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Sales of hurricane-related recreational vehicles and manufactured homes helped boost Drew Industries Inc. to record profits during a traditionally slow first quarter, ended March 31.
The White Plains, N.Y., company, parent to RV and MH suppliers Lippert Components Inc. and Kinro, reported a 70% increase in net income to $10.2 million from $5.8 million a year ago on a 35% bounce in sales of $208 million compared with $155 million.
“We are pleased with our continued growth in sales and profits, which were again fueled by a combination of organic growth, new product introductions and acquisitions,” said Leigh J. Abrams, Drew president and CEO. “We also experienced increased sales due to hurricane-related demand for emergency housing,”
Drew reported sales of between $10 million and $14 million of components for Emergency Living Units (ELUs) purchased by the Federal Emergency Management Agency (FEMA).
“Our sales continue to be strong, with April 2006 sales up approximately 25% from April 2005, despite the fact that hurricane-related demand for RVs and manufactured homes has apparently fallen sharply,” Abrams said. “We expect our sales will continue to increase due to market share gains, sales from our new products and the acquisitions we completed during the last 12 months. We will also stay focused on improving operating leverage and manufacturing efficiency.”
In March, Drew completed the acquisition of SteelCo Inc., a West Coast-based manufacturer of RV and MH chassis, and also announced an agreement to purchase Happijac, a manufacturer of bed lifts for toy haulers.
Drew’s RV segment, which represented 72% of first-quarter sales, increased revenues 42% to $149 million compared to $105 million the previous year. The company said that industrywide its core travel trailer and fifth-wheel markets remains “healthy,” reporting increases in shipments and retail sales during the quarter.
Drew continues to experience rising raw material costs, which it said have been partially offset by price increases to customers.
“Over the last two years, Drew’s operating management has done an outstanding job of working with our customers to obtain sales price increases, even though these have been generally without margin, allowing us to offset the extraordinary increases in the cost of raw materials,” said Fred Zinn, Drew executive vice president and CFO. “However, we still expect there will be continued pressure on our profit margins as long as raw materials costs remain volatile.”