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Wall Street Rewarding RV Industry’s Investors

June 10, 2013 by · Leave a Comment 

RV builders and suppliers posted an unusually strong session on Wall Street on Friday (June 7). And a breakout on an 11% gain by Thor Industries Inc. drew attention to three of the group’s other stocks, Investors Business Daily reported.

RV shipments rose to more than 32,000 units in April, the highest level for the month since 2007. And the peak selling season for RVs is just beginning.

Thor reported adjusted EPS growth of 24%, easily clearing analyst expectations for a 13% pop. Revenue just met analyst forecasts. The company held its dividend steady at 18 cents, equal to about 1.7% on an annualized basis.

The stock rose in heavy trading Friday of 494,357 shares, clearing a $43.54 buy point. It also lifted shares to their highest mark since October 2007.

Winnebago Industries Inc. gained 4% in weak trade Friday. In this case, the weak trade is a positive. The possible buy point here is $21.42. Analysts see Winnebago’s EPS rising 261% this fiscal year ending in August, on a 34% gain in sales, the best estimates in the group.

Two other stocks in the group, both thinly traded, are also set up in bases. Drew Industries Inc. has scooped out a shallow, three-month “cup” with a $38.92 buy point. Cavco Industries Inc. builds manufactured homes and park model RVs.

 

Drew Industries Reports Record Revenue in Q1

May 3, 2013 by · Leave a Comment 

Drew Industries Inc., parent to RV and manufactured housing suppliers Lippert Components Inc. and Kinro Inc., reported record sales during its first quarter, ended March 31.

Sales during the three-month period increased 13% to $253 million compared to $223.5 million a year ago. First quarter net income was $8.4 million, or 36 cents per diluted share, versus $11.1 million, or 49 cents per share, in the previous year, according to a news release.

“Our operating profit margin was below the first quarter of 2012 due to production inefficiencies and costs incurred as a result of our significant growth and expansion over the past year; however, profit margins improved sequentially in the 2013 first quarter,” said Fred Zinn, Drew president and CEO. “Our operating profit margin for the first quarter of 2013 was 5.8% before executive succession charges, compared to 4.1% in the 2012 fourth quarter. This sequential margin gain was less than originally projected, primarily due to higher material costs, substantial fixed costs invested in customer service and in anticipation of further sales growth, and seasonally higher payroll taxes.”

“In the first quarter of 2013, our labor efficiencies continued to improve, with labor costs as a percent of sales declining more than 1% compared to the fourth quarter of 2012,” added Jason Lippert, CEO of Lippert Components and Kinro. “We are also implementing additional efficiency improvements. As we previously reported, we expected the cost of implementing facility consolidations, realigning production and improving production processes to continue in the first quarter of 2013, although to a lesser degree than in the 2012 fourth quarter, and this was the case. These costs are expected to decline further in the second quarter of 2013. We remain confident in our ability to achieve further profit improvement, particularly during the second half of 2013, as these costs return to more normal levels, and as the bottom-line impact of the efficiency improvements gains momentum.”

Sales in the first quarter of 2013 increased despite a temporary slowdown in RV industrywide production levels in late March 2013. The increase in Drew’s first quarter net sales was a result of a 15% sales increase by its RV segment, which accounted for 89% of consolidated sales this quarter. RV segment sales growth was primarily due to a 10% increase in industrywide wholesale shipments of travel trailer and fifth-wheel RVs, Drew’s primary RV market. Sales of recently introduced components for towable RVs, as well as motorhome components, also increased, as did sales to adjacent industries and the aftermarket.

In April, RV industrywide production levels improved following the slowdown in late March, and Drew’s consolidated net sales reached a monthly record $100 million, 20% higher than in April 2012.

The company’s content per travel trailer and fifth-wheel increased 11% from the year-earlier period as a result of recent product introductions, product improvements and market share gains.

As previously announced, Zinn will retire as president and CEO in May and Lippert will become Drew’s CEO, while Scott Mereness will serve as Drew’s president. Drew will also be relocating its headquarters from White Plains, N.Y., to Elkhart, Ind.

As a result of the company’s executive succession and corporate relocation, Drew recorded a pre-tax charge of $1.1 million in the first quarter related to contractual obligations for severance and the acceleration of equity awards held by certain employees whose employment will terminate as a result of the relocation to Indiana. The company will record an additional pre-tax charge of $0.7 million related to contractual obligations in the second quarter . No other related charges are expected thereafter. Once the transition and corporate office relocation are completed, the company will save approximately $2 million annually.

 

Drew Moving Corporate Office to Elkhart, Ind.

April 10, 2013 by · Leave a Comment 

Jason Lippert, CEO of Lippert Components Inc. and Kinro Inc., major units of Drew Industries Inc.

Drew Industries Inc., a manufacturer of a broad array of components for recreational vehicles, manufactured homes and other industries, announced plans Tuesday (April 9) to relocate its headquarters from White Plains, N.Y. to Elkhart, Ind., and expand its manufacturing operations, creating up to 800 new jobs by 2017.

Drew Industries, parent company of Elkhart County-based Lippert Components Inc. and Kinro Inc., plans to invest $12.75 million to renovate and equip four manufacturing facilities in Goshen and Elkhart. As part of the project, Drew Industries will install new manufacturing and production lines, which are expected to be operational this year, according to a news release.

“Our focus on job creation is paying off as Indiana’s economic momentum continues,” said Gov. Mike Pence. “Drew Industries’ announcement builds on our strength as the RV capital of the world and serves as the latest proof that our convenient location, competitive tax environment and talented workforce have put Indiana on the map as a state that works for business.”

With more than 5,200 full-time employees across the country, Drew Industries currently has approximately 3,400 employees in Indiana. The company has already begun hiring additional engineers, furniture assemblers, general laborers, drivers and welders in Elkhart County.

“We have experienced significant growth over the past three years,” said Jason D. Lippert, chairman and CEO of Lippert Components and Kinro. “When looking to relocate our corporate headquarters, Indiana made the most sense due to its talented workforce, and because most of the RVs produced in the United States are produced in Elkhart County. We greatly appreciate the support provided to us by the state of Indiana, Elkhart County and the cities of Goshen and Elkhart and we look forward to continued growth and future success here.”

Founded in 1962, Drew Industries, through its wholly-owned operating subsidiaries, Lippert Components and Kinro, is a supplier of components for recreational vehicles and manufactured homes. In addition, Drew Industries manufactures components for adjacent industries including buses, trailers used to haul boats, livestock, equipment and other cargo, truck caps, modular housing and factory-built mobile office units.

From 30 factories located throughout the United States, the company’s products include chassis, fabricated steel chassis parts, slide-out mechanisms, axles, upholstered furniture, mattresses, windows, doors, leveling and stabilization equipment, suspension enhancement products, electronics, thermoformed products and aluminum extrusion products.

“We’re excited about Drew Industries’ plans for expansion,” said Elkhart Mayor Dick Moore. “This expansion further solidifies Elkhart’s position as the RV capital of the world. I look forward to many more future expansions like this in the community.”

The Indiana Economic Development Corp. offered Drew Industries up to $4,300,000 in conditional tax credits and up to $200,000 in training grants based on the company’s job creation plans. These tax credits are performance-based, meaning until Hoosiers are hired, the company is not eligible to claim incentives. The city of Elkhart and the city of Goshen will consider additional property tax abatements at the request of the Economic Development Corp. of Elkhart County.

“Elkhart County is fortunate to have Drew Industries,” said Goshen Mayor Allan Kauffman. “They have become one of the largest employers in the city of Goshen and Elkhart County. We are pleased with their ongoing commitment to investing in our community and applaud their success.”

 

 

RV Supplier Drew Posts Record Revenue

February 20, 2013 by · Leave a Comment 

Drew Industries Inc., parent to RV industry suppliers Lippert Components Inc. and Kinro Inc., today (Feb. 20) reported record revenue for its full year, ended Dec. 31, boosted by a 25% increase in fourth-quarter sales and strong performance from its RV segment.

The White Plains, N.Y-based company, which recently announced a realignment in upper management and the relocation of its headquarters to Elkhart, Ind., reported net income of $4.7 million, or $0.21 per diluted share, in its fourth quarter compared to $4.1 million the year prior. The company noted that earnings included a previously announced after-tax charge of $0.9 million in connection with executive succession.

Sales in the fourth quarter increased to $200 million, 25% higher than last year, as a result of a 31% sales increase by the RV segment. This segment accounted for 86% of consolidated net sales in the quarter. RV segment sales growth was largely due to a 21% increase in industrywide wholesale shipments of travel trailers and fifth-wheels, Drew’s primary RV market. Sales of recently introduced RV products and motorhome components also increased, as did sales to adjacent industries.

Drew reported that in January 2013, consolidated net sales reached approximately $85 million, 28% higher than in January 2012, as a result of continued solid growth in the company’s RV segment. Drew estimates that industrywide production of towable RVs increased about 20% in January 2013.

Net sales for the year increased by $220 million to a record $901 million. Acquisitions added approximately $60 million to 2012 net sales. Sales growth in new markets and new products were also key factors enabling Drew’s sales to exceed industry growth rates. Key additions to the company’s RV product lines in recent years include advanced leveling devices, in-wall slide-out systems and awnings. Together, net sales of these products reached $65 million in 2012.

For the full year, Drew’s net income increased to $37.3 million, or $1.64 per diluted share, up from net income of $30.1 million, or $1.34 per diluted share, in 2011. Excluding charges related to executive succession, net income would have been $38.3 million in 2012, or $1.68 per diluted share.

The company’s content per travel trailer and fifth-wheel in 2012 increased by $365 to $2,713, or 16% greater than in 2011. Content per motorhome RV reached $1,071 in 2012, an increase of 68% over 2011.

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“Our solid sales gains, along with favorable RV industry fundamentals, are encouraging,” said Fred Zinn, Drew’s president and CEO. “In the 2012 fourth quarter our operating profit margin before executive succession charges, while higher than last year, did not improve enough. Labor efficiencies improved at several key production facilities. However, this improvement was offset by the cost of implementing facility consolidations and improving production processes, as well as refinements to the calculation of our warranty accrual, and other transitory cost increases. We are confident in our ability to achieve profit improvement, particularly in the second half of 2013, as these costs return to more normal levels, and as the bottom-line impact of the efficiency improvements that have been implemented gains momentum.”

“The steps we have taken are enabling our production lines to be more efficient,” said Jason Lippert, currently CEO of Lippert Components and Kinro who will will take over as CEO of Drew in May while Scott Mereness will serve as president. “During the quarter we consolidated and realigned production of several key product lines, including furniture, manufactured housing and RV windows, chassis and thermoforming, and continued to benefit from and expand our lean manufacturing initiatives. While these efforts cost us $2 million in the 2012 fourth quarter, they are continuing to make us more efficient. Also, in the 2012 fourth quarter we retained more of our seasonal workforce than typical, ending the year with 5,200 employees. We spent the last 12 months building and training our workforce, so that we can minimize hiring and training costs as demand ramps up in early 2013.”

Report: RV Industry Sees Marked Growth in ’12

November 5, 2012 by · Leave a Comment 

The market for recreational vehicles hit a ditch a few years ago as the financial crisis and recession reeled in credit and sent consumers on a mad dash away from big-ticket purchases.

Investors Business Daily reported that the industry began to grind its way out in 2010. Today, manufacturers of RVs and RV components are enjoying their strongest growth in years thanks to a combination of better economic conditions, improved lending and new products.

Leading names such as Thor Industries Inc., Winnebago Industries Inc. and Drew Industries Inc. have all seen a recent rise in sales and earnings as the RV industry continues to recover from the beating it took in 2008 and 2009.

The Recreation Vehicle Industry Association (RVIA) expects overall shipments of RVs to reach 273,600 units this year. That’s up from 252,300 units in 2011 and well above the 165,700 units that were sold during the industry bottom in 2009.

The current rebound is partly due to the natural business cycle. Once an industry hits bottom, there’s no place to go, theoretically, but up. But the RV industry also benefits from other positive trends, says RVIA spokesman Kevin Broom.

“There’s a new product mix out there that is helping drive sales,” he said. “On the motorhome side, there are an increasing number of fuel-efficient vehicles. You have better technology, more and different kinds of products, and different ways of building them.”

The industry has gotten another leg up from an expanded customer base that goes beyond the traditional RV demographic of retirees and empty nesters. Today, about one-third of RV owners have kids at home under the age of 18, Broom says.

Credit markets also have loosened up compared to a few years ago, when the financial crisis caused many banks to tighten up their lending standards for expensive items. This was an especially thorny problem in the RV business, where the average vehicle is priced around $37,000.

“The credit freeze in late 2008 and early 2009 hurt the RV industry two ways,” Broom said. “There was an inability on the part of many consumers to get loans. RV dealers had a hard time getting financing to replace their inventory.”

That issue has improved considerably over the last year or so, he says. More financing options are available to dealers, which means more product is available to consumers at the retail level.

Analyst Touts Cavco and Drew Industries Investments

June 15, 2012 by · Leave a Comment 

Editor’s Note: The following investment advice story is from John Udovich writing for the SmallCapNetwork. Among the products of Cavco Industries Inc. and Skyline Corp. are park models purchased by campgrounds and RV parks.

While much of the homebuilding sector has been left for dead, the RV and manufactured home sector is showing some signs of life, meaning it might be time to take a look at RV and manufactured home stocks like Cavco Industries (NASDAQ: CVCO), Skyline Corp. (NYSE: SKY) and Drew Industries (NYSE: DW). After all, there are still consumers who can afford RVs while manufactured homes have moved beyond images trailer parks. So which are the best RV and manufactured home stocks, Cavco Industries (CVCO), Skyline Corp. (SKY) or Drew Industries (DW)? Here is a closer look to help you decide:

Cavco Industries Made a Big Acquisition Last Year

Cavco Industries is a builder of manufactured and modular homes, park model homes and vacation cabins in the USA. At the end of May, Cavco Industries reported that fiscal 4Q2012 net sales surged 156 percent from $38,822,000 to $99,513,000 while net income rose from $1,733,000 to $2,888,000. For the entire fiscal year, net sales rose 158 percent to from $171,827,000 to $443,066,000 while net income rose from $4,072,000 to $29,728,000. It should be noted that the surge in revenues and net income was due to Fleetwood Homes, Inc., a subsidiary that is owned 50 percent by Cavco and 50 percent by the Third Avenue Value Fund (TAVFX), acquiring Palm Harbor Homes Inc. during the quarter ended June 30, 2011. The acquisition expanded the geographic reach of Cavco Industries along with the diversity of home products plus allowed for the introduction of related mortgage and insurance business lines. Otherwise, Cavco Industries did note seasonally slow winter home buying activity that began to show a modest improvement in both consumer interest and traffic levels at the end of the quarter, plus a generally challenging economic environment. On Thursday, Cavco Industries rose 3.63 percent to $47.94 (CVCO has a 52 week trading range of $28.43 to $54.11 a share) for a market cap of $330.34 million plus the stock is up 19.7 percent since the start of the year, up 27.12 percent over the past year and up 34.1 percent over the past five years.

Skyline Corp. Has Not Seen Profits in Awhile

Skyline Corp. designs, produces and markets manufactured housing, modular housing and towable recreational vehicles to independent dealers and manufactured housing communities located throughout the U.S.A. and Canada. Investors should be aware that Skyline Corp. has been operating at a loss since 2008 while EBITDA and free cash flow has been negative since 2007. Moreover and last March, Third Avenue Management sold 55.7 percent of its stake in Skyline Corp. for $3,394,689 while keeping a 4.31 percent stake. Third Avenue has had the stock since before the 2Q2009 after it had been sinking for several years and had bought it for roughly $20 per share – well above its current market price. On Thursday, Skyline Corp. rose 3.05 percent to $4.39 (SKY has a 52-week trading range of $4.02 to $17.95 a share) for a market cap of $36.84 million plus the stock is up 0.92 percent since the start of the year, down 70.7 percent over the past year and down 86.6 percent over the past five years. Skyline Corp. does have a forward dividend of $0.36 for a dividend yield of 8.5 percent.

Drew Industries is Benefiting From More RV Sales

Drew Industries supplies a broad array of components for recreational vehicles (RVs) and manufactured homes to nearly all of the leading producers of RVs and manufactured homes. In Early May, Drew Industries reported better than expected quarterly sales results thanks to strong RV demand (sales in the RV segment accounts for more than three-quarters of the company’s net sales). Specifically, Drew Industries reported that net sales rose 32 percent to $223.6 million while net income came in at $11.1 million verses $9.4 million. Moreover, sales in the RV Segment to producers of travel trailer and fifth-wheel RVs rose 29 percent verses an 11 percent industry-wide increase and the company noted that over the past few months, retail demand in the RV industry has been improving – despite the economic headwinds. It also worth noting that Drew Industries’ manufactured homes segment saw sales rise 26 percent thanks to a 35 percent increase in industry-wide production of manufactured homes during the quarter (DW has less content in smaller homes which accounted for some of the industry rise). On Thursday, Drew Industries rose 0.70 percent to $27.20 (DW has a 52-week trading range of $17.49 to $30.55 a share) for a market cap of $605.86 million plus the stock is up 10.9 percent since the start of the year, up 14.3 percent over the past year and down 18.6 percent over the past five years.

The Bottom Line. Investors should probably stay away from Skyline Corp. (SKY) and instead be taking a closer look at RV and manufactured home stocks like Cavco Industries (CVCO) and Drew Industries (DW) as they appear poised to move higher.

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