This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of Gibraltar. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. Before making any investment decisions regarding our company, we strongly advise you to read the section entitled Risk Factors in our most recent annual report on Form 10-K which can be accessed under the SEC Filings link of the Investor Info page of our website at www.gibraltar1.com. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Refining and Growing Our Business Gibraltar [NASDAQ:ROCK] is a leading manufacturer, processor, and distributor of products for the building, industrial, and vehicular markets Headquartered in Buffalo, New York Largest producer of ventilation products, mailboxes, bar grating, and expanded metal, and a leader in cold-rolled strip steel Two business segments: Building Products and Processed Metal Products Successful acquisition history 30 businesses since 1995 have broadened Gibraltar s product lines and services through entering new markets and expanding its customer base Focus on higher-margin, value-added products TTM sales and EBITDA of $1.4 billion and $140 million, respectively 3
Margin Improvement Activities Incl. SCM Plant Consolidation (2007/2008 combined) 23 Staffing Reduction (since 2007, including acquisitions) 19% Sales Increase (year to date) 8% Working Capital Reduction (since 9/30/07) Debt Reduction (since 9/30/07 peak) $69 M $160 M Divestitures (Bath Cabinets, Hubbell, SCM) 2007/2008 Acquisitions (Florence, Noll, Dramex) 2007 4
Streamlining Our Operations 64 Current Facilities 23 Facilities closed since 1/01/2007 4 Divestitures 5
Broad Geographic Reach 6
Debt Reduction September 30, 2007 December 31, 2007 March 31, 2008 June 30, 2008 September 30, 2008 December 31, 2008 (Est.) $ 553,634,000 $ 488,609,000 $ 462,781,000 $ 438,311,000 $ 428,797,000 $ 360,000,000* * includes debt pay down related to SCM sale & estimated Q4 free cash flow debt reduction. 7
$ Sales per Employee $ Sales per Employee 2007 $331,209 $ Sales per Employee 2008E $371,870 8
Gibraltar at a Glance Building Products 80% of Sales* Processed Metal Products 20% of Sales* Residential Approx. 60% of Sales Commercial Industrial Architectural Approx. 40% of Sales Cold-Rolled Strip Steel 25-30% New Housing 70-75% Repair/Remodel 80% North America 20% Europe 55-60% Automotive ⅔ Domestic ⅓ Transplant Total market estimated at: $500-600 Billion $300-400 Billion $40-60 Billion We Look to Build a Leading Share in Niche Segments of Large Markets * After SCM Divestiture 9
Growth Despite Difficult Markets Revenue Revenue ($ ($ in in millions) millions) EBITDA EBITDA ($ ($ in in millions) millions) 1400 1200 1000 800 1391 1312 140 CAGR = 15% 1234 CAGR = 12% 120 973 100 86 765 80 72 675 102 132 116 140 600 60 400 40 200 0 2003 2004 2005 2006 2007 TTM Sept 08 20 0 10.6% 11.3% 10.5% 10.8% 8.8% 10.1% 2003 2004 2005 2006 2007 TTM Sept 08 Income from continuing operations before interest, taxes, depreciation, amortization. 10
Three-Pronged Strategy Maximize Profitability of Existing Businesses Profitable Top Line Growth New and customized products Manage Portfolio Sale of Thermal Processing and strapping businesses in 2006 Service center and bath cabinet businesses sold in 2007 Sale of SCM in October 2008 Acquire Businesses that Strengthen Product Leadership 32 strategic acquisitions over the past 13 years 10 in last 4 years, 9 in Building Products segment Florence, Dramex, and Noll in 2007 Gibraltar s strategy is to focus on manufacturing value-added products within niche markets where it can capture market-leading positions. 11
Building Products Overview Strong Positions in Residential New Build, Residential Repair/Remodel and Commercial Markets TTM Sales Percent of 80% Total Sales* Products $1,006 million 7-8 categories ~ 80% of sales Many with demand nationwide Facilities Markets 57 facilities in 23 states, Canada, England, Germany, and Poland Residential (New Build, Repairs/Remodeling) Commercial, Industrial, and Architectural * After SCM Divestiture 12
Building Products Market A Leading Share in Niche Markets Market Share Ventilation Products #1 Mailboxes #1 Gutter Protection #1 Structural Connectors #2 Bar Grating #1 Expanded Metal #1 Metal Lath #1 Metal Building Accessories National Leader 80% of Sales from Products with #1 or #2 Market Share 13
Processed Metal Products Overview Supplier to Blue Chip Customers in North America and Worldwide TTM Sales* Percent of 20% Total Sales* Products Facilities Markets $257 million Precision Processing and Production of Cold-Rolled Strip Steel 7 facilities in 4 states Appliance, Auto, Power and Hand Tools, Hardware, and Coinage * After SCM Divestiture 14
Processed Metal Products Market Strong Market Position Cold-Rolled Strip Steel 30-35% market share The largest producer of the precision strip steel that is used in automatic transmissions 15
Strategically Transforming the Business Strategic Transactions Have Improved the Performance Characteristics of the Company 32 Acquisitions During Last 13 Years Ten Acquisitions Over Last 4 Years Including the Company s largest to date AMICO Combined incremental annual revenue in excess of $600 million Focus on Quick Integration and Operating Performance Improvement Integration and consolidation of existing and acquired facilities Executing sales, marketing, manufacturing, and distribution synergies 16
Disciplined Acquisition Strategy Target Financial Criteria Immediately Accretive to Earnings Under-Utilized Assets with Room to Grow Target Operating Synergies Operating Margin of >10% Expand Products, Processes, and Services Extend Geographic Penetration and Reach Diversify Customer Base and Business Mix Offer Long-Term Growth Potential Proven Management Teams Willing to Stay Compatible Cultures 17
Financial Goals Target Gross Margin 20%+ SG&A 10% of Sales Operating Margin 10%+ Net Income Margin 6%+ Annual Free Cash Flow $50 Million+ Days of Working Capital 60 days Capital Expenditures Depreciation 18
Third-Quarter & Y-T-D Financial Results ($ in millions) Revenues Operating Income * Diluted EPS Free Cash Flow Q308 Q307 YTD Q308 $377.1 $1,081.9 $342.6 +10% +8% YTD Q307 $1,003.1 $35.5 $92.6 $25.4 $71.5 +40% +29% $0.64 $1.55 $0.38 $0.70 $1.04 +68% +49% $9.0 $($22.9) $31.9 $58.4 $(16.1) $74.5 Revenues Building Products Segment up 11% with contribution from 2007 acquisitions Processed Metals Segment (includes SCM Metal Products) steady Operating Income Building Products Segment solid including incremental income from 2007 acquisitions Processed Metals Segment rose on improved pricing and operational efficiency As percent of revenues, both segments each improved Q3 by at least 60 bps EPS from Continuing Operations Improvement from both Segments Lower interest expense; rates and principal FCF 2007 benefited from $16M of cash flows from Discontinued Operations FCF = Cash from Operations less Capital Expenditures less Dividends paid * Includes charges primarily due to facility consolidations of $3.7 and $6.6 for Q308 and YTD Q308 and $0.4 and $2.4 for Q307 and YTD Q307 19
Balance Sheet ($ in millions) Sept 08 Jun 08 Mar 08 Dec 07 Sept 07 Short-Term Debt $ 2.7 $ 2.7 $ 2.9 $ 3.0 $ 2.9 Long-Term Debt 426.1 435.6 459.8 485.6 550.7 Total Debt 428.8 438.3 462.7 488.6 553.6 Cash and Cash Equivalents 27.5 26.7 35.1 35.3 32.7 Net Debt $ 401.3 $ 411.6 $ 427.6 $ 453.3 $ 520.9 Total Debt / Total Capitalization 41% 43% 45% 46% 49% Net Debt / Net Capitalization 39% 41% 43% 44% 48% 20
2008 Earnings Outlook Outlook Previous Earnings Call EPS - Diluted including SCM Metal Products $1.61 to $1.68 $1.50 to $1.65 Less Sale of SCM Metal Products in Q408: SCM's net earnings for 2008 $ (0.16) Interest expense allocated to SCM $ 0.02 Amount reclassed to Discontinued Operations $ (0.14) EPS - Diluted from Conitnuing Operations $1.47 to $1.54 Expected Next Earnings Conference Call with Investors: Thursday, February 26, 2009 21
Investment Highlights Improving Performance 2008 EPS up from 2007 EPS, in spite of slower market conditions Strong financial profile Moderately leveraged, with conservative approach from management Initiatives to further leverage critical mass and reduce overall operational costs Diversified product mix with leading positions Blue chip customer base Broad geographic presence History of successful acquisitions Proven growth strategy Broad product diversification more than 5,000 products in two segments #1 market share in Building Products & Processed Metals (ventilation, mailboxes, cold-rolled strip) Customers represent major players in each of the markets served including The Home Depot, Lowe s, the Big Three in automotive, Toyota, and Honda 20,000 customers world-wide 64 facilities in 25 states, Canada, England, Germany, and Poland Global presence in North America, Europe, Asia, and Central and South America History of acquiring complementary companies that are immediately accretive to earnings, completing more than 30 since 1995 Quick and smooth integration of past acquisitions Strong and sustained growth through four recessions in 34-year history 2003-TTM June 08; Revenue CAGR of 15%; EBITDA CAGR of 12% Experienced management team Executives with backgrounds at large, diverse, international manufacturing companies Experience through a variety of economic cycles and business environments 22 7
Supplemental Data
Building Products Segment ($ in millions) Q308 Q307 YTD Q308 YTD Q307 Revenues $277.5 $787.9 $247.2 $710.5 +12% +11% Revenues Acquisitions in 2007 added $72.8M or 7% Residential housing down; offset by commercial & industrial Operating Income* Operating Margin $33.5 $93.9 $28.5 $78.4 +18% +20% 12.1% 11.5% 11.9% 11.0% +60 b.p. +90 b.p. Operating Income & Margin Favorable: acquisitions, pricing and operational efficiency Commercial / industrial mix improving * Includes charges primarily due to facility consolidations of $2.7 and $4.0 for Q308 and YTD Q308 and $0.2 and $0.4 for Q307 and YTD Q307 24
Processed Metals Segment ($ in millions) Q308 Q307 YTD Q308 YTD Q307 Revenues Operating Income* Operating Margin $99.6 $95.4 $294.0 $292.6 +4% -% $12.2 $24.8 $5.5 $16.1 +120% +54% 12.2% 5.8% 8.4% 5.5% +640 b.p. +290 b.p. Revenues Softness in automotive market - North American production down (16%) vs. Q307 Marketing programs and pricing to market provided offsets Operating Income & Margin Favorable: savings from facility closures in 2007, pricing, & cost reductions * Includes charges primarily due to facility consolidations of $1.3 YTD Q308 and $0.2 and $2.0 for Q307 and YTD Q307 25
Q408 / FY08 Market Assumptions Markets & Other Factors Building Products Residential housing 1 : - FY08: 925,000 (single & multi family) - Q308 vs. Q307, down 33% Improving commercial building and industrial markets participation GDP 2 : Q408: -1.5% annualized Processed Metals North American auto build 3 : - FY08: 12.8 million - down 15% from 2007 (Q308 down 16% vs. Q307) 1 Global Insight and various industry sources 2 Global Insight 26 3 Ward s Auto and various industry sources
All But One Housing Cycle Preceded a Recession Housing Starts, Downturns in Starts, and Recessions 3,000 2,500 Level of Starts Downturns in Starts 2,000 1,500 1,000 Housing Units (000s) Recessions 500 0 1959Jan 1963Jan 1967Jan 1971Jan 1975Jan 1979Jan 1983Jan 1987Jan 1991Jan 1995Jan 1999Jan 2003Jan 2007Jan? Recessions Downturn in Starts Total Starts: 4-month rolling average (000s, SAAR) Reprinted with permission from the Joint Center for Housing Studies of Harvard University 2008. Data sources: US Census Bureau, NBER 27
2008E 2005 2008E North American Car & Truck Builds 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 28 2002 2005 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
Strategic Growth Through Acquisitions 2005 1997 SEMCO 1999 Weather Guard Hughes 2003 CMI Air Vent American Wilcon Gutter Helmet AMICO SCM-China 2007 Dramex Noll Florence 1998 2000 2004 2006 Solar Appleton USP Milcor Renown Covert Portals Plus SCM Home Impressions Steel City EMC Building Products Segment 29 Processed Metal Products Segment
2007 Acquisitions Dramex Noll-NorWesCo Florence Manufactures standard and flattened expanded metal, structural grating, micro-mesh, and decorative metal patterns Manufacturing facilities in Canada, the United States, and the United Kingdom Integrated into AMICO Produces more than 4,000 products that serve the building, HVAC, and lawn & garden markets Strengthens Gibraltar s presence in the Northern California, Pacific Northwest, and Rocky Mountain markets Manufactures engineered storage solutions, including centralized mail and package delivery products Customers include U.S. Postal Service, distributors, catalog houses, national retail chains, and wholesalers Added $160 Million of Annualized Sales 30
Rebounding Quickly from a Slowdown Sales in millions $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07TTM Recession 31
Stable Margins in Spite of Volatility Steel Steel prices prices vs. vs. quarterly quarterly EBITDA EBITDA and and gross gross profit profit margin margin Hot Rolled Steel (Quarter Avg. $/ton) Quarterly EBITDA ($ in mm) $977 $1,052 Quarterly Gross Margin $462 $610 $703 $658 $632 $533 $462 $550 $550 $592 $622 $563 $553 $518 $517 $535 $692 $288 $16 $273 $284 $317 $23 $22 $19 $25 $35 $37 $36 $26 $28 $31 $32 $41 $38 $42 $27 $24 $36 $34 $19 $28 $48 $46 23% 20% 21% 22% 19% 20% 18% 17% 18% 19% 19% 20% 22% 21% 17% 18% 16% 18% 19% 15% 17% 22% 21% Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep 2003 2004 2005 2006 2007 2008 Gross Margins and EBITDA for FY 2005 and FY 2006 have been restated for continuing operations Gibraltar has maintained stable margins throughout the steel cycle 32