Good day, ladies and gentlemen, and welcome to the Second Quarter 2010 Drew Industries Incorporated Earnings Conference Call. My name is Nuvalia and I’ll be your coordinator for today. (Operator Instructions) I will now turn the call over to your host for today’s call Mr. Jeff Tryka, Drew’s Investor Relations. Please proceed.

Thank you, Nuvalia. Good morning everyone and welcome to Drew Industries 2010 second quarter conference call. I’m Jeff Tryka with Lambert Edwards, Drew’s investor relations firm. I have with me members of Drew’s management team including Leigh Abrams, Chairman of the Board of Drew; Fred Zinn, President, CEO, and a Director of Drew; Jason Lippert, Chairman and CEO of Lippert Components and Kinro; and Joe Giordano, CFO and Treasurer of Drew. We want to take a few moments to discuss our quarterly results. However, before we do so, it is my responsibility 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. As a result, I must caution you that there are a number of factors, many of which are beyond the company's control, which could cause actual results and events to materially differ from those described in the forward-looking statements. These factors are identified in our press releases, our Form 10-K for the year ended 2009 and in our subsequent Form 10-Qs all as filed with the SEC. With that, I would like to turn the call over to Fred Zinn. Fred?

Thank you very much, Jeff. Thanking you all for joining us on the call and also on the webcast. Once again we are very pleased to be able to report such robust sales gains and strong operating results in both of our segments, RV and manufactured housing. I think the biggest takeaways from our press release this quarter are our continued overall market share gains and sales increases supported by tangible evidence of improved retail demand for recreational vehicles in both the United States and Canada. For the last several quarters, we along with the industry analysts have been saying that stronger retail demand was the key to sustain growth in the RV industry. We really had only been able to cite anecdotal reports from dealer surveys. Now, recently released data, which for the first time includes retail sales in Canada, confirms that retail sales of travel trailer and fifth-wheel RVs were up 11% year-to-date through May 2010. During that period, retail sales in the United States increased 7% compared to the same period in 2009 while retail sales in Canada surged 28% from the year earlier period and represented more than 20% of combined retail sales. As a result of this strong retail sell through, we estimate that dealer inventories declined somewhat in both April and May, after increasingly consistently since last summer. In addition for the second quarter, sales in our manufactured housing segment increased substantially over the prior year levels, including a 35% increase in the second quarter alone. Further, we are very encouraged that Drew sales gains in this segment of our business exceeded industry wide products comps by nearly 20% in each quarter. Our manufactured housing sales gains were largely due to growth in sales of our aftermarket replacement products which we expect will continue…

Thank you, Fred. For the 12-month period ended June 2010, our content for travel trailer and fifth-wheel RV continued to grow increasing 9% as compared to the 12-month period ended June 2009, while increasing 10% for the first six months of 2010 to more than $2,250 per unit as compared to $2,046 per unit in the first six months of 2009. The increase in content is due primarily to market share gains and new product introductions. Our manufactured housing entry door product line which was added in the fall of 2009 continues to gain market acceptance, and for the second quarter of 2010 had sales of nearly $800,000 for both new manufactured homes and the after-market. We anticipate this new product line will continue to gain market share in 2010. In addition to our goal of increasing market share through increased content of our products in new RVs and manufactured homes, we've gained a greater share of the after market for replacement components in both the RV and the manufactured housing industries. For the 12 months ended June 2010, our manufactured housing and RV aftermarket sales were approximately $21 million, an increase of 40% from the $15 million dollars for the 12 months ended June 2009 including a 48% increase during the second quarter of 2010. We anticipate continued expansion of our after market business. For the second quarter of 2010 our grossed sales was 78% of sales compared to 80% of sales in the second quarter of 2009. Cost of sales in 2010 second quarter benefited from spreading of fixed costs over a larger sales base, but was negatively impacted by higher raw material and overtime costs. Raw material cost continued to be very volatile during the second quarter of 2010 reaching a higher peak than was estimated only…

Thanks Joe. Nuvalia, we can open up for questions.

(Operator instructions): Your first question comes from the line of Jamie Baskin with Thompson Research Group.

First question, I know in the release you mentioned 23% sales increase in July, can you tell me how much the split is between the RV and the manufacture housing?

Yeah, it's too early. We don't really have that yet. You should recall that last year starting in July and then continued with the rest of the year, sales volumes in the industry did improve. So, the comps obviously can't remain at 80% about last year. We were pleased with the 20% (inaudible).

Well, how about the manufactured housing trend since the expiration of the tax credit? Has that fallen off or what you’re seeing?

Yeah, certainly there was a boost in production through our industry as a result of the tax credit. When it expired, there was a modest slow down in the industry-wide sales. It's a little hard for us to (inaudible) that out because we’re increasing our after market sales and increase in other product content indicated in the door business. So it's not affecting us, quiet as much but there was a small decrease, I would say that. Jason, do you have anything else?

No, that pretty much sums it up.

Final question, just your RV outlook for the remaining half of a 2010 and how much quarter visibility if you really have right now?

Well, in terms of an outlook we really don’t release forecast, but the RVIA is projecting, I think on the order of 190,000 or 191,000 for the year. The travel trailer and fifth-wheel RVs, they were about 112,000 for the first half, so we're looking, if their projection holds true, about 79,000 for the second half of the year. Their forecast is about a year old and I suspect things were a little bit better – a month old, And I do suspect in the last month or six weeks, things were a little better that they expected, so we’ll see what happens with the forecast, but it does look like the second half for the year is likely to have a lower industry production. Jason, do you want to comment on what we see from customers at this point?

Going forward?

Yeah, just you know, are we seeing typical season of slowdowns in demand, have we come back from the July closedowns.

Yeah. I think that prior to FEMA [ph], we saw industry slowdown every fourth quarter or going into the fourth quarter, so end of the -- tail end of third quarter might be starting a little bit of early this year because of the pipeline sale but, the orders for August and September look better than we have seen in a while. So, we are feeling pretty good about that.

I think typically, Jamie, the H2 of the year, while there really hasn’t been a typical year in a while, the second half of the year is typically a little slower. And then you tack on the fact that in the first half of this year dealers built something between 15 or maybe closer to 20,000 inventory, you can see why there will be some slowdown in the second half.

Your next question comes from the line of Scott Stember from Sidoti & Company. Scott Stember - Sidoti & Company: Could you maybe talk about some products besides the entry door for the manufacturing housing side that you have been pleasantly surprised with that has big potential as the market comes back?

For manufactured housing products? Scott Stember - Sidoti & Company: On the RV side, particularly you had already talked about manufacturing housing side, so talk about…

Yeah, sure. I think in general we are very happy with the way our new product introductions are going. We are pleased with what’s the response we have seen to our new products that we acquired in the first quarter. We had initially acquired in the first quarter a new type of leveling device for high end fifth-wheels and made some nice improvements to that. Jason, you want to talk about the response for that?

Yeah, the entry doors, going there back for a second, took us a good solid 14 months to really bump up our sales on that product since we introduced it and… Scott Stember - Sidoti & Company: The RV doors?

Yeah, the RV entry doors. The leveling products that we are currently in the process of hitting the market with will take about the same time period to see similar results. So, in prototyping phase and early selling phases of that product, but it's going really well and appears to be really strong and feel like that will be one of our home run products. Yeah that’s start to get going with one of our customers and we will see more content in the tent camper arena on a lot of different levels from slide out to the pop-up mechanism to some of the entry door products on the tent campers that we are just getting going on, axles and chassis and things like that we haven’t done with respect to the tent campers. We are working on content pretty hard with everybody in the RV arena from motor homes and tent campers and the total business.

I think it is also a little early to talk about the numbers on the new wall slider that we acquired but so far the customer acceptance has been very good. Scott Stember - Sidoti & Company : Fred, you made a comment about how you're making some investments for certain production lines in the quarter, would they be the ones that you guys just talked about?

In some cases, but we also had demand for some other products, I don’t want to go into specific products, but with the spike in demand for some products we did have to, other products, in established products, we had to increase our demands both in terms of hiring the people and adding some production space. Scott Stember - Sidoti & Company : Just a last question about July. I know you said that you don’t have a split at this point but is it a fair assumption that the RV side would be performing better than that total number?

Yeah, I think so. Jason, is that what you are saying?

Yes. Scott Stember - Sidoti & Company : That’s all I have, thank you.

Your next question comes from the line of Bret Jordan from Avondale Partners.

A couple of quick questions here. One of them goes into that what you are seeing in July and I guess since we have got retail added through May, anecdotally, are you seeing the trends improving sequentially? You have talked about in recent weeks you have increased capacity. Are you seeing the sell through? I guess if you look at US versus Canadian sell through, are you saying it ramped at an improving rate?

We are a couple of steps away from the end user. We are selling to an OEM or we are selling to a dealer or selling to a retailer, so I am not sure what's the best source. In terms of the increased capacity, in just recent weeks we are responding to the capacity increases we have seen, demand increases we've seen over the last few months. So, it's not something that we are turning on a dime right now to increase our capacity. I think it's important to note that some of the capacity moves we're making right now are geared toward how our customers are feeling about 2011.

Looking at the Canadian business which is now, you say, greater than 20% of the total and it's growing at 3x the rate plus of US business, where do you -- back of the envelope Canada as a percentage of North America right now this year because clearly that’s sort of a lagging numbers that they reported?

The total Canadian retail you mean for the?

Right, I mean, we're looking at dealer inventories selling down and we are including Canada in sort of gross dealer inventories, what percentage of North America is Canada right now?

It's about 20% the best as I can figure. It hasn't been particularly stable. We've looked back at some of the prior years data, both wholesale and retail data, which I believe is available and it is not particularly stable. This time Canada was stronger than United States and is running about I think both wholesale and retail on the order of 20%

Okay, and then on the content per motor home numbers since you have got the new slide that sort of gets you access to that category, what is your content per motor home?

Content per motor home, can you stay with me for one quick second and I will see if I can get that number? We give it to you on a trailing 12 months. It’s on the order of $800 a little bit higher, a little bit less. The impact of the new wall slide is probably still reasonably small because again we just acquired that three months ago.

It’s 619 for the trailing 12 months which was 611 for the trailing 12 months back in March.

When would you see the new slide beginning to be sold into the motor home category?

Jason, what do you think in terms of your timing on the wall slide?

We are probably 12 months away. The motor home manufacturers usually are a lot slower to change than the towable manufactures and there’s a lot more prototyping that takes place there with -- they can’t change a lot of the things due to some of the chassis platforms and things that we can do on the towable side. So, I’d say over the next 12 months we will be seeing a lot bigger impact with our slide into the motor homes. We have already converted a few of the large motor home manufactures over and prototyping with many others and really that that home markets condensed over the last couple of years. So, it’s a lot easier to hit a 100% of that market in a shorter period time than with the towable side of things.

Of course, the slide out is not our only motor home product, we’ve got a new leveling device or some improved leveling device that we will hopefully also see some good growth there.

Are you saying you’re now in the pop up business or doing more in the pop up space, are you saying that your customers or the manufactures producing more lower priced units and that the consumers bias is still to the cheaper homes?

I think that’s the tent camper total units has increased as a result of people going toward more entry level type units. I think that the numbers stayed around 10,000 for the last couple of years. There is definitely a trend towards entry level units and trailer fifth-wheels and towable trailers. The tent campers have an area or segment that we have traditionally had zero market share and so I think we are picking up right now is a bonus.

Your next question comes in the line of Liam Burke from Janney Montgomery Scott

Fred, I know you did talk or don’t want to talk about the specific products where you saw a higher demand and or acquired capacity increases, but is the increased demand a function of market share gains or is it just the increase in unit volume for your customers?

I think it’s clearly both. We definitely saw a increase. Obviously, there have been huge increases in industry demand the quarter but they came a little more rapidly than we expected. In some cases our market share also increased.

In terms of acquisitions I know you made some within you two segments earlier in the year. You have always discussed a third leg or a third business. Without getting into specifics is that still what you are considering in terms of the acquisition front?

I think its still possible. Right now, we are looking into series related industries. We have talked about it before whether it's mid-sized buses we developed seating components for mid-sized buses, windows for mid-size buses. We are looking at other products that could be nice product area for us. Some of our customers, as you know, already make mid-size buses, but utility and cargo travelers require many of the same components that we made for towable RVs (inaudible) in some cases doors or ramp doors and windows. So, its really a combination of various products as opposed to looking for some new third leg we are looking at related industries that will give us more market demand.

Your next question comes from the line of Torin Eastburn from CJS Securities.

Fred, I didn’t hear the very beginning of your remarks. Do you have any thoughts on why the June sell numbers specifically were so strong?

Well, I think there were hopefully in response to increased retail demand and retail was up quite strongly particularly in Canada, which I did mention in the early part of my prepared remarks. I am sure our customers are responding to increased demand. I think everybody has been conservative in terms of what they are projecting for the future and they are hopefully adjusting their production based on demand, they truly are.

Okay. The July shutdown this year, were they any longer or shorter than they typically are?

Yeah. As far as I understand, they are about the same. Jason, do you see anything different than usual?

What was the question?

In terms of the July shutdowns. Were they longer or shorter?

I think they are generally categorized what the (inaudible) averaged in some cases a little below what the shorter shut downs than what they normally take.

Certainly shorter than the last couple of years.

Yeah, right.

Okay. (inaudible), if you look at your RV concept for on a quarterly basis, it was down a bit sequentially. I know it’s volatile. Is there any reason to believe it’s anything other than timing?

I don’t believe it has anything to do other than timing. That’s kind of why I talked about in my speech, the six-month number which takes into account that first quarter timing when we believe our customers built some of their inventory up ahead of the wholesale shipments which made our content look a little bit higher during the first quarter.

(Operator instructions). Your next question comes from the line of (inaudible).

Hi. I don’t know if u talked about this but there’s been some strength from some of the bolt manufacturers. How’s our specialty trailer business being doing in this environment? I have a few other ones as well.

Still very slow. Our specialty trailer, boat trailers are largely on the West Coast and the market is still suffering and we’ve taken a lot of steps to improve our efficiencies, consolidate operations where we've had to do. I am hoping we will see an increase in the West Coast. I think certain through the second quarter there was no significant improvement.

From a competitive standpoint has anything changed in the trailer business at all? Have some other competitors left the market or…?

You mean boat trailers?

Yes.

Jason, have you seen anything there, in terms of boat trailer market?

We didn’t have that much competition on the West Coast. It’s just, like Fred said, the economy is so depressed out there, nobody is buying a whole lot of the marine products out on the West Coast. This is small part of business. It’s a pretty small part of our business anyway.

Yeah, it's just a few percent of RV segment, 2% or a few percent.

Okay. I am just trying to get to lay the land because mostly it was a little bit more material.

When it comes back we stand to do really well there because we are one of just a couple of guys on the West Coast that build everything from (inaudible) trailers up to the large boat trailers. So, when it does come back we will be in a good spot. It is just things are real slow coming along, on the country.

Fred, maybe you can comment on this on a bigger picture basis. I think on the last call we talked about being more conservative on our cash balance. At the time, we were looking at some increased raw material cost. Now, we are talking about potentially falling raw material costs, another couple of good quarters potentially in front of us, sizable cash balance. What's the strategy for the cash going forward?

Well, you are right. Certainly, the cash balance is building and we'll continue to hopefully build. We do have some investments, as I mentioned, in capacity that we have done and we will continue to do. I understand that, at some point, we have to look at all of the potential uses of cash from acquisitions to distribution to stockholders. The changes in the tax laws could change by year-end the way we are looking at those types of investments whether motivating the sellers to speed up their potential sales into 2010 or changing the way we would (inaudible) content distribution. So, I am not answering any question specifically in expect to say that we are looking at all of those kinds of distributions that we do in every board meeting and we are trying to track the expectations in terms of changes in the tax rates and how may they affect various investments. The acquisitions and other investments to increase our potential are still on our top priority.

With the current environment of increased sales I am assuming that multiples have begun to increase and at the same time we have a multiple on our stock. Does it make sense to do acquisitions on a multiple that is higher than our share price multiple?

Rarely. It depends on what the potential is of the acquisition, not only on its past performance. Typically, I know you had to follow a (inaudible) for that one particularly we are usually very conservative and careful in the way we price our acquisitions. We don’t pay high multiples. I don’t expect that we will especially now while the industry has recovered, it's still not back to where it was. So, usually we would not pay higher multiples than what Drew has. It depends on the potential for investment.

At this moment, there are no further questions on the line.

Okay, very good. I do certainly thank all of you for participating. I look forward to speaking with all of you on our conference call when we talk about third quarter results. Certainly, as many of you know, I travel around the country around a fair bit and I would be happy to speak to you when I am visiting your areas. So, thank you again.

Thank you for your participation in today's conference. This concludes your presentation, and you may now disconnect. Have a great day.