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Form 8-K DREW INDUSTRIES Inc For: May 09

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May 9, 2016 7:52 AM EDT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): May 9, 2016

DREW INDUSTRIES INCORPORATED
 
 
 
 
 
 
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
001-13646
13-3250533
 
 
 
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer
Identification No.)
 
 
 
3501 County Road 6 East, Elkhart, Indiana
46514
 
 
 
(Address of principal executive offices)
(Zip Code)
 
 
 
Registrant's telephone number, including area code:
(574) 535-1125
 
 
 
 
 
 
 
N/A
 
 
 
 
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 2.02
Results of Operations and Financial Condition

Item 7.01
Regulation FD Disclosure

The following information is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition" and Item 7.01, "Regulation FD Disclosure." Such information, including the Exhibit attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

On May 9, 2016, Drew Industries Incorporated issued a press release setting forth Drew Industries Incorporated's 2016 first quarter financial results. A copy of Drew Industries Incorporated's press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.

Item 9.01
Financial Statements and Exhibits

Exhibits

99.1
Press Release dated May 9, 2016



Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



DREW INDUSTRIES INCORPORATED
(Registrant)


By:       /s/ David M. Smith                    
David M. Smith
Chief Financial Officer


Dated: May 9, 2016



2



Exhibit 99.1
FOR IMMEDIATE RELEASE
 
Contact: David Smith, CFO
Phone:   (574) 535-1125
E Mail:   [email protected]
 
 

DREW INDUSTRIES REPORTS 2016 FIRST QUARTER RESULTS


Elkhart, Indiana - May 9, 2016 - Drew Industries Incorporated (NYSE: DW), a leading supplier of components for recreational vehicles (RVs) and manufactured homes, today reported net income of $36.0 million, or $1.45 per diluted share, for the first quarter ended March 31, 2016, compared to net income of $20.1 million, or $0.82 per diluted share, for the first quarter ended March 31, 2015.

Consolidated net sales in the first quarter of 2016 increased to $423 million, 17 percent higher than the 2015 first quarter. The increase in year over year sales reflects industry-wide growth in wholesale shipments of towable RV’s, which increased by 11 percent in the first quarter of 2016, enhanced by acquisitions completed by the Company over the twelve months ended March 31, 2016, as well as the July 2015 distribution and supply agreement for premium electronics with Furrion, which together added $25 million in net sales in the first quarter of 2016. Through continued focus on serving the aftermarket, the Company also increased aftermarket sales in the first quarter of 2016 by more than 40 percent. In April 2016, Drew’s consolidated net sales reached approximately $145 million, 11 percent higher than April 2015.

The Company’s content per travel trailer and fifth-wheel RV for the twelve months ended March 31, 2016, increased $64 to $2,978, compared to content per travel trailer and fifth-wheel RV for the twelve months ended March 31, 2015 of $2,914. The Company’s content per motorhome RV for the twelve months ended March 31, 2016, increased by $122, to $1,858, compared to content per motorhome RV for the twelve months ended March 31, 2015, of $1,736.

“Our net sales in the 2016 first quarter increased at a double digit year-over-year rate of 17 percent and by over $60 million over the first quarter of 2015,” said Jason Lippert, Drew’s Chief Executive Officer. “This growth reflects the current strength of our industry, as well as the continued execution of our plan to drive growth in our primary areas of focus. This includes growth from acquisitions, focusing on the needs of the aftermarket customer, new markets for core products and organic growth from innovative new products, enhancements to existing products and market share gains. Of particular note, our net sales attributable to the aftermarket and adjacent industries increased during the 2016 first quarter by a combined $28 million, or 46 percent.”

“Thus far in 2016 we completed three acquisitions, adding approximately $57 million of expected annual sales with further sales and profit growth potential. Notably, this includes our second acquisition in the marine space and our first acquisition in Europe,” said David Smith, Drew’s Chief Financial Officer. The three operations acquired by Drew so far during 2016 are:

•
Project 2000 S.r.l. -- An Italian manufacturer of innovative, space-saving bed lifts and retractable steps for RVs, with estimated annual sales of €10 million (US$12 million);

•
Flair Interiors -- A Goshen, Indiana manufacturer of RV furniture, with estimated annual sales of $25 million; and

•
Highwater Marine Furniture -- An Elkhart, Indiana marine furniture operation providing furniture solutions for Highwater Marine, LLC, a manufacturer of pontoon boats. Estimated annual sales for the marine furniture operation were $20 million.


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Over the twelve month period through March 2016, retail sales of travel trailer and fifth-wheel RVs increased an estimated 12 percent. Wholesale unit sales during this time nearly matched retail sales. Based on the strength of retail sales and the current outlook from several RV OEMs and their dealer networks, most industry analysts continue to report that RV dealer inventory is in line with anticipated retail demand.

“Our operating profit in the first quarter of 2016 improved to $56 million, compared to $32 million in the first quarter of 2015,” said Scott Mereness, Drew’s President. “Accretive acquisitions completed over the last 12 months, significant growth in aftermarket sales and a focus on cost management and operational efficiencies, combined with strong industry growth and lower costs for certain key commodities, all contributed to our profit improvement. Starting in the second half of 2015, commodity prices for both aluminum and steel began to trend lower, resulting in favorable material costs compared to the first half of 2015. These commodity prices have historically been volatile and recently experienced some increases.” Mereness continued, “We believe these first quarter results reflect the effective execution of the strategy we have set to profitably grow sales in key areas of our business and exercise disciplined cost management.”

Jason Lippert concluded, “We have completed ten acquisitions since the beginning of 2014 and a significant amount of structural work inside our business to be in a position to deliver these results. We plan to continue our focus on developing, engineering and building products that create value for our customers, as well as to continue improving our service delivery through customer support, so that each day we are the supplier of choice for the industries we serve. We are excited by what the future holds as we continue to innovate and expand with new products, new customers, new markets and new geographies.”

Conference Call & Webcast
Drew will provide an online, real-time webcast of its first quarter 2016 earnings conference call on the Company’s website, www.drewindustries.com, on Monday, May 9, 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 1648926. 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 manufacturers of recreational vehicles and manufactured homes, and to a lesser extent supplies components for adjacent industries including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; modular housing; and factory-built mobile office units. Drew’s products include steel chassis and chassis components; axles and suspension solutions; slide-out mechanisms and solutions; thermoformed bath, kitchen and other products; 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 slide toppers; LED televisions and sound systems; navigation systems; wireless backup cameras; other accessories; and electronic components. 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.


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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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DREW INDUSTRIES INCORPORATED
OPERATING RESULTS
(unaudited)

 
Three Months Ended 
 March 31,
 
Last Twelve
 
2016
 
2015
 
Months
(In thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
Net sales
$
422,798

 
$
361,457

 
$
1,464,407

Cost of sales
314,357

 
285,054

 
1,126,367

Gross profit
108,441

 
76,403

 
338,040

Selling, general and administrative expenses
52,713

 
44,565

 
194,180

Severance
—

 
—

 
3,716

Operating profit
55,728

 
31,838

 
140,144

Interest expense, net
476

 
189

 
2,172

Income before income taxes
55,252

 
31,649

 
137,972

Provision for income taxes
19,293

 
11,576

 
47,741

Net income
$
35,959

 
$
20,073

 
$
90,231

 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
Basic
$
1.46

 
$
0.83

 
$
3.70

Diluted
$
1.45

 
$
0.82

 
$
3.65

 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
Basic
24,567

 
24,215

 
24,386

Diluted
24,794

 
24,541

 
24,716

 
 
 
 
 
 
Depreciation and amortization
$
10,943

 
$
9,802

 
$
42,765

Capital expenditures
$
6,271

 
$
8,593

 
$
26,667


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DREW INDUSTRIES INCORPORATED
SEGMENT RESULTS
(unaudited)

 
Three Months Ended 
 March 31,
 
Last Twelve
 
2016
 
2015
 
Months
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
Net sales: (1)
 
 
 
 
 
RV Segment:
 
 
 
 
 
RV OEMs:
 
 
 
 
 
Travel trailers and fifth-wheels
$
283,369

 
$
259,695

 
$
962,461

Motorhomes
28,523

 
22,309

 
92,727

RV aftermarket
24,968

 
17,209

 
95,206

Adjacent industries
54,819

 
35,358

 
191,642

Total RV Segment net sales
391,679

 
334,571

 
1,342,036

 
 
 
 
 
 
MH Segment:
 
 
 
 
 
Manufactured housing OEMs
21,229

 
17,823

 
85,438

Manufactured housing aftermarket
4,649

 
3,829

 
16,379

Adjacent industries
5,241

 
5,234

 
20,554

Total MH Segment net sales
31,119

 
26,886

 
122,371

 
 
 
 
 
 
Total net sales
$
422,798

 
$
361,457

 
$
1,464,407

 
 
 
 
 
 
Operating profit:
 
 
 
 
 
RV Segment
$
51,281

 
$
29,133

 
$
129,633

MH Segment
4,447

 
2,705

 
14,227

Total segment operating profit
55,728

 
31,838

 
143,860

Severance
—

 
—

 
(3,716
)
Total operating profit
$
55,728

 
$
31,838

 
$
140,144

(1) In the third quarter of 2015, the Company refined the various sales categories within the RV Segment. This refinement had no impact on total RV Segment net sales or trends. Prior periods have been reclassified to conform to this presentation.


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DREW INDUSTRIES INCORPORATED
BALANCE SHEET INFORMATION
(unaudited)

 
March 31,
 
December 31,
 
2016
 
2015
 
2015
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
Current assets
 
 
 
 
 
Cash and cash equivalents
$
27,917

 
$
27,927

 
$
12,305

Accounts receivable, net
104,695

 
89,798

 
41,509

Inventories, net
165,184

 
138,276

 
170,834

Prepaid expenses and other current assets
23,408

 
19,897

 
21,178

Total current assets
321,204

 
275,898

 
245,826

Fixed assets, net
150,378

 
149,087

 
150,600

Goodwill
86,112

 
66,521

 
83,619

Other intangible assets, net
109,347

 
93,898

 
100,935

Deferred taxes
29,391

 
30,453

 
29,391

Other assets
12,610

 
13,272

 
12,485

Total assets
$
709,042

 
$
629,129

 
$
622,856

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
Current liabilities
 
 
 
 
 
Accounts payable, trade
$
48,392

 
$
63,212

 
$
29,700

Dividend payable
7,344

 
48,227

 
—

Accrued expenses and other current liabilities
99,654

 
69,499

 
69,162

Total current liabilities
155,390

 
180,938

 
98,862

Long-term indebtedness
49,920

 
49,955

 
49,910

Other long-term liabilities
36,334

 
28,230

 
35,509

Total liabilities
241,644

 
259,123

 
184,281

Total stockholders’ equity
467,398

 
370,006

 
438,575

Total liabilities and stockholders’ equity
$
709,042

 
$
629,129

 
$
622,856




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DREW INDUSTRIES INCORPORATED
SUMMARY OF CASH FLOWS
(unaudited)

 
Three Months Ended 
 March 31,
 
2016
 
2015
(In thousands)
 
 
 
 
 
 
 
Cash flows from operating activities:
 
 
 
Net income
$
35,959

 
$
20,073

Adjustments to reconcile net income to cash flows provided by operating activities:
 
 
 
Depreciation and amortization
10,943

 
9,802

Stock-based compensation expense
3,140

 
3,063

Other non-cash items
(166
)
 
153

Changes in assets and liabilities, net of acquisitions of businesses:
 
 
 
Accounts receivable, net
(63,286
)
 
(51,811
)
Inventories, net
8,497

 
(3,505
)
Prepaid expenses and other assets
(2,197
)
 
(344
)
Accounts payable, trade
18,692

 
13,678

Accrued expenses and other liabilities
31,929

 
16,024

Net cash flows provided by operating activities
43,511

 
7,133

 
 
 
 
Cash flows from investing activities:
 
 
 
Capital expenditures
(6,271
)
 
(8,593
)
Acquisitions of businesses
(18,100
)
 
(2,723
)
Proceeds from sales of fixed assets
234

 
68

Other investing activities
(151
)
 
(177
)
Net cash flows used for investing activities
(24,288
)
 
(11,425
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Exercise of stock-based awards, net of shares tendered for payment of taxes
(3,196
)
 
(1,847
)
Proceeds from line of credit borrowings
81,458

 
175,350

Repayments under line of credit borrowings
(81,458
)
 
(191,000
)
Proceeds from shelf-loan borrowing
—

 
50,000

Payment of contingent consideration related to acquisitions
(415
)
 
(127
)
Other financing activities
—

 
(161
)
Net cash flows (used for) provided by financing activities
(3,611
)
 
32,215

 
 
 
 
Net increase in cash
15,612

 
27,923

 
 
 
 
Cash and cash equivalents at beginning of period
12,305

 
4

Cash and cash equivalents at end of period
$
27,917

 
$
27,927


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DREW INDUSTRIES INCORPORATED
SUPPLEMENTARY INFORMATION
(unaudited)
 
Three Months Ended
 
 
 
 
March 31,
 
Last Twelve
 
 
2016
 
2015
 
Months
 
Industry Data(1) (in thousands of units):
 
 
 
 
 
 
Industry Wholesale Production:
 
 
 
 
 
 
Travel trailer and fifth-wheel RVs
90.7

 
81.8

 
323.3

 
Motorhome RVs
14.0

 
11.9

 
49.4

 
Manufactured homes
19.1

 
15.4

 
74.3

 
Industry Retail Sales:
 
 
 
 
 
 
Travel trailer and fifth-wheel RVs
58.8

(2) 
55.1

 
320.3

(2) 
Impact on dealer inventories
31.9

(2) 
26.7

 
3.0

(2) 
Motorhome RVs
9.1

(2) 
8.6

 
42.5

(2) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
 
 
 
March 31,
 
 
 
 
2016
 
2015
 
 
 
Drew Estimated Content Per Industry Unit Produced:
 
 
 
 
 
 
Travel trailer and fifth-wheel RV
$
2,978

(3) 
$
2,914

(3) 
 
Motorhome RV
$
1,858

(3) 
$
1,736

(3) 
 
Manufactured home
$
1,150

 
$
1,192

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
 
December 31,
 
 
2016
 
2015
 
2015
 
Balance Sheet Data:
 
 
 
 
 
 
Current ratio
2.1

 
1.5

 
2.5

 
Total indebtedness to stockholders’ equity
0.1

 
0.1

 
0.1

 
Days sales in accounts receivable
20.7

 
21.2

 
14.2

 
Inventory turns, based on last twelve months
6.8

 
8.2

 
6.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
 
Estimated Full Year Data:
 
 
 
 
 
 
Capital expenditures
$ 20 - $ 26 million
 
 
 
Depreciation and amortization
$ 42 - $ 47 million
 
 
 
Stock-based compensation expense
$ 15 - $ 17 million
 
 
 
Annual tax rate
35% - 36%
 
 
 
(1) Industry wholesale production data for travel trailer and fifth-wheel RVs and motorhome RVs provided by the Recreation Vehicle Industry Association. Industry wholesale production data for manufactured homes provided by the Institute for Building Technology and Safety. Industry retail sales data provided by Statistical Surveys, Inc.
(2) March 2016 retail sales data for RVs has not been published yet, therefore 2016 retail data for RVs includes an estimate for March 2016 retail units.
(3) In the third quarter of 2015, the Company refined the calculation of RV content per unit. This refinement had no impact on total RV Segment net sales or trends of content per unit. Prior periods have been reclassified to conform to this presentation.

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