 2012, during which sales reached approximately $73 million, 49% higher than in July 2011. Excluding the impact of acquisitions, net sales for July 2012 were up approximately 35%. It is estimated that industrywide shipments of travel trailer and fifth-wheel RVs increased 20% to 25% in July 2012.
Drew’s operating profit margin was 7.6% in the second quarter of 2012 compared to 7.8 percent in the 2012 first quarter. Profit margins continue to be impacted by excess labor, overtime and related costs, all of which reduced net income by approximately $3 million, or $0.13 per diluted share compared to expectations. These higher costs were the result of lower operating efficiencies due to greater-than-expected demand which caused the company to hire, train and support 1,100 more employees than in the second quarter of 2011. Material cost as a percent of sales was also higher than in the first quarter, partly as a result of increased outsourcing costs due to capacity limitations, as well as higher scrap costs.
“As a result of higher-than-expected demand for our products throughout the second quarter of 2012, our operating margins did not improve sequentially as had been anticipated,” said Fred Zinn, Drew’s president and CEO. “In some product lines, demand exceeded our capability to efficiently produce. In order to maintain our commitments to customers for on-time delivery of quality products, we incurred substantial overtime costs and other inefficiencies. However, the increased demand for our products will ultimately benefit our long-term profitability, as we increase capacity and improve production efficiencies.”
“We continue to devote significant effort, and invest financial resources, to expand production capacity and improve production efficiencies,” said Jason Lippert, CEO of Drew’s subsidiaries, Lippert Components and Kinro. “Over the past year and a half we have added 700,000 square feet of production space, and plan to reopen some of the space we shuttered in prior years. Further, we are developing leaner manufacturing strategies, and exploring technology to improve our production capabilities. We have experienced growth surges in the past, and we have right-sized our capacity through investment in people, technology and facilities. While the full impact of such investments takes time to realize, we expect production efficiencies to improve, and we will continue to invest in order to realize our future potential.”
Drew will provide an online, real-time webcast of its second quarter 2012 earnings conference call on the company’s website, www.drewindustries.com today at 11 a.m. Eastern. The call can also be accessed at www.companyboardroom.com.
To view the entire report click here.