Good day, ladies and gentlemen, and welcome to the Gibraltar Industries Fourth Quarter 2011 Earnings Conference Call. [Operator Instructions] I would like to now turn the call over to your host for today, Mr. David Calusdian, from the Investor Relations firm Sharon Merrill. Please proceed.

Good morning, everyone, and thank you for joining us. If you have not received a copy of the earnings press release that was issued yesterday evening, you can find it in the Investor Info section of the Gibraltar website, gibraltar1.com. During the prepared remarks today, management will be referring to presentation slides that summarize the company's fourth quarter and full year performance. These slides are also posted on the website. Please turn to Slide #2 in the presentation. Gibraltar's earnings release and this morning's slide presentation both contain adjusted non-GAAP financial measures. Reconciliations of GAAP to adjusted measures have been appended to the earnings release. Additionally, the company's remarks contain forward-looking statements about future financial results. The company's actual results may differ materially from the anticipated events, performance or results expressed or implied by these forward-looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can also be accessed through the company's website. On our call this morning are Gibraltar's Chairman and CEO, Brian Lipke; Henning Kornbrekke, President and COO; and Ken Smith, Chief Financial Officer. At this point, I will turn the call over to Brian.

Thanks, David. Welcome, everyone, and thanks for joining us on our call this morning. I'll begin, as usual, with some brief comments and then turn the call over to Henning and Ken for a more detailed review of our results. And then following that, I'll close our prepared remarks with some comments about our business outlook, before opening up the call to any questions that any of you may have. You can refer to Slide 3 in our presentation at this point. Gibraltar continued to deliver solid results in the fourth quarter, including a year of strong performance despite near 0 growth in our traditional core end markets. Net sales grew 21% for the quarter and 20% for the full year. Adjusted gross margins were up by 180 basis points and 250 basis points for Q4 and the year, respectively. Excluding special items, adjusted EPS from continuing operations improved modestly for the quarter and significantly, for 2011 as a whole. Three years ago, we made a very strategic decision not to simply wait for housing and the other end markets we serve to recover. Instead, we decided to aggressively reconfigure our business based on the belief that we had to position the business to make a profit at these historically low levels of end market activity, because we didn't believe it was going to turn around quickly. Three years later, our major end markets are still operating at historically low levels of activity. There are signs, growing signs, of improvement in these markets, and the rebound is expected to gain momentum over the next couple of years. We've been reducing our costs through lean initiatives, facilities consolidation, a drive for operational excellence, while pursuing growth throughout the company. With no meaningful help from housing starts and remodeling activity, we've been…

Thanks, Brian. Taking off where Brian left off, on Slide #6. Gibraltar's growing presence in the Industrial and Infrastructure markets has enabled us to offset weak demand in housing by selling our products into 2 of the fastest-growing areas in the economy. Equally important in our traditional core markets, residential and nonresidential construction, we've not only established ourselves as the leader in the majority of our product categories, but we're also being aggressive in launching new products, expanding our geographic coverage and improving our penetration of existing nationwide customer accounts to continue increasing our overall market share. Looking at the fourth quarter, specifically, although housing starts and residential repair and remodeling demand remained generally weak by historical standards, net sales are up 7% year-over-year on an organic basis, with 11% in nonresidential sales, more than offsetting a decline in residential. As we indicated on our call in November, our bright spot in residential was demand for our roof ventilation products, resulting from last spring's storm damage, which generated unifying growth in the Southeast U.S. Although this and other storm-related repair and remodeling activity is likely to diminish in the near term, the warm weather we're having this winter is driving stronger construction activity, which is spilling over into the first quarter with order rates remaining stronger than historical first quarter trends. Our strong position in Repair and Remodeling is enabling us to continue gaining share in the Retail channel, with a focus on expanding our presence in Home Centers. Looking at our Residential products, specifically, our sales in the Home Center channel grew in the high-single digits for the fourth quarter and 2011 as a whole. Year-over-year, we're offering targeted programs to our Home Center customers on a region-by-region basis, securing more shelf space for a larger portion of our…

Thanks, Henning. Let's turn to Slide #8 in the presentation entitled Year-Over-Year Improvement. Regarding the fourth quarter, revenues and underlying operations improved very nicely. The 2 acquisitions we completed in the second quarter of 2011 contributed as expected. Regarding the organic growth, higher revenues from Nonresidential products were the principal contributors. Adjusted gross profit continued to be favorable. Slide 8 shows the improvement versus the prior-year periods. With gross profits increasing at a faster rate than the revenue increases, we demonstrated our ability to leverage our lower cost structure and improving efficiencies. The adjusted gross margin for the fourth quarter 2011 was 16.6%, an increase of 180 basis points compared to the fourth quarter a year ago. In the full year 2011, adjusted gross margin of 19.8% was 250 basis points higher than the full year 2011 -- I'm sorry, 2010. Our improving efficiencies came from supply chain and production processes, plus savings from facility consolidations. Now to Slide 9 and starting with our SG&A expenses. SG&A expenses for the fourth quarter 2011 amounted to $33 million, an increase of $6.5 million from the fourth quarter a year ago. The increase stemmed from incremental SG&A from acquisitions of almost $3.5 million, plus higher expense for equity-based compensation. The accounting for equity-based accounting under GAAP uses fair value methods, which I liken to mark-to-market accounting. And our stock price is one key variable in the valuation. And the dramatic increase on our stock price during the fourth quarter of 2011 contributed to a $6 million charge for performance-based equity comp in the fourth quarter of 2011, compared to $2 million charge in the fourth quarter a year ago. While the Q4 2011 charge was $6 million, the charge for the full year 2011 was $4 million, though the quarterly valuations can…

Thanks, Ken. My wrap-up comments are summarized on Slide #13. As I said at the outset, and as Henning and Ken have outlined in their comments, we've taken control of our own business by reconfiguring it with a much lower cost structure and returning it to profitability, in spite of the historically weak end market conditions which exist today. As a result, we believe that Gibraltar is well positioned to leverage improved margins from incremental sales as 2012 begins. We expect this to be the case regardless of whether those sales are driven by continued growth in demand in the industrial and infrastructure markets, by future accretive acquisitions or by even a modest recovery in new construction and remodeling. And if we're lucky, we'll get some of all of that. We're feeling more optimistic about the outlook of our end markets than we felt at the time of our third quarter conference call in November. Although overall levels of end market activity remained historically weak, we can point to 3 indicators that suggest the pickup in 2012. The first is the American Institute of Architects' Architectural Billings Index, or ABI. The ABI measures overall demand for design services and is viewed as a reliable 9- to 12-month leading indicator of commercial construction activity. December marked the second consecutive, positive month for the ABI, indicating that nonresidential construction may have bottomed and could potentially improve modestly year-over-year in 2012. This is also true for the industrial portion of Nonresidential Construction end markets. Second, it appears federal spending for infrastructure will continue at levels equivalent to current levels or better, as the need is clear, and this kind of spending creates jobs immediately. This is positive for our bridge, road and airport projects. As Henning said, D.S. Brown began 2012 with a…

[Operator Instructions] Our first question is from Peter Lisnic with Robert W. Baird.

This is Josh Chan, filling in for Pete. I wanted to ask about your comments on the Residential market. I guess you're talking about weak demand currently. First part is, you did comment that your Home Center sales were up. So I'm wondering where you saw the weakness in particular? And then the second part would be, are you seeing actual signs of improvements in your business given some of the indicators that you talked about?

Yes. The Residential weakness is fairly spread evenly. I mean, some of the outlets were up, but then others were down. And I guess, I don't want to really identify specifically for other reasons, but, in general, they moved as we thought they would move, down pretty much in line with the downturn in housing. But I think, as Brian said, we're encouraged going forward. We see those opportunities starting to pick up. We've already started to generate some backlog and our incoming business coming into this quarter is moving ahead stronger than we expected. Your second question was what?

Have you seen actual signs of improvement in your underlying business based on the indicators sort of improving?

Yes. We have. We've just come back from the housing study group that we’re part of in Washington. And I would tell you that it was probably the first meeting that we've been to in 4 or 5 years where there was general optimism, which was very encouraging. I think everyone is, at this point, and everyone we've talked to, both in the industry and in Washington, was optimistic going forward for 2012 and beyond.

Okay. And could you give us the volume and price breakdown of the 7% organic growth for the quarter?

It was pretty, I’d say probably 3/4 to 80% was in the price realization category. And the other fill in would be from volume.

Okay. And then kind of based on your commentary on some optimism, is it reasonable to expect that volume growth could accelerate as we enter into 2012?

Yes. Particularly as we make our way into the year, yes.

Our next question is from the line of Ken Zener of KeyBanc Capital Markets.

Can you talk about the strategy of acquiring Edvan, the Canadian distributor? Was that to resolve any bottleneck issues related to inventory or was it more market share? And how do you see that trend persisting?

It was clearly market share. We worked very closely with the distributor, who did a great job of growing in that particular area. He was ready to exit the business, and we worked with him at pulling the business into Gibraltar. We see that as a great growth opportunity for us up in the Northwest section of the country. Very closely tied into oil exploration...

And mining.

So we're very encouraged. And mining, yes. It’s a small acquisition, but it’s going to have a nice effect, a nice growth opportunity for us.

And then on the SG&A, I mean, is it fair to say based on 2011's stock treatment that essentially $1 quarter-to-quarter in the stock price is equal to $0.01 in EPS? Or is there going to be a change in your guidance methodology that would alter that?

Generally, that's true for every $1 that our stock price moves, there can be $0.01 impact on EPS. But the other determinant that's important in the calculation is the performance of the peer group or how the TSRs compare, because it's our stock price moves against another group. So if the other group’s performance held steady, even, unchanged, then a change of $1 in our stock price would essentially equal $0.01 a share.

And the last comment was on the increased Retail share. Was there any shift in terms of the dynamics, in terms of the opportunity that you had in terms of pricing, servicing, portfolio?

Yes. Increasing on Retail, we've had the opportunity to broaden the programs that we have with those retailers. And in fact, we're working with one of our customers to start buildup in inventory, to start supplying them in some new product areas that we did not previously participate in.

Can you comment on the benefit of that channel fill?

We're going to have a nice increase in sales, I think, for the total company, it roughly represents close to 1.5%. And again, that's on total company. So that's a nice increase in that channel. And we're also exploring within the opportunity to do it nationwide, which would be a substantial opportunity, certainly for our company.

Right. So 1.5% is a percent of the whole company, but I think that's on the Residential and that's only a partial regional load?

Yes.

[Operator Instructions] Our next question is from the line of Tim Hayes with Davenport & Company.

If I recall right, third quarter was hurt by some trends in metal prices where you had some high-cost inventories going through the P&L. How did that impact you in Q4? Was it still a hit but a much smaller hit or...

I think in the -- for the full year or the quarter?

Just the quarter, Q4, versus the impact in Q3?

For the quarter, we were just about flat. I mean -- in fact, we picked up 0.10 a percentage point. So I would say in the quarter, flat. On a full year basis, we managed it well. We picked up 1.3 percentage points on a full year basis. So as we indicated earlier, we've done a much better job at managing the volatility. And I think Brian indicated in 2012 we think we're even going to be -- we'll even have a smaller purchase price variance.

Our next question is from Robert Kelly with Sidoti & Company.

With Industrial and Commercial being 50% in the business of these sales, does that change the incremental margin story for Gibraltar? Does it enhance it compared to where you were even a year ago? Just curious with the mix of business changing so much.

I think it does. I think we all talked about, and I think Brian, at great length, talked about our focus at improving our operating characteristics. And with the mix of businesses we have today as the volumes picks up, you'll see our operating margins and gross margins continue to increase. We'll get the leverage with the higher volume, but their operating characteristics have switched also. We saw some of that full year. Our gross margins were close to 20%. And with the previous mix, we would have been at least 2 percentage points lower than that on gross margin. So we're seeing -- you're seeing exactly what we've been telling you that you would see. And that will continue to increase going forward.

Great. And then just tying that back to some comments you made in the past when you weren't so heavy on the Industrial side. You talked about a longer-term operating margin goal in the 12% range. Is there now a higher target because of the mix of business?

Our operating margin goal is 12%, and we're on target for that.

I'd say that the change would be that we hope to get there quicker.

[Operator Instructions] At this time, we've reached the end of the Q&A session. I will turn the conference back over to Mr. Lipke for any closing or additional remarks.

Number one, thanks for participating in the call. Number two, we look forward to talking with you again when we release our first quarter numbers. Number three, we're entering 2012 with a higher degree of optimism than we had entering 2011. I think the progress that we made during 2011 strengthens our overall position to perform better in 2012. Thanks again, and we'll see you next quarter.

Ladies and gentlemen, thank you very much for your participation in today's conference call. You may now disconnect. Have a wonderful day.