Drew Industries Reports Record Second Quarter

Record Earnings and Sales, New Products Highlight Quarter

WHITE PLAINS, N.Y., July 26 -- Drew Industries Incorporated continued its string of record quarters led by sales and earnings growth in both its recreational vehicle and manufactured housing segments. Drew reported a 15 percent increase in sales and record profits for the second quarter ended June 30, 2005.

Drew, a leading national supplier of recreational vehicle and manufactured housing components, reported record net earnings of $8.7 million, or $0.81 per diluted share, on record net sales of $163 million for the second quarter of 2005, compared with net earnings of $8.2 million, or $0.77 per diluted share, on net sales of $142 million for the same quarter of last year.

"We are pleased with our growth during the quarter, and with our preparation for future expansion through product development, market share growth and the addition of the Venture Welding acquisition," said Leigh J. Abrams, Drew's President and CEO. "During the quarter, we captured additional market share for our recently introduced slide-out mechanisms and leveling devices for motorhomes, as well as for RV axles, bath products, and steps.

"Our specialty trailer operation in Indiana, opened earlier this year, has continued to expand, and our new window factory in Arizona commenced operations only a few days ago. This is our first factory in the Arizona market. During the quarter, we incurred start-up costs of nearly $850,000 related to these new products and the new facility, and we are likely to incur additional start-up costs over the next few quarters. However, based on our track record of successful investments in facilities and product development, we believe these moves will result in substantial returns in the future."

For the six months ended June 30, 2005, Drew reported net income of $14.5 million, or $1.35 per diluted share, compared to net income of $14.1 million, or $1.34 per diluted share, in the same period last year. Net revenue was $318 million for the first six months of 2005, compared to $250 million for the same period of 2004. Results for the first six months of 2005 include first quarter charges of $2.6 million relating to previously announced legal proceedings, which reduced net income by $0.12 per diluted share.

Recreational Vehicle Products Segment

Drew supplies windows, doors, chassis, slide-out mechanisms and power units, leveling devices, bath products, axles, steps and electric stabilizer jacks for the recreational vehicle (RV) market. Approximately 95 percent of Drew's RV product sales are to the travel trailer and fifth wheel segment of the RV industry, but many of the Company's recently introduced products are targeted for motorhomes. Drew's RV segment also manufactures and markets specialty trailers for equipment hauling, boats, personal watercraft and snowmobiles.

Drew reported net sales of $111 million this quarter for its RV segment, an increase of 18 percent over the $94 million reported in the second quarter of last year. Organic growth, excluding the impact of acquisitions and sales price increases, was approximately nine percent.

The RV segment's sales slowed in June and early July due to reduced production by RV manufacturers, primarily in response to dealers' efforts to reduce inventories of 2005 models in advance of the introduction this summer of 2006 models. Some RV manufacturers also expanded their typical July 4th holiday shutdown from one week to two weeks, including the last week of June, causing RV segment sales to fall three to five percent short of Drew's initial expectations this quarter.

Operating margin for Drew's RV products segment was 9.5 percent in the second quarter of 2005, an improvement from the first quarter margin, but below the 11.1 percent achieved in the second quarter last year. The operating margin declined from last year in part due to the more than $600,000 of start-up costs related to new RV product introductions, as well as an increase in the allowance for doubtful accounts of approximately $600,000 in this segment. Further, the substantial raw material cost increases incurred in 2004 were passed on to customers largely without margin, leaving net profits intact, but reducing Drew's overall margin percentage.

"Production efficiencies improved throughout our RV operations, even with the time and expense related to new product introductions," said Abrams. "Our operating management continues to do an outstanding job of controlling costs while simultaneously moving ahead with expansion programs which will enable us to continue to exceed industry growth."

Manufactured Housing Products Segment

Drew supplies vinyl and aluminum windows and screens, chassis, chassis parts, and bath and shower units to the manufactured housing (MH) industry, as well as chassis and windows for modular homes and offices. Drew reported that new homes produced by the MH industry were flat in April and May 2005 after several consecutive monthly increases, although industry production is up about four percent year-to-date. This follows an almost six-year slump that saw industry production decline by 65 percent, according to the Manufactured Housing Institute.

"While the monthly production of the MH industry did not continue to increase this quarter as it has in prior months, it still appears that lower repossessions, reduced dealer inventories and improved financing practices are likely to have a positive impact on industry-wide production levels. While it's too early to determine if a sustained trend is on the immediate horizon, we continue to expect modest growth for the MH industry in 2005," said Abrams.

Drew's MH segment sales increased nine percent to $52 million this quarter compared with $48 for last year's quarter. Excluding the impact of price increases and acquisitions, sales were approximately the same as last year's second quarter. The operating profit margin of the MH products segment increased to 12.7 percent this quarter, compared to 11.4 percent in the second quarter last year. The increase in margin resulted partly from improved production efficiencies, which offset the impact of $200,000 of start-up costs and $250,000 of additional bad-debt expense in this segment.

"The acquisition during the quarter of the assets and business of Venture Welding further enhances Drew's position as the leading supplier of components to the MH industry," said Abrams. "Also, the patented cold-camber technology acquired in this transaction will enable us to build superior chassis and continue to improve production efficiencies and fits with our emphasis on innovation and product development leadership.

"We were pleased with our record results in the quarter, and are optimistic the investments we've made -- in the second quarter as well as in the past -- will lead us into a successful second half of 2005."

Conference Call

Drew will provide an online, real-time webcast and rebroadcast of its first quarter earnings conference call tomorrow, Wednesday, July 27, 2005, at 11:00 a.m. Eastern time, on the Company's website, http://www.drewindustries.com/ . Individual investors can also listen to the call at http://www.companyboardroom.com/ .

Institutional investors can access the call via the password-protected event management site, StreetEvents (http://www.streetevents.com/ ). A replay of the conference call will be available by telephone by dialing (888) 286-8010 and referencing access code 10232788. A replay will also be available on Drew's website.

About Drew

Drew, through its wholly owned subsidiaries, Kinro and Lippert Components, supplies a broad array of components for RVs and manufactured homes. Drew's products include vinyl and aluminum windows and screens, doors, chassis, chassis parts, RV slide-out mechanisms and power units, leveling devices, bath and shower units, axles, steps, electric stabilizer jacks and trailers for equipment hauling, boats, personal watercrafts and snowmobiles, as well as chassis and windows for modular homes and offices. From 50 factories located throughout the United States and one factory in Canada, Drew serves most major national manufacturers of RVs and manufactured homes in an efficient and cost- effective manner. Additional information about Drew and its products can be found at http://www.drewindustries.com/ .

                       DREW INDUSTRIES INCORPORATED
                            OPERATING RESULTS
                               (unaudited)

                     Six Months Ended         Quarter Ended
                         June 30,                 June 30,     Last Twelve
                     2005        2004        2005       2004      Months

  (In thousands, except per share amounts)

  Net sales        $317,569    $249,710    $163,023   $141,687   $598,729
  Cost of sales     246,750     192,271     125,222    109,127    468,970
      Gross profit   70,819      57,439      37,801     32,560    129,759
  Selling, general
   and administrative
   expenses          45,277      33,269      22,671     18,410     84,819
  Other income           31         428           -          -         31
      Operating
       profit        25,573      24,598      15,130     14,150     44,971
  Interest expense,
   net                1,999       1,413       1,055        788      3,725
      Income before
       income taxes  23,574      23,185      14,075     13,362     41,246
  Provision for
   income taxes       9,097       9,042       5,414      5,211     15,804
      Net income    $14,477     $14,143      $8,661     $8,151    $25,442

  Net income per
   common share:
      Net Income:
          Basic       $1.39       $1.38        $.83       $.79      $2.46
          Diluted     $1.35       $1.34        $.81       $.77      $2.39(1)

  Weighted average
   common shares
   outstanding:
          Basic      10,403      10,258      10,443     10,271     10,354
          Diluted    10,696      10,588      10,730     10,616     10,653

  Depreciation
   and amortization  $5,451      $4,497      $2,877     $2,362    $10,254
  Capital
   expenditures      $9,605     $10,322      $4,513     $7,220    $26,341

(1) Includes after tax charges related to legal proceedings of $1.3 million in the first quarter of 2005 and $.9 million in the fourth quarter of 2004, net of the related reduction in incentive compensation. These charges reduced diluted net income per share by $.21.

                       DREW INDUSTRIES INCORPORATED
                             SEGMENT RESULTS
                               (unaudited)

                             Six Months Ended        Three Months Ended
                                  June 30,                June 30,
  (In thousands)              2005        2004        2005        2004

  Net sales
    RV Segment              $216,257    $166,971    $110,999     $93,798
    MH Segment               101,312      82,739      52,024      47,889
      Total                 $317,569    $249,710    $163,023    $141,687

  Operating Profit
    RV Segment               $18,906(1)  $18,265     $10,512     $10,406
    MH Segment                10,463(2)    9,057       6,593       5,445
      Total segments
       operating profit       29,369      27,322      17,105      15,851
  Amortization of intangibles   (645)       (466)       (360)       (261)
  Corporate and other         (3,182)     (2,686)     (1,615)     (1,440)
  Other income                    31         428           -           -
      Operating profit       $25,573     $24,598     $15,130     $14,150

(1) After a charge of $.5 million related to legal proceedings, less the related reduction in incentive compensation.

(2) After a charge of $2.1 million related to legal proceedings, less the related reduction in incentive compensation.

                       DREW INDUSTRIES INCORPORATED
                        BALANCE SHEET INFORMATION
                               (unaudited)

                                             June 30,           December 31,
  (In thousands, except ratios)       2005            2004          2004

  Current assets
    Cash and cash equivalents        $7,019             $60        $2,424
    Accounts receivable, trade,
     less allowance                  46,563          37,903        26,099
    Inventories                      72,273          75,036        72,332
    Prepaid expenses and other
     current assets                  10,280           6,916        10,552
       Total current assets         136,135         119,915       111,407
  Fixed assets, net                 106,675          90,055        99,781
  Goodwill                           23,439          16,926        16,755
  Other intangible assets            10,134           6,933         6,070
  Other assets                        7,755           2,915         4,040
       Total assets                $284,138        $236,744      $238,053

  Current liabilities
    Notes payable, including
     current maturities of
     long-term indebtedness         $11,460         $12,183       $12,121
    Accounts payable, accrued
     expenses and other current
     liabilities                     59,895          55,200        42,082
       Total current liabilities     71,355          67,383        54,203
  Long-term indebtedness             69,170          57,496        59,303
  Other long-term obligations         1,984           2,363         2,503
       Total liabilities            142,509         127,242       116,009
       Total stockholders' equity   141,629         109,502       122,044
       Total liabilities and
        stockholders' equity       $284,138        $236,744      $238,053

  Current ratio                       1.9               1.8           2.1
  Total indebtedness to
   stockholders' equity               0.6               0.6           0.6

                       DREW INDUSTRIES INCORPORATED
                          SUMMARY OF CASH FLOWS
                               (Unaudited)

  (In thousands)
                                                         Six Months Ended
                                                             June 30,
                                                       2005           2004

  Cash flows from operating activities:
    Net income                                       $14,477        $14,143
    Depreciation and amortization                      5,451          4,497
    Deferred taxes                                   (1,018)              -
    Loss on disposal of fixed assets                     104            119
    Stock based compensation expense                     628            537
    Changes in assets and liabilities:
      Accounts receivable, net                       (20,464)       (18,043)
      Inventories                                        987        (30,951)
      Prepaid expenses and other assets                1,233          1,614
      Accounts payable, accrued expenses and other
       liabilities                                    16,722         20,562
  Net cash flows provided by operating activities     18,120          7,522

  Cash flows from investing activities:
    Capital expenditures                              (9,605)       (10,322)
    Acquisition of businesses                        (17,793)       (21,588)
    Proceeds from sales of fixed assets                  643            148
    Other investments                                    (51)          (289)
        Net cash flows used for investing activities (26,806)       (32,051)

  Cash flows from financing activities:
    Proceeds from line of credit and other
     borrowings                                      121,925        115,330
    Repayments under line of credit and other
     borrowings                                     (112,719)       (85,647)
    Exercise of stock options                          4,399          1,169
    Other                                               (324)             -
        Net cash flows provided by financing
         activities                                   13,281         30,852

        Net increase (decrease) in cash                4,595         (8,721)
  Cash and cash equivalents at beginning of period     2,424          8,781
  Cash and cash equivalents at end of period          $7,019            $60