Drew Industries Inc. announced sales and earnings for the full year ended Dec. 31 will reach record levels, but warned that several factors will negatively affect the White Plains, N.Y.-based company’s fourth quarter.
Drew, parent company to component suppliers Kinro Inc., Arlington, Texas, and Lippert Components Inc., Goshen, Ind., plans to release 2004 fourth quarter and year-end financial results on Feb. 15.
The firm restated that a verdict rendered in a California court in favor of a Lippert employee included compensatory damages of $464,000 and punitive damages, which likely will be reduced, of $4 million. Lippert will appeal the decision, but a related charge applied to the fourth quarter will reduce earnings.
Drew indicated that raw material costs, primarily steel, would also have an impact on fourth quarter profits. To offset the costs, Drew instituted price increases, which went into effect in early January, 2005.
Operating results in the fourth quarter of 2004 were also affected by facility impairment charges to reduce the value of facilities vacated during the quarter to their estimated fair market value. Fourth quarter profits were reduced further by start-up costs on new facilities and products.
“We fully expect that the long-term benefits from our moves to consolidate production into other existing facilities will far outweigh the impairment charge and short-term additional costs,” said Leigh J. Abrams, Drew president and CEO. “Excluding the expense related to the lawsuit, we expect earnings for the current fourth quarter to be slightly below earnings in last year’s fourth quarter. The unanticipated costs and expenses we incurred are disappointing, but they do not appear to be an indication of future problems.
“Our operations remain very strong, and our sales and profits for the year will still far exceed our previous records. Likewise, our ability to gain market share, enter new product segments and continually control costs should allow us to set new sales and profit records in 2005.”