Drew Industries Reports Second Quarter 2013 Results

             Drew Industries Reports Second Quarter 2013 Results

PR Newswire

ELKHART, Ind., Aug. 6, 2013

ELKHART, Ind., Aug. 6, 2013 /PRNewswire/ --Drew Industries Incorporated
(NYSE: DW), a leading supplier of components for recreational vehicles (RVs)
and manufactured homes, today reported net income of $15.9 million, or $0.67
per diluted share, for the second quarter ended June 30, 2013, net of a
previously announced after-tax charge of $0.4 million related to executive
succession. Excluding this charge, net income in the second quarter of 2013
would have been $16.3 million, or $0.69 per diluted share, an increase of 39
percent compared to net income of $11.7 million, or $0.52 per diluted share,
in the second quarter of 2012.

"Our operating profit margins improved sequentially in the second quarter of
2013 primarily due to efficiency improvements implemented by management, as
well as the benefits of spreading fixed costs over a seasonally larger sales
base and seasonally lower payroll taxes," said Jason Lippert, Drew's Chief
Executive Officer. "This sequential margin gain was greater than originally
expected, as many of the improvements implemented by management resulted in
efficiency gains sooner than anticipated. We were confident that the steps we
had taken to meet anticipated customer demand and improve profitability were
correct, and it was reassuring to see the results of these efforts in the 2013
second quarter."

Net sales in the second quarter of 2013 increased to a record $287 million, 14
percent higher than the same period last year. The increase in Drew's second
quarter net sales was a result of a 16 percent sales increase by Drew's RV
Segment, which accounted for 88 percent of consolidated net sales this
quarter. RV Segment sales growth was largely due to a 12 percent increase in
industry-wide wholesale shipments of travel trailer and fifth-wheel RVs,
Drew's primary RV market. Sales of recently introduced components for towable
and motorhome RVs also contributed to the revenue increase, as did sales to
adjacent industries and the aftermarket.

The Company's content per travel trailer and fifth-wheel RV and motorhome RV
for the twelve months ended June 2013 increased 5 percent and 23 percent,
respectively, from the year-earlier period as a result of recent product
introductions, product improvements and market share gains. The Company's
content per manufactured home for the twelve months ended June 2013 declined 3
percent from the year-earlier period primarily due to customer mix. The change
in content per RV and manufactured home is a measure of the change in Drew's
overall market share across its existing product lines.

Retail demand for towable RVs increased 10 percent in the first five months of
2013, following an 8 percent increase in retail demand for the full year 2012.
June 2013 retail data is not yet available. Most industry analysts report that
dealer inventories of towable RVs are in line with anticipated retail demand.
Future RV industry-wide production levels will depend on the strength of
future retail sales.

"Our labor efficiencies continued to improve, with labor costs as a percent of
sales declining in the second quarter of 2013," continued Jason Lippert. "This
improvement followed a sequential reduction of labor as a percent of sales of
more than 1 percent in the first quarter of 2013. These reductions during the
first two quarters of 2013 were primarily due to improved production
processes, as well as expected declines in the costs of implementing facility
consolidations and realignments. Nonetheless, we are continuing to implement
additional efficiency improvements as we identify them. However, the benefits
of such improvements on our operating margins in the latter half of 2013 will
likely be offset by the spreading of fixed costs over a seasonally smaller
sales base."

In July 2013, Drew's consolidated net sales reached approximately $83 million
– 13 percent higher than in July 2012 – as a result of continued solid growth
in the Company's RV Segment. Drew estimates that industry-wide wholesale
shipments of travel trailer and fifth-wheel RVs increased 7 percent in July
2013 compared to July 2012. Drew also estimates that July 2013 industry-wide
production of manufactured homes increased 5 to 10 percent compared to July
2012.

"Since the end of 2011, we have achieved significant growth, with our net
sales for the twelve months ended June 30, 2013 increasing over $285 million,
or 42 percent," said Scott Mereness, Drew's President. "In response to this
sales growth, and in anticipation of future growth, we added significant
resources, investing in personnel and facilities to expand and improve
production capacity, as well as to improve customer service. Many of the
benefits and efficiencies of these initiatives were realized in the 2013
second quarter. Having just completed the peak seasonal period, we are now
evaluating our human resource and facility requirements for the balance of
2013 and beyond."

Jason Lippert added, "We will continue to invest in resources to strategically
grow the business, especially in research and development, to provide creative
and unique products. Staying ahead of the market through innovation has been
important to our success, and will be even more important to maintaining our
position as a leading supplier to the industries we serve. In addition, we
will invest in areas where we believe additional savings can be realized, such
as purchasing, automation and human resources. While some of these initiatives
and related fixed costs may have a negative impact on operating margins in the
short term, we believe they will benefit the long-term growth of the Company."

"As previously announced, Fred Zinn retired as President and CEO in May 2013,"
said Leigh Abrams, Chairman of Drew's Board of Directors. "Jason Lippert
became Drew's CEO, and Scott Mereness became Drew's President. Jason and Scott
have been vital to our sales growth and operational success for many years and
are highly respected throughout the industries we serve. As expected, this
executive succession transition was very smooth, and we are confident that
Jason, Scott and their team are ready to lead Drew for many years to come."

As a result of the Company's executive succession and corporate relocation
from New York to Indiana, a pre-tax charge of $0.7 million was recorded in the
second quarter of 2013 related to contractual obligations for severance and
the acceleration of equity awards held by certain employees whose employment
terminated. No other related charges are expected. Once the transition and
corporate office relocation are completed during the latter half of 2013, the
Company expects to save approximately $2 million annually.

"Our operating cash flow in the second quarter of 2013 remained strong," said
Joe Giordano, Drew's Chief Financial Officer and Treasurer. "At the end of the
quarter, we had no debt, $32 million of cash and substantial available credit
lines, and we expect continued solid cash flow. We are well positioned to take
advantage of attractive investment opportunities that can further improve our
results."

Conference Call & Webcast
Drew will provide an online, real-time webcast of its second quarter 2013
earnings conference call on the Company's website, www.drewindustries.com, on
Tuesday, August 6, 2013, at 11:00 a.m. Eastern time. The call can also be
accessed at www.companyboardroom.com.

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 (888) 286-8010 and referencing access code 18767066. A replay of the
webcast will also be available on Drew's website.

About Drew Industries
From 31 factories located throughout the United States, Drew Industries,
through its wholly-owned subsidiaries, Kinro and Lippert Components, supplies
a full line of components for the leading manufacturers of recreational
vehicles and manufactured homes. In addition, Drew manufactures components for
adjacent industries including buses; trailers used to haul boats, livestock,
equipment and other cargo; truck caps; modular housing; and factory-built
mobile office units. Drew's products include steel chassis; vinyl and aluminum
windows and screens; slide-out mechanisms and solutions; axles and suspension
solutions; furniture and mattresses; thermoformed bath, kitchen and other
products; manual, electric and hydraulic stabilizer and lifting systems;
chassis components; entry, baggage, patio and ramp doors; entry steps;
awnings; electronics; aluminum extrusions; 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" within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect
to financial condition, results of operations, business strategies, operating
efficiencies or synergies, competitive position, growth opportunities for
existing products, acquisitions, plans and objectives of management, markets
for the Company's Common Stock 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 (the "Exchange Act") and Section 27A of the Securities Act of 1933
(the "Securities Act").

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 our senior management at
the time such statements were made, and involve a number of risks and
uncertainties that could cause actual results to differ materially from those
suggested by such forward-looking statements. The Company does not undertake
to update forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements are made. You should
consider forward-looking statements, therefore, in light of various important
factors, including those set forth under the caption "Risk Factors" in our
Annual Report on Form 10-K for the year ended December 31, 2012, and in our
subsequent filings with the Securities and Exchange Commission (the "SEC").

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, availability of credit for financing the retail and wholesale
purchase of products for which we sell our components, availability and costs
of labor, inventory levels of retail dealers and manufacturers, levels of
repossessed products for which we sell our components, changes in zoning
regulations for manufactured homes, seasonality and cyclicality in the
industries to which we sell our products, 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
successful integration of acquisitions, realization of efficiency
improvements, the successful entry into new markets, interest rates, oil and
gasoline prices, and the successful implementation of management succession.
In addition, international, national and regional economic conditions and
consumer confidence affect the retail sale of products for which we sell our
components.

DREW INDUSTRIES INCORPORATED
OPERATING RESULTS
(unaudited)
                         Six Months Ended      Three Months Ended
                         June 30,              June 30,              Last
                                                                     Twelve
(In thousands, except    2013       2012       2013       2012       Months
per share amounts)
Net sales                $        $        $        $        $  
                         539,778    474,566    287,192    251,014    966,335
Cost of sales            430,754    383,320    225,759    204,591    779,898
Gross profit             109,024    91,246     61,433     46,423     186,437
Selling, general and     67,852     54,905     34,992     27,455     122,018
administrative expenses
Executive succession     1,876      -          733        -          3,332
Operating profit         39,296     36,341     25,708     18,968     61,087
Interest expense, net    203        130        85         56         403
Income before income     39,093     36,211     25,623     18,912     60,684
taxes
Provision for income     14,856     13,387     9,758      7,204      21,931
taxes
Net income               $       $       $       $       $   
                         24,237     22,824     15,865     11,708     38,753
Net income per common
share:
Basic                    $      $      $      $      $    
                         1.05      1.02      0.68      0.52      1.69
Diluted                  $      $      $      $      $    
                         1.03      1.01      0.67      0.52      1.67
Weighted average common
shares outstanding:
Basic                    23,139     22,479     23,261     22,516     22,889
Diluted                  23,553     22,686     23,650     22,731     23,262
Depreciation and         $       $       $      $      $   
amortization             13,453     12,361     6,901      5,980      26,757
Capital expenditures     $       $       $      $      $   
                         17,545     13,154     8,607      7,470      36,417

DREW INDUSTRIES INCORPORATED
SEGMENT RESULTS
(unaudited)
                                 Six Months Ended  Three Months Ended
                                 June 30,          June 30,            Last
                                                                       Twelve
(In thousands)                   2013     2012     2013       2012     Months
Net sales:^(1)
RV Segment:
RV original equipment
manufacturers:
Travel trailers and              $      $      $        $      $  
fifth-wheels                     394,512  350,348  209,013    183,013  700,081
Motorhomes                       21,275   15,502   11,025     8,930    38,470
RV aftermarket                   12,881   9,359    7,152      5,369    22,641
Adjacent industries              48,401   38,777   25,876     21,119   82,816
Total RV Segment net sales       477,069  413,986  253,066    218,431  844,008
MH Segment:
Manufactured housing original    40,370   40,490   22,591     21,778   80,273
equipment manufacturers
Manufactured housing             7,239    7,188    3,587      3,576    13,161
aftermarket
Adjacent industries              15,100   12,902   7,948      7,229    28,893
Total MH Segment net sales       62,709   60,580   34,126     32,583   122,327
Total net sales                  $      $      $        $      $  
                                 539,778  474,566  287,192    251,014  966,335
Operating Profit:^(2)
RV Segment                       $     $     $       $     $   
                                 34,864   29,349   22,600     14,819   52,687
MH Segment                       6,308    6,992    3,841      4,149    11,732
Total segment operating profit   41,172   36,341   26,441     18,968   64,419
Executive succession             (1,876)  -        (733)      -        (3,332)
Total operating profit           $     $     $       $     $   
                                 39,296   36,341   25,708     18,968   61,087

(1) In the second quarter of 2013, the Company refined the various sales
categories within the RV Segment and MH Segment. This refinement had no impact
on

total RV Segment and MH Segment net sales or trends. Prior periods have been
reclassified to conform to this presentation.
(2) Effective with the second quarter of 2013, in connection with the
management succession and relocation of the corporate office from New York to
Indiana,

corporate expenses, accretion related to contingent consideration and other
non-segment items, which were previously reported on separate lines, have been

included as part of segment operating profit. Corporate expenses are allocated
between the segments based upon net sales. Accretion related to contingent

consideration and other non-segment items are included in the segment to which
they relate. The segment disclosures from prior years have been reclassified

to conform to the current year presentation.

DREW INDUSTRIES INCORPORATED
BALANCE SHEET INFORMATION
(unaudited)
                              June 30                         December 31,
(In thousands)                2013            2012            2012
Current Assets
Cash and cash equivalents     $    31,877  $    42,514  $     9,939
Accounts receivable, net      59,515          50,900          21,846
Inventories                   99,777          91,413          97,367
Deferred taxes                10,073          10,125          10,073
Prepaid expenses and other    10,844          9,631           14,798
current assets
Total current assets          212,086         204,583         154,023
Fixed assets, net             117,419         99,342          107,936
Goodwill                      21,552          21,177          21,177
Other intangible assets, net  64,307          73,986          69,218
Deferred taxes                14,993          14,496          14,993
Other assets                  7,392           5,618           6,521
Total assets                  $   437,749   $   419,202   $    373,868
Current liabilities
Accounts payable, trade       $    33,463  $    44,372  $     21,725
Accrued expenses and other    57,405          48,665          48,055
current liabilities
Total current liabilities     90,868          93,037          69,780
Other long-term liabilities   21,734          21,305          19,843
Total liabilities             112,602         114,342         89,623
Total stockholders' equity    325,147         304,860         284,245
Total liabilities and         $   437,749   $   419,202   $    373,868
stockholders' equity

DREW INDUSTRIES INCORPORATED
SUMMARY OF CASH FLOWS
(unaudited)
                                                Six Months Ended
                                                June 30,
(In thousands)                                  2013            2012
Cash flows from operating activities:
 Net income                                    $    24,237  $    22,824
 Adjustments to reconcile net income to cash
flows provided by operating activities:
Depreciation and amortization                   13,453          12,361
Stock-based compensation expense                5,844           3,069
Other non-cash items                            1,624           1,131
Changes in assets and liabilities, net of
acquisitions of businesses:
Accounts receivable, net                        (37,520)        (28,280)
Inventories                                     (2,367)         1,227
Prepaid expenses and other assets               3,573           (4,642)
Accounts payable                                11,696          28,630
Accrued expenses and other liabilities          12,499          12,241
Net cash flows provided by operating            33,039          48,561
activities
Cash flows from investing activities:
 Capital expenditures                          (17,545)        (13,154)
 Acquisitions of businesses                    (1,451)         (1,473)
 Proceeds from sales of fixed assets           70              2,123
 Other investing activities                    (48)            (48)
Net cash flows used for investing               (18,974)        (12,552)
activities
Cash flows from financing activities:
 Proceeds from exercise of stock options       10,686          1,471
 Proceeds from line of credit borrowings       135,452         37,702
 Repayments under line of credit               (135,452)       (37,702)
borrowings
 Payment of contingent consideration           (2,813)         (1,550)
related to acquisitions
Net cash flows provided by (used for)           7,873           (79)
financing activities
Net increase in cash                            21,938          35,930
Cash and cash equivalents at beginning of       9,939           6,584
period
Cash and cash equivalents at end of period      $    31,877  $    42,514

DREW INDUSTRIES INCORPORATED
SUPPLEMENTARY INFORMATION
(unaudited)
                     Six Months Ended  Three Months Ended
                     June 30,          June 30,                  Last
                                                                 Twelve
                     2013       2012   2013         2012         Months
Industry
Data^(1)(in
thousands of
units):
Industry
Wholesale
Production:
Travel trailer
and fifth-wheel      146.6      131.5  79.9         71.1         258.0
RVs
Motorhome RVs        19.5       14.5   11.0         7.6          33.2
Manufactured         29.1       27.7   16.3         14.9         56.3
homes
Industry Retail
Sales:
Travel trailer
and fifth-wheel      135.4 ^(2) 123.1  92.9    ^(2) 84.0         235.3    ^(2)
RVs
Impact on dealer     11.2  ^(2) 8.4    (13.0)  ^(2) (12.9)       22.7     ^(2)
inventories
                                       Twelve Months Ended
                                       June 30,
                                       2013         2012
Drew Content Per
Industry Unit
Produced:
Travel trailer and fifth-wheel RV      $    ^(3) $    ^(3)
                                        2,713       2,584
                                       $         $   
Motorhome RV                            1,159 ^(3)       ^(3)
                                                    941
Manufactured home                      $         $   
                                        1,426       1,476
                                       June 30,                  December
                                                                 31,
                                       2013         2012         2012
Balance Sheet
Data:
Current ratio                          2.3          2.2          2.2
Total indebtedness to stockholders'    -            -            -
equity
Days sales in accounts receivable      20.1         19.3         14.3
Inventory turns, based on last twelve  7.8          7.1          7.8
months
                                       2013
Estimated Full
Year Data:
Capital expenditures                   $ 30 - $ 34 million
Depreciation and amortization          $ 26 - $ 28 million
Stock-based compensation expense       $ 10 - $ 11 million
Annual tax rate                        37% - 38%
(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) June retail sales data for RVs has not been published yet, therefore 2013
retail data for RVs includes an estimate for June 2013 retail units.
(3) In the second quarter of 2013, 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.





DREW INDUSTRIES INCORPORATED
RECLASSIFIED SEGMENT RESULTS
(unaudited)
Effective with the second quarter of 2013, in connection with the management
succession and relocation of the corporate office from New York to Indiana,
corporate expenses, accretion related to contingent consideration and other
non-segment items, which were previously reported on separate lines, have been
included as part of segment operating profit. Corporate expenses are allocated
between the segments based upon net sales. Accretion related to contingent
consideration and other non-segment items are included in the segment to which
they relate. The segment disclosures from prior years have been reclassified
to conform to the current year presentation.
Reclassified information relating to segments follows for the (in thousands):
                                                                     Six
                                                                     Months
                  Three Months Ended                                 Ended
                  March 31,    June 30,                              June 30,
                  2013         2013                                  2013
Net sales:
RV Segment   $          $                                   $  
                  224,003      253,066                               477,069
MH Segment   28,583       34,126                                62,709
Total net sales   $          $                                   $  
                  252,586      287,192                               539,778
Operating
Profit:
RV Segment   $         $                                  $   
                  12,264       22,600                                34,864
MH Segment   2,467        3,841                                 6,308
Total segment
operating         14,731       26,441                                41,172
profit
Executive         (1,143)      (733)                                 (1,876)
succession
Total operating   $         $                                  $   
profit            13,588       25,708                                39,296
                  Three Months Ended                                 Year
                                                                     Ended
                  March 31,    June 30,    September    December     December
                                           30,          31,          31,
                  2012         2012        2012         2012         2012
Net sales:
RV Segment   $          $         $          $          $  
                  195,555      218,431     194,957      171,982      780,925
MH Segment   27,997       32,583      31,366       28,252       120,198
Total net sales   $          $         $          $          $  
                  223,552      251,014     226,323      200,234      901,123
Operating
Profit:
RV Segment   $         $        $         $        $   
                  14,530       14,819      11,587       6,236        47,172
MH Segment   2,843        4,149       3,361        2,063        12,416
Total segment
operating         17,373       18,968      14,948       8,299        59,588
profit
Executive         -            -           -            (1,456)      (1,456)
succession
Total operating   $         $        $         $        $   
profit            17,373       18,968      14,948       6,843        58,132
                  Three Months Ended                                 Year
                                                                     Ended
                  March 31,    June 30,    September    December     December
                                           30,          31,          31,
                  2011         2011        2011         2011         2011
Net sales:
RV Segment   $          $         $          $          $  
                  146,229      157,199     136,228      130,987      570,643
MH Segment   22,604       28,849      30,461       28,609       110,523
Total net sales   $          $         $          $          $  
                  168,833      186,048     166,689      159,596      681,166
Operating
Profit:
RV Segment   $         $        $        $        $   
                  13,601       15,286      5,653        3,175        37,715
MH Segment   1,942        2,624       3,550        2,717        10,833
Total operating   $         $        $        $        $   
profit            15,543       17,910      9,203        5,892        48,548







DREW INDUSTRIES INCORPORATED
RECLASSIFIED RV CONTENT PER UNIT
(unaudited)
In the second quarter of 2013, 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.
The trend in the Company's average product content per RV produced is an
indicator of the Company's overall market share of components for new RVs. The
Company's average product content per type of RV, calculated based upon the
Company's net sales of components to RV OEMs for the different types of RVs
produced for the respective twelve month period, divided by the industry-wide
wholesale shipments of the different types of RVs for the same period, was:
                     Twelve Months Ended
                     March 31,      June 30,       September      December 31,
                                                   30,
Content per
(2013):
Travel trailer       $          $    
and fifth-wheel      2,705          2,713
RV
Motorhome RV         $          $    
                     1,221          1,159
Content per
(2012):
Travel trailer       $           $           $          $    
and fifth-wheel      2,441         2,584         2,673          2,700
RV
Motorhome RV         $         $         $          $    
                     771            941            1,092          1,160
Content per
(2011):
Travel trailer       $           $           $           $   
and fifth-wheel      2,177         2,182         2,235         2,337
RV
Motorhome RV         $         $         $         $     
                     660            646            666            705



SOURCE Drew Industries Incorporated

Website: http://www.drewindustries.com
Contact: Joe Giordano, CFO & Treasurer, (574) 535-1125,
Drew@drewindustries.com