Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Michael Cox, from Piper Jaffray. You may proceed.
Michael Cox - Piper Jaffray
Good morning. Congratulations on another strong quarter, gentlemen. My first question is on the pricing environment. I was wondering if you could talk a little bit about the general stickiness of the price increases that you’ve implemented through the course of the year, now that we’ve started to see commodity prices come down.
Ken Smith
The real question at hand is more about maintaining the spreads. And that’s something that Gibraltar has always focused on. If you look back over the history of the gross margins that the company has been able to generate, you’d see a very consistent pattern on a year-over-year, quarter-over-quarter basis, driven primarily by the change in seasonal volume, with the first and fourth quarters historically being our two weakest quarters and the second and third being our two strongest quarters.
And that’s, if you look back over a number of years and that pattern exists, in spite of the dramatic volatility that has been in place particularly from a steel standpoint. If you go back to 2003, steel was at different points in time in the quarter, but in the high $200 per ton rate. In ’74 it peaked at $700 a ton. ’75 it came down. I’m sorry, in ’05 it came down, ’06 it came up a little bit. ’07 it dipped and then in ’08 it climbed to all time high levels.
But throughout that entire period of time, in spite of the ups and downs in the commodity, raw material pricing environment, we’ve been able to maintain a fairly consistent, year-over-year quarterly pattern of earnings. The other factor that has changed Gibraltar is we’ve moved the company more and more into the end product manufacturing arena.
And now with the sale of SCM, over 80% of our sales will be of manufactured end products. It’s built in more consistency and better ability to deal with the volatility and the raw material pricing ranges because as we move more and more into end product manufacturing, raw material becomes a smaller and smaller percentage of our overall selling price and thus has less of an impact on volatility.
So, as we look out into the future, and continue on our path of streamlining our operations and getting more efficient, I should add without limiting our ability to service the customers, we feel comfortable with our ability to continue to manage that part of the spread equation as we go forward.
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