Like most companies operating in the manufactured housing and recreational vehicle industries, Drew Industries
Granted, quarterly sales plummeted 17% in comparison to last year's Q1, ending up at $173 million. Also granted, profits were down a good 6% -- but that was much less than expected, and here's why.
Drew knew it was in for a tough quarter, and probably a continued tough stretch as MH and RV makers from Champion
The net result of all this cost cutting and lean-and-meaning was a 19% drop in the cost of goods sold -- more than the decline in sales, and a reduction in selling, general, and administrative expenses of 12% -- a yeoman's effort. What's more, these efforts should stand Drew in good stead going forward, as the firm is seeing renewed upwards pressure on raw material costs which will squeeze operating margins mightily. As when faced by this problem in the past, Drew intends to seek price increases from its customers -- but also as before, Drew will be cementing customer loyalty at the expense of its own profit margins by passing along raw material price increases "at cost," with no mark-up for profit.
Drew has readied itself for continued turbulence in the industry, improving its own chances of surviving. Moreover, as weaker rivals flounder, a healthy Drew will be able to continue its stated goals of snapping up those rivals, gaining market share from those it doesn't buy, and getting bigger, ever bigger.
Draw yourself a map of Drew's progress with:
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