CHICAGO Drew Industries Inc.s profits narrowed in the first quarter as production issues, higher material costs and expansions and reorganizations bit into the bottom line.
But costs associated with consolidating facilities and realigning production are expected to decline in future quarters, the White Plains, N.Y.-based supplier of components for the recreational vehicle (RV) and manufactured homes markets said in commentary released with earnings data May 3.
"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," said Jason Lippert, chief executive officer of Drew subsidiaries Lippert Components Inc. and Kinro.
Lippert will replace Drew president and chief executive officer Fred Zinn, who plans to retire May 10 (amm.com, Feb. 13).
Drew posted net income of $8.37 million for the three months ended March 31, down 24.7 percent from $11.12 million in the same period last year despite a 13-percent increase in sales to $252.59 million thanks to strong results from Drews RV segment, which saw sales jump 14.5 percent. RV sales accounted for 89 percent of consolidated net sales, the company said.
RV production improved in April after a slowdown in late March, Drew said. The company estimates that wholesale shipments of travel trailers and fifth-wheel RVs increased about 15 percent last month compared with the same month last year, and retail demand for towable RVs increased about 10 percent in the first quarter.
Drew said its content per travel trailer and fifth-wheel RV increased 11 percent in the first quarter from a year earlier.
RV dealers in the United States and Canada have boosted inventory levels over the past six months in anticipation of the seasonally stronger spring and summer selling seasons, Drew said. But the company cautioned that future RV production levels will depend on retails sales, which it said are sensitive to overall economic conditions.