x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE
ACT OF 1934
|
Delaware
|
13-3250533
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
Page
|
||
PART
I –
|
FINANCIAL
INFORMATION
|
|
Item
1 – FINANCIAL STATEMENTS
|
||
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
3
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
4
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
5
|
|
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
|
6
|
|
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
7 –
18
|
|
Item
2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
|
19
– 35
|
|
Item
3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
36
|
|
Item
4 – CONTROLS AND PROCEDURES
|
36
|
|
PART
II –
|
OTHER
INFORMATION
|
|
Item
1 – LEGAL PROCEEDINGS
|
37
|
|
Item
1A – RISK FACTORS
|
37
|
|
Item
6 – EXHIBITS
|
37
|
|
SIGNATURES
|
38
|
|
EXHIBIT
31.1 – SECTION 302 CEO CERTIFICATION
|
39
|
|
EXHIBIT
31.2 – SECTION 302 CFO CERTIFICATION
|
40
|
|
EXHIBIT
32.1 – SECTION 906 CEO CERTIFICATION
|
41
|
|
EXHIBIT
32.2 – SECTION 906 CFO CERTIFICATION
|
42
|
Six Months Ended
|
Three Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(In
thousands, except per share amounts)
|
||||||||||||||||
Net
sales
|
$ | 319,719 | $ | 171,582 | $ | 173,502 | $ | 100,563 | ||||||||
Cost
of sales
|
248,502 | 145,203 | 135,944 | 80,010 | ||||||||||||
Gross
profit
|
71,217 | 26,379 | 37,558 | 20,553 | ||||||||||||
Selling,
general and administrative expenses
|
42,582 | 33,610 | 21,351 | 16,360 | ||||||||||||
Goodwill
impairment
|
- | 45,040 | - | - | ||||||||||||
Other
(income)
|
- | (200 | ) | - | - | |||||||||||
Operating
profit (loss)
|
28,635 | (52,071 | ) | 16,207 | 4,193 | |||||||||||
Interest
expense, net
|
647 | 435 | 421 | 235 | ||||||||||||
Income
(loss) before income taxes
|
27,988 | (52,506 | ) | 15,786 | 3,958 | |||||||||||
Provision
(benefit) for income taxes
|
11,068 | (18,360 | ) | 6,194 | 1,402 | |||||||||||
Net
income (loss)
|
$ | 16,920 | $ | (34,146 | ) | $ | 9,592 | $ | 2,556 | |||||||
Net
income (loss) per common share:
|
||||||||||||||||
Basic
|
$ | 0.77 | $ | (1.58 | ) | $ | 0.43 | $ | 0.12 | |||||||
Diluted
|
$ | 0.76 | $ | (1.58 | ) | $ | 0.43 | $ | 0.12 | |||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
22,112 | 21,662 | 22,121 | 21,682 | ||||||||||||
Diluted
|
22,262 | 21,662 | 22,276 | 21,738 |
June
30,
|
December
31,
|
|||||||||||
2010
|
2009
|
2009
|
||||||||||
(In
thousands, except shares and per share amount)
|
||||||||||||
ASSETS
|
||||||||||||
Current
assets
|
||||||||||||
Cash
and cash equivalents
|
$ | 47,073 | $ | 24,919 | $ | 52,365 | ||||||
Short-term
investments
|
10,993 | 1,997 | 12,995 | |||||||||
Accounts
receivable, trade, less allowances
|
41,267 | 22,165 | 12,541 | |||||||||
Inventories
|
69,175 | 58,833 | 57,757 | |||||||||
Prepaid
expenses and other current assets
|
15,156 | 16,667 | 13,793 | |||||||||
Total
current assets
|
183,664 | 124,581 | 149,451 | |||||||||
Fixed
assets, net
|
79,930 | 86,087 | 80,276 | |||||||||
Goodwill
|
7,086 | - | - | |||||||||
Other
intangible assets, net
|
60,421 | 41,417 | 39,171 | |||||||||
Deferred
taxes
|
16,532 | 14,922 | 16,532 | |||||||||
Other
assets
|
3,021 | 3,521 | 2,635 | |||||||||
Total
assets
|
$ | 350,654 | $ | 270,528 | $ | 288,065 | ||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||||
Current
liabilities
|
||||||||||||
Current
maturities of long-term indebtedness
|
$ | - | $ | 388 | $ | - | ||||||
Accounts
payable, trade
|
29,380 | 8,047 | 7,513 | |||||||||
Accrued
expenses and other current liabilities
|
42,127 | 25,064 | 28,194 | |||||||||
Total
current liabilities
|
71,507 | 33,499 | 35,707 | |||||||||
Long-term
indebtedness
|
- | 800 | - | |||||||||
Other
long-term liabilities
|
16,211 | 9,260 | 8,243 | |||||||||
Total
liabilities
|
87,718 | 43,559 | 43,950 | |||||||||
Stockholders’
equity
|
||||||||||||
Common
stock, par value $.01 per share: authorized 30,000,000 shares; issued
24,583,933 shares at June 2010, 24,180,258 shares at June 2009
and 24,561,358 at December 2009
|
246 | 242 | 246 | |||||||||
Paid-in
capital
|
76,140 | 67,190 | 74,239 | |||||||||
Retained
earnings
|
214,350 | 187,337 | 197,430 | |||||||||
|
290,736
|
254,769 | 271,915 | |||||||||
Treasury
stock, at cost – 2,596,725 shares
|
(27,800 | ) | (27,800 | ) | (27,800 | ) | ||||||
Total
stockholders’ equity
|
262,936 | 226,969 | 244,115 | |||||||||
Total
liabilities and stockholders’ equity
|
$ | 350,654 | $ | 270,528 | $ | 288,065 |
Six Months Ended
|
||||||||
June 30,
|
||||||||
2010
|
2009
|
|||||||
(In
thousands)
|
||||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss)
|
$ | 16,920 | $ | (34,146 | ) | |||
Adjustments
to reconcile net income (loss) to cash flows provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
8,457 | 9,312 | ||||||
Deferred
taxes
|
- | (15,660 | ) | |||||
(Gain)
loss on disposal of fixed assets and other non-cash items
|
(754 | ) | 1,420 | |||||
Stock-based
compensation expense
|
1,831 | 2,143 | ||||||
Goodwill
impairment
|
- | 45,040 | ||||||
Changes
in assets and liabilities, net of business acquisitions:
|
||||||||
Accounts
receivable, net
|
(28,718 | ) | (14,252 | ) | ||||
Inventories
|
(11,959 | ) | 35,290 | |||||
Prepaid
expenses and other assets
|
(953 | ) | 672 | |||||
Accounts
payable, accrued expenses and other liabilities
|
32,898 | (3,481 | ) | |||||
Net
cash flows provided by operating activities
|
17,722 | 26,338 | ||||||
Cash
flows from investing activities:
|
||||||||
Capital
expenditures
|
(4,471 | ) | (1,093 | ) | ||||
Acquisitions
of businesses
|
(21,400 | ) | (339 | ) | ||||
Proceeds
from sales of fixed assets
|
804 | 751 | ||||||
Purchases
of short-term investments
|
(12,992 | ) | (1,997 | ) | ||||
Proceeds
from maturities of short-term investments
|
15,000 | - | ||||||
Other
investing activities
|
(22 | ) | (15 | ) | ||||
Net
cash flows used for investing activities
|
(23,081 | ) | (2,693 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from line of credit and other borrowings
|
- | 5,775 | ||||||
Repayments
under line of credit and other borrowings
|
- | (13,270 | ) | |||||
Exercise
of stock options and deferred stock units
|
70 | 94 | ||||||
Other
financing activities
|
(3 | ) | (17 | ) | ||||
Net
cash flows provided by (used for) financing activities
|
67 | (7,418 | ) | |||||
Net
(decrease) increase in cash
|
(5,292 | ) | 16,227 | |||||
Cash
and cash equivalents at beginning of period
|
52,365 | 8,692 | ||||||
Cash
and cash equivalents at end of period
|
$ | 47,073 | $ | 24,919 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$ | 161 | $ | 403 | ||||
Income
taxes, net of refunds
|
$ | 8,752 | $ | 4,014 |
Total
|
||||||||||||||||||||
Common
|
Paid-in
|
Retained
|
Treasury
|
Stockholders’
|
||||||||||||||||
Stock
|
Capital
|
Earnings
|
Stock
|
Equity
|
||||||||||||||||
(In
thousands, except shares)
|
||||||||||||||||||||
Balance
– December 31, 2009
|
$ | 246 | $ | 74,239 | $ | 197,430 | $ | (27,800 | ) | $ | 244,115 | |||||||||
Net
income for the six months ended June 30, 2010
|
- | - | 16,920 | - | 16,920 | |||||||||||||||
Issuance
of 22,575 shares of common stock pursuant to stock options and
deferred stock units
|
- | 195 | - | - | 195 | |||||||||||||||
Income
tax impact of issuance of common stock pursuant to stock
options and deferred stock units exercised
|
- | (125 | ) | - | - | (125 | ) | |||||||||||||
Stock-based
compensation expense
|
- | 1,831 | - | - | 1,831 | |||||||||||||||
Balance
– June 30, 2010
|
$ | 246 | $ | 76,140 | $ | 214,350 | $ | (27,800 | ) | $ | 262,936 |
1.
|
Basis
of Presentation
|
2.
|
Segment
Reporting
|
●Towable
steel chassis
|
●Aluminum
windows and screens
|
|
●Towable
axles and suspension solutions
|
●Chassis
components
|
|
●Slide-out
mechanisms and solutions
|
●Furniture
and mattresses
|
|
●Thermoformed
bath, kitchen and other products
|
●Entry and baggage
doors
|
|
●Toy hauler ramp
doors
|
●Entry
steps
|
|
●Manual,
electric and hydraulic stabilizer
|
●Other
accessories
|
|
and
lifting systems
|
●Specialty
trailers for hauling boats, personal watercraft, snowmobiles and
equipment
|
●Vinyl
and aluminum windows and screens
|
●Steel
chassis
|
|
●Thermoformed
bath and kitchen products
|
●Steel
chassis parts
|
|
●Steel
and fiberglass entry doors
|
●Axles
|
|
●Aluminum
and vinyl patio doors
|
Six
Months Ended
|
Three
Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
sales:
|
||||||||||||||||
RV
Segment
|
$ | 268,626 | $ | 131,161 | $ | 144,264 | $ | 78,881 | ||||||||
MH
Segment
|
51,093 | 40,421 | 29,238 | 21,682 | ||||||||||||
Total
net sales
|
$ | 319,719 | $ | 171,582 | $ | 173,502 | $ | 100,563 | ||||||||
Operating
profit (loss):
|
||||||||||||||||
RV
Segment
|
$ | 26,972 | $ | (715 | ) | $ | 14,090 | $ | 5,148 | |||||||
MH
Segment
|
5,302 | (588 | ) | 3,736 | 1,593 | |||||||||||
Total
segment operating profit (loss)
|
32,274 | (1,303 | ) | 17,826 | 6,741 | |||||||||||
Corporate
|
(3,944 | ) | (3,178 | ) | (2,018 | ) | (1,618 | ) | ||||||||
Goodwill
impairment
|
- | (45,040 | ) | - | - | |||||||||||
Other
items
|
305 | (2,550 | ) | 399 | (930 | ) | ||||||||||
Total
operating profit (loss)
|
$ | 28,635 | $ | (52,071 | ) | $ | 16,207 | $ | 4,193 |
Three Months Ended
|
Year
Ended
|
|||||||||||||||||||
(In
thousands)
|
March
31,
|
June
30,
|
September
30,
|
December
31,
|
December 31,
|
|||||||||||||||
2009
|
2009
|
2009
|
2009
|
2009
|
||||||||||||||||
Operating
(loss) profit:
|
||||||||||||||||||||
RV
Segment
|
$ | (5,863 | ) | $ | 5,148 | $ | 10,205 | $ | 6,170 | $ | 15,660 | |||||||||
MH
Segment
|
(2,181 | ) | 1,593 | 2,397 | 1,407 | 3,216 | ||||||||||||||
Total
segment operating (loss) profit
|
(8,044 | ) | 6,741 | 12,602 | 7,577 | 18,876 | ||||||||||||||
Corporate
|
(1,560 | ) | (1,618 | ) | (1,752 | ) | (1,612 | ) | (6,542 | ) | ||||||||||
Goodwill
impairment
|
(45,040 | ) | - | - | - | (45,040 | ) | |||||||||||||
Other
items
|
(1,620 | ) | (930 | ) | 463 | (788 | ) | (2,875 | ) | |||||||||||
Operating
(loss) profit
|
$ | (56,264 | ) | $ | 4,193 | $ | 11,313 | $ | 5,177 | $ | (35,581 | ) |
3.
|
Acquisitions,
Goodwill and Other Intangible
Assets
|
Cash
consideration
|
$ | 1,400 | ||
Contingent
consideration
|
404 | |||
Total
fair value of consideration given
|
$ | 1,804 | ||
Patents
|
$ | 1,157 | ||
Other
identifiable intangible assets
|
180 | |||
Total
fair value of assets acquired
|
$ | 1,337 | ||
Goodwill
(tax deductible)
|
$ | 467 |
Cash
consideration
|
$ | 20,000 | ||
Contingent
consideration
|
9,929 | |||
Total
fair value of consideration given
|
$ | 29,929 | ||
Patents
|
$ | 16,840 | ||
In-process
research and development
|
4,457 | |||
Other
identifiable intangible assets
|
1,603 | |||
Identifiable
tangible assets acquired
|
410 | |||
Total
fair value of assets acquired
|
$ | 23,310 | ||
Goodwill
(tax deductible)
|
$ | 6,619 |
MH
Segment
|
RV
Segment
|
Total
|
||||||||||
Balance
– December 31, 2009
|
$ | - | $ | - | $ | - | ||||||
Acquisitions
|
- | 7,086 | 7,086 | |||||||||
Balance
– June 30, 2010
|
$ | - | $ | 7,086 | $ | 7,086 |
Accumulated
|
Estimated
Useful
|
||||||||||||
Gross
|
Amortization
|
Net
|
Life in Years
|
||||||||||
Non-compete
agreements
|
$ | 3,094 | $ | 1,125 | $ | 1,969 |
3
to 7
|
||||||
Customer
relationships
|
25,155 | 10,040 | 15,115 |
3
to 16
|
|||||||||
Tradenames
|
7,269 | 2,819 | 4,450 |
5
to 15
|
|||||||||
Patents
|
45,120 | 6,233 | 38,887 |
5
to 19
|
|||||||||
Other
intangible assets
|
$ | 80,638 | $ | 20,217 | $ | 60,421 |
4.
|
Cash
and Investments
|
June 30,
|
December 31,
|
|||||||||||
2010
|
2009
|
2009
|
||||||||||
Cash
in bank
|
$ | 33,073 | $ | 24,919 | $ | 49,365 | ||||||
Treasury
bills – cash equivalents
|
14,000 | - | 3,000 | |||||||||
Treasury
bills – short-term investments
|
10,993 | 1,997 | 12,995 | |||||||||
Total
cash and investments
|
$ | 58,066 | $ | 26,916 | $ | 65,360 |
5.
|
Inventories
|
June 30,
|
December 31,
|
|||||||||||
2010
|
2009
|
2009
|
||||||||||
Finished
goods
|
$ | 9,695 | $ | 7,718 | $ | 9,264 | ||||||
Work
in process
|
1,792 | 2,287 | 1,576 | |||||||||
Raw
material
|
57,688 | 48,828 | 46,917 | |||||||||
Total
inventories
|
$ | 69,175 | $ | 58,833 | $ | 57,757 |
6.
|
Long-Term
Indebtedness
|
Industrial
Revenue Bonds, secured by certain
|
||||
real
estate and equipment
|
$ | 1,188 | ||
Less
current portion
|
388 | |||
Total
long-term indebtedness
|
$ | 800 |
7.
|
Stockholders’
Equity
|
Six
Months Ended
|
Three
Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Weighted
average shares outstanding
|
||||||||||||||||
for
basic earnings per share
|
22,112 | 21,662 | 22,121 | 21,682 | ||||||||||||
Common
stock equivalents pertaining
|
||||||||||||||||
to
stock options and contingently
|
||||||||||||||||
issuable
deferred stock units
|
150 | - | 155 | 56 | ||||||||||||
Total
for diluted shares
|
22,262 | 21,662 | 22,276 | 21,738 |
8.
|
Commitments
and Contingencies
|
Present
Value
|
||||||||||||||
Expiration
of
|
Maximum
|
Estimated
|
of
Estimated
|
|||||||||||
Acquisition
|
Earn-out
|
Earn-out Payment
|
Earn-out Payment
|
Earn-out Payment
|
||||||||||
Schwintek
products
|
March
2014(1)
|
N/A |
(2)
|
$ | 14,403 | $ | 10,330 | |||||||
Level-UpTM
six-point leveling system
|
February
2016
|
N/A | $ | 1,671 | $ | 916 | ||||||||
QuickBiteTM
coupler
|
October
2025
|
$ | 2,500 | $ | 2,500 | $ | 877 | |||||||
Slide-out
storage box for pick-up trucks
|
September
2015
|
N/A | $ | - | $ | - |
(1)
|
Earn-out payments
for three of the four products expire in March 2014. Earn-out payments for
the remaining product expire five years after the product is first sold to
customers.
|
(2)
|
Two
of the four products acquired have a combined maximum earn-out payment of
$12.7 million. The other two acquired products have no cap on earn-out
payments.
|
Balance
at December 31, 2009
|
$ | 1,370 | ||
Acquisitions
|
10,333 | |||
Payments
|
(3 | ) | ||
Interest
accretion
|
493 | |||
Fair
value adjustments
|
(70 | ) | ||
Balance
at June 30, 2010
|
12,123 | |||
Less
current portion in accrued expenses and other
|
||||
current
liabilities
|
2,638 | |||
Total
long-term portion in other long-term liabilities
|
$ | 9,485 |
9.
|
Fair
Value Measurements
|
·
|
Level
1 – Quoted prices (unadjusted) for identical assets and liabilities in
active markets that the Company has the ability to access at the
measurement date.
|
|
·
|
Level
2 – Quoted prices for similar assets and liabilities in active markets;
quoted prices for identical or similar assets and liabilities in markets
that are not active; and inputs other than quoted prices that are
observable for the asset or liability, including interest rates, yield
curves and credit risks, or inputs that are derived principally from or
corroborated by observable market data through
correlation.
|
|
·
|
Level
3 – Values determined by models, significant inputs to which are
unobservable and are primarily based on internally derived assumptions
regarding the timing and amount of expected cash
flows.
|
10.
|
New
Accounting Pronouncements
|
●Towable
steel chassis
|
●Aluminum
windows and screens
|
|
●Towable
axles and suspension solutions
|
●Chassis
components
|
|
●Slide-out
mechanisms and solutions
|
●Furniture
and mattresses
|
|
●Thermoformed
bath, kitchen and other products
|
●Entry
and baggage doors
|
|
●Toy
hauler ramp doors
|
●Entry
steps
|
|
●Manual,
electric and hydraulic stabilizer
|
●Other
accessories
|
|
and
lifting systems
|
●Specialty
trailers for hauling boats, personal watercraft, snowmobiles and
equipment
|
●Vinyl
and aluminum windows and screens
|
●Steel
chassis
|
|
●Thermoformed
bath and kitchen products
|
●Steel
chassis parts
|
|
●Steel
and fiberglass entry doors
|
●Axles
|
|
●Aluminum
and vinyl patio doors
|
Wholesale
|
Retail
|
|||||||
Quarter
ended March 31, 2009
|
(61 | )% | (40 | )% | ||||
Quarter
ended June 30, 2009
|
(44 | )% | (34 | )% | ||||
Quarter
ended September 30, 2009
|
5 | % | (23 | )% | ||||
Quarter
ended December 31, 2009
|
88 | % | (10 | )% | ||||
Quarter
ended March 31, 2010
|
99 | % | 6 | % | ||||
Quarter
ended June 30, 2010
|
80 | % | 14 | %(1) | ||||
(1) Through May 2010, the latest period for which retail information is available. |
Year
ended December 31, 2009
|
(25 | )% | (30 | )% | ||||
Year
ended December 31, 2008
|
(29 | )% | (19 | )% |
Six Months Ended
|
Three Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
sales:
|
||||||||||||||||
RV
Segment
|
$ | 268,626 | $ | 131,161 | $ | 144,264 | $ | 78,881 | ||||||||
MH
Segment
|
51,093 | 40,421 | 29,238 | 21,682 | ||||||||||||
Total
net sales
|
$ | 319,719 | $ | 171,582 | $ | 173,502 | $ | 100,563 | ||||||||
Operating
profit (loss):
|
||||||||||||||||
RV
Segment
|
$ | 26,972 | $ | (715 | ) | $ | 14,090 | $ | 5,148 | |||||||
MH
Segment
|
5,302 | (588 | ) | 3,736 | 1,593 | |||||||||||
Total
segment operating profit (loss)
|
32,274 | (1,303 | ) | 17,826 | 6,741 | |||||||||||
Corporate
|
(3,994 | ) | (3,178 | ) | (2,018 | ) | (1,618 | ) | ||||||||
Goodwill
impairment
|
- | (45,040 | ) | - | - | |||||||||||
Other
items
|
305 | (2,550 | ) | 399 | (930 | ) | ||||||||||
Total
operating profit (loss)
|
$ | 28,635 | $ | (52,071 | ) | $ | 16,207 | $ | 4,193 |
Three Months Ended
|
Year Ended
|
|||||||||||||||||||
(In thousands)
|
March 31,
|
June 30,
|
September 30,
|
December 31,
|
December 31,
|
|||||||||||||||
2009
|
2009
|
2009
|
2009
|
2009
|
||||||||||||||||
Operating
(loss) profit:
|
||||||||||||||||||||
RV
Segment
|
$ | (5,863 | ) | $ | 5,148 | $ | 10,205 | $ | 6,170 | $ | 15,660 | |||||||||
MH
Segment
|
(2,181 | ) | 1,593 | 2,397 | 1,407 | 3,216 | ||||||||||||||
Total
segment operating (loss) profit
|
(8,044 | ) | 6,741 | 12,602 | 7,577 | 18,876 | ||||||||||||||
Corporate
|
(1,560 | ) | (1,618 | ) | (1,752 | ) | (1,612 | ) | (6,542 | ) | ||||||||||
Goodwill
impairment
|
(45,040 | ) | - | - | - | (45,040 | ) | |||||||||||||
Other
items
|
(1,620 | ) | (930 | ) | 463 | (788 | ) | (2,875 | ) | |||||||||||
Operating
(loss) profit
|
$ | (56,264 | ) | $ | 4,193 | $ | 11,313 | $ | 5,177 | $ | (35,581 | ) |
(In thousands)
|
Six Months Ended June 30, 2009
|
Three Months Ended June 30, 2009
|
||||||||||||||||||||||
GAAP
|
Adjustments
|
Non-GAAP
|
GAAP
|
Adjustments
|
Non-GAAP
|
|||||||||||||||||||
Cost of sales
|
$ | 145,203 | $ | 2,555 | $ | 142,648 | $ | 80,010 | $ | - | $ | 80,010 | ||||||||||||
Selling,
general and administrative
expenses
|
$ | 33,610 | $ | 3,547 | $ | 30,063 | $ | 16,360 | $ | 1,173 | $ | 15,187 | ||||||||||||
Goodwill
impairment
|
$ | 45,040 | $ | 45,040 | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Operating
(loss) profit
|
$ | (52,071 | ) | $ | 51,142 | $ | (929 | ) | $ | 4,193 | $ | 1,173 | $ | 5,366 | ||||||||||
Net
(loss) income
|
$ | (34,146 | ) | $ | 33,102 | $ | (1,044 | ) | $ | 2,556 | $ | 716 | $ | 3,272 | ||||||||||
Net
(loss) income per diluted share
|
$ | (1.58 | ) | $ | 1.53 | $ | (0.05 | ) | $ | 0.12 | $ | 0.03 | $ | 0.15 |
(In thousands)
|
Six Months Ended June 30, 2009
|
Three Months Ended June 30, 2009
|
||||||||||||||||||||||
GAAP
|
Adjustments
|
Non-GAAP
|
GAAP
|
Adjustments
|
Non-GAAP
|
|||||||||||||||||||
RV
Segment operating (loss) profit
|
$ | (715 | ) | $ | 3,013 | $ | 2,298 | $ | 5,148 | $ | 77 | $ | 5,225 | |||||||||||
MH
Segment operating (loss) profit
|
$ | (588 | ) | $ | 685 | $ | 97 | $ | 1,593 | $ | 76 | $ | 1,669 | |||||||||||
Goodwill
impairment
|
$ | (45,040 | ) | $ | 45,040 | $ | - | $ | - | $ | - | $ | - | |||||||||||
Other
items
|
$ | (2,550 | ) | $ | 2,404 | $ | (146 | ) | $ | (930 | ) | $ | 1,020 | $ | 90 | |||||||||
Operating
(loss) profit
|
$ | (52,071 | ) | $ | 51,142 | $ | (929 | ) | $ | 4,193 | $ | 1,173 | $ | 5,366 |
|
§
|
Net
sales in the 2010 second quarter were $174 million, an increase of 73
percent from the $101 million of net sales in the second quarter of 2009.
This sales increase was largely the result of an 80 percent increase in
industry-wide wholesale shipments of travel trailers and fifth-wheel RVs,
and a 17 percent increase in industry-wide production of manufactured
homes. In addition, primarily as a result of new products, market share
gains, and recent acquisitions, the Company’s product content for travel
trailers and fifth-wheel RVs in the 2010 second quarter increased
substantially compared to the same period in
2009.
|
|
§
|
For
the second quarter ended June 30, 2010, the Company reported net income of
$9.6 million, or $0.43 per diluted share, compared to $2.6 million, or
$0.12 per diluted share for the comparable period in 2009. The 2009 second
quarter included $0.7 million ($0.03 per diluted share) of “extra”
expenses, net of taxes, primarily due to plant consolidations related to
unprecedented conditions in the RV and manufactured housing industries
during that period.
|
|
§
|
On
March 16, 2010, the Company acquired certain intellectual property and
other assets from Michigan-based Schwintek, Inc. The purchase included
certain products for which patents are pending, consisting of an
innovative RV wall slide-out mechanism, an aluminum cylinder for use in
leveling devices for motorhomes, and a new power roof lift for tent
campers. The purchase price was $20.0 million paid at closing from
available cash, plus earn-outs depending on future unit sales of these
products in excess of pre-established hurdles over approximately the next
five years.
|
|
§
|
Compared
to the first quarter of 2010, higher raw material costs added
approximately $1.5 million to cost of sales in the second quarter of 2010.
Steel, aluminum and ABS resin prices increased as much as 50 percent
during the first part of 2010, depending on the type of commodity.
However, beginning in the latter part of the second quarter of 2010, the
cost of certain raw materials have declined, although, depending upon the
type of commodity, still remaining higher than during the fourth quarter
of 2009. For those products using raw materials the costs of which have
risen on a longer-term basis, the Company has implemented sales price
increases. Further, the adverse impact of the higher-cost raw materials is
expected to diminish as lower-cost raw materials begin to flow through
cost of sales later in the third quarter of
2010.
|
|
§
|
Operating
profit in the second quarter of 2010, as compared to the same period in
2009, benefited from net fixed cost reductions of approximately $1
million. While the Company remains focused on controlling costs, due to
the rise in demand, annualized fixed costs were recently increased by
approximately $1 million for additional salaried staff and increased
capacity. The Company does not expect additional significant changes in
fixed costs for the balance of
2010.
|
2010
|
2009
|
Change
|
||||||||||
Content
per Travel Trailer and Fifth-Wheel RV
|
$ | 2,207 | $ | 2,033 | 9 | % | ||||||
Content
per Motorhome
|
$ | 619 | $ | 471 | 31 | % | ||||||
Content
per all RVs
|
$ | 1,893 | $ | 1,687 | 12 | % |
2010
|
2009
|
Change
|
||||||||||
Travel
Trailer and Fifth-Wheel RVs
|
190,500 | 119,000 | 60 | % | ||||||||
Motorhomes
|
21,100 | 13,600 | 55 | % | ||||||||
All
RVs
|
229,000 | 147,200 | 56 | % |
|
·
|
The
spreading of fixed manufacturing and selling, general and administrative
costs over a larger sales base.
|
|
·
|
Lower
health insurance costs and bad debt
expense.
|
|
·
|
Implementation
of cost-cutting measures.
|
|
·
|
Volatile
raw material costs. Steel, aluminum and ABS resin prices increased as much
as 50 percent during the first part of 2010, depending on the type of
commodity. However, beginning in the latter part of the second quarter of
2010, the cost of certain raw materials have declined, although, depending
upon the type of commodity, still remaining higher than during the fourth
quarter of 2009. For those products using raw materials the costs of which
have risen on a longer-term basis, the Company has implemented sales price
increases. Further, the adverse impact of the higher-cost raw materials is
expected to diminish as lower-cost raw materials begin to flow through
cost of sales later in the third quarter of
2010.
|
|
·
|
Excess
production costs incurred as a result of greater than anticipated
increases in demand in certain product lines. These excess production
costs are expected to be lower in the third quarter of
2010.
|
|
·
|
Higher
incentive compensation and retirement costs. In the first and second
quarter of 2009, there was no incentive compensation recorded due to the
year-to-date operating loss.
|
|
·
|
The
spreading of fixed manufacturing and selling, general and administrative
costs over a larger sales base.
|
|
·
|
Lower
health insurance and warranty costs and bad debt
expense.
|
|
·
|
Improved
operating efficiencies in certain product lines due to the increase in
sales, partially offset by higher overtime
costs.
|
|
·
|
Implementation
of cost-cutting measures.
|
|
·
|
Volatile
raw material costs. While lower than during the first six months of 2009,
raw material costs were higher than during the fourth quarter of 2009.
Steel, aluminum and ABS resin prices increased as much as 50 percent
during the first part of 2010, depending on the type of commodity.
However, beginning in the latter part of the second quarter of 2010, the
cost of certain raw materials began to decline although, depending upon
the type of commodity, still remaining higher than during the fourth
quarter of 2009. For those products using raw materials the costs of which
have risen on a longer-term basis, the Company has implemented sales price
increases. Further, the adverse impact of the higher-cost raw materials is
expected to diminish as lower-cost raw materials begin to flow through
cost of sales later in the third quarter of
2010.
|
|
·
|
Excess
production costs incurred as a result of greater than anticipated
increases in demand in certain product lines. These excess production
costs are expected to be lower in the second half of
2010.
|
|
·
|
Higher
incentive compensation and retirement costs. In the first six months of
2009, there was no incentive compensation recorded due to the operating
loss.
|
2010
|
2009
|
Change
|
||||||||||
Content
per Home Produced
|
$ | 1,462 | $ | 1,461 | 0 | % | ||||||
Content
per Floor Produced
|
$ | 893 | $ | 890 | 0 | % |
2010
|
2009
|
Change
|
||||||||||
Total
Homes Produced
|
51,800 | 62,100 | (17 | )% | ||||||||
Total
Floors Produced
|
84,800 | 102,000 | (17 | )% |
|
·
|
Lower
health insurance costs and bad debt
expense.
|
|
·
|
The
spreading of fixed manufacturing and selling, general and administrative
costs over a larger sales base.
|
|
·
|
Improved
operating efficiencies due to the increase in
sales.
|
|
·
|
Implementation
of cost-cutting measures.
|
|
·
|
Volatile
raw material costs. While lower than during the first six months of 2009,
raw material costs were higher than during the fourth quarter of 2009.
Steel, aluminum and ABS resin prices increased as much as 50 percent
during the first part of 2010, depending on the type of commodity.
However, beginning in the latter part of the second quarter of 2010, the
cost of certain raw materials began to decline although, depending upon
the type of commodity, still remaining higher than during the fourth
quarter of 2009. For those products using raw materials the costs of which
have risen on a longer-term basis, the Company has implemented sales price
increases. Further, the adverse impact of the higher-cost raw materials is
expected to diminish as lower-cost raw materials begin to flow through
cost of sales later in the third quarter of
2010.
|
|
·
|
Higher
incentive compensation and retirement costs. In the first six months of
2009, there was no incentive compensation recorded due to the operating
loss.
|
Six Months Ended
|
Three Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Selling,
general and administrative expenses:
|
||||||||||||||||
Legal
|
$ | 67 | $ | 345 | $ | 31 | $ | 52 | ||||||||
Loss
on sold facilities and write-downs to estimated current fair value of
facilities to be sold
|
166 | 2,128 | 39 | 878 | ||||||||||||
Other
|
(200 | ) | 277 | (200 | ) | - | ||||||||||
Net
gain on insurance claim
|
(402 | ) | - | (402 | ) | - | ||||||||||
Incentive
compensation impact of other non-segment items
|
64 | - | 133 | - | ||||||||||||
Other
(income) from the collection of a previously reserved note
|
- | (200 | ) | - | - | |||||||||||
$ | (305 | ) | $ | 2,550 | $ | (399 | ) | $ | 930 |
2010
|
2009
|
|||||||
Net
cash flows provided by operating activities
|
$ | 17,722 | $ | 26,338 | ||||
Net
cash flows used for investing activities
|
(23,081 | ) | (2,693 | ) | ||||
Net
cash flows provided by (used for) financing activities
|
67 | (7,418 | ) | |||||
Net
(decrease) increase in cash
|
$ | (5,292 | ) | $ | 16,227 |
|
a)
|
Evaluation
of Disclosure Controls and
Procedures
|
|
b)
|
Changes
in Internal Controls
|
|
a)
|
Exhibits
as required by item 601 of Regulation
S-K:
|
|
1)
|
31.1
Certification of Chief Executive Officer pursuant to 13a-14(a) under the
Securities Exchange Act of 1934. Exhibit 31.1 is filed
herewith.
|
|
2)
|
31.2
Certification of Chief Financial Officer pursuant to 13a-14(a) under the
Securities Exchange Act of 1934. Exhibit 31.2 is filed
herewith.
|
|
3)
|
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
1350. Exhibit 32.1 is filed
herewith.
|
|
4)
|
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
1350. Exhibit 32.2 is filed
herewith.
|
DREW
INDUSTRIES INCORPORATED
|
|
Registrant
|
|
By
|
/s/ Joseph S. Giordano
III
|
Joseph
S. Giordano III
|
|
Chief
Financial Officer and Treasurer
|
|
August
6, 2010
|