Gibraltar Steel, battered by the slowdown in its automotive and steel heat treating markets that was "clearly exacerbated" by the Sept. 11 terrorist attacks, saw its third-quarter profits cut in half, the Hamburg-based steel processor said Friday.
In response, Gibraltar has eliminated between 150 and 170 jobs this year, or about 6 percent of its 3,300-person work force, reduced overtime expenses by about 30 percent and cut back on almost all discretionary spending, company officials said. Gibraltar also imposed a wage and hiring freeze at the end of last month.
The job cuts have not had any impact on Gibraltar's local operations in Hamburg, Lackawanna, Cheektowaga and Kenmore, said Kenneth Houseknecht, a company spokesman.
"We have always run a lean company," said Brian J. Lipke, Gibraltar's chairman and chief executive officer. "The best way I know to avoid having to lay people off is not to hire them in the first place."
While Gibraltar officials were reluctant to discuss their outlook for their business because of a pending stock sale, company President Walter Erasmus said many of the firm's customers were being cautious about spending in the wake of the terrorist attacks.
"Our revenue and earnings outlook for the fourth quarter is not clear enough for us to provide specific earnings guidance," Erasmus told analysts in a conference call.
During the third quarter, Gibraltar's profits fell to $3.6 million, or 28 cents per share, from $7.2 million, or 57 cents per share, a year ago.
The earnings included a charge of $600,000, or 5 cents per share, to write off the value of Gibraltar's investment in FerrousExchange, a steel purchasing Web site. Excluding that charge, Gibraltar's profits fell a penny short of the 34 cents per share that analysts had been expecting, according to Thomson Financial/First Call.
The company's sales fell by 9 percent to $161.5 million from $178.3 million as the company's automotive industry revenues dropped by 20 percent and its steel heat treating business endured a 10 percent decline. Sales of Gibraltar's construction products were off by 2 percent.
Excluding Gibraltar's acquisitions of a steel heat treating company and a building products firm over the last year, the company's sales were down 11 percent during the quarter, Erasmus said.
"In recognition of the difficult and volatile operating environment, we continued to focus on relentlessly driving costs from our business and strengthening relationships with our customers," Lipke said.
The company reduced its inventory by $6 million, or about 7 percent, during the third quarter, stretching the drop in inventories to 17 percent for the first nine months of the year, Erasmus said.
Gibraltar also benefited from lower raw material costs and falling interest rates, which reduced the company's interest expense by $1.3 million during the quarter. The company also reduced its long-term debt by about $29 million to $226 million.