Drew Industries Inc. aims to become the leading supplier of systems and components to the RV industry and the American Stock Exchange-listed company’s record third-quarter sales and earnings indicates the effectiveness of that strategy, according to Leigh Abrams, president and CEO.
Drew, also a supplier to manufactured housing industry customers, plans to become a leading RV industry supplier through internal growth and acquisitions.
In the third quarter, Drew, which primarily supplies the travel-trailer and fifth-wheel segments of the RV industry, reports its sales revenue to RV industry customers increased 26%, outpacing the 10% unit volume growth achieved by the combined travel-trailer/fifth-wheel segment in the first eight months of this year.
Drew’s total sales in the three months ended Sept. 30 amounted to a record $96.1 million, an 8% increase over its $89.2 million in sales in the same portion of last year. Sales to RV industry customers accounted for 62% of Drew’s total sales in the July-through-September period.
The company’s third-quarter net income also increased 40% to $6.6 million, compared with $4.7 million a year earlier.
Improved operating results, especially at Drew’s RV industry supplier plants in Rialto, Calif., Goshen and Middlebury, Ind., were major contributors to Drew’s higher profits, according to the company.
Ingthe first nine months of this year, Drew’s net income totaled $15.2 million, compared with a net loss of $17.1 million a year earlier. Drew incurred a net loss in 2002 because it took a $30.1 million noncash cash to account for goodwill impairment.
The company’s total sales in the first nine months of this year also increased 8% to $266.3 million.
“Our continued market share gains, along with new product introductions, superior customer service and stringent cost controls have combined to yield a truly outstanding quarter for Drew, particularly in view of the continuing sales decline in the manufactured housing industry,” Abrams said. “We gained market share in all our RV product lines and continue to layer on additional complementary lines through new product development as well as acquisitions.”
In July, Drew completed the acquisition of Smith Center, Kan.-based LTM Manufacturing, a supplier of specialty sideout trays for batteries, LP tanks and storage as well as electric stabilizer jacks, flexguard slideout wire protection systems and slideout patio decks.
Earlier this month, Drew also purchased Elkhart, Ind.-based ET&T Frames, a supplier of chassis for specialty trailers, park models, office units, cargo trailers and, to a lesser extent, towable RVs.
The manufacturing operations of LTM and ET&T are being consolidated into existing Drew factories, so they will not increase the parent company’s overhead, although they will add $11.5 million to Drew’s total annual sales plus increase profitability, Abrams said.
Drew used available cash to buy LTM, ET&T and prepay $1.4 million in mortgage debt. As of Sept. 30, Drew’s debt totaled $35.2 million, although it has not borrowed from its $30 million line of credit.