Gibraltar Reports First-Quarter 2016 Financial Results

Adjusted EPS Increases YOY to $0.24 from $0.06; Sales Grow 17%

Confirms Full-Year 2016 Guidance of $1.30 to $1.40 Adjusted EPS

BUFFALO, N.Y.--()--Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading manufacturer and distributor of building products for industrial, infrastructure, residential, and renewable energy and conservation markets, today reported its financial results for the three-month period ended March 31, 2016. All financial metrics in this release reflect only the Company’s continuing operations unless otherwise noted.

First-quarter Consolidated Results

Gibraltar’s net sales for the first quarter of 2016 increased 17 percent to $233.7 million, compared with $200.6 million in the first quarter of 2015. First-quarter adjusted net income was $7.6 million, or $0.24 per diluted share, compared with $1.8 million, or $0.06 per diluted share, in the first quarter of 2015. The adjusted first-quarter 2016 results exclude special items with an after-tax net charge totaling $1.1 million, or $0.04 per diluted share, resulting primarily from business restructuring under the 80/20 simplification initiative. The adjusted first-quarter 2015 results excluded special items with an after-tax net benefit totaling $3.7 million, or $0.12 per diluted share, resulting primarily from a gain on the sale of a facility, partially offset by costs related to the Company’s senior leadership transition. Including these items in the respective periods, the Company’s first-quarter 2016 GAAP net income was $6.5 million, or $0.20 per diluted share, compared with a net income of $5.5 million, or $0.18 per diluted share, in the first quarter of 2015.

Management Comments

“Gibraltar began 2016 with a strong first-quarter performance as we exceeded our guidance on both the top and bottom lines,” said Chief Executive Officer Frank Heard. “We reported an over 300 percent increase in adjusted net income on a 17 percent increase in sales as a result of significant gains from our value creation strategy and the benefits of our June 2015 acquisition of Rough Brothers Inc. (RBI). RBI continues to leverage solid top-line growth into strong profitability.

“Our positive financial results in recent quarters reflect a rapid culture transformation at Gibraltar, which has led to significant operational improvements across the organization. We have made excellent progress in re-focusing our resources and increasing efficiencies. As a result, we have delivered increased profitability out of our base businesses despite market headwinds,” Heard said.

First-quarter Segment Results

Residential Products

First-quarter 2016 net sales in Gibraltar’s Residential Products segment decreased 6 percent to $100.1 million, compared with $106.8 million for the first quarter of 2015, reflecting the completion of a significant contract for centralized mailboxes as of December 2015. First-quarter 2016 adjusted operating margin increased to 13.2 percent compared to 7.7 percent in the prior-year period. The segment’s adjusted operating margin reflected the benefit of improved operational efficiencies and early contributions from the 80/20 simplification initiative.

Industrial and Infrastructure Products

First-quarter 2016 net sales in Gibraltar’s Industrial & Infrastructure Products segment decreased 15 percent to $79.7 million, compared with $93.8 million for the first quarter of 2015. However, adjusted operating margin doubled to 5.0 percent as the combination of improved manufacturing efficiencies, tighter management of raw material costs, and initial benefits from 80/20 simplification helped offset the effect of the revenue decrease. Sales in this segment reflected lower shipment volumes plus the effect of lower steel costs on customer pricing. First-quarter volume was lower year-over-year by 9 percent as domestic energy and mining activity declined, in part, due to the effects of reduced oil prices.

Renewable Energy and Conservation

This newly named segment contains the results of RBI, an acquisition the Company completed on June 9, 2015. RBI has established itself during the past six years as North America’s fastest-growing provider of solar racking solutions. RBI was accretive to the Company’s results, adding adjusted earnings of $0.09 per diluted share to the first quarter, on revenues of $53.9 million.

The first-quarter 2016 net sales of $53.9 million represent an increase of 35 percent, compared to $39.9 million for the first quarter of 2015 (prior to the acquisition by Gibraltar). Sales growth in this segment reflected continued strong demand for RBI’s ground-mounted solar racking products as well its commercial greenhouse products.

Business Outlook

“Looking ahead in 2016, we will build on our previous successes to advance our four pillar strategy, which includes operational improvement, portfolio management, product innovation plus accretive acquisitions which serve as strategic accelerators to growth. As a result, even with continued softness in certain end markets, we expect to achieve our key financial objectives for 2016: increasing earnings, making more efficient use of our capital, and delivering higher shareholder returns than we did in 2015.”

Gibraltar expects 2016 total revenues in the range of $1.04 billion to $1.06 billion, an increase of approximately 1 percent compared with $1.04 billion in 2015, led by continuing growth in sales of solar racking. This revenue range for 2016 is lower than previous guidance due to the Company’s divestiture in April 2016 of its European industrial business that contributed $36 million in revenues with breakeven profitability to our Industrial & Infrastructure Products segment in 2015. Despite expected modest revenue growth this year, Gibraltar is confirming its guidance for higher adjusted earnings for full year 2016. Adjusted earnings for 2016 are expected in the range of $1.30 to $1.40 per diluted share, compared with $1.09 per diluted share in 2015.

For the second quarter of 2016, revenues are expected to increase 7 to 8 percent and adjusted EPS are expected to be between $0.36 and $0.41, compared with $0.25 for the second quarter of 2015, as a result of the income from the Renewable Energy and Conservation segment and continuing operational efficiencies.

First-quarter Conference Call Details

Gibraltar has scheduled a conference call today starting at 9:00 a.m. ET to review its results for the first quarter of 2016. 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: 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 for industrial, infrastructure, residential, and renewable energy and conservation markets. With a four-pillar strategy focused on operational improvement, product innovation, acquisitions and portfolio management, Gibraltar’s mission is to drive best-in-class performance. Gibraltar serves customers worldwide through facilities in the United States, Canada, Germany, China, and Japan. Comprehensive information about Gibraltar can be found on its website at 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 and performance 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 gains / losses on sales of assets, restructuring primarily associated with the 80/20 simplification initiative, acquisition-related items, and other reclassifications. 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-month period ending June 30, 2016, on Thursday, July 28, 2016, 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)

 
Three Months Ended
March 31,
2016     2015
Net Sales $ 233,677 $ 200,615
Cost of sales 183,521   170,700  
Gross profit 50,156 29,915
Selling, general, and administrative expense 36,549   20,945  
Income from operations 13,607 8,970
Interest expense 3,691 3,700
Other income (195 ) (3,559 )
Income before taxes 10,111 8,829
Provision for income taxes 3,618   3,292  
Income from continuing operations 6,493 5,537
Discontinued operations:
Loss before taxes (44 )
Benefit of income taxes   (16 )
Loss from discontinued operations   (28 )
Net income $ 6,493   $ 5,509  
Net earnings per share – Basic:
Income from continuing operations $ 0.21 $ 0.18
Loss from discontinued operations    
Net income $ 0.21   $ 0.18  
Weighted average shares outstanding – Basic 31,423   31,191  
Net earnings per share – Diluted:
Income from continuing operations $ 0.20 $ 0.18
Loss from discontinued operations    
Net income $ 0.20   $ 0.18  
Weighted average shares outstanding – Diluted 31,790   31,386  
 
           

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 
March 31,
2016
December 31,
2015
Assets
Current assets:
Cash and cash equivalents $ 82,627 $ 68,858
Accounts receivable, net 149,458 164,969
Inventories 106,406 107,058
Other current assets 9,852   10,537  
Total current assets 348,343 351,422
Property, plant, and equipment, net 116,681 118,932
Goodwill 293,664 292,390
Acquired intangibles 121,649 123,013
Other assets 4,112   4,015  
$ 884,449   $ 889,772  
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 83,994 $ 89,204
Accrued expenses 50,615 67,605
Billings in excess of cost 31,523 28,186
Current maturities of long-term debt 400   400  
Total current liabilities 166,532   185,395  
Long-term debt 209,032 208,882
Deferred income taxes 42,964 42,654
Other non-current liabilities 44,973 42,755
Shareholders’ equity:

Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding

Common stock, $0.01 par value; authorized 50,000 shares; 31,827 and 31,779
shares issued in 2016 and 2015

318 317
Additional paid-in capital 255,125 253,458
Retained earnings 184,566 178,073
Accumulated other comprehensive loss (12,301 ) (15,416 )
Cost of 500 and 484 common shares held in treasury in 2016 and 2015 (6,760 ) (6,346 )
Total shareholders’ equity 420,948   410,086  
$ 884,449   $ 889,772  
 
       

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
Three Months Ended
March 31,
2016     2015
Cash Flows from Operating Activities
Net income $ 6,493 $ 5,509
Loss from discontinued operations   (28 )
Income from continuing operations 6,493 5,537

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization 6,054 6,149
Stock compensation expense 1,348 568
Net gain on sale of assets (189 ) (8,141 )
Restructuring charges, non-cash 910 108
Other, net (407) (1,647 )
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable 14,880 (15,332 )
Inventories 117 (5,361 )
Other current assets and other assets (254 ) 1,786
Accounts payable (5,101 ) 8,450
Accrued expenses and other non-current liabilities (8,497 ) (6,869 )
Net cash provided by (used in) operating activities 15,354   (14,752 )
Cash Flows from Investing Activities
Cash paid for acquisitions (2,314 )
Net proceeds from sale of property and equipment 57 26,181
Purchases of property, plant, and equipment (1,501 ) (2,022 )
Other, net 1,118   (61 )
Net cash (used in) provided by investing activities (2,640 ) 24,098  
Cash Flows from Financing Activities
Payment of debt issuance costs (54 )
Purchase of treasury stock at market prices (414 ) (356 )
Net proceeds from issuance of common stock 133 9
Excess tax benefit from stock compensation 187   18  
Net cash used in financing activities (148 ) (329 )
Effect of exchange rate changes on cash 1,203   (1,327 )
Net increase in cash and cash equivalents 13,769 7,690
Cash and cash equivalents at beginning of year 68,858   110,610  
Cash and cash equivalents at end of period $ 82,627   $ 118,300  
 
       

GIBRALTAR INDUSTRIES, INC.

Non-GAAP Reconciliation of Adjusted Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

Three Months Ended
March 31, 2016

As
Reported
In GAAP
Statements

   

Acquisition
Related
Items

   

Restructuring
Costs

   

Adjusted
Statement of
Operations

Net Sales
Residential Products $ 100,147 $ $ $ 100,147
Industrial & Infrastructure Products 80,017 80,017
Less Inter-Segment Sales (367 )     (367 )
79,650       79,650  
Renewable Energy & Conservation 53,880 53,880
Consolidated sales 233,677 233,677
 
Income from operations
Residential Products 12,231 1,018 13,249
Industrial & Infrastructure Products 3,326 680 4,006
Renewable Energy & Conservation 4,313       4,313  
Segment Income 19,870 1,698 21,568
Unallocated corporate expense (6,263 ) 31     (6,232 )
Consolidated income from operations 13,607 31 1,698 15,336
 
Interest expense 3,691 3,691
Other income (195 )     (195 )
Income before income taxes 10,111 31 1,698 11,840
Provision for income taxes 3,618   11   620   4,249  
Income from continuing operations $ 6,493   $ 20   $ 1,078   $ 7,591  
Income from continuing operations per share – diluted $ 0.20   $   $ 0.04   $ 0.24  
 
Operating margin
Residential Products 12.2 % % 1.0 % 13.2 %
Industrial & Infrastructure Products 4.2 % % 0.9 % 5.0 %
Renewable Energy & Conservation 8.0 % % % 8.0 %
Segments Margin 8.5 % % 0.7 % 9.2 %
Consolidated 5.8 % % 0.7 % 6.6 %
 
 
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statements of Operations
(in thousands, except per share data)
(Unaudited)
 
    Three Months Ended
March 31, 2015

As
Reported In
GAAP
Statements

   

Gain on
Sale of
Facility

   

Reclass of
Hedging
Activity

   

Acquisition
Related
Items

   

Restructuring
Costs

   

Adjusted
Statement of
Operations

Net Sales
Residential Products $ 106,795 $ $ $ $ $ 106,795
Industrial & Infrastructure Products 94,285 94,285
Less Inter-Segment Sales (465 )         (465 )
93,820           93,820  
Consolidated sales 200,615 200,615
 
Income from operations
Residential Products 12,133 (6,799 ) 2,723 219 8,276
Industrial & Infrastructure Products 2,006         364   2,370  
Segment Income 14,139 (6,799 ) 2,723 583 10,646
Unallocated corporate expense (5,169 )     (228 ) 517   (4,880 )
Consolidated income from operations 8,970 (6,799 ) 2,723 (228 ) 1,100 5,766
 
Interest expense 3,700 3,700
Other income (3,559 )   2,723       (836 )
Income before income taxes 8,829 (6,799 ) (228 ) 1,100 2,902
Provision for income taxes 3,292   (2,526 )   (85 ) 408   1,089  
Income from continuing operations $ 5,537   $ (4,273 ) $   $ (143 ) $ 692   $ 1,813  

Income from continuing
operations per share – diluted

$ 0.18   $ (0.14 ) $   $   $ 0.02   $ 0.06  
 
Operating margin
Residential Products 11.4 % (6.4 )% 2.5 % % 0.2 % 7.7 %

Industrial & Infrastructure
Products

2.1 % % % % 0.4 % 2.5 %
Segments Margin 7.0 % (3.4 )% 1.4 % % 0.3 % 5.3 %
Consolidated 4.5 % (3.4 )% 1.4 % (0.1

)%

0.5 % 2.9 %
 

Contacts

Gibraltar Industries, Inc.
Kenneth Smith, 716-826-6500 ext. 3217
Chief Financial Officer
kwsmith@gibraltar1.com

Contacts

Gibraltar Industries, Inc.
Kenneth Smith, 716-826-6500 ext. 3217
Chief Financial Officer
kwsmith@gibraltar1.com