Exhibit 99.1
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FOR IMMEDIATE RELEASE
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Date: July 24, 2003
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Contact: Leigh J. Abrams, President and CEO DREW
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Phone: (914) 428-9098 Fax: (914) 428-4581
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E Mail: Drew@drewindustries.com
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DREW INDUSTRIES REPORTS IMPROVED
SECOND-QUARTER RESULTS
RV segment gains drive increases in sales, net income
WHITE PLAINS, NEW YORK - JULY 24, 2003 - Drew Industries Incorporated (AMEX: DW)
today announced improved operating results for the second quarter ended June 30,
2003, highlighted by increased profitability and market share gains in the
recreational vehicle segment.
The White Plains, N.Y.-based supplier of RV and manufactured housing components,
reported net sales increased four percent to $89.4 million in the second quarter
of 2003, compared with net sales of $85.7 million in the second quarter of 2002.
Net income improved 12 percent to $5.3 million, or $.52 per diluted share, in
the 2003 second quarter, compared with net income of $4.8 million, or $.48 per
share, in the same period last year.
For the first six months of 2003, Drew reported that net income rose to $8.6
million, or $.84 per diluted share, on net sales of $170.2 million, compared to
a net loss of $21.8 million, or $2.19 per share, on net sales of $157.9 million
during the first six months of 2002. The 2002 six-month results include a charge
of $30.1 million, or $3.03 per diluted share, for impairment of goodwill. Income
from continuing operations for the first six months of 2003 was approximately
the same as during the first six months of 2002.
"We are pleased with Drew's results through the first half of 2003, particularly
the improvements we showed in the second quarter," said Leigh J. Abrams,
President and CEO of Drew Industries. "We have continued to gain market share
and report improved results despite the continued downturn in the manufactured
housing industry because we offer customers an expansive product line and highly
responsive service. Additionally, our company-wide efforts to improve
productivity and reduce operating costs as a percentage of sales have yielded
improved margins and profitability this quarter."
Gross margin improved to 25.6 percent of sales in the second quarter of 2003,
versus 25.1 percent in the same period a year ago. Company-wide efforts to
manage selling, general and administrative costs helped Drew reduce consolidated
operating expenses as a percentage of sales compared with the year-ago period.
Higher sales, improved gross margin and efforts to manage operating expenses
resulted in an 11.6 percent increase in operating profit versus the 2002 second
quarter. Consolidated operating profit increased to $9.6 million in the 2003
second quarter, an improvement of $1 million over the same period last year.
Recreational Vehicle Products Segment
Drew's recreational vehicle (RV) products segment continued to outperform the RV
industry by achieving a 26 percent increase in net sales during the second
quarter of 2003, compared to a four percent decrease in industry-wide shipments
of RVs in April and May, the only two months for which industry statistics are
available. Industry-wide shipments of travel trailers and fifth wheel RVs,
Drew's primary RV markets, increased an aggregate of four percent in April and
May. Net sales increased throughout Drew's RV product lines, highlighted by an
81 percent increase in sales of RV slide-out mechanisms and power units.
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DREW INDUSTRIES / Page 2
Drew reported that RV segment operating profits rose 70 percent to $6.9 million
in the second quarter of 2003. Segment operating margins improved to 12.4
percent of sales, from 9.2 percent in the second quarter of last year. Improved
operating results at several of the Company's facilities, especially those in
Rialto, Calif., and Goshen and Middlebury, Ind., contributed significantly to
the increased profitability of Drew's RV segment.
Mr. Abrams said: "Our RV segment continues to grow despite some softening in the
industry this year. Acquisitions we have made in recent years have allowed us to
expand our product line and better serve our customers. Additionally, the trend
toward greater use of slide-outs is continuing, which has spurred sales and
improved profitability at our Lippert Components division. The long-term
demographic trends for the RV industry are excellent, and we remain confident in
our ability to continue outperforming the industry throughout 2003."
Drew said the RV segment accounted for $55.5 million, or 62 percent, of the
Company's sales, and $6.9 million, or 64 percent, of consolidated segment
operating profit during the second quarter of 2003.
Manufactured Housing Products Segment
Drew's manufactured housing (MH) products segment continues to be hampered by
the prolonged slump in the industry. Net sales by the Company's MH segment
declined 18 percent, to $34.0 million in the current quarter. This was better
than the industry-wide 27 percent decline in production in April and May, the
only two months for which industry statistics are available. Though Drew's MH
segment has remained profitable in every quarter through this slump, higher
insurance costs and lower sales volume caused segment-operating profit to
decline from 13.2 percent of sales in the second quarter of 2002, to 11.6
percent of sales in the same period this year.
"The manufactured housing industry continues to be plagued by repossessions and
tight credit, and those factors are weighing on Drew's MH segment. However, our
MH segment has remained profitable throughout this period, and steel prices have
decreased recently from the high levels of last year, easing the burden on our
costs," said Abrams. "We believe the quality of manufactured homes and the cost
advantages over site-built homes will lead to greater demand for these homes
over time. The long-term outlook for the industry, as well as Drew's MH segment,
remains strong, emphasized by the recent interest of Warren Buffett of Berkshire
Hathaway and others in the financial community in this industry."
Balance Sheet/Other
Drew reported that operating cash flow and the Company's asset management
efforts enabled the Company to reduce its debt by $11.6 million since the end of
the first quarter of 2003. Drew currently has no borrowings under its $30
million line of credit, despite making a scheduled payment of $8 million on its
Senior Notes earlier this year, and expending $4 million for the acquisition of
LTM Manufacturing in July 2003.
Drew also reported that its efforts to manage working capital resulted in a
decrease in inventories, which were $5.3 million lower than at December 31,
2002. Accounts receivable remain current and continue to be collected quickly,
with less than 21 days sales outstanding at the end of the quarter. Capital
expenditures were $2.8 million for the six months, and are expected to be
approximately $7.5 million for the year. Depreciation and amortization was $3.9
million for the six months and is expected to total approximately $8.2 million
for the year.
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DREW INDUSTRIES / Page 3
"We are pleased that Drew's long track record of profitable quarters continues,
and we look forward to continuing our momentum throughout the coming quarters,"
said Abrams. "Our acquisition of LTM last week brings several complementary RV
products to our Lippert Components subsidiary. LTM specializes in innovative,
time-saving and convenience products, such as specialty slide-out storage trays,
decks and electric stabilizer jacks for the changing needs of RVers, and we
expect to expand our market share in the RV segment as a result."
Drew is pleased to have received notification recently from Institutional
Shareholders Services, Inc. (ISS), a Rockville, Md.- based independent research
firm that advises institutional investors, that Drew's corporate governance
policies outranked 98.4 percent of all companies listed in the Russell 3000
Index.
Conference Call
Drew will provide an online, real-time webcast and rebroadcast of its second
quarter earnings conference call on Thursday, July 24, 2003, at 11:00 a.m.
Eastern time, at www.drewindustries.com. Individual investors can also listen to
the call at www.companyboardroom.com.
Institutional investors can access the call via the password-protected event
management site, StreetEvents (www.streetevents.com). A replay of the conference
call will be available by telephone by dialing (888) 286-8010 and referencing
access code 58165607. A replay will also be available on Drew's website.
About Drew
Drew, through its wholly owned subsidiaries, Kinro and Lippert Components,
supplies a broad array of components for RVs and manufactured homes. Drew's
products include aluminum and vinyl windows and screens, doors, chassis, chassis
parts, RV slide-out mechanisms and power units, bath and shower units, and
electric stabilizer jacks. From 40 factories located throughout the United
States and one factory in Canada, Drew serves most major national manufacturers
of RVs and manufactured homes in an efficient and cost-effective manner.
Additional information about Drew and its products can be found at
www.drewindustries.com.
Forward Looking Statements
This press release contains certain statements, including the Company's plans
and expectations regarding its operating strategies, products and costs, and its
views of the prospects of the recreational vehicle and manufactured housing
industries, which are forward-looking statements and are made pursuant to the
safe harbor provisions of the Securities Litigation Reform Act of 1995. These
forward-looking statements reflect the Company's views, at the time such
statements were made, with respect to the Company's future plans, objectives,
events and financial results, such as revenues, expenses, income, earnings per
share, capital expenditures, and other financial items. Forward-looking
statements are not guarantees of future performance; they are subject to risks
and uncertainties. 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.
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 pricing
pressures due to competition, raw material costs (particularly aluminum, vinyl,
steel, glass, and ABS resin), availability of retail and wholesale financing for
manufactured homes, availability and costs of labor, inventory levels of
retailers and manufacturers, the financial condition of our customers, interest
rates, and adverse weather conditions impacting retail sales. In addition,
general economic conditions and consumer confidence may affect the retail sale
of recreational vehicles and
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manufactured homes.
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DREW INDUSTRIES INCORPORATED
OPERATING RESULTS
Six Months Ended Quarter Ended
June 30, June 30, Last
----------------------- --------------------- Twelve
(In thousands, except per share amounts) 2003 2002 2003 2002 Months
-------- --------- ------- -------- ---------
Net sales $170,237 $ 157,905 $89,410 $ 85,718 $ 337,763
Cost of sales 129,404 118,350 66,527 64,211 257,898
-------- --------- ------- -------- ---------
Gross profit 40,833 39,555 22,883 21,507 79,865
Selling, general and administrative expenses 25,299 24,068 13,298 12,922 50,605
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Operating profit 15,534 15,487 9,585 8,585 29,260
Interest expense, net 1,618 1,804 807 873 3,380
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Income from continuing operations before
income taxes and cumulative effect of
change in accounting principle 13,916 13,683 8,778 7,712 25,880
Provision for income taxes 5,443 5,227 3,433 2,905 10,099
-------- --------- ------- -------- ---------
Income from continuing operations before
cumulative effect of change in
accounting principle 8,473 8,456 5,345 4,807 15,781
Discontinued operations (net of taxes) 138 (157) -- (40) 95
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Income before cumulative effect of
change in accounting principle 8,611 8,299 5,345 4,767 15,876
Cumulative effect of change in accounting
principle for goodwill (net of taxes) -- (30,080) -- -- (82)
-------- --------- ------- -------- ---------
Net income (loss) $ 8,611 $ (21,781) $ 5,345 $ 4,767 $ 15,794
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Net income (loss) per common share:
Income from continuing operations
before cumulative effect of change
in accounting principle:
Basic $ .85 $ .87 $ .53 $ .49 $ 1.59
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Diluted $ .83 $ .85 $ .52 $ .48 $ 1.56
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Discontinued operations, net of taxes:
Basic $ .01 $ (.01) $ -- $ -- $ .01
======== ========= ======= ======== =========
Diluted $ .01 $ (.01) $ -- $ -- $ .01
======== ========= ======= ======== =========
Cumulative effect of change in
accounting principle for goodwill,
net of taxes:
Basic $ -- $ (3.10) $ -- $ -- $ (.01)
======== ========= ======= ======== =========
Diluted $ -- $ (3.03) $ -- $ -- $ (.01)
======== ========= ======= ======== =========
Net income (loss)
Basic $ .86 $ (2.24) $ .53 $ .49 $ 1.59
======== ========= ======= ======== =========
Diluted $ .84 $ (2.19) $ .52 $ .48 $ 1.56
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Weighted average common shares outstanding:
Basic 10,007 9,717 10,045 9,753 9,935
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Diluted 10,215 9,924 10,249 9,987 10,154
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Depreciation and amortization $ 3,923 $ 3,470 $ 1,961 $ 1,770 $ 7,785
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Capital expenditures $ 2,840 $ 5,143 $ 1,674 $ 2,696 $ 8,235
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DREW INDUSTRIES INCORPORATED
SEGMENT RESULTS
Six Months Ended June 30, Three Months Ended June 30,
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(In thousands) 2003 2002 2003 2002
--------- --------- -------- --------
Net sales
RV Segment $ 105,714 $ 78,814 $ 55,457 $ 44,106
MH Segment 64,523 79,091 33,953 41,612
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Total $ 170,237 $ 157,905 $ 89,410 $ 85,718
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Operating Profit
RV Segment $ 11,416 $ 7,638 $ 6,886 $ 4,056
MH Segment 6,479 9,730 3,938 5,486
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Total segments operating profit 17,895 17,368 10,824 9,542
Amortization of intangibles (375) (359) (182) (182)
Corporate and other (1,986) (1,522) (1,057) (775)
--------- --------- -------- --------
Operating profit $ 15,534 $ 15,487 $ 9,585 $ 8,585
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BALANCE SHEET INFORMATION
June 30,
----------------------
(In thousands, except per share amounts and ratios) 2003 2002
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Current assets
Cash and cash equivalents ........................................... $ 4,884 $ 1,633
Accounts receivable, trade, less allowances ......................... 20,137 21,612
Inventories ......................................................... 31,825 30,729
Prepaid expenses and other current assets ........................... 5,596 4,048
Discontinued operations ............................................. 6 3,253
-------- --------
Total current assets ............................................ 62,448 61,275
Fixed assets, net ...................................................... 73,154 72,392
Goodwill ............................................................... 7,043 5,972
Other intangible assets ................................................ 4,417 881
Other assets ........................................................... 3,062 5,641
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Total assets .................................................... $150,124 $146,161
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Current liabilities
Notes payable, including current maturities of long-term indebtedness $ 10,003 $ 9,639
Accounts payable, accrued expenses and other current liabilities .... 28,961 33,300
Discontinued operations ............................................. 131 1,102
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Total current liabilities ....................................... 39,095 44,041
Long-term indebtedness ................................................. 26,759 40,633
Other long-term liabilities ............................................ 3,245 260
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Total liabilities ............................................... 69,099 84,934
Total stockholders' equity ...................................... 81,025 61,227
-------- --------
Total liabilities and stockholders' equity ...................... $150,124 $146,161
======== ========
Current ratio .......................................................... 1.6 1.4
Total indebtedness to stockholders' equity ............................. 0.5 0.8