Gibraltar Reports Second-Quarter Financial Results

  • Sales Rise 5% to $235 Million; Adjusted EPS of $0.19
  • Residential End Markets did not Rebound as Expected
  • Updates Full-Year Revenues to $853M to $860M; Adjusted EPS $0.50 to $0.55

BUFFALO, N.Y.--()--Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading manufacturer and distributor of products for residential and industrial markets, today reported its financial results for the three- and six-month periods ended June 30, 2014. All financial metrics in this release reflect only the Company’s continuing operations unless otherwise noted.

Second-Quarter Consolidated Results

Gibraltar’s net sales for the second quarter of 2014 increased 5% to $235.0 million, compared with $224.5 million for the second quarter of 2013. Second-quarter 2014 adjusted net income was $6.1 million, or $0.19 per diluted share, compared with adjusted net income of $8.2 million, or $0.26 per diluted share, in the second quarter of 2013. The adjusted second-quarter 2014 results exclude special items with an after-tax net gain totaling $0.4 million, or $0.02 per diluted share, resulting primarily from acquisition-related gains and exit activity costs related to business restructuring. The adjusted net income for the second quarter of 2013 excluded after-tax special charges of $0.5 million, or $0.01 per diluted share, resulting primarily from exit activity costs related to business restructuring. Including these items in the respective periods, the Company’s second-quarter 2014 GAAP results were net income of $6.4 million, or $0.21 per diluted share, compared with net income of $7.7 million, or $0.25 per diluted share, in the second quarter of 2013.

Six-Month Consolidated Results

For the six months ended June 30, 2014, total net sales increased 1% to $426.0 million, from $421.3 million in the comparable 2013 period. Adjusted net income from continuing operations was $4.4 million, or $0.14 per diluted share, compared with $9.4 million, or $0.30 per diluted share, in the comparable period of 2013. The adjusted results for the first six months of 2014 exclude after-tax special charges totaling $0.1 million, resulting primarily from the net of acquisition-related gains and exit activity costs related to business restructuring. Adjusted net income for the first six months of 2013 excluded after-tax special charges of $5.3 million, or $0.17 per diluted share, resulting primarily from costs related to the Company’s successful re-financing of its senior subordinated notes. Including these items, GAAP net income for the first six months of 2014 was $4.3 million, or $0.14 per diluted share, compared with net income of $4.1 million, or $0.13 per diluted share, in the comparable period of 2013.

Management Comments

“After a long cold winter that drove lower-than-anticipated first-quarter results, end market demand in the second quarter did not rebound as expected,” said Chairman and Chief Executive Officer Brian Lipke. “Demand for roofing-related products remained unexpectedly weak throughout the second quarter and well below demand anticipated by many industry observers. This contributed to lower-than-anticipated revenue growth in our Residential Products segment as the improvement in customer orders experienced at the end of March and April did not carry into the remainder of the quarter.”

“The other parts of our business performed as expected during the quarter,” Lipke said. “As a result, Gibraltar’s consolidated revenue increased 5% from the second quarter last year, driven by strong contributions from our centralized postal storage solutions business and improved volumes in the industrial markets. On the bottom-line, our results reflected unfavorable product mix, increased commodity costs and reduced pricing. Moreover, our results for the second quarter last year benefited from a stronger product mix in our Industrial and Infrastructure Products segment.”

Second-Quarter Segment Results

Residential Products

Second-quarter 2014 net sales in Gibraltar’s Residential Products segment increased 6% to $117.4 million, compared with $110.4 million for the second quarter of 2013. Second-quarter 2014 adjusted operating margin decreased 330 basis points year over year to 9.3%. Sales growth in this segment reflected strong demand for postal storage products. The segment’s lower adjusted operating margin reflected higher raw materials costs, price reductions provided in certain product lines, and slower than expected contributions from key profit improvement initiatives.

Industrial and Infrastructure Products

Second-quarter 2014 net sales in Gibraltar’s Industrial & Infrastructure Products segment increased 3% to $117.9 million, compared with $114.6 million for the second quarter of 2013. Second-quarter 2014 adjusted operating margin improved over the first quarter but decreased 190 basis points year over year to 5.4%. Sales in the segment reflected improving volume in the industrial markets offset by lower shipment volumes to the transportation infrastructure market. Segment adjusted operating margin reflected lower infrastructure shipments, which resulted in a less profitable mix compared with the year-earlier quarter. Higher raw material costs also contributed to the reduced margins for the segment.

Outlook

“With the exception of continuing growth in demand for our postal products, we expect end market conditions for the second half of 2014 to remain similar to those in the first half 2014. As a result, we now expect that Gibraltar will deliver comparable revenues for the second half of 2014 to those reported in the first half of the year, and 6% higher than the prior year period,” said Gibraltar President Frank Heard. “For full-year 2014, we project total revenues in the range of $853 to $860 million, compared with $828 million in 2013.”

“On the bottom line, our recent margin improvement initiatives, including improving production efficiencies, should result in a notable increase in adjusted earnings for the second half of 2014 compared to the first half 2014, and be equivalent to those for the second half 2013. We anticipate reporting adjusted earnings per share in the range of $0.23 to $0.27 for the third quarter of 2014, compared with $0.31 for the same period last year, and $0.50 to $0.55 for full year 2014, compared with $0.69 in 2013. We expect GAAP earnings per share of $0.45 to $0.50 for full-year 2014, compared with a loss of $0.18 in 2013,” Heard concluded.

Second-Quarter Conference Call Details

Gibraltar has scheduled a conference call today starting at 9:00 a.m. ET to review its results for the second quarter of 2014. Interested parties may access the call by dialing (877) 407-5790 or (201) 689-8328. The presentation slides that will be discussed in the conference call are expected to be available this morning, prior to the start of the call. The slides may be downloaded from the Gibraltar website: http://www.gibraltar1.com. A webcast replay of the conference call and a copy of the transcript will be available on the website following the call.

About Gibraltar

Gibraltar Industries is a leading manufacturer and distributor of building products, focused on residential and low-rise commercial building markets, as well as industrial and transportation infrastructure markets. The Company generates more than 80% of its sales from products that hold leading positions in their markets, and serves customers across North America and Europe. Gibraltar’s strategy is to grow organically by expanding its product portfolio and penetration of existing customer accounts, while broadening its market and geographic coverage through the acquisition of companies with leadership positions in adjacent product categories. Comprehensive information about Gibraltar can be found on its website at http://www.gibraltar1.com.

Safe Harbor Statement

Information contained in this news release, other than historical information, contains forward-looking statements and is subject to a number of risk factors, uncertainties, and assumptions. Risk factors that could affect these statements include, but are not limited to, the following: the availability of raw materials and the effects of changing raw material prices on the Company’s results of operations; energy prices and usage; changing demand for the Company’s products and services; changes in the liquidity of the capital and credit markets; risks associated with the integration of acquisitions; and changes in interest and tax rates. In addition, such forward-looking statements could also be affected by general industry and market conditions, as well as general economic and political conditions. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law or regulation.

Non-GAAP Financial Data

To supplement Gibraltar’s consolidated financial statements presented on a GAAP basis, Gibraltar also presented certain adjusted financial data in this news release. Adjusted financial data excluded special charges consisting of restructuring primarily associated with the closing and consolidation of our facilities, acquisition-related items, and note re-financing costs. These adjustments are shown in the non-GAAP reconciliation of adjusted operating results excluding special charges provided in the financial schedules that accompany this news release. The Company believes that the presentation of results excluding special charges provides meaningful supplemental data to investors, as well as management, that are indicative of the Company’s core operating results and facilitates comparison of operating results across reporting periods as well as comparison with other companies. Special charges are excluded since they may not be considered directly related to our ongoing business operations. These adjusted measures should not be viewed as a substitute for our GAAP results, and may be different than adjusted measures used by other companies.

Next Earnings Announcement

Gibraltar expects to release its financial results for the three- and nine-month periods ending September 30, 2014, on Tuesday, October 28, 2014, and hold its earnings conference call later that morning, starting at 9:00 a.m. ET.

 
 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

 
 

Three Months Ended
June 30,

     

Six months Ended
June 30,

2014       2013   2014       2013  
Net sales $ 234,960 $ 224,519 $ 425,992 $ 421,320
Cost of sales   194,837   179,813     356,005   340,437  
Gross profit 40,123 44,706 69,987 80,883
Selling, general, and administrative expense   25,393   28,423     54,924   59,404  
Income from operations 14,730 16,283 15,063 21,479
Interest expense 3,691 3,690 7,331 14,850
Other expense (income)   519   (9 )   549   (75 )
Income before taxes 10,520 12,602 7,183 6,704
Provision for income taxes   4,089   4,870     2,838   2,615  

Income from continuing operations

6,431

7,732

4,345

4,089

Discontinued operations:
Loss before taxes (7 )
Benefit of income taxes           (3 )
Loss from discontinued operations           (4 )
 
Net income $ 6,431 $ 7,732   $ 4,345 $ 4,085  
 
Net earnings per share – Basic:
Income from continuing operations $ 0.21 $ 0.25 $ 0.14 $ 0.13
Loss from discontinued operations            
Net income $ 0.21 $ 0.25   $ 0.14 $ 0.13  
Weighted average shares outstanding – Basic   31,066   30,925     31,028   30,901  
 
Net earnings per share – Diluted:
Income from continuing operations

$

0.21

$ 0.25 $ 0.14 $ 0.13
Loss from discontinued operations            
Net income $ 0.21 $ 0.25   $ 0.14 $ 0.13  
Weighted average shares outstanding – Diluted   31,271   31,099     31,235   31,079  
 
 
 
 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)

       

June 30,
2014

         

December 31,
2013

Assets
Current assets:
Cash and cash equivalents

$

87,757

$

97,039

Accounts receivable, net of reserve 129,765 90,082
Inventories 126,577 121,152
Other current assets   18,148     14,127  
Total current assets 362,247 322,400
 
Property, plant, and equipment, net 128,774 131,752
Goodwill 341,196 341,174
Acquired intangibles 88,974 91,777
Other assets   7,436     7,059  
 
Total assets

$

928,627

 

$

894,162

 
 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable

$

99,264

$

69,625

Accrued expenses 50,848 49,879
Current maturities of long-term debt   400     409  
Total current liabilities 150,512 119,913
 
Long-term debt 213,200 213,598
Deferred income taxes 55,178 55,124
Other non-current liabilities 32,227 33,778
 
Shareholders’ equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding

Common stock, $0.01 par value; authorized 50,000 shares, 31,290 and 31,131 shares issued in 2014 and 2013

313 311
Additional paid-in capital 245,488 243,389
Retained earnings 240,794 236,449
Accumulated other comprehensive loss (3,862 ) (3,585 )
Cost of 417 and 395 common shares held in treasury in 2014 and 2013   (5,223 )   (4,815 )
 
Total shareholders’ equity   477,510     471,749  
 
Total liabilities & shareholders’ equity

$

928,627

 

$

894,162

 
 
 
 
 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

 
        Six Months Ended June 30,
2014           2013
Cash Flows from Operating Activities
Net income

$

4,345

$

4,085

Loss from discontinued operations   -     (4 )
Income from continuing operations 4,345 4,089
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization 13,104 13,716
Stock compensation expense 1,616 1,623
Other non-cash adjustments 13 1,653
Non-cash charges to interest expense 522 496
Loss on early note redemption - 7,166

Increase (decrease) in cash resulting from changes in the
following (excluding the effects of acquisitions):

Accounts receivable (41,927 ) (34,296 )
Inventories (5,723 ) (3,628 )
Other current assets and other assets (3,965 ) (3,206 )
Accounts payable 29,698 13,487
Accrued expenses and other non-current liabilities   (1,468 )   4,169  
Net cash (used in) provided by operating activities of continuing operations (3,785 ) 5,269
Net cash used in operating activities of discontinued operations   -     (7 )
Net cash (used in) provided by operating activities   (3,785 )   5,262  
 
Cash Flows from Investing Activities
Purchases of property, plant, and equipment (11,498 ) (4,741 )
Cash paid for acquisitions, net of cash acquired - (146 )
Other investing activities 121 -
Net proceeds from sale of property and equipment   5,950     247  
Net cash used in investing activities   (5,427 )   (4,640 )
 
Cash Flows from Financing Activities
Proceeds from long-term debt - 210,000
Long-term debt payments (407 ) (205,080 )
Payment of deferred financing fees - (3,755 )
Payment of note redemption fees - (3,702 )
Purchase of treasury stock at market prices (408 ) (636 )
Net proceeds from issuance of common stock 404 336
Excess tax benefit from stock compensation   81     62  
Net cash used in financing activities   (330 )   (2,775 )
 
Effect of exchange rate changes on cash   260     (1,238 )
 
Net decrease in cash and cash equivalents (9,282 ) (3,391 )
 
Cash and cash equivalents at beginning of period   97,039     48,028  
 
Cash and cash equivalents at end of period

$

87,757

 

$

44,637

 
 
 
 
 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statements of Operations
(in thousands, except per share data)
(Unaudited)

 

          Three Months Ended June 30, 2014

As

Reported
In GAAP
Statements

 

     

Acquisition
Related Items

     

Restructuring
Costs

     

Adjusted
Statement of
Operations

 

Net Sales
Residential Products

$

117,400

$

$

$

117,400

Industrial & Infrastructure Products 117,938 117,938
Less Inter-Segment Sales   (378 )           (378 )
  117,560             117,560  
Consolidated sales 234,960 234,960
 
Income from operations
Residential Products 11,089 (182 ) 10,907
Industrial & Infrastructure Products   5,976         357     6,333  
Segment Income 17,065 175 17,240
Unallocated corporate expense   (2,335 )   (742 )       (3,077 )
Consolidated income from operations 14,730 (742 ) 175 14,163
 
Interest expense 3,691 3,691
Other expense   519             519  

Income (loss) before income taxes

10,520 (742 ) 175 9,953

Provision (benefit of) for income taxes

  4,089     (272 )   64     3,881  

Income (loss) from continuing operations

$

6,431

 

$

(470

)

$

111

 

$

6,072

 

Income (loss) from continuing operations per share – diluted

$

0.21

 

$

(0.02

)

$

 

$

0.19

 
 
Operating margin
Residential Products 9.4 %

(0.2

)%

9.3 %
Industrial & Infrastructure Products 5.1 % 0.3 % 5.4 %
Segments Margin 7.3 % 0.1 % 7.3 %
Consolidated 6.3 % (0.3 )% 0.1 % 6.0 %
 
 
 
 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statements of Operations
(in thousands, except per share data)
(Unaudited)

 

         

Three Months Ended June 30, 2013

As

Reported

In GAAP
Statements

     

Restructuring
Costs

     

Adjusted
Statement of
Operations

 

Net Sales
Residential Products

 

$

110,448

 

$

 

$

110,448

Industrial & Infrastructure Products 114,577 114,577
Less Inter-Segment Sales   (506 )       (506 )
  114,071         114,071  
Consolidated sales 224,519 224,519
 
Income from operations
Residential Products 13,219 679 13,898
Industrial & Infrastructure Products   8,273     72     8,345  
Segment Income 21,492 751 22,243
Unallocated corporate expense   (5,209 )   8     (5,201 )
Consolidated income from operations 16,283 759 17,042
 
Interest expense 3,690 3,690
Other income   (9 )       (9 )
Income before income taxes 12,602 759 13,361
Provision for income taxes   4,870     279     5,149  
Income from continuing operations

$

7,732  

 

$

480

 

 

$

8,212

 
Income from continuing operations per share – diluted

 

$

0.25

 

 

$

0.01

 

 

$

0.26

 
 
Operating margin
Residential Products 12.0 % 0.6 % 12.6 %
Industrial & Infrastructure Products 7.2 % 0.1 % 7.3 %
Segment Margin 9.6 % 0.3 % 9.9 %
Consolidated 7.3 % 0.3 % 7.6 %
 
 
 
 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statements of Operations
(in thousands, except per share data)
(Unaudited)

          Six Months Ended June 30, 2014

As
Reported
In GAAP
Statements

 

       

Acquisition
Related Items

 

       

Restructuring
Costs

       

Adjusted
Statement of
Operations

 

Net Sales
Residential Products

 

$

204,383

 

$

 

$

 

$

204,383

Industrial & Infrastructure Products 222,284 222,284
Less Inter-Segment Sales   (675 )           (675 )
  221,609             221,609  
Consolidated sales 425,992 425,992
 
Income from operations
Residential Products 13,182 206 145 13,533
Industrial & Infrastructure Products   9,084         459     9,543  
Segment Income 22,266 206 604 23,076
Unallocated corporate expense   (7,203 )   (740 )       (7,943 )
Consolidated income from operations 15,063 (534 ) 604 15,133
 
Interest expense 7,331 7,331
Other expense   549             549  
Income (loss) before income taxes 7,183 (534 ) 604 7,253
Provision for (benefit of) income taxes   2,838     (194 )   225     2,869  
Income (loss) from continuing operations

 

$

4,345

 

 

$

(340

)

 

  379  

 

$

4,384

 
Income (loss) from continuing operations per share – diluted

 

$

0.14

 

 

$

(0.01

)

 

$

0.01

 

 

$

0.14

 
 
Operating margin
Residential Products 6.4 % 0.1 % 0.1 % 6.6 %
Industrial & Infrastructure Products 4.1 % 0.2 % 4.3 %
Segments Margin 5.2 % 0.1 % 5.4 %
Consolidated 3.5 % (0.1 )% 0.1 % 3.6 %
 
 
 
 
GIBRALTAR INDUSTRIES, INC.

Non-GAAP Reconciliation of Adjusted Statements of Operations

(in thousands, except per share data)

(Unaudited)

          Six Months Ended June 30, 2013

As

Reported

In GAAP
Statements

     

Acquisition
Related Items

     

Restructuring
Costs

     

Note
Refinancing

     

Adjusted
Statement of
Operations

Net Sales
Residential Products

 

$

200,112

 

$

 

$

 

$

 

$

200,112

Industrial & Infrastructure Products 222,044 222,044
Less Inter-Segment Sales   (836 )               (836 )
  221,208                 221,208  
Consolidated sales 421,320 421,320
 
Income from operations
Residential Products 19,857 710

 

20,567
Industrial & Infrastructure Products   14,600     203     75         14,878  
Segment Income 34,457 203 785 35,445
Unallocated corporate expense   (12,978 )   120     127         (12,731 )
Consolidated income from operations 21,479 323 912 22,714
 
Interest expense 14,850 (7,166 ) 7,684
Other income   (75 )               (75 )
Income before income taxes 6,704 323 912 7,166 15,105
Provision for income taxes   2,615     118     335     2,616     5,684  
Income from continuing operations   4,089  

 

$

205

 

 

$

577

 

 

$

4,550

 

 

$

9,421

 
Income from continuing operations per share – diluted

 

$

0.13

 

 

$

 

 

$

0.02

 

 

$

0.15

 

 

$

0.30

 
 
Operating margin
Residential Products 9.9 % 0.4 % 10.3 %
Industrial & Infrastructure Products 6.6 % 0.1 % 6.7 %
Segment Margin 8.2 % 0.2 % 8.4 %
Consolidated 5.1 % 0.1 % 0.2 % 5.4 %
 
 

Contacts

Gibraltar Industries, Inc.
Kenneth Smith, 716.826.6500 ext. 3217
Chief Financial Officer
kwsmith@gibraltar1.com

Release Summary

Gibraltar Reports Second-Quarter Financial Results

Sharing

Contacts

Gibraltar Industries, Inc.
Kenneth Smith, 716.826.6500 ext. 3217
Chief Financial Officer
kwsmith@gibraltar1.com