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When I was a Junior studying Chemical Engineering at the University of Pennsylvania. A elder man who was long on wisdom but short on fashion appeared in the parking lot at our fraternity house. Mark Leahy was his name, and he coined the catchphrase “Hey, you wanna go to Florida?” So, heeding Mark Leahy’s sage advice, the brothers of Sigma Nu went onward to Florida.
Now we didn’t go the easy way. A 10 minute cab ride would have put us into Philadelphia International onto the next fast flight to Ft. Lauderdale. Instead, we drove 4 hours roundtrip to Neptune, NJ to pick up 2 Winnebagos for the 26 hour ride to Ft. Lauderdale. No problem, we brought a keg with us. That was fun until we finished the keg. Then the keg just sat there. Someone had the bright idea to leave the keg in the RV because we could get our $10 deposit back if we returned it. When Spanky drove the Winnebago he got so nervous, he slammed on the brakes and one of the Little Sisters came crashing down out of the top bunk onto the Keg. So the keg had the best sleeping quarters in the vehicle.
On the way down, who could forget this landmark:
Wow…we are almost there!
What a superior idea. We could park in the municipal lot with all of the other homeless people and sleep in 90 degree humidity with no air conditioning for 8 nights. After about 30 minutes, the RV began to smell less like fresh air and sunshine, and more like stale beer, sweat, vomit and pee pee. Yes we certainly were a bunch of drunk pumpkins:
Combine this with the fact that we had no place to take a shower, and we were very dismayed at our batting average when we tried to score on the cheerleaders from the University of Kentucky.
The good news in this is that young $$$MR. MARKET$$$ completely destroyed the competition in the beer chugging contest at the Button, turning all of my would be competion into different versions of my latest girlfriend. In the meantime, Titan Omega was doing gymnastics on top of the Winnebago, falling off and smashing his jimmy joint against the tire so that it swelled up to the size of a beer can. On the way home, Buddha crashed the Winnebago into some still unknown hard object, and the bad man from Neptune kept our deposit money. And the rest is hysterical..I mean history.
Today I bought Drew Industries (DW) at 38.37. I will sell it in 4 to 6 weeks at 44.28. Here’s why I like DW:
DW stock is up 120% in the last 12 months, yet it still trades at a PE of only 18. That means there is still a lot of room for this stock to grow. It’s price momentum has chugged along at an astounding r^2 of 0.92 over the last 12 months. Amazing!
Drew Industries Incorporated (NYSE
W), through its wholly-owned subsidiaries, Kinro and Lippert Components, supplies a broad array of components for recreational vehicles (“RVs”) and manufactured homes. Drew’s products include windows, doors, chassis, RV slide-out mechanisms, bath and shower units, and specialty trailers. Drew is an important supplier to nearly all of the leading producers of RVs and manufactured homes. For the year ended December 31, 2003, recreational vehicle products accounted for about 62% of consolidated net sales, and manufactured housing products accounted for about 38%.
A growing RV market is really making Drew a high flyer. First-quarter results in their RV area were up 46% from a year ago. Pretty soon, every shriv is going to have one in their driveway, and Drew will be going along for the ride. The fastest growing segment of our population are those that are 50+. The US population aged 55 and over is projected to increase 52% between 2003 and 2020. Yikes! If you have time on your hands, RVing is a safe, fun and affordable way to have a great time for the entire family. Mom does all the work and Dad and the kids just sing songs and make a mess. It’s great. RV Vacations strengthen family ties.
Operations of the company's RV segment consist primarily of fabricating, welding, painting and assembling components into finished products, and tempering glass for its own use and for sale to other window manufacturers. By being a parts supplier to the whole RV and Manufactured Housing market (Champion, Clayton, Coachmen, Fleetwood, Thor, etc), Drew doesn’t have to worry about which RV’s people are buying. They just want to be the floating boat in the rising tide. Drew’s outstanding customer service and being a national supplier makes DW a key partner with their customers. Drew’s current peak potential sales per RV are $1,500 to $1,700 and growing, and so is their profit margin.
The other side of DW’s business, Manufactured Housing also has some nice upside to the story. The Manufactured Housing Industry estimates the number of units built this year will rise 9% to 143,000, its first year-over-year gain since 1998. In late April, the company said that based on the improved results of its manufactured housing segment in the first quarter, and particularly in March, it believes the manufactured housing industry may have ended its five year slide. Throughout the five-year industry downturn, Drew’s Manufactured Housing products segment has remained profitable by maximizing operating efficiencies, pursuing acquisitions, and concentrating on market share gains. Should the industry continue to recover, Drew will reap the benefits, as Drew’s sales would be expected to increase nearly $10 million for each additional 10,000 manufactured homes produced by the industry. Also, Fannie Mae recently changed its lending policy to make manufactured home loans more attractive. And Drew has been upping its market share. Drew's total sales per home were $525 in 1998. Last year, that number hit $1,020.
Through strategic acquisitions, Drew has been growing revenues while piling up accretive earnings. It’s a tried and true business strategy. Gobble up the competition but don’t pay too much. By acquiring manufacturers of products for both manufactured homes and recreational vehicles, expanding its geographic market and product lines, adding manufacturing facilities, integrating manufacturing, distribution and administrative functions, and developing new and innovative products, Drew has grown to encompass 41 manufacturing facilities in 17 states and Canada, with sales reaching $353 million in 2003. The increased scale has improved their purchasing power and should lower their materials costs.
So has $$$MR. MARKET$$$ gone crazy? Hasn’t he learned anything from his Southern Sojourn? Of course he has….like the song says, it’s earnings earnings earnings. Drew Industries announced an 83 percent increase in net income on a 34 percent increase in sales for the first quarter ended March 31, 2004. Drew said the gains were propelled by strong growth in the Company's recreational vehicle products segment, as well as higher sales in its manufactured housing (MH) segment for the first time in six quarters. Net sales increased to a quarterly record of $108.0 million in
the 2004 period, compared to net sales of $80.8 million in the first quarter of 2003. Drew also reached a new milestone with the Company's net worth exceeding $100 million for the first time ever.
The ANAL-ysts have DW earning $2.51 for full year 2004. $$$MR. MARKET$$$ issues a bellowing laugh at this ridiculous estimate. Sounds like these guys were drinking with Titan Omega. $$$MR. MARKET$$$ projects the following revenues and earnings:
1QA 108M / $0.57
2QE 121M / $0.77
3QE 128M/ $0.80
4QE 117M / $0.65
Total 474M/ $2.79
At $2.79/share and a PE of 18, that would send the stock price to $50.22, which exceeds my sell target.
Beyond the income statement, the balance sheet tells an even more remarkable story. At the end of 2003, the company had more cash on hand then it has ever had in its history. Similarly, its current assets are growing at a much faster rate than its liabilities, indicating a trend that is very healthy for its business. Same thing goes for their inventory turns. Combine this with the fact that it has cut its long term debt by more than half in the last 3 years. Even after the recent acquisition of Zieman, Drew’s debt is less than 75% of equity.
Drew's total debt declined $15 million since last March, as strong
operating results offset increases in inventories and accounts receivables. This means that operations are funding the business and that this is no fancy financial engineering story. The Return on Equity of 23.7% attests to this, compared to the industry average of 13.8%. Similarly, Return on Assets is 12.1% compared to Industry Average of 5.2%..
$$$MR. MARKET$$$ is not the only one watching this. Drew was ranked 64 of the top 100 companies featured in Business Week's "Hot Growth Companies," a special report included in the June 7 issue of the publication. Additionally, the Company was profiled and ranked 69 of the top 100 companies featured in the June 1 edition of Investor's Business Daily's "IBD 100." Even though these publications are inferior to $$$MR. MARKET$$$’s internet appraisals, it’s always good to know that the lemmings are following me.
Drew’s Directors and Officers own approximately 28% of the outstanding shares of Drew’s Common Stock, helping to ensure that management’s interests are aligned with those of other stockholders. They love Drew too. They are not just drinking the Kool-Aid.
In summary, here’s why I like Drew:
• Highly Experienced and Motivated Management
• Low-Cost Producer
• Outstanding Customer Service
• National Supplier able to serve National Customers
• Product Line Expansion
• Strategic acquisitions
• Record of Profitability
• Strong cash flow, balance sheet and Return on Equity
• Strong RV and MH Industry Growth potential
• Consistent Approach for Long Term Appreciation
• Ownership of Executives and Directors…like this guy:
"We are pleased with this recognition of the financial performance of Drew by two of the top business publications in the nation," said Leigh J. Abrams, President and CEO of Drew. "Drew is focused on becoming the leading supplier to the RV and manufactured housing markets through both organic growth and acquisitions. We have achieved superior sales and earnings growth and return on invested capital through new products, product innovations and other growth initiatives and expect our momentum to continue based on our current order trends and market conditions."
“It was a great quarter by any measure as both our RV and manufactured
housing segments ran well ahead of their industries. The first quarter sales increase of $27 million was almost entirely due to increases in product shipments across all of the Company's product lines, rather than price increases. Based on the improved results of our MH segment in the quarter, and particularly in the month of March, we believe that the MH industry may have finally ended its five-year slide," said Abrams. In addition to RV industry growth, Drew gained new customers and increased sales of recently introduced products, such as slide-out mechanisms and stabilizers for motorhomes, as well as increasing sales of various innovative products for RVs that were acquired in the July 2003 acquisition of LTM Manufacturing.”
"The way it's going now, it's going to be a spectacular year. Every industry has to take a breather. This year, the first four to five months have been just unbelievably strong. My fear is 'Can it continue at this rate?' I don't know the answer.”
Awww stop being so humble!! I can see the Winnebagos streaking down I-95 as we speak. The highway’s jammed with broken heroes on a last chance power drive. To boldly go where no man has gone before?
Now we didn’t go the easy way. A 10 minute cab ride would have put us into Philadelphia International onto the next fast flight to Ft. Lauderdale. Instead, we drove 4 hours roundtrip to Neptune, NJ to pick up 2 Winnebagos for the 26 hour ride to Ft. Lauderdale. No problem, we brought a keg with us. That was fun until we finished the keg. Then the keg just sat there. Someone had the bright idea to leave the keg in the RV because we could get our $10 deposit back if we returned it. When Spanky drove the Winnebago he got so nervous, he slammed on the brakes and one of the Little Sisters came crashing down out of the top bunk onto the Keg. So the keg had the best sleeping quarters in the vehicle.
On the way down, who could forget this landmark:
Wow…we are almost there!
What a superior idea. We could park in the municipal lot with all of the other homeless people and sleep in 90 degree humidity with no air conditioning for 8 nights. After about 30 minutes, the RV began to smell less like fresh air and sunshine, and more like stale beer, sweat, vomit and pee pee. Yes we certainly were a bunch of drunk pumpkins:
Combine this with the fact that we had no place to take a shower, and we were very dismayed at our batting average when we tried to score on the cheerleaders from the University of Kentucky.
The good news in this is that young $$$MR. MARKET$$$ completely destroyed the competition in the beer chugging contest at the Button, turning all of my would be competion into different versions of my latest girlfriend. In the meantime, Titan Omega was doing gymnastics on top of the Winnebago, falling off and smashing his jimmy joint against the tire so that it swelled up to the size of a beer can. On the way home, Buddha crashed the Winnebago into some still unknown hard object, and the bad man from Neptune kept our deposit money. And the rest is hysterical..I mean history.
Today I bought Drew Industries (DW) at 38.37. I will sell it in 4 to 6 weeks at 44.28. Here’s why I like DW:
DW stock is up 120% in the last 12 months, yet it still trades at a PE of only 18. That means there is still a lot of room for this stock to grow. It’s price momentum has chugged along at an astounding r^2 of 0.92 over the last 12 months. Amazing!
Drew Industries Incorporated (NYSE
W), through its wholly-owned subsidiaries, Kinro and Lippert Components, supplies a broad array of components for recreational vehicles (“RVs”) and manufactured homes. Drew’s products include windows, doors, chassis, RV slide-out mechanisms, bath and shower units, and specialty trailers. Drew is an important supplier to nearly all of the leading producers of RVs and manufactured homes. For the year ended December 31, 2003, recreational vehicle products accounted for about 62% of consolidated net sales, and manufactured housing products accounted for about 38%. A growing RV market is really making Drew a high flyer. First-quarter results in their RV area were up 46% from a year ago. Pretty soon, every shriv is going to have one in their driveway, and Drew will be going along for the ride. The fastest growing segment of our population are those that are 50+. The US population aged 55 and over is projected to increase 52% between 2003 and 2020. Yikes! If you have time on your hands, RVing is a safe, fun and affordable way to have a great time for the entire family. Mom does all the work and Dad and the kids just sing songs and make a mess. It’s great. RV Vacations strengthen family ties.
Operations of the company's RV segment consist primarily of fabricating, welding, painting and assembling components into finished products, and tempering glass for its own use and for sale to other window manufacturers. By being a parts supplier to the whole RV and Manufactured Housing market (Champion, Clayton, Coachmen, Fleetwood, Thor, etc), Drew doesn’t have to worry about which RV’s people are buying. They just want to be the floating boat in the rising tide. Drew’s outstanding customer service and being a national supplier makes DW a key partner with their customers. Drew’s current peak potential sales per RV are $1,500 to $1,700 and growing, and so is their profit margin.
The other side of DW’s business, Manufactured Housing also has some nice upside to the story. The Manufactured Housing Industry estimates the number of units built this year will rise 9% to 143,000, its first year-over-year gain since 1998. In late April, the company said that based on the improved results of its manufactured housing segment in the first quarter, and particularly in March, it believes the manufactured housing industry may have ended its five year slide. Throughout the five-year industry downturn, Drew’s Manufactured Housing products segment has remained profitable by maximizing operating efficiencies, pursuing acquisitions, and concentrating on market share gains. Should the industry continue to recover, Drew will reap the benefits, as Drew’s sales would be expected to increase nearly $10 million for each additional 10,000 manufactured homes produced by the industry. Also, Fannie Mae recently changed its lending policy to make manufactured home loans more attractive. And Drew has been upping its market share. Drew's total sales per home were $525 in 1998. Last year, that number hit $1,020.
Through strategic acquisitions, Drew has been growing revenues while piling up accretive earnings. It’s a tried and true business strategy. Gobble up the competition but don’t pay too much. By acquiring manufacturers of products for both manufactured homes and recreational vehicles, expanding its geographic market and product lines, adding manufacturing facilities, integrating manufacturing, distribution and administrative functions, and developing new and innovative products, Drew has grown to encompass 41 manufacturing facilities in 17 states and Canada, with sales reaching $353 million in 2003. The increased scale has improved their purchasing power and should lower their materials costs.
So has $$$MR. MARKET$$$ gone crazy? Hasn’t he learned anything from his Southern Sojourn? Of course he has….like the song says, it’s earnings earnings earnings. Drew Industries announced an 83 percent increase in net income on a 34 percent increase in sales for the first quarter ended March 31, 2004. Drew said the gains were propelled by strong growth in the Company's recreational vehicle products segment, as well as higher sales in its manufactured housing (MH) segment for the first time in six quarters. Net sales increased to a quarterly record of $108.0 million in
the 2004 period, compared to net sales of $80.8 million in the first quarter of 2003. Drew also reached a new milestone with the Company's net worth exceeding $100 million for the first time ever.
The ANAL-ysts have DW earning $2.51 for full year 2004. $$$MR. MARKET$$$ issues a bellowing laugh at this ridiculous estimate. Sounds like these guys were drinking with Titan Omega. $$$MR. MARKET$$$ projects the following revenues and earnings:
1QA 108M / $0.57
2QE 121M / $0.77
3QE 128M/ $0.80
4QE 117M / $0.65
Total 474M/ $2.79
At $2.79/share and a PE of 18, that would send the stock price to $50.22, which exceeds my sell target.
Beyond the income statement, the balance sheet tells an even more remarkable story. At the end of 2003, the company had more cash on hand then it has ever had in its history. Similarly, its current assets are growing at a much faster rate than its liabilities, indicating a trend that is very healthy for its business. Same thing goes for their inventory turns. Combine this with the fact that it has cut its long term debt by more than half in the last 3 years. Even after the recent acquisition of Zieman, Drew’s debt is less than 75% of equity.
Drew's total debt declined $15 million since last March, as strong
operating results offset increases in inventories and accounts receivables. This means that operations are funding the business and that this is no fancy financial engineering story. The Return on Equity of 23.7% attests to this, compared to the industry average of 13.8%. Similarly, Return on Assets is 12.1% compared to Industry Average of 5.2%..
$$$MR. MARKET$$$ is not the only one watching this. Drew was ranked 64 of the top 100 companies featured in Business Week's "Hot Growth Companies," a special report included in the June 7 issue of the publication. Additionally, the Company was profiled and ranked 69 of the top 100 companies featured in the June 1 edition of Investor's Business Daily's "IBD 100." Even though these publications are inferior to $$$MR. MARKET$$$’s internet appraisals, it’s always good to know that the lemmings are following me.
Drew’s Directors and Officers own approximately 28% of the outstanding shares of Drew’s Common Stock, helping to ensure that management’s interests are aligned with those of other stockholders. They love Drew too. They are not just drinking the Kool-Aid.
In summary, here’s why I like Drew:
• Highly Experienced and Motivated Management
• Low-Cost Producer
• Outstanding Customer Service
• National Supplier able to serve National Customers
• Product Line Expansion
• Strategic acquisitions
• Record of Profitability
• Strong cash flow, balance sheet and Return on Equity
• Strong RV and MH Industry Growth potential
• Consistent Approach for Long Term Appreciation
• Ownership of Executives and Directors…like this guy:
"We are pleased with this recognition of the financial performance of Drew by two of the top business publications in the nation," said Leigh J. Abrams, President and CEO of Drew. "Drew is focused on becoming the leading supplier to the RV and manufactured housing markets through both organic growth and acquisitions. We have achieved superior sales and earnings growth and return on invested capital through new products, product innovations and other growth initiatives and expect our momentum to continue based on our current order trends and market conditions."
“It was a great quarter by any measure as both our RV and manufactured
housing segments ran well ahead of their industries. The first quarter sales increase of $27 million was almost entirely due to increases in product shipments across all of the Company's product lines, rather than price increases. Based on the improved results of our MH segment in the quarter, and particularly in the month of March, we believe that the MH industry may have finally ended its five-year slide," said Abrams. In addition to RV industry growth, Drew gained new customers and increased sales of recently introduced products, such as slide-out mechanisms and stabilizers for motorhomes, as well as increasing sales of various innovative products for RVs that were acquired in the July 2003 acquisition of LTM Manufacturing.”
"The way it's going now, it's going to be a spectacular year. Every industry has to take a breather. This year, the first four to five months have been just unbelievably strong. My fear is 'Can it continue at this rate?' I don't know the answer.”
Awww stop being so humble!! I can see the Winnebagos streaking down I-95 as we speak. The highway’s jammed with broken heroes on a last chance power drive. To boldly go where no man has gone before?
Thank you for bringing this one to my attention.
286-8010 and referencing access code 42202528. A replay will also be available on Drew's website.
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