Citing growth in its core recreational vehicle and manufactured housing segments, Drew Industries Inc. reported an 18% increase in net income on record revenues during its second quarter, ended June 30.
“We are pleased to report another outstanding quarter, a result of our strategy based on a combination of organic growth, new product introductions and acquisitions,” said Leigh J. Abrams, president and CEO of the White Plains, N.Y., firm. “We continued to achieve market share gains in many of our established product lines during the quarter, as well as in several of our new product categories, particularly RV axles.”
Drew, parent to suppliers Lippert Components Inc. and Kinro Inc., posted sales of $202 million compared with $163 million a year ago, while net income increased to a record $10.2 million from $8.7 million.
For the six months, sales rose to $410.4 million from $317.5 million the year prior. During the period, net income was $20.4 million compared with $14.5 million.
Second-quarter sales in Drew’s RV segment increased 26% to $140 million compared to $111 million a year ago. Abrams noted that Drew primarily services the towable sector, which industrywide has been outperforming the motorized market.
In addition to several product introductions by its subsidiaries – placing Drew in new market segments – Abrams noted recent acquisitions which helped improve sales, including the purchase of Indiana-based MH chassis supplier Venture Welding and SteelCo, a West Coast-based manufacturer of chassis for RVs and manufactured homes.
In June 2006, Lippert also acquired Happijac Co., which builds bed lifts for toy haulers. Abrams said due to the timing of the acquisition, Happijac did not have a significant impact on Drew’s second quarter, but would elevate sales going forward due to the strength of the toy hauler segment.
“Happijac had annualized sales of approximately $15 million prior to our acquisition, and we expect sales to increase based on the popularity of toy haulers, which are among the RV industry’s fastest growing product lines,” he said. “We also expect margins to improve by taking advantage of cost savings between Happijac and Lippert.”
Drew also reported cutbacks in its specialty trailer operations while margins continued to be impacted by volatility in raw material costs.
“The costs of many of our primary raw materials are still very volatile, though our operating management continues to do a great job of offsetting the impact of higher raw material costs with sales price increases to customers,” said Fred Zinn, Drew’s executive vice president and CFO. “However, because these cost increases were passed along to our customers generally without margin, our profit margins have been reduced.”