Drew Industries Inc., parent to RV and manufactured housing suppliers Lippert Components Inc. and Kinro Inc., reported record sales during its first quarter, ended March 31.
Sales during the three-month period increased 13% to $253 million compared to $223.5 million a year ago. First quarter net income was $8.4 million, or 36 cents per diluted share, versus $11.1 million, or 49 cents per share, in the previous year.
“Our operating profit margin was below the first quarter of 2012 due to production inefficiencies and costs incurred as a result of our significant growth and expansion over the past year; however, profit margins improved sequentially in the 2013 first quarter,” said Fred Zinn, Drew president and CEO. “Our operating profit margin for the first quarter of 2013 was 5.8% before executive succession charges, compared to 4.1% in the 2012 fourth quarter. This sequential margin gain was less than originally projected, primarily due to higher material costs, substantial fixed costs invested in customer service and in anticipation of further sales growth, and seasonally higher payroll taxes.”
“In the first quarter of 2013, our labor efficiencies continued to improve, with labor costs as a percent of sales declining more than 1% compared to the fourth quarter of 2012,” added Jason Lippert, CEO of Lippert Components and Kinro. “We are also implementing additional efficiency improvements. As we previously reported, we expected the cost of implementing facility consolidations, realigning production and improving production processes to continue in the first quarter of 2013, although to a lesser degree than in the 2012 fourth quarter, and this was the case. These costs are expected to decline further in the second quarter of 2013. We remain confident in our ability to achieve further profit improvement, particularly during the second half of 2013, as these costs return to more normal levels, and as the bottom-line impact of the efficiency improvements gains momentum.”
Sales in the first quarter of 2013 increased despite a temporary slowdown in RV industrywide production levels in late March 2013. The increase in Drew’s first quarter net sales was a result of a 15% sales increase by its RV segment, which accounted for 89% of consolidated sales this quarter. RV segment sales growth was primarily due to a 10% increase in industrywide wholesale shipments of travel trailer and fifth-wheel RVs, Drew’s primary RV market. Sales of recently introduced components for towable RVs, as well as motorhome components, also increased, as did sales to adjacent industries and the aftermarket.
In April 2013, RV industrywide production levels improved following the slowdown in late March, and Drew’s consolidated net sales reached a monthly record $100 million, 20% higher than in April 2012.
The company’s content per travel trailer and fifth-wheel increased 11% from the year-earlier period as a result of recent product introductions, product improvements and market share gains.
As previously announced, Fred Zinn will retire as president and CEO in May and Lippert will become Drew’s CEO while Scott Mereness will serve as Drew’s president. Drew will also be relocating its headquarters from White Plains, N.Y., to Elkhart, Ind.
As a result of the company’s executive succession and corporate relocation, Drew recorded a pre-tax charge of $1.1 million in the first quarter related to contractual obligations for severance and the acceleration of equity awards held by certain employees whose employment will terminate as a result of the relocation to Indiana. The Company will record an additional pre-tax charge of $0.7 million related to contractual obligations in the second quarter . No other related charges are expected thereafter. Once the transition and corporate office relocation are completed, the company will save approximately $2 million annually.
Drew Industries Inc., a key supplier to the recreational vehicle and manufactured housing industries, will release its first quarter 2013 financial results before the market opens on May 3.
Drew also will host a conference call on May 3rd at 11 a.m. (Eastern Time) 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.’s plans to relocate its headquarters from White Plains, N.Y., to Indiana’s Elkhart County will add up to 800 jobs to the area, according to a press release from the Indiana Economic Development Corp.
Drew, parent to RV and manufactured housing suppliers Lippert Components Inc. and Kinro Inc., announced the relocation in February along with key management changes, including the appointment of Jason D. Lippert as the company’s chairman and CEO.
The company said it plans to invest $12.75 million to renovate and equip four manufacturing facilities in Goshen and Elkhart. As part of the project, Drew will install new manufacturing and production lines, which are expected to be operational this year.
“Our focus on job creation is paying off as Indiana’s economic momentum continues,” said Gov. Mike Pence. “Drew Industries’ announcement builds on our strength as the RV capital of the world and serves as the latest proof that our convenient location, competitive tax environment and talented workforce have put Indiana on the map as a state that works for business.”
With more than 5,200 full-time employees across the country, Drew Industries currently has approximately 3,400 employees in Indiana. The company has already begun hiring additional engineers, furniture assemblers, general laborers, drivers and welders in Elkhart County.
“We have experienced significant growth over the past three years,” said Lippert. “When looking to relocate our corporate headquarters, Indiana made the most sense due to its talented workforce, and because most of the RVs produced in the United States are produced in Elkhart County. We greatly appreciate the support provided to us by the state of Indiana, Elkhart County and the cities of Goshen and Elkhart and we look forward to continued growth and future success here.”
“We’re excited about Drew Industries’ plans for expansion,” said Elkhart Mayor Dick Moore. “This expansion further solidifies Elkhart’s position as the RV capital of the world. I look forward to many more future expansions like this in the community.”
The Indiana Economic Development Corporation offered Drew up to $4.3 million in conditional tax credits and up to $200,000 in training grants based on the company’s job creation plans. These tax credits are performance-based, meaning until Hoosiers are hired, the company is not eligible to claim incentives. The city of Elkhart and the city of Goshen will consider additional property tax abatements at the request of the Economic Development Corporation of Elkhart County.
“Elkhart County is fortunate to have Drew Industries,” said Goshen Mayor Allan Kauffman. “They have become one of the largest employers in the city of Goshen and Elkhart County. We are pleased with their ongoing commitment to investing in our community and applaud their success.”
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.
To view the full report click here.
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.
Lippert Components Inc (LCI) announced that Josh Roan has been promoted to the senior leadership team for the window division, based in Goshen, Ind.
According to a press release, Roan has worked in the RV industry for over 17 years. For the past 10 years he oversaw divisions for Lippert and sister company Kinro Inc., including managing LCI’s largest chassis division in Goshen as well as its specialty products division.
In his new position, Roan will help lead 955 employees producing an average of 8,000 RV windows in any given day.
“Josh is one of the strongest managers we have,” said Scott Mereness, president of LCI. “He has proven himself in multiple situations with outstanding leadership and team building skills.”
Roan noted, “One of my goals moving forward is to exceed customer expectations. I plan on growing and leading the very best team in the industry here at our Indiana window division.”
Roan will also oversee several new initiatives in the coming months. Due in early 2013 is equipment for a second glass tempering and processing facility that when installed will add 63,000 additional square feet of glass and window manufacturing space, effectively doubling Kinro’s current glass tempering capabilities.
“With the addition of manufacturing space and investments in equipment, as well as the addition of dedicated leaders such as Josh to our window operations, we will be well positioned to meet our increasing customer demand for windows,” said Mereness.
Goshen, Ind.-based Lippert Components Inc. (LCI) announced that Dana Gehman has been named as motorized engineering manager. According to a press release, Gehman has been hired to “better serve the unique requirements of the motorized RV industry” for Lippert and sister company Kinro Inc.
Gehman comes to LCI/Kinro with 23 years experience at Fleetwood Enterprises Inc. Most recently he worked with Fleetwood’s motorized division and oversaw the development of motorhome “hulls,” which is essentially everything above the floor of the RV.
“Dana understands the engineering behind motorized RVs, and more importantly, how many of our products interrelate with motorhome construction,” says Andy Murray, vice president of RV sales for LCI and Kinro. “Dana will be the central point of engineering contact for our motorized customers, and will work with our existing engineering teams to support our entire catalog of motorhome products including slideouts, leveling systems, windows and electronics.
“We recognize the needs of our motorized customers are somewhat unique compared to our traditional customer base, so Dana will be a critical part of our strategy to provide the best products and service in the motorized industry.”
Gehman noted, “I’m excited to bring almost 25 years of innovative product development and problem solving experience, from folding trailers to motorhomes, to Lippert Components and its customers.”
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.”
To view the entire report click here.
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.”
Goshen, Ind.-based Lippert Components Inc. (LCI) and Kinro Inc., subsidiaries of Drew Industries Inc., announced today that April Klein has joined its executive team as vice president of customer support services. According to a press release, Klein will oversee the customer service, warranty and parts departments, as well as work with the aftermarket support team.
“As one of the largest suppliers in the RV industry, our customers expect and deserve the best,” said Jason Lippert, chairman and CEO of LCI and Kinro. “Under April’s leadership we are taking another great step towards delivering world-class service, as well as achieving synergies that will benefit the entire company.”
Klein comes to LCI and Kinro with over 25 years in the RV industry. As the former vice president of customer service at Monaco Coach Corp., Klein has extensive experience in managing large-scale operations, including multiple-site parts distribution centers, customer service call centers, warranty operations, technical publications, dealer training, factory service operations and recall administration.
Lippert said that the company had also made a number of additions and improvements to its aftermarket and customer service teams, including:
• Increased Staffing: 20 positions were added to the customer service department, which now totals nearly 50 people.
• Additional Space: The company added 2,000 square feet for the customer support call center and related offices.
• Upgraded Phone System: The new state-of-the-art phone system has a variety of features that will enhance the customer service capabilities of the service and warranty department. These features include live call monitoring and training, recorded calls, and queued calls with an active call back feature, as well as voice recognition technology.
• Warehouse Improvements: The warehouse has been equipped with inventory management systems for real-time parts status.