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Gibraltar leaping in ranks of WNY firms

Gibraltar Industries, ever so quietly, is moving in with the big boys.

After agreeing last week to a $240 million deal to buy Alabama Metal Industries Corp. and another deal to buy Gutter Helmet, the Hamburg-based steel and metal construction products manufacturer is building itself into one of the region's biggest businesses.

Assuming the Alabama Metals deal passes muster with anti-trust regulators, Gibraltar will have bulked up into a company with $1.4 billion in annual sales. That puts it in the same league as Rich Products Corp., Delaware North Cos., National Fuel Gas Co. and M&T Bank Corp.

That's what 24 acquisitions in the last 12 years will do.

"We've continued to reshape the company," says Brian J. Lipke, Gibraltar's chairman and chief executive officer. "We've dramatically changed its size, geographic coverage and product mix."

Alabama Metals will be Gibraltar's biggest deal yet and proof that the company is serious about using the "critical mass" Lipke likes to talk about to make bigger acquisitions, letting it branch out with new products and push into new markets.

"It makes our company much larger and much stronger," Lipke says.

The Birmingham, Ala.-based company is expected to add to Gibraltar's profits right away, with profit margins that are slightly better than Gibraltar's companywide average in 2004. Plus, sales are now expected to grow about twice as fast as the overall economy, says Henning Kornbrekke, Gibraltar's president and chief operating officer.

Beyond that, Alabama Metals does a lot of the other things that Gibraltar looks for in an acquisition. "It gives us leadership positions in a number of new product areas. It significantly expands and diversifies our customer base," Lipke says.

It also makes Gibraltar's building products unit the dominant force in the company's three-pronged business, generating $800 million annually. That gives the building products business twice the sales of Gibraltar's processed metal products segment and almost eight times the revenues from its thermal processing segment.

The deal gives Gibraltar almost a third of the market for bar grating and about 30 percent of the market for metal lath, along with a quarter of the market for safety and plank grating, Lipke says. Only a handful of Alabama Metals' 8,000 customers also buy products from Gibraltar, which creates additional opportunities for each business to sell to the others' customers. Gutter Helmet, with $16 million in sales, makes Gibraltar a leader in the market for rain-carrying products.

The Alabama Metals deal also pushes Gibraltar's building products segment, which currently gets almost 95 percent of its business from the residential market, into the commercial construction arena, where Alabama Metals gets about two-thirds of its revenues, Kornbrekke says. Once the deal is done, about a quarter of Gibraltar's building products business will come from commercial construction.

While Gibraltar's approach to acquisitions is to keep existing management in place and tinker as little as possible, company officials say they should be able to cut some costs through centralized purchasing and by capitalizing on the extra buying power it should have now that the company will be buying 1 million tons of steel a year.

The cost savings, Lipke says, "will be the icing on the cake."

And going forward, Kornbrekke says Gibraltar executives think there will be opportunities to buy other businesses that could add on to the business at Alabama Metals, which focused on conserving its cash under the ownership of private equity firm CGW Southeast Partners.

But that will be part of another story, as Gibraltar tries to reach its next goal: $2 billion in sales by 2009.


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