2003
2003
A Leading National Supplier of a Wide Variety of
Components for RV’s and Manufactured Homes
This presentation contains certain “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 with respect to financial condition, results of operations, business strategies, operating efficiencies or
synergies, competitive position, growth opportunities for existing products, plans and objectives of management, markets
for the Company’s common stock and other matters. Statements in this presentation that are not historical facts are
“forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Exchange Act and Section
27A of the Securities Act. Forward-looking statements, including, without limitation those relating to our future business
prospects, revenues, expenses and income, wherever they occur in this presentation, are necessarily estimates reflecting
the best judgment of our senior management, at the time such statements were made, and involve a number of risks and
uncertainties that could cause actual results to differ materially from those suggested by forward-looking statements. The
Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after
the date the forward-looking statements are made. You should consider forward-looking statements, therefore, in light of
various important factors, including those set forth in this presentation and the Company’s SEC filings.
There are a number of factors, many of 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 include pricing pressures
due to domestic and foreign competition, costs and availability of raw materials (particularly steel and related
components, vinyl, aluminum, glass and ABS resin), availability of retail and wholesale financing for manufactured homes,
availability and costs of labor, inventory levels of retailers and manufacturers, levels of repossessed manufactured homes,
the disposition into the market by FEMA by sale or otherwise of RVs or manufactured homes purchased by FEMA in
connection with natural disasters, changes in zoning regulations for manufactured homes, the decline in the manufactured
housing industry, the financial condition of our customers, retention of significant customers, interest rates, oil and gasoline
prices, the outcome of litigation, and adverse weather conditions impacting retail sales. In addition, national and regional
economic conditions and consumer confidence may affect the retail sale of recreational vehicles and manufacture
d homes.
Forward Looking Statement
- 2 -
About Drew Industries
A leading national manufacturer of quality
components for Recreational Vehicles (RV) and
Manufactured Homes (MH)
- 3 -
Headquartered in White
Plains, New York – 10
employees
36 manufacturing facilities in
the U.S.
Approximately 4,000
employees nationwide
Organic growth from 2001
through 9/30/07 was over
$168 million or a 9% average
annual growth, excluding
price increases, acquisitions,
and FEMA business
Company Overview
Financial Performance
(1)
2001- LTM September 2007 EBIDTA CAGR = 20%. EBITDA
is operating profit plus depreciation and amortization
Sales and EBITDA (in millions)
MH Segment sales
RV Segment sales
EBITDA(1)
- 4 -
Kinro, Inc. - Acquired 1980
Aluminun windows for RVs
Doors for RVs and MHs
Aluminum and vinyl windows and screens for MHs
Bath and shower units, and sinks for MHs and RVs
Exterior panels for RVs
Lippert Components, Inc. - Acquired 1997
Chassis and chassis parts for RVs and MHs
Slide-out mechanisms and leveling devices for RVs
Axles for towable RVs, MHs and specialty trailers
Bed lifts and ramp doors for “toy-hauler” RVs
Steps for RVs
Suspension systems
Specialty trailers for boats, personal watercraft and
hauling equipment
Drew’s Companies
- 5 -
Drew’s Segments – LTM 9/30/07
MH = $186 million
28%
RV = $483 million
72%
- 6 -
Segment Operating Profit - $73 million
Revenues - $669 million
MH = $14 million
19%
RV = $59 million
81%
Drew’s Products
Sales - $669 million
12 Months Ended September 30, 2007
RV Chassis and Chassis
Parts: $201 million
RV Windows and Doors:
$107 million
Other: $6 million
MH and RV Bath
Products: $23 million
Specialty Trailers:
$20 million
RV Slide-out
mechanisms:
$109 million
RV and MH Axles
and Tires:
$56 million
MH Chassis and Chassis
Parts: $73 million
MH Windows, Doors and
Screens: $74 million
- 7 -
Supplier to Industry Leaders
Outstanding customer service and national coverage, with 36
production facilities (nearly 3 million sq. ft.), make us a key partner
with our customers.
Supply most of the Leading Producers of RVs and MHs:
Fleetwood (NYSE: FLE)
Skyline (NYSE: SKY)
Coachmen (NYSE: COA)
Forest River (owned by Berkshire Hathaway)
Heartland Recreational Vehicles, LLC (privately owned)
Monaco Coach (NYSE: MNC)
Starcraft (privately owned)
Thor (NYSE: THO)
Champion (NYSE: CHB)
Clayton (owned by Berkshire Hathaway)
Oakwood Homes and Southern Energy Homes
(owned by Clayton)
Palm Harbor (Nasdaq: PHHM)
- 8 -
Increase sales and profitability through:
Market share growth
New product introductions
Strategic acquisitions
This strategy accomplished through:
Outstanding customer service
Motivating management through profit incentives and
training programs
Maintaining highly efficient factories by optimizing
production efficiencies through state-of-the-art
manufacturing technology, and stringent cost controls
Extensive R & D efforts
Disciplined and patient acquirer
Business Strategy
- 9 -
Content Per Vehicle - RV
Peak potential is $2,500 to $2,800 per RV
90% of RV segment sales are for Towable RVs
(1)
Excludes sales of specialty trailers.
(2)
Excludes sales of Emergency Living Units (“ELU’s”) purchased by FEMA.
Operating
profit margin 8.6% 9.4% 11.3% 9.2% 9.6% 8.6% 12.2%
(1)
(1)(2)
(1)
(1)(2)
- 10 -
See Page 17 for Industry Information
Content Per Home - MH
Peak potential is $3,300 to $3,600 per home
Operating
Profit margin 10.8% 11.0% 10.7% 10.1% 10.2% 9.5% 7.7%
See Page 21 for Industry Information
- 11 -
Est.
New Product Introductions
Annualized sales of these products increased from about $105 million in the 3rd quarter of 2006.
(a)
Including recent acquisitions.
(in millions)
Market
Potential
Drew
Annualized
Sales Level
Slide-out mechanisms for motorhomes
$ 65
$10-$12
Windows for people movers
10
$3
Axles for towables
75
$35-$40
Steps for RVs
25
$6-$8(a)
Bed lifts for “toy hauler” RVs
20
$15-$18
Ramp doors for “toy hauler” RVs
15
$2-$3
Suspension systems for towables
15
$5-$7(a)
Bath products for RVs
30
$4
Thermoformed exterior parts
120
$1
Specialty trailers
200
$30(a)
Axles for specialty trailers
180
$6-$8
Total
$ 755
Approx. $120
- 12 -
Drew is a disciplined and patient acquirer
Target price less than 6 times pro forma EBITDA
Immediately accretive
Complementary to our core RV and MH markets
Seek to acquire products or technologies that
we can introduce through our nationwide
customer base and factory network
Become a more extensive supplier to our
customers
Acquisition Criteria
Strategic
Acquisitions
- 13 -
Acquisition History
Strategic
Acquisitions
Each of our RV and MH acquisitions has expanded
geographic markets or broadened product lines
May 2004
Zieman
RV and MH
chassis, and
specialty trailers.
Annual sales of
over $40 million
July 2007
Extreme
Engineering
Custom boat
trailers. Annual
Sales of $12
million
2001
Better Bath
Bath and shower
products for MH.
Annual sales of
$20 million
14 Acquisitions
1980 – 2003
Including Kinro
(1980) and Lippert
Components (1997)
March 2006
Steelco
MH & RV Chassis.
Annual sales
of $8 million
May 2007
Coach Step
Electric steps for
motorhomes. Annual
sales of $2 million
May 2005
Venture Welding
MH Chassis.
Annual sales of
$18 million
June 2006
Happijac
Bed lifts for
“toy haulers”.
Annualized sales
of $15 million
January 2007
Trailair/Equa-
Flex
RV Suspension
Systems.
Annual sales
of $3 million
- 14 -
Drew’s Management Team
Leigh J. Abrams, CEO 35+ years
Fredric M. Zinn, CFO 25+ years
Leigh Abrams
Innovative &
Experienced
Management
David L. Webster, CEO, Chairman 30+ years
Jason D. Lippert, CEO, Chairman 12+years
Jason Lippert
David Webster
Highly respected and experienced
management:
Excellent management training and
incentive programs
- 15 -
Investments
Kinro and Lippert
have extensive R&D
departments
Since January 1997:
Invested over $159 million
in plant and equipment
Invested over $189 million for acquisitions
Invested $40 million for stock repurchases at an
average price of $5.37 per share
These investments have been
accretive to earnings
- 16 -
RVs - Industry Wholesale Shipments
90% of Drew’s current RV product sales are for Travel Trailers and 5th Wheel RVs
(1)
Includes approximately 13,500 RVs purchased by FEMA for emergency housing for 2004 hurricane victims.
(2)
Excludes 38,900 ELU’s in 2005 and 31,400 ELU’s in 2006 purchased by FEMA. A total of 70,300 ELU’s were purchased by
FEMA for the period 9/05 to 4/06. The Company’s sales content per ELU was significantly less than that of a typical travel
trailer.
(3)
Starting in September 2005, about 27,000 towable RVs were purchased by FEMA from dealers which were replaced by
the dealers in 2005 and 2006.
(4)
Projection by RVIA. A portion of decline is attributable to FEMA units produced in 2006.
(Thousands of Vehicles)
(1)
(2)(3)
293
361
370
321
311
257
300
321
391
384
(4)
(2)(3)
- 17 -
373
(4)
86% of industry 2006 unit sales
50% of 2006 wholesale dollar sales
or $5.9 billion
Retail cost $4,000 to $100,000 per
unit. Average about $20,000
From 1998 to 2006 the travel trailer
and 5th wheel market grew at an
annual rate of approximately 8%,
compared to a 2% annual decrease
in motorhome shipments
RV Market
14% of industry 2006 unit sales
50% of 2006 wholesale dollar sales
or $5.9 billion
Retail cost $41,000 to $400,000+
per unit. Average about $100,000
Travel trailer
Fifth wheel travel trailer
Travel trailer with
expandable ends
Folding camping trailer
Sport utility RV
Type C Motorhomes
Truck camper
TOWABLE RVS (90% of Drew’s RV revenues)
MOTORHOMES
Type B Motorhomes
Type A Motorhomes
- 18 -
Retail sales of Travel Trailers up this year
Positive Demographic Trends:
Primary owners of RVs are 50 and over
According to census projections in March 2004,
there are expected to be
20 million more people
over 50 by 2014
Industry Advertising
Campaign:
Target Market 30 and over
Post 9/11 security concerns and high airline
ticket prices increase RV travel use
Growth In RV Market
Strong Growth
Prospects
- 19 -
How RVs Are Used
Shift in U.S. culture toward more RV-related
activities:
College and NFL football games
NASCAR events
“Toy Haulers”
More economical
family vacations:
Typical RV family vacation
up to 74% less expensive
Many RVs are “parked” over the long-term as
second homes
Strong Growth
Prospects
- 20 -
MH – Industry Production
(Thousands of Homes)
(1) Includes approximately 3,500, 15,000 and 3,000, for 2004, 2005 and 2006, respectively, MHs
purchased by FEMA for emergency housing for hurricane victims.
(2) Estimate by Company management.
Drew’s MH segment remained profitable every quarter since 1998.
(1)
(1)
(1)
(2)
- 21 -
Manufactured Housing
(MH)Market
Cost per sq. ft. is $39 for MH vs.
$91 for site-built homes
Average retail price of
$62,300 for a 1,595 sq. ft. MH
9 million manufactured
homes across the U.S.
Improved quality,
appearance and safety
Studies have shown that MH built since 1995 sustain no
more damage in hurricanes than site-built homes
Industry production was down 69% from 1998 to 2006, but
Drew’s MH sales were up 13% and segment operating
profit was down only 20%
Strong Growth
Prospects
- 22 -
Improved lending practices
Conventional financing more common
than chattel; improves collateral
Subprime market woes could help MH
Pressure on Fannie Mae/Freddie Mac
to support MH loans
MH: Industry Financing Trends
Strong Growth
Prospects
- 23 -
MH: Other Favorable Factors
Baby Boomers retiring in increasing numbers
Appropriate dealer and manufacturer inventory
levels
Potential for rebuilding the Gulf Coast
Affordability and quality
New HUD code
Improved industry image
Advertising campaign
being developed
Berkshire investments
Strong Growth
Prospects
- 24 -
Executives and Directors currently own
10%
Drew’s Corporate Governance Program
Ranked in the 86th percentile of all Russell
3000 Companies by Institutional Shareholder
Services.
Added to S&P SmallCap 600 Index in
October 2005
Drew’s Ownership and
Governance
- 25 -
Financial Performance
Stock Price History
The price of Drew’s Common stock is more than 13 times the
price as of December 31, 2000
Drew has 21.9 million shares outstanding and a market
capitalization of approximately $875 million as of October 30,
2007
Drew effected a 2-for-1 stock split on 9/7/05 to holders of record on 8/19/05
(December 31 unless noted)
- 26 -
($ in millions, except EPS)
2004
2005
2006(1)(2)
LTM
9/07(2)
LTM
9/07 vs
2006
Sales
$ 531
$ 669
$ 729
$ 669
-8%
Operating Profit
$ 44.0
$ 57.7
$ 55.3
$ 62.8
+14%
% of Sales
8.3%
8.6%
7.6%
9.4%
Net Income
$ 25.1
$ 33.6
$ 31.0
$ 36.9
+19%
Diluted EPS(1)
$ 1.18
$ 1.56
$ 1.42
$ 1.68
+18%
EBITDA(3)
$ 53.3
$ 69.7
$ 71.0
$ 80.3
+13%
Operating Results
Year Ended December 31, (except as noted)
Financial
Performance
(1) Excluding the estimated impact of hurricane-related sales from both 2006 and 2005, the Company
estimates that diluted EPS would have been approximately $1.33 in 2006, compared to approximately
$1.40 in 2005.
(2)
Sales during the latter part of 2006 and the first nine months of 2007 were negatively impacted by
weakness in both the RV and MH industries.
(3)
EBITDA is operating profit plus depreciation and amortization (see page 37).
- 27 -
Results By Segment
($ in millions)
2004
2005
2006(3)
LTM 9/07(3)
Net sales
RV Segment
$ 346.2
$ 447.7
$ 508.8
$ 483.3
MH Segment
$ 184.7
$ 221.5
$ 220.4
$ 185.6
Operating Profit
RV Segment
$ 32.6
$ 43.1
$ 43.9
$ 59.0
MH Segment
$ 17.7(1)
$ 22.6(1)
$ 21.0(2)
$ 14.3
Operating Profit as a Percentage of Net sales
RV Segment
9.4%
9.6%
8.6%
12.2%
MH Segment
9.6%
10.2%
9.5%
7.7%
Year Ended December 31, (except as noted)
(1) After a charge of $1.4 million and $0.8 million for 2004 and 2005, respectively, related to legal
proceedings, net of related incentive compensation.
(2)
After a gain of $0.8 million related to the sale of closed facilities, net of related incentive compensation.
(3)
Sales during the latter part of 2006 and first nine months of 2007 were negatively impacted by weakness
in both the RV and MH industries.
See Form 10-K filed March 13, 2007 for a reconciliation to 2004 through 2006 consolidated results.
See page 38 for reconciliation to LTM 9/07 consolidated results.
Financial
Performance
- 28 -
Operating Results
($ in millions, except EPS)
2006
2007(1)
Sales
$ 181
$ 173
-4%
Operating Profit
$ 12.9
$ 18.3
+42%
% of Sales
7.1%
10.5%
Net Income
$ 6.9
$ 11.1
+60%
Diluted EPS
$ 0.32
$ 0.50
+56%
Three Months Ended September 30,
Financial
Performance
(1) Sales during third quarter of 2007 were negatively impacted by weakness in both the RV and
MH industries.
- 29 -
Results By Segment
($ in millions)
2006
2007
Net sales
RV Segment
$ 126.4
$ 127.2
-1%
MH Segment
$ 54.3
$ 46.2
-15%
Operating Profit
RV Segment
$ 10.7
$ 17.6
+65%
MH Segment
$ 5.2(1)
$ 3.6(1)
-30%
Operating Profit as a Percentage of Net Sales
RV Segment
8.4%
13.8%
MH Segment
9.5%(1)
7.9%(1)
Financial
Performance
Three Months Ended September 30,
See Press Release dated October 31, 2007 for a reconciliation to consolidated results.
(1) Operating profit of this segment for the third quarter of 2006 includes a net gain of $0.5 million related to facility
sales and consolidation costs, as compared to a net charge less than $0.1 million in the same period of 2007. Also,
the third quarter of 2007 includes expenses related to ongoing litigation aggregating $0.6 million. Excluding the
impact of these items, the operating profit margin of this segment would have been 9.1 percent and 8.6 percent
for the third quarter of 2007 and 2006, respectively.
- 30 -
Operating Results
Financial
Performance
Nine Months Ended September 30,
($ in millions, except EPS)
2006(1)
2007(1)
Sales
$ 591
$ 531
-10%
Operating Profit
$ 48.3
$ 55.8
+16%
% of Sales
8.2%
10.5%
Net Income
$ 27.4
$ 33.3
+22%
Diluted EPS(1)
$ 1.25
$ 1.51
+20%
(1) Sales during the latter half of 2006 and first nine months of 2007 were negatively impacted by
weakness in both the RV and MH industries, whiles sales in the first nine months of 2006 included
approximately $20 million of hurricane-related sales, and net income of approximately $.09 per
diluted share.
- 31 -
Results By Segment
($ in millions)
2006(1)
2007(1)
Net sales
RV Segment
$ 415.7
$ 390.2
-6%
MH Segment
$ 175.4
$ 140.6
-20%
Operating Profit
RV Segment
$ 38.0
$ 53.2
+40%
MH Segment
$ 17.5
$ 10.7
-39%
Operating Profit as a Percentage of Net Sales
RV Segment
9.1%
13.6%
MH Segment
10.0%
7.6%
Financial
Performance
Nine Months Ended September 30,
(1) Sales during the latter half of 2006 and first nine months of 2007 were negatively impacted by weakness
in both the RV and MH industries, whiles sales in the first nine months of 2006 included approximately $20
million of hurricane-related sales.
See Press Release dated October 31, 2007 for a reconciliation to consolidated results.
- 32 -
Balance Sheet
($ in millions)
12/31/05
12/31/06
9/30/06
9/30/07
Total assets
$ 307
$ 311
$ 345
$ 365
Total debt
$ 73
$ 56
$ 79
$ 43
Invested cash
$ -
$ 3
$ -
$ 41
Stockholders’ equity
$ 168
$ 205
$ 199
$ 244
RATIOS
Days sales in accounts
receivable(1)
21 days
16 days
20 days
22 days
Inventory turns(2)
6.5 turns
5.6 turns
5.9 turns
6.1 turns
Financial
Performance
(1) Days sales in accounts receivable is the most recent month’s net sales divided by accounts
receivable, net, at the end of the period
(2) Inventory turns is cost of goods sold for the last twelve months divided by average inventory for
the last twelve months.
- 33 -
Financial Strength
12/31/04
12/31/05
12/31/06
LTM 9/07
Return on Equity
23%
24%
16%
17%
Return on Assets
12%
12%
9%
11%
Total Debt to Equity
0.6
0.4
0.3
0.2
Total Debt to EBITDA
1.3
1.1
0.8
0.5
Financial
Performance
(1) EBITDA is operating profit plus depreciation and amortization (see page 37)
- 34 -
Peer comparison
Trailing
P/E
Forward
P/E
ROA
ROE
Drew (DW)
26.9
18.6
10%
16%
Fleetwood (FLE)
N/A
67.3
(4%)
(71%)
Monaco (MNC)
N/A
17.7
1%
(1%)
Spartan (SPAR)
22.6
13.1
13%
20%
Thor (THO)
20.4
14.7
11%
18%
Winnebago (WGO)
19.6
12.6
9%
19%
Financial
Performance
Source: Capital IQ, October 30, 2007, except forward P/E, which is provided by Thomson
Financial and is based on fiscal 2008 analyst projections.
- 35 -
Thank you!
- 36 -
($ in millions)
2001
2002
2003
2004
2005
2006
LTM
9/07
Operating Profit
$ 20.3
$29.2
$ 34.3
$ 44.0
$ 57.7
$ 55.3
$ 62.8
Depreciation &
Amorti
zation
$ 8.4
$ 7.3
$ 7.8
$ 9.3
$ 12.0
$ 15.7
$ 17.5
EBITDA
$ 28.7
$ 36.5
$ 42.1
$ 53.3
$ 69.7
$ 71.0
$ 80.3
Capital
Expenditures
$8.2
$ 10.5
$ 5.1
$ 27.1
$26.1
$ 22.3
$ 9.7
Reconciliation of Operating Profit
to EBITDA
Financial
Performance
- 37 -