GSW Inc.

GSW Inc.

October 27, 2005 16:10 ET

GSW Inc. Reports Third Quarter 2005 Results

OAKVILLE, ONTARIO--(CCNMatthews - Oct. 27, 2005) -

- Sales of $145.6 million, an increase of $8.0 million or 6% above Q3 2004

- Net income of $15.1 million, an increase of $9.4 million or 166% above the
same period last year

- Earnings per share of $4.41 per share compared to $1.66 per share in Q3 2004

GSW Inc. (TSX:GSW.A)(TSX:GSW.SV.B), a leading North American manufacturer of consumer durable products, released its third quarter results today for the period ending September 30, 2005.

"I am very pleased with our year over year growth to date, especially in view of the industry's decline in residential water heater units compared to last year," says Peter Sharpe, president and chief executive officer.

Third quarter sales in the Water Products segment increased $8.6 million or 6.8% over the prior year and decreased $0.6 million or 4.6% in the Building Products segment. The strengthening of the Canadian dollar during the quarter and compared to the average rate to last year further impacted operating results. The reported sales for the quarter are approximately $11.1 million lower than would have been reported at last year's average rate for the third quarter.

Sharpe also stated, "We are now starting to realize the benefits of our increased focus on managing our product liability exposure." During the third quarter, the Company received an updated actuarial report of the insurance loss reserves for its captive insurance company. As a result of improved claims experience and improvements in claims management, a reduction in insurance loss reserves has been recorded during the quarter.

Certain material input prices started to escalate in the third quarter. "We will continue to seek out operational efficiencies at every opportunity in responding to increasing input costs from our suppliers," says Sharpe.

The Company also tendered its shares in Camco Inc. during the quarter to the offer from a subsidiary of Controladora Mabe S.A. de C.V. A gain on disposition of the Camco shares of approximately $1.0 million was recorded during the period.

As previously announced, the Company's two majority shareholders are in discussions with A.O. Smith regarding a possible sale transaction. As part of the transaction process A.O. Smith requires regulatory approvals. The regulatory reviews are expected to be completed by mid December.

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 for the three months and nine months ended September 30, 2005 were as follows:

(in thousands of dollars, except per share amounts, unaudited)
2005 2004
$ $
Three Months to September 30

Sales 145,609 137,612

Income from operations before the undernoted 17,040 6,323
Unusual item - 1,880
Gain on disposition of Camco 986 -
Foreign exchange gain (loss) (291) 80
Income before income taxes 17,735 8,283
Income tax (expense) (2,669) (2,620)
Net income 15,066 5,663

Earnings per common share 4.41 1.66

Nine Months to September 30

Sales 461,537 430,688

Income from operations before the undernoted 45,249 20,685
Unusual item - 1,880
Gain on disposition of Camco 986 -
Foreign exchange gain (loss) (358) 220
Income before income taxes 45,877 22,785
Income tax (expense) (12,965) (8,079)
Net income 32,912 14,706

Earnings per common share 9.62 4.30

All amounts referred to in this release are in Canadian dollars unless noted otherwise.

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 results.

Contact Information

  • GSW Inc.
    Jamie Hyde
    Chief Financial Officer
    (905) 829-1197, Ext.227