Gibraltar Reports Fourth-Quarter and 2009 Results

Gibraltar Industries, Inc. (NASDAQ: ROCK), a leading manufacturer and distributor of products for the building and industrial markets, today reported its results for the three and twelve months ended December 31, 2009. The reported results include the Processed Metal Products segment as part of continuing operations for 2009 and prior periods. The majority of this segment was sold subsequent to year end, as announced on February 1, 2010.

Fourth-quarter sales decreased 25% to $187 million compared to the fourth quarter of 2008, as unit volumes fell with weaker-than-expected business conditions in the residential building, construction, and industrial markets, together with lower price realization on certain product lines. In spite of the significantly lower sales, the Company reported substantially improved profitability driven by its restructuring of the business along with its cost-cutting activities and a lowered break-even point, resulting in a much smaller loss from continuing operations before special charges. The fourth-quarter 2009 loss from continuing operations before special charges was $3.1 million, or $0.10 per diluted share, compared to a loss from continuing operations before special charges of $9.5 million, or $0.32 per diluted share, in the fourth quarter of 2008. After-tax special charges amounted to $25.6 million, or $0.85 per diluted share, and $0.5 million, or $0.01 per diluted share, during the fourth quarters of 2009 and 2008, respectively. These charges included $25.4 million of intangible asset impairment charges during 2009, exit-activity costs related to the restructuring of our business for both periods, and a write down of deferred financing costs as a result of early payment of our term loan during the fourth quarter of 2009. The combined effect of the items above resulted in a GAAP loss from continuing operations of $28.7 million, or $0.95 per diluted share, in the fourth quarter of 2009, compared to a loss of $10.0 million, or $0.33 per diluted share, in the fourth quarter of 2008.

For the twelve months ended December 31, 2009, the prolonged and deep downturn in all of the Company’s end markets sharply reduced unit volumes, lowering sales to $834 million, a decrease of 32% compared to 2008. The full-year loss from continuing operations before special charges in 2009 was $7.4 million, a $0.25 loss per diluted share, compared to income from continuing operations before special charges of $38.0 million, or $1.26 per diluted share, in 2008. After-tax special charges amounted to $44.4 million, or $1.47 per diluted share, and $4.6 million, or $0.15 per diluted share, during 2009 and 2008, respectively. These charges included $40.4 million of intangible asset impairment charges during 2009, exit-activity costs and asset-impairment charges related to the restructuring of our business for both periods, and a write down of deferred financing costs in 2009. The sum of the items above resulted in a loss from continuing operations of $1.72 per diluted share in 2009, compared to earnings of $1.11 per diluted share in 2008.

In addition to the decline in unit volume in 2009, the Company also experienced reduced margins from the precipitous decrease in commodity costs that led to high-cost inventory being sold at lowered customer selling prices during the first three quarters of 2009. The Company estimated the effect, primarily experienced by its Processed Metal Products segment, as having increased the 2009 loss from continuing operations per share by between $0.25 and $0.30. "We are entering 2010 with balanced inventory costs and selling price spreads. With the sale of our Processed Metal Products segment earlier this month, we now expect to have a far more stable and higher-margin business,” said Brian J. Lipke, Gibraltar’s Chairman and Chief Executive Officer.

"In spite of historically weak demand levels in all of our major end markets, we made continued progress positioning Gibraltar for significantly improved results as business volumes begin to rebound. We aggressively cut costs and significantly lowered our breakeven point, and we implemented a series of steps to substantially reduce working capital and preserve cash, pay down debt, and strengthen our balance sheet. In the last two years, we closed 34% of our facilities, reduced employment by 38%, lowered working capital by $164 million or 54%, and paid down debt by $230 million, or 47%. As of December 31, 2009, we had debt outstanding of $257 million, and a debt-to-capitalization ratio of 33%,” noted Mr. Lipke.

On February 1, 2010, Gibraltar sold the majority of the assets of its non-core Processed Metal Products segment. Proceeds from the sale were $30.1 million. Previously, the Company had generated $44 million of cash from the reduction of its investment in this business since September 30, 2008, plus we expect to realize an additional $23 million of cash upon the liquidation of the remaining net assets not included in the sale. When completed, we expect to have realized in excess of $95 million of cash which the Company has used or will use to pay down debt. "This sale finalized our exit from the steel-processing business, a process that started four years ago, and our energy and resources will focus on our higher-margin, higher-growth building and industrial businesses, which we expect to generate better returns for our shareholders,” noted Mr. Lipke.

"With most of our restructuring activities and costs now behind us, a stronger balance sheet, improved liquidity, and better alignment between raw material costs and selling prices, even slight improvements in end-market activity levels can produce meaningful gains in profitability, as we saw in the middle two quarters of 2009. As our end markets show more signs of a sustainable recovery, we will begin to step back into the acquisition arena,” said Henning N. Kornbrekke, Gibraltar’s President and Chief Operating Officer.

"In spite of unexpected weakness in the fourth quarter, we believe the economy and our end markets are on the front end of a recovery. We see the first quarter reflecting a similar environment and challenges as were faced during the fourth quarter of 2009 with improvement beginning thereafter and continuing throughout the year. Some of our businesses are experiencing increases in remodeling/repair activity. Coupled with expected seasonal increases in demand, we are anticipating a return to profitability in the second and third quarters and for the full year,” said Mr. Kornbrekke.

Gibraltar has scheduled a conference call to review its results for the fourth quarter of 2009 tomorrow, February 25, 2010, starting at 9:00 am ET. A link to the call can be accessed on Gibraltar’s Web site, at http://www.gibraltar1.com. The presentation slides that will be discussed during the call are expected to be available on Wednesday, February 24, 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: http://www.gibraltar1.com/investors/index.cfm?page=48. 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.

Gibraltar Industries serves customers in a variety of industries in all 50 states and throughout the world from facilities in the United States, Canada, England, Germany, and Poland. Gibraltar’s common stock is a component of the S&P SmallCap 600 and the Russell 2000^® Index.

To supplement Gibraltar’s consolidated financial statements presented on a GAAP basis, Gibraltar also presented certain non-GAAP financial data in this news release. Non-GAAP financial data excluded special charges consisting of intangible asset impairment charges recorded during the quarters ended March 31, 2009 and December 31, 2009, exit activity costs and related asset impairment charges primarily associated with the closing and consolidation of our facilities, and the write down of deferred financing fees due to the amendment of our senior credit agreement. These non-GAAP adjustments are shown in the non-GAAP reconciliation of results excluding special charges provided in the financial statements that accompany this news release. We believe that presentation of results excluding special charges provides meaningful supplemental data to investors, as well as management, that is indicative of the Company’s core operating results and facilitates comparison of operating results across reporting periods as well as comparison with other companies. Special charges are excluded since they may not be considered directly related to our ongoing business operations. These non-GAAP measures should not be viewed as a substitute for our GAAP results, and may be different than non-GAAP measures used by other companies.

Information contained in this release, other than historical information, should be considered forward-looking and may be subject to a number of risk factors and uncertainties. Risk factors that could affect these statements include, but are not limited to, the following: the availability of raw materials and the effects of changing raw material prices on the Company’s results of operations; energy prices and usage; changing demand for the Company’s products and services; changes in the liquidity of the capital and credit markets; risks associated with the integration of acquisitions; and changes in interest or tax rates. In addition, such forward-looking statements could also be affected by general industry and market conditions, as well as general economic and political conditions. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law or regulation.