Drew Industries Incorporated (DW)

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Drew Industries Incorporated (DW)

Q4 2008 Earnings Call

February 12, 2009 11:00 am ET


Ryan McGrath – Lambert, Edwards & Associates

Leigh J. Abrams – Chairman of the Board

Fredric M. Zinn – President & Chief Executive Officer

Joseph S. Giordano III – Chief Financial Officer & Treasurer

Jason D. Lippert – Chairman, President & Chief Executive Officer – Lippert Components, Inc.


Kathryn Thompson – Avondale Partners

Scott Stember – Sidoti & Company, LLC

Torin Eastburn – CJS Securities

Adam Schwartz – First Manhattan

Barry Vogel – Barry Vogel & Associates

John Dasher – Pinnacle



Good day ladies and gentlemen, and welcome to the fourth quarter 2008 Drew Industries Inc. earnings conference call. My name is Grace Ann and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. (Operator Instructions). As a reminder this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host of today's conference, Mr. Ryan McGrath with Drew's Investor Relations. Please proceed.

Ryan McGrath

Thank you. Good morning everyone, and welcome to Drew Industries 2008 fourth quarter and year-end conference call. I'm Ryan McGrath of Lambert, Edwards, Drew's Investor Relations firm. And I have with me today members of Drew's management team, including Leigh Abrams, Chairman of the Board of Drew; Fred Zinn, President and CEO and a Director of Drew; Jason Lippert, President and CEO of Lippert Components and Kinro and a Director of Drew; and Joe Giordano, CFO and Treasurer of Drew.

I want to take a few minutes to discuss our quarterly and year-end results. However, before we do so, it's my responsibility to inform you that certain statements made in today's conference call regarding Drew Industries and its operations may be considered forward-looking statements under the securities laws.

As a result I must caution you that there are a number of factors, many of which are beyond the company's control, which could cause actual results and events to differ materially than those described in the forward-looking statements. These factors are identified in our press releases in our Form 10-K for the year ended 2007 and in our subsequent Form 10-Qs all filed with the SEC.

With that, I would like to turn the call over to Leigh Abrams. Leigh?

Leigh J. Abrams

Thank you, Ryan. And good morning and welcome to all of you on this call, and to all of those listening on the Internet. After 30 years as Drew's CEO I believe it's time for me move on to new challenges and adventures, its highly unusual for someone to be the CEO of the company for as long as I have. But all I can say is that I've had great experiences, terrific opportunities and tremendous satisfaction as the CEO of Drew. And then now as Chairman of the Board of Drew, Drew will continue to be a big part of my life.

I also want to take this opportunity to thank all you for your valued support and encouragement for Drew and me over these past years. I take great confident in knowing that Fred Zinn, who has been with Drew for the last 28 years will be succeeding me. Fred was appointed President last May, and CEO as of January 1, '09. Fred is very smart highly qualified and has the full and enthusiastic backing and confidence of me and our entire Board of Directors.

I look forward to Fred helping Drew become an even better company in the years ahead. In addition, as we have previously reported, David Webster, the long time President and CEO of our Kinro subsidiary has also recently retired. Jason Lippert, the CEO of our very successful Lippert Components Subsidiary is now also the CEO of Kinro, which for many years was the backbone of Drew's success.

My only regret is that I'm leaving Fred and Jason with the job of coping with one of the worst recessions this country have seen in many years. However, I am certain that Fred and Jason are up for the task. Rusty Rose, who has been Drew's Chairman for the past 30 years will now be our Lead Director. Rusty and I will always be available to consult with Fred and Jason and offer whatever advice we can. Our interest in Drew remains as intense as ever as Rusty is one of Drew's largest stockholders and I have a significant portion of my net worth in Drew's stock, albeit less than it in the past as a result of our lower stock price. It is now my pleasure to turn Drew and this call over to Fred.

Fredric M. Zinn

Thank you very much, Leigh. However, we saved the litany of bad economic and industry news that led to Drew's first quarter as low as in many years I know you've all heard it many times before, but I should point out that despite the dismal economic environment, for the full year 2008, Drew achieved a profit of $0.53 a share or $0.76 a share excluding the goodwill impairment and retirement charges that we described in our press release. While that's well below prior year earnings, we still believe it's quite an accomplishment in these very, very difficult economic times.

Joe will give you more of the details on our the results for the quarter, but basically excluding the goodwill impairment and executive retirement charges the decline in our operating profit for the fourth quarter was almost entirely caused by the $73 million organic drop in sales. And that sales decline resulted from reduced industry-wide production both because in this environment it's difficult for dealers and consumers to get loans and because consumers are reluctant to make big, take discretionary purchases.

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