Drew Industries Reports Increased Profitability for Second Quarter

WHITE PLAINS, N.Y. July 31 /PRNewswire-FirstCall/ -- Drew Industries Incorporated (NYSE: DW) today reported increased net income for the six months and quarter ended June 30, 2007 .

Drew, a leading supplier of components for recreational vehicles (RV) and manufactured homes, reported a 23 percent increase in net income to $12.6 million, or $0.57 per diluted share, for the 2007 second quarter, compared to net income of $10.2 million, or $0.47 per diluted share, for the 2006 second quarter.

Net sales in the second quarter of 2007 declined 9 percent to $184 million, from net sales of $202 million in last year's second quarter. Drew attributed the sales decline to the 13 percent decline in industry shipments of travel trailer and fifth wheel RVs during the second quarter, as well as the 19 percent decline in industry shipments of manufactured homes for April and May 2007 , the latest period for which industry statistics are available. Excluding the impact of price increases and the effect of acquisitions completed during 2006 and 2007, Drew's year-over-year organic sales declined by $32 million, or 16 percent, in the second quarter of 2007.

Drew added that due to the seasonality of the RV and manufactured housing industries, the Company's results in the first and fourth quarters are usually the weakest, while second and third quarter results are traditionally stronger.

Net income for the current six-month period increased 8 percent to $22.2 million, or $1.01 per diluted share, compared to net income of $20.4 million, or $0.93 per diluted share, for the comparable period last year. Sales for the six months ended June 30, 2007 , declined 13 percent to $357 million, compared to net sales of $410 million for the same period last year. The first quarter of 2006 included sales of approximately $20 million, and net income of approximately $0.09 per diluted share related to the impact of the 2005 Gulf Coast hurricanes.

"We believe our improved results this quarter, despite the current weakness in both the RV and manufactured housing industries, is the direct result of our long-standing strategy of pursuing new product introductions, market share growth, and acquisitions. In addition, our ability to reduce costs and make our operations even more efficient was a significant factor in our improved results," said Leigh J. Abrams, Drew's President and CEO.

"Our aggressive cost-cutting program included closing and consolidating 10 facilities over the last 12 months, eliminating more than 90 salaried positions, and closing our Indiana-based specialty trailer operation in September 2006 , which reported an operating loss of $1.0 million in the second quarter of 2006. Further, improved importing and production efficiencies resulted in increased profit margins, particularly in our axle product line. While our extensive plant consolidation program has continued, severance expenses this quarter aggregated only $300,000."

In addition to the 10 facilities closed over the last 12 months, Drew plans to close approximately five more in the coming months, integrating these operations into other existing facilities.

In January 2007 , Drew completed the acquisition of Trailair and its affiliate Equa-Flex, which sell several patented products, including innovative suspension systems used primarily for towable RVs, with sales of approximately $3 million in 2006. Drew reported that this operation has performed better than anticipated, with sales now running at an annualized rate of more than $5 million. Drew's Lippert Components (LCI) subsidiary has successfully integrated the operation into its existing facilities.