Good day, ladies and gentlemen, and welcome to the Gibraltar Industries Third Quarter 2013 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to 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 this morning, 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 third quarter performance. These slides also are posted to the website. Please turn to Slide #2 in the presentation. Gibraltar's earnings release and this morning's slide presentation both contain 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; recently retired President and Chief Operating Officer, Henning Kornbrekke; and CFO, Ken Smith. At this point, I will turn the call over to Brian.

Thanks, David. Good morning, everyone, and thanks for joining us on our call today. I'm going to start off with some highlights on our business this quarter and then turn the call over to Henning and Ken for more detailed comments on our results. And then I'll close our prepared remarks with some thoughts on the outlook for Q4 and 2014. And at that point, we'll open the call to any questions that any of you may have. Before I move into that part of our discussion this morning, I'd like to make a special note. As most of you know, Henning Kornbrekke retired from Gibraltar at the close of our third quarter and has agreed to continue on as a consultant for an interim period. And since we're reviewing the third quarter results, which he was part of, he's also participating in today's earning call. I want to publicly extend a note of thanks to Henning for his many contributions to Gibraltar during his more than a decade with the company, which included some very challenging times for our industry and for Gibraltar over the last 5 years or so. Henning, your support and efforts have helped to position Gibraltar for significantly improving performance as our end markets continue to rebound. Thanks for your many contributions over the years. With that, I'll turn -- I'll ask you to turn to Slide #3 in our presentation titled Q3 Overview. Gibraltar overperformed this quarter on both the top and bottom lines compared to last year. Net sales were up 6%. Adjusted EPS increased nearly 30% from Q3 last year and also exceeded our EPS guidance for the quarter. The revenue growth came from our recent acquisitions, which continued to perform as expected with sales improvements by some of our operating units,…

Thank you, Brian. Good morning, everyone. Let's turn now to Slide #4 titled Revenue Exposures, which illustrates our 2013 revenue exposure by end markets served. As the center pie chart shows the residential and low-rise commercial building market represents about 50% of our current sales. Of that 50%, 1/5 comes from the low-rise commercial building market, which consists of structures such as professional buildings, hotels and retail centers. The other 4/5 of this half of the overall business is residential and most of that is driven by repair and remodeling activity. The other half of our consolidated sales is split roughly 40% and 10%, coming from the industrial and transportation infrastructure markets, respectively. And repair and remodel activity is a meaningful driver of demand from these 2 market categories. So with this context, let's move to Slide #4 titled Revenue Dynamics. As Brian cited, we had solid sales growth this quarter led by recent acquisitions. And for businesses owned in both periods, we had strong growth from residential new construction. Our third quarter sales to the homebuilding sector were up 10% year-over-year driven by continued demand for our storage and security products. Regarding residential repair and remodeling demand, on our last call -- last quarter, we dialed down our previous guidance for consolidated revenues in 2013, in part due to lower second quarter volume and moderate market activity but we expected improvement in quarter 3 versus quarter 3 of 2012. Quarter 3's actual sales were nearly consistent with this expectation. Overall, residential repair and remodeling sales, including roofing, were flat with our quarter 3 of 2012, which included a negative comparison for our ventilation products. Although we don't sell roofing shingles, we do sell roof and attic ventilation products along with trims, flashings, metal roofing and rain dispersion products. Our…

Thanks, Henning, and good morning. Before I comment on Slide 7, I want to provide some color to the noncash asset impairment charge we recorded in our GAAP results this quarter. The charge primarily relates to our sole European business that sells fabricated expanded metal products into a variety of industrial markets across Europe. The European recession, accelerated by sovereign debt issues and governmental austerity measures, has contracted economies there and has diminished the sales and cash flows generated by our European business. After updating the fair value of our European industrial business based on expected future cash flows, we wrote down that business intangibles this quarter. Now let's turn to Slide #7 titled Year-over-year Performance. First I'll detail the third quarter results and comparisons. For the third quarter, revenues increased on acquisition-related growth while businesses we owned in both quarters experienced a 1% decrease in revenues. Company-wide, the 1% organic decrease was comprised of a 3% decrease in pricing, partially offset by a 2% increase in volume. The pricing pressure is primarily related to sales of our industrial products, as Henning noted. Sales of industrial -- of residential products increased 6% organically compared to Q3 of last year, net of volume gains from residential new construction and residential repair and remodeling volume that was equivalent to last year. Regarding the factors affecting margins and earnings as cited by Brian and Henning, the following reconciles our nearly 30% EPS improvement from last year's adjusted EPS of $0.24 to $0.31 this quarter, with the key differences being a $0.04 increase from lower operating cost; plus a $0.02 increase from the recent acquisitions; plus a $0.01 increase from residential new construction volume; plus $0.02 improvement on lower interest expense resulting from our successful refinancing of notes in January of 2013; and a…

Think you, Ken. Before we open the call to your questions, I wanted to talk about the outlook for Q4 and the quarters ahead. We continue to focus on organic growth opportunities, which will consume some of our approximate $200 million to $300 million of available manufacturing capacity as a key to our growth. We're continuing to be aggressive at driving organic growth and we feel good about our prospects in this area. In the residential repair and remodeling sector, we're not expecting significant improvement in Q4, but 2014 is shaping up to be a stronger year than 2013. Although the recovery and big-ticket remodeling has taken longer to materialize than we had anticipated, the latest published reports suggest that conditions may finally be improving. Harvard's Joint Center for Housing Studies index, leading indicator of remodeling activity, is dramatically up from where it was a year ago. The joint center's economists said in September that remodeling contractors have been reporting improving market conditions and are seeing strength in the future market indicators. Pent-up demand is 1 factor. It's been 6 years since the housing collapse and the home maintenance projects can only be deferred for so long. In addition, recent homebuyers are traditionally the most active home remodelers and this year's strength in existing home sales is beginning to translate into stronger sales of home improvement products. Given these dynamics, the LIRA index is projecting continued strengthening of the repair and remodeling market through the end of 2013 and into the first half of 2014. We remain optimistic about the outlook for new residential construction. Housing appears to be in the midst of a long-term recovery. The current reports on permits, seasonally adjusted starts and new home sales suggest that residential new build has lost some momentum recently. We believe…

[Operator Instructions] Our first question comes from Peter Lisnic from Robert W. Baird. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: This is Josh Chan filling in for Pete. I have a question on the industrial pricing pressure that you noted. If we just focus on the industrial side, could you tell us how much pricing was down in that particular vertical? And then also, did it get worse compared to just the second quarter?

It was down approximately 4% in the third quarter, I'm sorry, on the third quarter. And it was largely eased on the second quarter. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: I'm sorry, did you say it was down a little bit from the second quarter as well?

Yes. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then -- so how are you thinking about industrial pricing heading into the fourth quarter and next year? I mean, steel prices have bounced off the bottom a little bit, so is that going to be a benefit in terms of firming up the price or how are you thinking about industrial pricing going forward?

As I noted in my prepared remarks, we believe that for the near term, that we will continue to face pricing pressure. However, more importantly, the decline in sales and operating margins in that part of our business is simply not acceptable, and we have worked very hard with the managers of that business to come up with a significant series of internal operating initiatives that we hope and believe will counter the downward margin pressures that we've experienced this year to a very large extent. So in short, let me say that in a positive sense, we're expecting that even with continued pricing pressure in the industrial market that our internal activities are going to offset a significant part of that as we move into 2014. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: Okay, that's encouraging to hear. On the -- and the repair and remodel market being flat for you, how are you thinking about that comparison versus the market, I guess, many building products manufacturers have been seeing somewhat accelerating growth in recent quarters and, obviously, your products aren't comparable to the broader market in general, but could you help us sort of understand that gap between this accelerating growth that some are seeing in a relatively flat comparison still here?

Sure can. When we talk about repair and remodeling, we include in that, our roofing products because a substantial amount of those are used in reroofing activity, which we consider to be repair and remodeling activity. If you follow the roofing industry stats this year, you'll note, as Henning mentioned, that they are -- that part of the remodeling industry is experiencing a downturn compared to where it was in 2012. More -- far more significant, though, than the downturn that we're experiencing in those products. So that has been an offset to some of the other business areas that we're involved in, which have actually seen improvements in their sales of products that go to the residential repair and remodeling marketplace other than roofing related. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: Okay. I guess, if you take out sort of the ventilation business, is there a way that you can ballpark for us, maybe how fast the rest of the repair and remodel business is growing so we can sort of see the...

We think the repair and remodel is going to grow probably at high single-digit rates as we go into '14 and we think that will accelerate as you move through '14. As Brian indicated, agrees with the data we're getting from LIRA. I think LIRA is looking at double-digit growth and certainly you would correlate to high single-digit into low double-digit growth.

[Operator Instructions] Our next question comes from Robert Kelly from Sidoti & Company. Robert J. Kelly - Sidoti & Company, LLC: Just a point of clarification on the previous caller's question. I think you answered his question that pricing for industrial was down sequentially from 2Q? Is that correct?

Yes, I did. Robert J. Kelly - Sidoti & Company, LLC: So selling prices were down sequentially. So...

No, no. The effect of pricing being down lessened in the third quarter.

[indiscernible] stabilize. Robert J. Kelly - Sidoti & Company, LLC: Yes, that's what I wanted to kind of reconcile because in your Q2 transcript, you said that there was an $0.08 year-over-year drag from industrial pricing in margins, and this quarter it's a $0.03 drag. So is the comp just easier or you're just seeing some stability in the demand trend and the pricing trend?

There is some stability going forward, and the fact that, I think we indicated -- I think all of us did, that there's some upward momentum as we move through the fourth quarter into the first quarter. So we're starting to see signs that are encouraging. Robert J. Kelly - Sidoti & Company, LLC: Upward momentum with respect to volume or pricing for industrial?

Both. Both. Robert J. Kelly - Sidoti & Company, LLC: Okay. As far as the steps that you're taking internally to kind of offset...

One last, one last comment on top of that. I'm a believer that because the demand is so low that we're seeing more price competition, as demand increases, I think we'll see that abate -- diminish as demand increases. I think also tied to that is as demand increases that should provide greater stability and upward mobility for steel prices, which also help us raise our selling prices. Robert J. Kelly - Sidoti & Company, LLC: Sure. Sure. So a self-reinforcing sort of scenario.

Exactly. Exactly. Robert J. Kelly - Sidoti & Company, LLC: As far as the steps that you're taking to address what could be -- I mean, assuming that pricing and demand remains weak into '14, you talked about internal steps that you take. What are those exactly? Have they been taken or do you plan on taking them in 4Q?

Well, it's an ongoing project. We're looking very closely at the business, we're restructuring the business so that it can be competitive in the environment that exists today, and as we complete that restructuring, the business will improve its output as we go into 2014. So we expect the operating characteristics to get stronger, that's where we're positioning the company going forward.

A little more color on that is that we have been involved in consolidation activities in that part of our business and a couple of the steps that we've taken actually resulted in disruptions in the yields that we were getting from raw material. We are aggressively working on that. We think we have the majority of that behind us and that should contribute in a meaningful way to better returns in that business. Robert J. Kelly - Sidoti & Company, LLC: Okay, all right. So in the slide that you've given us for 3Q, you talked about industrial being a 40 basis point drag on operating margins in 3Q, right?

Right. Robert J. Kelly - Sidoti & Company, LLC: So as we hit 4Q, given the steps you've taken and given the stability in pricing, should that number decline, should it be less than 40 basis points in 4Q? And at what point does it become kind of a neutral drag just given the steps you're taking internally?

I think it's going to be neutral in the fourth quarter and I think it will improve as we go into the front part of 2014, because don't forget, we're moving into a slower period. It's a seasonally slower period and as we move out of that and you get the natural pickup through the first 2 quarters of the year, the improvements that Brian just described will continue to have more of an impact -- a meaningful impact that will eventually correlate to improvements you'll see on the P&L. Robert J. Kelly - Sidoti & Company, LLC: Okay. So just tying that back to the fact that you see res remodel and new construction fundamentals improving, the mix of acquisitions getting better and Industrial being neutral to EBIT in 4Q, why do you see flat earnings year-over-year in 4Q?

The fourth quarter is always a wildcard. Different companies make year-end determinations on inventory levels, and as a result, it's always difficult for us to project what's going on there. Robert J. Kelly - Sidoti & Company, LLC: Okay. So just kind of tend to be conservative.

We also have in our transportation infrastructure business, some of the large projects that get shipped in the second half of 2012, are not in our backlog currently to the degree they were last year. So we'll have a bit lower earnings coming out of our infrastructure business in the fourth quarter compared to the prior year's quarter, as one example.

Yes, the timing becomes a big issue, particularly with some of our businesses. If things go the right way, they might all close in the fourth quarter, in which case they will overproduce and if not they'll get shifted into the first quarter. It's hard -- as Brian said, it's harder to predict at this point. Robert J. Kelly - Sidoti & Company, LLC: No, understood. There's a lot of moving pieces but it just seems like a trend for -- 90% of your business is moving up, just given the commentary.

Yes. Robert J. Kelly - Sidoti & Company, LLC: So having said all that, running out into 2014 a similar scenario, would 2014 be the year we start to see the incremental operating leverage you talked about in the past, 30% being your bogey for incremental operating margins? Should we start to see that show up in 2014, based on what you're seeing here in 3Q into 4Q?

Yes. We believe we'll see improved -- based on everything we've told you so far, our expectation is improved gross margins as we go into 2014. We think that will correlate with the improvements we just discussed in the Industrial business. We continue to see the improvements that we had said that we hoped to see in the West Coast business, that's continued to perform just about as expected and we think that will continue into 2014. So I think when you put all of the pieces together, you'll start to see the expected improved operating characteristics that we've been describing for the last, probably 2 years.

And most of the revenue growth being from the increased volume that we'll take across the cost structure that we have. So I -- just to supplement in agreement with what Henning just said. Robert J. Kelly - Sidoti & Company, LLC: Okay, fair enough. And then just as far as the Industrial market, I'm sorry, the infrastructure market, it seems like the reauthorization of the highway bill, the changes to the federal credit program, that seems to be a pretty big catalyst for state-level spending at least in the next 2 years. I mean, are you hearing -- I know it's not showing up in your backlog just yet, but are you hearing that commentary and sentiment from the infrastructure customers that you're dealing with?

It is. And I think it varies by state. I think when we look at different [ph] analysis, we have a different mix of products this year than we had the previous year. And Ken had described, we have more smaller projects and fewer bigger projects. I think that based on, I think, what we're looking at, I think we would expect a more leveling of the project activity. We'll have a greater portion of larger projects. We continue to do well in the smaller varying projects that we've been involved with.

I'd back up 1 step from what Henning just said and mention that the need for bridge and highway repairs and maintenance is more acute than ever. I'd also mention that the states now are recognizing that they have to come up with ways to raise revenue to augment what they're getting from the federal government to catch up with the needed repairs to bridges in various and different states. I've personally seen a number of bridges -- older bridges where -- in more rural areas, where they've actually reduced the traffic flow to 1 lane at a time because of the structural deficiencies on some of those bridges. So the states are recognizing that the need is getting increasingly more acute and our -- we've read several articles recently about states looking at different ways to raise additional revenue to fund bridge and road repairs. So the need is clearly there, and I think the recognition, particularly at the state level, that money needs to be spent is registering and they're looking for ways to come up with [indiscernible] increase tax revenues.

I think a lot of [indiscernible] -- a lot of them have set up agencies to pay for those, if you look at the Verrazano Bridge, that's really funded by the port authority, and the port authority also funds the Whitestone Bridge [indiscernible] the Tappan Zee Bridge is funded by the New York State Thruway Authority, which is also self-funded and we're seeing more of those types of situations just across the nation.

We're very positive on that business on a long-term perspective.

Yes.

Our next question comes from Matthew Dodson from JWest LLC.

Kind of hit on your infrastructure again. Can you talk about, if you're seeing an increase in biddings? And then if the TIFIA really comes through, when would you see that orders come to you in 2014?

It's a good question. Generally from the start of the bidding process to the time that we begin shipping orders, can be up -- for major projects, can be well in excess of a year or more. In fact, I'm trying to think which major bridge project, we actually -- we shipped products over a 3-year period of time, the Golden Gate Bridge. But -- so there's a delay from when funding becomes available and when actual products get shipped. So it's all moving in a positive direction but there is a timing delay in all of that. Actually it was the Oakland Bay Bridge that we shipped products over 3 years, sorry. As far as bidding activity goes, we've seen a steady rate...

There's actually only a few select suppliers for the types of products that we make, and so the bidding activity has been fairly normal and we wouldn't expect that to change. I mean, it's a small segment of the market that we participate in and we are well represented in that segment of the market.

I'd like to add too, we didn't mention this in our prepared remarks, but we have a joint venture that we've established with a Chinese manufacturer to produce some of our products in their facility and we recently shipped our first projects through that joint venture to Mexico, just about a month ago. This -- having a facility in China is going to put us closer to the Chinese markets and the fact that we're in a joint venture with a Chinese company, we expect will help us penetrate to a greater extent, not only the Chinese market but also the market overall in that part of the world.

Yes. The Asian market is growing. And now that we've got presence there, we expect to grow with that market.

And actually just a little more color on that. In 2012, I don't have the numbers for 2013 yet. We shipped infrastructure projects to 16 different countries around the world. So clearly, our technology, our designs and our competitive position allow us to go far afield from the United States.

To frame that up, would you expect you would start delivering more on these projects in 2014 or do you expect to bid on more projects in the United States in 2014 or is it a combination of both?

Both.

At this time, we have no further questions. I would like to turn the call back over to Brian Lipke for closing comments.

Thank you, operator, and thanks to everyone for listening in our call today. We're going to be out on the road attending conferences and doing non-deal roadshows over the course of the year, so we look forward to seeing many of you during those trips. And we'll be speaking with you about our fourth quarter earnings results on February 20 of 2014. We look forward to speaking with you then. Thank you.

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