Drew Industries Incorporated (NYSE:DW), a supplier of components for the leading original equipment manufacturers (“OEMS”) of recreational vehicles (“RVs”) and adjacent industries, and the related aftermarkets of those industries, today reported consolidated net sales in the third quarter of 2016 increased to $412 million, 19 percent higher than the 2015 third quarter. Net income was $29.8 million, or $1.19 per diluted share, for the third quarter ended September 30, 2016, compared to net income of $17.3 million, or $0.70 per diluted share, for the third quarter ended September 30, 2015.
The increase in year-over-year net sales reflects industry-wide growth in wholesale shipments of towable RVs by OEMs, which contributed 14 percent of the net sales increase in the third quarter of 2016, enhanced by acquisitions completed by the Company over the twelve months ended September 30, 2016, which added $13 million in net sales in the third quarter of 2016. Through continued focus on aftermarket channels for the Company’s products, the Company increased net sales to the aftermarket in the third quarter of 2016 by more than 21 percent to $36 million.
The Company’s content per travel trailer and fifth-wheel RV for the twelve months ended September 30, 2016, increased $73 to $3,025, compared to the twelve months ended September 30, 2015, of $2,952. The Company’s content per motorhome RV for the twelve months ended September 30, 2016, increased $150 to $1,957, compared to the twelve months ended September 30, 2015, of $1,807. The content increases are a combined result of market share gains, acquisitions, new product introductions and changes in the types of RVs produced industry-wide.
“RV industry volume continues to out-pace 2015, as 2016 third quarter wholesale travel trailers are up nearly 21 percent and fifth-wheels are up over 17 percent,” stated Jason Lippert, Drew’s Chief Executive Officer. “Travel trailer sales momentum has continued as the industry attracts a new generation of RV enthusiasts. We are also pleased to see fifth-wheel wholesale units up approximately 2,500 units and 3,500 units over the third quarter and the first nine months of 2015, respectively. A 14 percent increase in wholesale shipments of motorhome RVs also contributed to the third quarter growth.”
Over the twelve-month period ending September 2016, retail sales of travel trailer and fifth-wheel RVs increased an estimated eight percent to over 337,000 units. Wholesale and retail unit sales during this period were closely aligned. Based on the retail sales strength experienced through the first nine months of 2016 and the current outlook from several RV OEMs and their dealer networks, most industry analysts continue to report RV dealer inventory is in line with anticipated retail demand.
“Our operating profit in the third quarter of 2016 improved to $45.1 million, compared to $27.2 million in the third quarter of 2015,” said Scott Mereness, Drew’s President. “Strong industry growth, lower costs for certain key commodities, accretive acquisitions completed over the last 12 months and a focus on cost management, lean initiatives and other operational efficiencies, continue to contribute to profit improvement.”
As of September 30, 2016, the Company had a net cash position of $45 million, an improvement of $83 million from a net debt position of $38 million at the beginning of the year, even after $34 million of acquisitions, $22 million for capital expenditures and $22 million of dividend payments in the first nine months of 2016. This cash generation was primarily the result of the Company’s operational performance, aided by inventory reductions of $10 million.
The fourth quarter of 2016 started with October consolidated net sales of approximately $144 million, 11 percent higher than October 2015, with one less shipping day in 2016.
Jason Lippert concluded, “We have built an organization with the best people and created a culture with core values that focus on meeting the challenge of providing value to our customers every day. We will continue our efforts to develop, engineer and build great products, as well as improving our service to all customer channels, so that each day we are the supplier of choice for the industries we serve. Additionally, we will continue to seek expansion with new and innovative products, new customers, new markets and new geographies.”
Conference Call & Webcast
Drew will provide an online, real-time webcast of its third quarter 2016 earnings conference call on the Company’s website, www.drewindustries.com, on Thursday, November 3, 2016, at 11:00 a.m. Eastern time.
Institutional investors can access the call via the password-protected site, StreetEvents (www.streetevents.com). A replay of the call will be available by dialing (855) 859-2056 and referencing access code 4479261. A replay of the webcast will also be available on Drew’s website.
About Drew Industries
From 45 manufacturing and distribution facilities located throughout the United States and in Canada and Italy, Drew Industries, through its wholly-owned subsidiary, Lippert Components®, supplies a broad array of components for the leading original equipment manufacturers of recreational vehicles and adjacent industries including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; manufactured homes; modular housing; and factory-built mobile office units. The Company also supplies components to the related aftermarkets of these industries, primarily by selling to retail dealers, wholesale distributors and service centers. Drew’s products include steel chassis and related components; axles and suspension solutions; slide-out mechanisms and solutions; thermoformed bath, kitchen and other products; vinyl, aluminum and frameless windows; manual, electric and hydraulic stabilizer and leveling systems; furniture and mattresses; entry, luggage, patio and ramp doors; electric and manual entry steps; awnings and awning accessories; electronic components; appliances; LED televisions and sound systems; navigation systems; wireless backup cameras; and other accessories. Additional information about Drew and its products can be found at www.drewindustries.com.