GSW Inc.

GSW Inc.

March 03, 2005 16:10 ET

GSW Inc. Reports 2004 Fiscal Year Results




MARCH 3, 2005 - 16:10 ET

GSW Inc. Reports 2004 Fiscal Year Results

OAKVILLE, ONTARIO--(CCNMatthews - March 3, 2005) - GSW Inc. (TSX:GSW.a)
( -

- Sales of $579.3 million, an increase of $71.9 million or 14.2% above

- Net income of $18.6 million, an increase of $6.5 million or 53.6%
above last year

- Earnings per share of $5.42 per share compared to $3.53 per share last

GSW Inc. (TSX:GSW.a) (, a leading North American
manufacturer of consumer durable products, today reported improved
financial results for the year end December 31, 2004.

"I am pleased with the results we have achieved for the year in the face
of significant material cost increases and a further strengthened
Canadian dollar," says Peter Sharpe, president and chief executive
officer. "We experienced steel cost increases on a year over year basis
of up to 80% and a dollar that increased 8% over the year against the US

"Our employees at all levels of the organization have responded
positively and proactively to very difficult market conditions," says

The sales increase of $71.9 million is comprised of a $70.5 million or
15.0% increase in the Water Products segment and a $1.4 million or 3.7%
increase in the Building Products segment. As a result of the
strengthened Canadian dollar, sales for the year are approximately $35.8
million lower than what would have been reported at last year's average
rate for the year.

Water Products

The Water Products segment experienced continued strong growth in unit
volume, which when combined with increased pricing in the market
produced sales growth over the prior year. Increased unit volume, which
spread fixed operating costs over a greater number of units, and
operational efficiencies helped offset part of the material cost
increases not recovered through price increases. A decline in segment
profit compared to the prior year was experienced in the fourth quarter
primarily due to the continuing inability to secure price increases in
certain customer channels. For the full year, segment profit increased
48% over the prior year.

Building Products

The Building Products segment continued to experience unit volume growth
in its gutter, rail and accessory products. The reported sales would
have increased 10% if the Canadian dollar had not strengthened against
the US dollar during the year. As a result of a continued focus on
manufacturing improvements and other cost reduction initiatives, segment
profit for the year increased 35% over the prior year.

Fourth Quarter Results

GSW's sales reached $148.6 million in the fourth quarter. This compares
to $124.7 million in the fourth quarter last year. The increase over the
prior year results from both volume and price increases in the market.
Income for the quarter before unusual items was $5.8 million compared to
$6.0 million last year. High material costs not recovered from customers
and a strengthened Canadian dollar negatively impacted earnings in the
fourth quarter.


"Our focus for the coming year remains the same - customer service,
operational excellence and shareholder value," added Sharpe. "We are
optimistic that the solid base we have established and our focus on
these principles will continue to yield positive results."

GSW Inc. has been a manufacturing pioneer since 1847. Today, the company
is a leading manufacturer and marketer of consumer durable products,
including water heaters and building products. The company employs over
1,700 people at three operating divisions in Canada and the United
States. GSW Inc. is listed on the Toronto Stock Exchange under the
symbol GSW.a and For more information about the company visit

Sales and earnings of GSW Inc. for the year ended December 31, 2004 and
the fourth quarter were as follows:

(in thousands of dollars, except earnings per share)

2004 2003
$ $
Three months to December 31
Sales 148,608 124,659

Income from operations before the undernoted 5,237 5,989
Unusual items - 500
Foreign exchange gain 546 61
Income before income taxes 5,783 6,550
Income tax expense (1,926) (3,125)
Net income 3,857 3,425

Earnings per share 1.12 0.99

Twelve months to December 31
Sales 579,296 507,383

Income from operations before the undernoted 25,922 17,432
Unusual items 1,880 2,255
Foreign exchange gain (loss) 766 (207)
Income before income taxes 28,568 19,480
Income tax expense (10,005) (7,392)
Net income 18,563 12,088

Earnings per share 5.42 3.53

This release contains forward-looking statements, which reflect
management's current views of future events and operations. These
forward-looking statements are based on assumptions and external
factors, including assumptions relating to product pricing, competitive
market conditions, financial data, and other risks or uncertainties
detailed from time to time in the Company's filings with securities
regulatory authorities. These forward-looking statements represent the
Company's judgment as of the date of this release and any changes in the
assumptions or external factors could produce significantly different


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