Atrium Reaches Aluminum Extrusion Agreement with Drew Industries

April 14th, 2014 by Editor

Drew Industries Inc., a supplier of components for manufactured homes and recreational vehicles, announced that its wholly owned subsidiary Lippert Components Inc. has entered into a six-year aluminum extrusion supply agreement with Atrium Windows and Doors Inc. Concurrently, Lippert Components sold some of its aluminum extrusion assets to Atrium.

“Extruded aluminum is a key raw material for us and identifying a strong supplier such as Atrium was critical in our search for a new third-party supplier,” says Scott Mereness, Drew’s president. “We were able to reach an agreement with Atrium to supply us with a portion of our extruded aluminum requirements over the next six years at a competitive market price.”

“We look forward to this new supplier relationship with Lippert Components,” adds Brian Slobodow, chief operating officer for Atrium. “Atrium has been extruding aluminum for more than 35 years, with a history of producing high-quality products. This additional extrusion volume will be produced at our existing Texas facility and will significantly increase the capacity utilization of our plant.”

Officials from Drew also reported that the company sold some of its aluminum extrusion assets to Atrium for $7.5 million, payable over the next four years, plus contingent consideration of $1.25 million once 95 million pounds of aluminum extruded products are purchased during the term of the supply agreement. Drew anticipates recording a pre-tax loss on this sale of approximately $2 million in the second quarter of 2014.

“As part of our ongoing evaluation of capacity and asset utilization, we concluded that our aluminum extrusion assets were not meeting our internal financial standards,” states Mereness. “The sale of our extrusion related assets will free up needed manufacturing space, as well as allow management to focus on other opportunities with higher growth potential. The outsourcing of these aluminum extrusion requirements to Atrium will immediately be accretive to earnings.”

Tags: , , , , , , , , , , , , , ,

Leave Comment