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Tumbling markets hurting Gibraltar's bottom line

The slumping housing and auto markets continue to take a toll on Gibraltar Industries.

The Hamburg-based building products manufacturer lost $3.5 million during the third quarter because of the nearly $14 million cost of shutting and selling its Hubbell Steel business in Ohio, while its earnings from its remaining businesses tumbled by 30 percent.

"Conditions in our two largest markets -- residential housing and automotive -- remained challenging," Brian J. Lipke, Gibraltar's chairman and chief executive officer, said during a conference call Thursday.

As a result, Gibraltar executives warned that profits during the current quarter are likely to be 20 percent to 40 percent lower than they were a year ago, excluding any special charges. That reduced earnings forecast of 12 cents to 16 cents per share is far less than the 31 cents per share that the seven analysts surveyed by Thomson Financial/First Call were expecting.

That caused Gibraltar's shares to tumble by 11 percent, closing Thursday at $16.10, down $1.92.

In response to the slowdown, Gibraltar has closed or consolidated eight facilities this year, including the shutdown of its Kenmore processed metals factory and the shift of that work to its plant in Cheektowaga. Further closings or consolidations are likely, although company officials declined to say what those steps would be.

Those steps should leave Gibraltar in a position to become even more profitable once the housing and auto markets rebound, Lipke said.

Gibraltar's third-quarter loss -- its first in almost 14 years -- equaled 12 cents per share, and compared with a profit of $18 million, or 60 cents per share, a year earlier.

Excluding the impact of the Hubbell shutdown and other smaller one-time expenses, Gibraltar's profits from continuing operations dropped to $12.8 million, or 43 cents per share, from $18.2 million, or 61 cents per share, a year ago. Those earnings topped analyst expectations by a penny.

The company's sales grew by 8 percent to $343 million from $318 million a year ago as revenues from companies Gibraltar acquired earlier this year offset an 8 percent drop in sales from its existing businesses.

Operating profits tumbled by 23 percent to $5.5 million at the company's processed metals business as revenue grew less than 1 percent to $95.4 million.

Earnings at its building products business dropped by 17 percent to $28.5 million, despite an acquisition-driven 11 percent increase in sales to $247 million, as lower sales volumes reduced profitability.


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