Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2013 Drew Industries Incorporated Earnings Conference Call. My name is Katina, and I will be your coordinator for today. [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 for today's call, Ms. Renee Ketels of Lambert Edwards. Please proceed.

Thank you. Good morning everyone and welcome to Drew Industries 2013 Fourth Quarter and Year End Conference Call. I'm Renee Ketels with Lambert Edwards, Drew's Investor Relations firm. And I am joined on the call today by members of Drew's management team, including Leigh Abrams, Chairman of the Board of Drew; Jason Lippert, CEO and Director of Drew; Scott Mereness, President of Drew; and Joe Giordano, CFO and Treasurer of Drew. Management will be discussing fourth quarter and year-end results in just a moment. But first, they have asked me 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 and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors are discussed in the company's earnings releases and its annual report on Form 10-K and its other filings with the SEC. The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. With that, I would like to turn the call over to Jason Lippert. Jason?

Thanks, Renee, and thank you, all, for joining us on the call today. I want to start off by once again thanking our outstanding employees. It's because of their hard work and dedication to our company and products that our net sales and our market share capitalization exceeded the $1 billion mark in 2013. These are very significant milestones for our company and together, we look forward to reaching many more. 2013 was a terrific year for the RV industry and for our company. During 2013, RV retail sales grew an estimated 14%, while RV industry-wide production experienced growth of 12%. The RV industry association is projecting that the RV sales will continue to grow throughout 2014. In particular, the improvement in 2013 for motorhome sales was a highlight for the industry, both of wholesale and retail activity, up more than 30%. Motorhome components remain a significant opportunity for us to grow our RV markets share. We've devoted significant resources over the last few years to develop more products and reach more of our potential customers in the motorhome sector and we expect to see the benefits of these efforts in the coming quarters. In fact, one of our largest motorhome customers shipped out our new RV remote control to many of their floor plans. A first for the motorhomes. Further, industry reports indicate that the RV dealer inventory levels and ordering patterns appear to in line with retail demand. Many of the RV OEMs have or are planning to increase production capacity to meet projected industry-wide growth in 2014. If the economy continues to grow without significant disruption, the RV industry and Drew both appear well positioned for the next couple of years. January 2014 got up to a slower start than expected due to the weather conditions in…

Thank you, Jason. In 2013, our net sales grew by over $100 million, making 2013 the fourth year in a row of consolidated net sales growth of more than $100 million. Our net sales to producers of towable and motorhome RVs grew 13% in 2013. And with respect to this growth, there are a few key product lines I'd like to point out. In 2012, we introduced our new RV awning product line, with a market potential of approximately $100 million for OEMs and an estimated $75 million of aftermarket potential. Our awning sales for 2013 were $13 million. But at the end of 2013, just our second year of producing and selling awnings, our sales reached an annual run rate of approximately $25 million, capturing approximately 25% of the OEM market for awnings. Additional market share growth in awnings for both OEMs and the aftermarket is expected in 2014. Another area of growth over the past several years have been leveling systems. A consistent factor in our growth has been our ability to anticipate and respond to the content demand for new features by the RV consumer. Leveling systems for RVs is just such an example. And as consumers look for ways to make their RV experience easier and more enjoyable, we have seen a substantial increase in demand for easier leveling systems for RVs. As a result, our 2013 sales of leveling products, including our patented Level-Up system, were $50 million compared to $35 million in 2012 and less than $10 million back in 2010. Finally, I want to point out the significant growth we have experienced in our furniture and mattress product lines, with sales exceeding $100 million for 2013 compared to less than $80 million in 2012, or a growth rate of 25%. And when I…

[Operator Instructions] Your first question comes from the line of Scott Stember, representing Sidoti & Company. Scott L. Stember - Sidoti & Company, LLC: Can you maybe touch on some of these new initiatives, Joe, that you referred to beyond the lean opportunities and just give us a little flavor for that?

What specifically, Scott? Why don't you start wherever you want. Scott L. Stember - Sidoti & Company, LLC: What's that, I'm sorry?

I said, what specific initiative. We'll just start wherever you want. Scott L. Stember - Sidoti & Company, LLC: Yes, no. I mean, Joe had pretty much said that a lot of the stuff that you did last year was fully represented in the numbers, and now there's the lean opportunity. But it seems like there's -- you alluded to the fact that there's some additional opportunities beyond that. I was just trying to figure out what that was.

Well, I mean, I think lean, Scott, to your point is a very big initiative. And when we started lean, we started out at 1 facility and it grew to 2 or 3, and as you know we have 31 facilities. So there's a handful of facilities that are really undergoing lean today. So the opportunity to roll it out to 2 dozen more is a very big initiative. Beyond lean, I mean, we are continually looking at other ways to improve efficiencies, whether it is how a production line is laid out, to where it is in the facility, to how we're shipping and how we're packaging our shipping. I mean, there are dozens of those type of initiatives that are continually underway and continually being looked at. So, I mean, I think lean is by far the biggest one of a general concept, but we're continuing to look at, again, facilities with the furniture operation, for example, relocating, gives us a blank slate, gives us a blank piece of paper and 350,000 square feet to take our operations and not only have the capacity to produce but layout the facility based on what we've learned in the last 5 or 6 years of owning a furniture operation. So I would expect there to be some nice efficiency improvements there in terms of labor, scrap, et cetera. Scott L. Stember - Sidoti & Company, LLC: Got you.

And just to add to that, I know you're talking about manufacturing efficiencies and we're doing beyond lean and automation. I'd just add that this is something we've done forever. It is our -- our businesses continued to grow over the years. We've had consolidation opportunities, combining many small plants and the larger plants, again, efficiency is there, and combining management teams and all the synergies that could come along with growth and any acquisition. So that's something we're doing all the time, and I think one of the reasons we've been able to be so competitive in our industry over the years is just being able to continually find ways to be more efficient, even in the midst of high growth.

Just to give another example, Scott, just -- because I know we all like examples, would be, when I think about axles and how we've grown in our axle product line over the last couple of years. And we look at that and we say we're pretty much Indiana-centric basis, but there's markets outside of Indiana, Texas and West Coast where we started setting up some lines there to really help grow our share out there, as well as grow it here in Indiana. But there's big markets outside of Indiana where we can make some modest investments and really grow efficiencies, cut down on freight and deliver a great product at the right price. Scott L. Stember - Sidoti & Company, LLC: That's perfect. The next question, just related to the new remote system that you;re rolling out to a motorized customer. Can you maybe just talk about the motorized opportunities in general? Maybe talk about awnings. I know that that's been done very well on the towable side. But maybe talk about how some of the other products are more motorhome specific. And then maybe just talk about the new, the remote opportunity as well.

Yes, I'll make a couple of comments there. The big strength of the motorhome side is just the momentum of the Retail and Wholesale right now. I mean, with numbers north of 30% there, it offers a pretty attractive opportunity, whether we're growing in that segment -- growing into that segment or whether we're just trying to maintain market share. So that's a real highlight of what's going on. But we've got a lot of crossover products from towables with respect to some of the metal and steel stamping work and chassis stretching in the motorhome side, the windows, the doors, the awnings. Some of those components change a little bit over the -- when you roll from trailers to motorhomes. But for all intents and purposes, the competency is the same, it's just a change in details. And on all of this, what we've tried to do is offer bigger and better advantages to these components as we roll into the motorhomes side. Like I mentioned in my comments initially, the remote, there's something we've been doing on the trailer -- travel trailer and fifth-wheel side for probably 5 or 6 years. And it's a -- to be able to control all your components and hardware on a motorhome, I mean, why wouldn't somebody in that price point want. So one of our large customers rolled into that here just last quarter and once something -- takes hold of an industry and get popular. We'll specifically see it roll out to a lot of other customers. But going back to my previous comment with some of our core products, like windows and doors and awnings, I mean we're adding features like speakers to the awnings, frameless windows, remote controls to doors that didn't exist prior to us moving into the motorhome market. So we hope that our products aren't only competitive but offer kind of a refreshed look and stuff that's been around for quite a long time. Scott L. Stember - Sidoti & Company, LLC: Great. And last question on the aftermarket side. Could you just talk about where you are with respect to rolling out some of your new products and did you rollout any awnings into the aftermarket program yet?

Well, I can tell you that our -- it's kind of we stated in the comments on the release, our aftermarket business continues to grow double-digit. It's a lot of time and energy and resources we're spending right now on just digging in deep with customers and developing relationships and developing their trust and the confidence in those customers that they're coming back to us, that we can do what we say we're going to do. There's -- we're working on all sorts of products right now, a lot of our core products, and then digging into some of our accessory products. But we're starting to move some awnings. We've got distributor and dealer customers all over North America now, from Canada to the main contiguous U. S. United States markets. We've got some stuff we're doing overseas that we consider aftermarket. So I think from an aftermarket standpoint, it's just going to be a lot of resources, a lot of development of the relationships. We've got the product breadth. We can sell all of our products into the aftermarket. And the more we continue to put in to the coaches and then, to customers' demand in their coaches, the more replacement opportunity there's going to be down the road. So I think as we grow, the aftermarket is going to grow anyway, but we can help ourselves by continuing to grow share and introduce new products and things like that.

Your next question comes from the line of Daniel Moore, representing CJS Securities.

The press release alluded to some of these capacity expansions, potentially having a short-term negative impact on margins. But obviously, Jason, in your prepared remarks, you said that would have no financial impact regarding the new manufacturing facility. Can you reconcile those and just help us think about how we should think about the potential for margin expansion continuing or perhaps a little bit of contraction over the next quarter or 2?

Yes. I think, Dan, the comments were that we do not -- we don't expect it to have a significant impact. I mean, when you relocate a facility, it costs money, there's no doubt about that. As you get into operation, this new 350,000 square-foot facility, it'll cost a little bit, we'll spend some money. I mean, probably a couple of million dollars of our CapEx will be for enhancements to that facility. By the way, it's only a few miles down the road, so it's not a super complex move. It will cost something, but we don't expect it to be significant. When we look back in 2012, I mean, we relocated and moved numerous facilities during a great period of expansion and growth. A year, I think, we were going 30% growth in sales and moving stuff around in 2012 that was, and we ran into significant costs, and even carried over to the beginning of 2013. So when we look at that, we do not expect it to be of the same magnitude. That was really the point, I think, we wanted to get across. It will have some impact, but not of that same magnitude.

That's helpful. Appreciate it. Switching gears a little bit. We don't talk as much about Manufactured Housing. What are you seeing in that market? What caused some of the declines in Q4? And maybe your outlook for fiscal '14 and just the general overall health for trends that you're seeing there.

I think our customers are feeling that the Manufactured Housing industry will continue to grow for 2014. In terms of our products, we're excited about our doors, entry doors continuing to gain market share, and we're looking for the industry to be up this year and our sales to continue to grow.

Okay. And then lastly, Jason, you've mentioned international opportunity. What kind of timeframe should we think about that potentially moving the needle and which market or markets do you see the largest opportunity in the short run?

Opportunities are in Europe and Australia to begin with. We're shipping into all 3 markets now. But like the aftermarket, we're gonna -- it's going to take time to develop the relationships and the trust with those customers, no different than it did with the U.S. business, RV business that we have and Specialty business. So it just takes time. That's usually -- I would expect some significant developments over the next few years. We're moving into those markets with slide outs and some other components that are going to give us a foot in the door. So we're really bullish on it. I mean, there's real good opportunities. And in all these markets, our customers are open to having us as a key supplier. So we're going to dig deep with the relationships over the next few years and see what happens. But the relationships come first and the trust, and then we can get into selling products and growing our book of business with these customers down the road.

[Operator Instructions] Your next question comes from the line of Kathryn Thompson, representing Thompson Group.

This is Wenjun, sitting in for Kathryn. I just have a followup on the Manufactured Housing segment. Could you provide some color on the pricing trends that you saw in the quarter?

On what trends?

Which trends, Wenjun?

Yes, pricing trends.

And are you talking by the industry pricing trends or our pricing trends?

Just overall general...

Selling prices?

Yes, selling prices.

Stable. I would characterize them as stable.

And Wenjun, it falls on the 10% part of our business right now. So we track it but it's a stable, as Scott have mentioned.

Your next question comes from the line of Kevin Leary, representing Spitfire Capital.

I just wanted to dig in a bit more on the new products. So there's an earlier comment about how one of the products had recently gone from $80 million to $100 million of sales. Which new product was that?

I was referring to our furniture and mattress, which is not really a new product. We got back -- we got into that back in 2008, but it continues to have significant growth, and that's why I wanted to mention that here on the call.

Okay. And so the -- that was the 2012 to 2013, was that $80 million to 100 million?

No. Yes, furniture and mattresses went from $80 million in 2012 sales to $100 million in 2013.

Okay, got it. So my question is, so there's $20 million of growth there. And if I take that and I divided it by the number of towable shipments in the year, I get to about $75 of content. Now maybe I'm not looking at that right. But content growth in the year was about $25, $26. Am I looking at that correctly, or are there other categories that are shrinking? Can you help me understand that a bit?

The one factor that's key in looking at content is the mix in the size of units and the floor plans of the various units. And that's one of the variables that doesn't come across in just the straight numbers when you look at content. So when you look at our sales and just take the straight number of units, there are other variables besides that. So you have an item like furniture and mattresses, which has clearly grown in content, but there are mixed changes in the ultimate marketplace that are difficult to quantify even when you look at travel trailers and fifth-wheels. Fifth-wheels, there's a percent of total that was down a little bit. Fifth-wheels have a higher content. That's the piece of the puzzle, and then you have to look at the various floor plans and the items that are in there.

Okay, that's helpful. And then just kind of broad strokes. As you guys look at market opportunities for things like remote controls or awnings or leveling devices or whatever the new market may be. Do you ever think about it in terms of what the dollar content is on x product category if you reach target penetration?

I don't think we started out looking at it that way. Certainly, when we come out with a product that we feel is right for either travel trailer or fifth-wheel or motorhome markets, our eyes are looking at how significant is the penetration going to be. But going back to the earlier comment about content, the travel trailer is becoming more and more popular over the last few years, as more entry-level prices does drive that content number significantly. It becomes more important for us to look at a lot of these accessory-type products to help build the content backup. But, yes, we do look at overall penetration. I mean, obviously, you've got to hit the right product, you've got to hit the right price and be competitive. And there's got to be some wow factor to it to get any kind of significant penetration. But it is something that we look at.

Your next question comes from the line of Alvin Concepcion, representing Citi.

Alvin Concepcion here. I was just wondering, retail demand looked pretty solid for the fourth quarter. To what extent did weather hurt retail demand towards the end of the quarter?

In December 2013?

Yes. I'm just curious.

No impact, really.

Yes, minimal, if any, is at the end of 2013. The polar vortex have been in January 2014, and I know in thee Northeast, I think where you are, Alvin, is continuing today with another 10 inches of snow or so.

Definitely. And I think on that note, what were the production issues related to weather in January due to margins? I mean, will margins be pressured due to the lumpy production to meet demand, and are you going to need to run double shifts in February that might hit margins as well?

There, clearly, will be some additional overtimes. Again, with a combination of just the natural rise in the business requests and orders, as well as making up some of the loss production days. I mean, if you think about our sales, the way we're running, it's probably about, give or take, $4 million or $5 million a day. And if you lose a few shipping days, that's -- the impacts, we do have to make that up in terms of shipping and production days. Now there will be some impact of overtime, to get at your question. But we, again, do not anticipate that will be too significant here on the first quarter results.

Moreover, the business is looking very strong coming into January and February, anyway. We had manufacturers talking about working Saturdays before the weather hit. And for that to happen as early in the selling season, the first 6 months are generally the strongest. And for that to happen this earlier compared to prior years, that just tells you how strong the OEMs feel about the businesses and the dealers feel about the businesses. Typically, we wouldn't see Saturdays until late March or April in the past. And we were seeing that in -- starting in February, without the weather. So that kind of gives you an idea to how bullish the OEMs and the dealers are on our RV business right now.

[Operator Instructions]

No more questions?

With no further questions at this time. I would now like to turn the call back to Mr. Jason Lippert for closing remarks.

Everybody, we appreciate your time and we look forward to talking to you on the first quarter 2014 earnings call. Thanks, again.