Drew Industries Inc,, parent to supplier Lippert Components Inc., today reported net income of $20.1 million, or 82 cents per diluted share, for the first quarter ended March 31, compared to net income of $16.2 million, or 67 cents per diluted share, for the previous year.
Consolidated net sales in the first quarter increased to a quarterly record $361 million, 27% higher than the 2014 first quarter. This growth in revenue primarily resulted from a 29% increase in sales of Drew’s RV segment, which accounted for 93% of consolidated net sales in the first quarter. RV segment sales growth was primarily due to an 8% increase in industrywide wholesale shipments of travel trailer and fifth-wheel RVs, Drew’s primary RV market, as well as increased content per unit through market share gains. The acquisitions completed by the company in 2014 and the first quarter of 2015 also added $18 million in net sales in the first quarter of 2015, all of which related to Drew’s RV segment. Further, the company organically increased sales to adjacent industries and the aftermarket.
Drew’s content per travel trailer and fifth-wheel RV for the 12 months ended March 31 increased by $192, or 7%, to $2,923, compared to $2,731 last year. This growth was primarily organic through new product introductions, product enhancements and market share gains. The company’s content per motorhome RV for the 12 months increased by $423, or 34%, to $1,679, compared to $1,256 a year ago, reflecting market share gains through both organic growth and acquisitions completed in 2014.
“With the strong underlying demand for our products in the first quarter of 2015, we achieved record net sales, the highest level for any quarter in Drew’s history,” said Jason Lippert, Drew CEO. “The industries we serve continue to grow, which, when coupled with our recent acquisitions, new products and market share gains, have led to the significant increase in our net sales for the first quarter of 2015. In particular, RV industry fundamentals show positive signs for 2015, including an estimated 13% increase in industry-wide retail sales of travel trailer and fifth-wheel RVs in the 2015 first quarter. As we stated in our year-end release, our RV OEM customers believe there is continued retail growth coming in 2015 and beyond, despite the RV industry approaching prior wholesale production peaks. Further, industry analysts report that dealer inventory is in line with anticipated retail demand.”
“As a result of their confidence in additional retail growth for the RV industry, many RV OEMs are adding significant capacity to meet the anticipated demand,” continued Lippert. “As a result of the significant investments in capital expenditures, facility start-ups and personnel we made in 2014, we continue to believe we are well positioned to meet the increased demands expected for 2015 and the beginning of 2016.”
In April 2015, Drew’s consolidated net sales reached approximately $129 million, 14% higher than April 2014, a record for the month of April. Excluding the impact of acquisitions, the Company’s consolidated net sales for April 2015 were up 9 percent.
“Our operating profit margins in the first quarter of 2015 were 8.8% compared to 9.1% in the first quarter of 2014,” said Drew President Scott Mereness. “In the latter half of 2014 we made significant investments in capacity, both facilities and personnel, to prepare for the expected significant increase in net sales in 2015 and beyond. As expected, our year-over-year incremental margin in the 2015 first quarter was lower than our target incremental margin, largely as a result of these investments in fixed costs for capacity expansion and higher material costs, partially offset by improved operating efficiencies. We added capacity ahead of projected demand, which enabled us to fulfill customer orders efficiently as demand increased. While certain capacity expansion plans had a negative impact on margins, over the long term these investments should allow us to improve our operating results, as well as continue to improve our customer service.”
“Additionally, increases in raw material costs, in particular aluminum, impacted our 2015 first quarter operating results,” continued Mereness. “Aluminum rose nearly 20% during the second half of 2014, and despite a decline in recent months, remains higher than the beginning of 2014. To help mitigate the impact of higher raw material and other costs, we continue to improve product designs, make efficiency improvements and work with our vendors to identify opportunities to reduce input costs.”
“During the first four months of 2015 we completed two acquisitions, which add approximately $42 million of acquired annual sales, and represent significant sales growth and profit potential,” said Joseph Giordano, Drew CFO and treasurer. The two operations acquired by Drew were:
“¢ EA Technologies “” A manufacturer of custom steel and aluminum parts and provider of electro-deposition (‘e-coat’) and powder coating services for RV, bus, medium-duty truck, automotive, recreational marine, specialty and utility trailer, and military applications. In connection with this acquisition, the company also acquired a 250,000-square-foot facility, which provides room for capacity expansion.
“¢ Spectal Industries “” A Canada-based manufacturer of windows and doors primarily for school buses, as well as commercial buses, emergency vehicles, trucks, agricultural equipment and RVs.
“Based on our commitment to provide outstanding customer service and product quality, we are confident in our ability to gain market share in these new product lines and improve profitability,” added Lippert.
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