Gibraltar Reports First-Quarter Results

BUFFALO, N.Y.--Gibraltar Industries, Inc. , a leading manufacturer, processor, and distributor of products for the building, industrial, and vehicular markets, today reported its financial results for the first quarter ended March 31, 2009.

First-quarter sales were $205 million, a decrease of 30% compared to $294 million in the first quarter 2008 as economic and market conditions continued to deteriorate well beyond expectations and any previous recessionary trends. Housing starts decreased 50% to below 600,000 units per year and automotive production decreased by 51% to below 8 million vehicles per year. Gibraltar unit-volume declines followed the market declines particularly in our Processed Metal Products segment where we experienced a decline of 45% in tons processed. Businesses within our Building Products segment that have a stronger focus in the repair, remodeling, and commercial markets experienced smaller unit-volume declines which partially offset the higher declines in our Processed Metal Products segment and other Building Products businesses.

The first-quarter 2009 results from continuing operations included an operating margin of (8.3)% and a loss of $12.0 million, or $(0.40) per diluted share, compared to a 6.5% operating margin and income of $7.4 million, or $0.25 per diluted share, in the first quarter 2008, excluding restructuring costs in both years and a non-cash impairment charge in the first quarter 2009. Results were driven by the significant decline in unit volume and, particularly in our Processed Metal Products segment, the precipitous decline in margins as a result of the FIFO impact on cost of sales. The Company incurred an after-tax non-cash goodwill impairment charge of $15.1 million, or $0.50 per diluted share, during the three months ended March 31, 2009. The Company also incurred after-tax restructuring charges of $0.5 million, or $0.02 per diluted share, in the first quarter of 2009 compared to $1.4 million, or $0.05 per diluted share, for the comparable prior-year period. The sum of the items above resulted in a diluted loss per share of $(0.92) for the first quarter of 2009 compared to income of $0.20 per share for the first quarter of 2008. Gibraltar has made additional progress in lowering its operating cost structure and strengthening its balance sheet, reducing debt by another $27 million or 8% during the first quarter of 2009, and by $224 million or 41% in the last 18 months.

“Fortunately our aggressive actions over the last four years and our focus to be the most efficient global producer in our product lines have provided a platform that has mitigated the impact of the current economic climate. Gibraltar is positioned to withstand this historic downturn and emerge as an even stronger company when conditions eventually stabilize and begin to improve. In addition, as a result of our aggressive restructuring we expect a significant improvement in profitability in the second quarter even though we only anticipate a slight seasonal up tick in sales,” said Brian J. Lipke, Gibraltar’s Chairman and Chief Executive Officer.

“In response to the continued deterioration of global economic conditions the Company initiated a series of additional actions to aggressively lower its cost structure, further reduce working capital, maximize cash, and continue to pay down debt. These actions included a further staffing reduction of 17 percent in the first quarter (staffing has been reduced by 36 percent from September 2007), ten percent salary reductions by the CEO and COO, a ten percent reduction in fees by the Board of Directors, the elimination of salary increases and the suspension of the company match on 401(k) contributions, furloughs in many of our business units, lower capital spending, travel restrictions, and many other discretionary spending reductions. We anticipate annualized cash savings of $84 million from the actions we have initiated thus far,” said Henning N. Kornbrekke, Gibraltar’s President and Chief Operating Officer.

“These additional cost-cutting activities – and the numerous supply chain and operational cost-saving initiatives already in place – build on the substantial progress we made during 2007 and 2008, when we closed, consolidated, or sold 31 facilities (a reduction of 31 percent). We will continue to streamline and consolidate our business, match capacity to demand, relentlessly attack costs, evaluate our portfolio of businesses, and make further adjustments if market conditions fall below our current expectations,” said Mr. Kornbrekke

“While some of these aggressive actions were driven by current volume levels, the structural changes are a key component of our strategy to be the low-cost provider of our products. It is important to emphasize that our streamlining and cost-reduction activities leave us with an estimated productive capacity of $1.5 billion to $1.6 billion. So we have substantial upside capacity to utilize as business conditions improve,” added Mr. Lipke.

Gibraltar has scheduled a conference call to review its results for the first quarter of 2009 tomorrow, May 7, 2009, starting at 9:00 am ET. A link to the call can be accessed on Gibraltar’s Web site, at GIBRALTAR1. The presentation slides that will be discussed during the call are expected to be available on Wednesday, May 6, by 6:00 p.m. ET. The slides may be downloaded from the Conference Calls page of the Investor Info section of the Gibraltar Web site: INVESTORS. If you are not able to participate in the call, you may listen to a replay or review a copy of the prepared remarks via the link above. Both will be available on the Gibraltar Web site shortly following the call. The conference call replay link, presentation slides, and prepared remarks will remain on the Gibraltar Web site for one year.