Drew Industries Reports 2016 Second Quarter Results

ELKHART, Ind., Aug. 4, 2016 /PRNewswire/ -- Drew Industries Incorporated (NYSE: DW), a leading supplier of components for recreational vehicles ("RVs") and adjacent industries, today reported consolidated net sales in the second quarter of 2016 increased to $441 million, 22 percent higher than the 2015 second quarter. The increase in year-over-year net sales reflects industry-wide growth in wholesale shipments of towable RVs by original equipment manufacturers ("OEMs"), which increased by 12 percent in the second quarter of 2016, enhanced by acquisitions completed by the Company over the twelve months ended June 30, 2016, as well as the July 2015 distribution and supply agreement for premium electronics with Furrion, which together added $29 million in net sales in the second quarter of 2016. Through continued focus on aftermarket channels for the Company's products, the Company increased net sales to the aftermarket in the second quarter of 2016 by more than 32 percent to $34 million. The third quarter of 2016 started with July consolidated net sales of approximately $118 million, five percent higher than July 2015 with two less shipping days in 2016.

The Company's content per travel trailer and fifth-wheel RV for the twelve months ended June 30, 2016, increased $95 to $3,013, compared to the twelve months ended June 30, 2015, of $2,918. The Company's content per motorhome RV for the twelve months ended June 30, 2016, increased $138 to $1,920, compared to the twelve months ended June 30, 2015, of $1,782. The content increases are primarily the result of organic growth, which in the case of towable RVs, consists of double-digit growth in travel trailer content, partially offset by flat fifth-wheel content. Acquisitions had a nominal impact on RV content.

"Our net sales in the 2016 second quarter increased at a year-over-year rate of 22 percent and by more than $78 million compared to the second quarter of 2015," said Jason Lippert, Drew's Chief Executive Officer. "Strong industry volumes attributed nine percent of the increase, with the remainder resulting from continued growth of our aftermarket business, organic growth through increased market share and new innovative products, and sales from acquired businesses."

"RV industry volume is out-pacing the RVIA's low single-digit unit growth projections for 2016 given at the end of last year, as 2016 second quarter wholesale travel trailers are up nearly 14 percent and fifth-wheels are up over four percent," continued Jason Lippert. "Travel trailer sales momentum continued this year, which we attribute to a new generation of enthusiasts embracing the RV lifestyle. We are also pleased to see fifth-wheel wholesale units up approximately 900 units and 1,000 units over the second quarter and year to date 2015, respectively. These overall increases for North America have been achieved despite retail sales of towable RVs in Canada being down 19 percent during the second quarter."

Over the twelve month period through June 2016, retail sales of travel trailer and fifth-wheel RVs increased an estimated 10 percent. Wholesale and retail unit sales during this period were closely aligned. Based on the retail sales strength experienced up to this point and the current outlook from several RV OEMs and their dealer networks, most industry analysts continue to report RV dealer inventory is in line with anticipated retail demand.

"Our operating profit in the second quarter of 2016 improved to more than $59 million, compared to nearly $34 million in the second quarter of 2015," said Scott Mereness, Drew's President. "Strong industry growth, lower costs for certain key commodities, accretive acquisitions completed over the last 12 months and a focus on cost management and operational efficiencies, all contributed to profit improvement." Mereness continued, "The second quarter results reflect the Company's ongoing commitment to grow sales to its OEM customers in RV and adjacent industries, while continuing to build a profitable aftermarket business."

Net income was $37.6 million, or $1.51 per diluted share, for the second quarter ended June 30, 2016, compared to net income of $20.9 million, or $0.85 per diluted share, for the second quarter ended June 30, 2015.

The Company continues to increase focus on opportunities in the aftermarket business, and as a result, during the second quarter of 2016, the Company modified its internal reporting structure. Beginning with the quarter ended June 30, 2016, the Company is reporting its financial performance based on two new reportable segments consisting of the OEM Segment, which includes products sold by the Company to OEMs for RVs and adjacent industries, and the Aftermarket Segment, which includes sales of repair and replacement products for RVs and adjacent industries into aftermarket distribution channels.

"This change in operating segments highlights the emphasis we are placing on building our aftermarket business while continuing to grow and expand sales of OEM products to RV customers and in other similar applications," said David Smith, Chief Financial Officer. Prior periods have been reclassified to conform to the current presentation and the Company plans to file with the Securities and Exchange Commission a current report on Form 8-K with financial information reflecting the historical performance of the realigned segments later in the third quarter. The change in reported segments will have no effect on the Company's net income, total assets or liabilities, or stockholders' equity.

"As of June 30, 2016, the Company had a net cash position of $29 million, an improvement of $66 million from a net debt position of $38 million at the beginning of the year, even after $15 million of dividend payments in the first half of 2016," added Smith. "This cash generation was the result of our operational performance and was strongly aided by inventory reductions of $26 million."

Jason Lippert concluded, "We have built an organization with the best people and created a culture with core values that focus on meeting the challenge of providing value to our customers every day. We will continue our efforts to develop, engineer and build great products, as well as improving our service to all customer channels, so that each day we are the supplier of choice for the industries we serve. Additionally, we will continue to seek expansion with new and innovative products, new customers, new markets and new geographies."

Conference Call & Webcast

Drew will provide an online, real-time webcast of its second quarter 2016 earnings conference call on the Company's website, www.drewindustries.com, on Thursday, August 4, 2016, at 11:00 a.m. Eastern time.

Institutional investors can access the call via the password-protected site, StreetEvents (www.streetevents.com). A replay of the call will be available by dialing (855) 859-2056 and referencing access code 47707850. A replay of the webcast will also be available on Drew's website.

About Drew Industries

From 45 manufacturing and distribution facilities located throughout the United States and in Canada and Italy, Drew Industries, through its wholly-owned subsidiary, Lippert Components®, supplies a broad array of components for the leading original equipment manufacturers of recreational vehicles and adjacent industries including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; manufactured homes; modular housing; and factory-built mobile office units. The Company also supplies components to the related aftermarkets of these industries, primarily by selling to retail dealers, wholesale distributors and service centers. Drew's products include steel chassis and related components; axles and suspension solutions; slide-out mechanisms and solutions; thermoformed bath, kitchen and other products; vinyl, aluminum and frameless windows; manual, electric and hydraulic stabilizer and leveling systems; furniture and mattresses; entry, luggage, patio and ramp doors; electric and manual entry steps; awnings and awning accessories; electronic components; appliances; LED televisions and sound systems; navigation systems; wireless backup cameras; and other accessories. Additional information about Drew and its products can be found at www.drewindustries.com.

Forward-Looking Statements

This press release contains certain "forward-looking statements" with respect to our financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities, acquisitions, plans and objectives of management 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, as amended, and Section 27A of the Securities Act of 1933, as amended, and involve a number of risks and uncertainties.

Forward-looking statements, including, without limitation, those relating to our future business prospects, net sales, expenses and income (loss), cash flow, and financial condition, whenever they occur in this press release are necessarily estimates reflecting the best judgment of the Company's senior management at the time such statements were made. 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 other matters described in this press release, pricing pressures due to domestic and foreign competition, costs and availability of raw materials (particularly steel, steel based components and aluminum) and other components, seasonality and cyclicality in the industries to which we sell our products, availability of credit for financing the retail and wholesale purchase of products for which we sell our components, inventory levels of retail dealers and manufacturers, availability of transportation for products for which we sell our components, the financial condition of our customers, the financial condition of retail dealers of products for which we sell our components, retention and concentration of significant customers, the costs, pace of and successful integration of acquisitions and other growth initiatives, availability and costs of labor, employee benefits, employee retention, realization and impact of efficiency improvements and cost reductions, the successful entry into new markets, the costs of compliance with environmental laws and increased governmental regulation and oversight, information technology performance and security, the ability to protect intellectual property, interest rates, oil and gasoline prices, the impact of international, national and regional economic conditions and consumer confidence on the retail sale of products for which we sell our components, and other risks and uncertainties discussed more fully under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, and in the Company's subsequent filings with the Securities and Exchange Commission. The Company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

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SOURCE Drew Industries Incorporated