Reports Revenues of $280.1 million, GAAP EPS of
$0.60 and Adjusted EPS of $0.71
GAAP and Adjusted EPS at Higher End of
Guidance
Strong Demand for Innovative Products
Continues
Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading
manufacturer and distributor of building products for the
residential, industrial, infrastructure, and renewable energy and
conservation markets, today reported its financial results for the
three- and nine-month periods ended September 30, 2018. All
financial metrics in this release reflect only the Company’s
continuing operations unless otherwise noted.
Third-quarter Consolidated Results
Gibraltar reported the following consolidated results:
Three Months Ended September 30, Dollars in
millions, except EPS
GAAP
Adjusted
2018
2017
%
Change
2018
2017
%
Change
Net Sales $280.1 $274.6 2.0% $280.1 $274.6 2.0% Net Income $19.5
$20.6 (5.3)% $23.2 $21.5 7.9% Diluted EPS $0.60 $0.64 (6.3)% $0.71
$0.67 6.0%
The Company reported third-quarter 2018 net sales of $280.1
million. The 2 percent increase was driven by strong growth in the
Renewable Energy & Conservation segment and increased demand
for higher-margin, innovative products, which were partially offset
by an unfavorable year-over-year comparison in the Residential
Segment due to strong storm-related roofing activity in the third
quarter of 2017, and lower end-market activity in
Infrastructure.
GAAP and adjusted earnings were at the higher end of the
Company’s guidance as noted in its second-quarter earnings release,
reflecting strong results in the Renewable Energy &
Conservation segment, a greater mix of higher-margin innovative
products, effective price-material cost management and ongoing
benefits from 80/20 simplification initiatives. The adjusted
amounts for the third quarter of 2018 and 2017 remove special items
from both periods, as described in the appended reconciliation of
adjusted financial measures.
Management Comments
“We delivered another solid quarter, reporting year-over-year
growth on both the top and bottom lines, excluding special charges,
even as we faced market headwinds,” said President and CEO Frank
Heard. “We executed on our four-pillar strategy, managed cost
volatility extremely well, achieved growth through innovative new
products, and maintained the momentum we have generated in the
renewable energy and conservation markets. Revenues were up 2
percent year over year and GAAP and adjusted earnings of $0.60 and
$0.71, respectively, were at the higher end of our guidance
range.”
Third-quarter Segment Results
Residential Products
For the third quarter, the Residential Products segment
reported:
Three Months Ended September 30, Dollars in
millions
GAAP Adjusted
2018
2017
%
Change
2018
2017
%
Change
Net Sales $125.8 $129.5 (2.9)% $125.8 $129.5 (2.9)% Operating
Margin 16.0% 18.4% (240) bps 17.5% 19.1% (160) bps
Third-quarter 2018 revenues in Gibraltar’s Residential Products
segment were down 3 percent year over year, primarily due to higher
storm-related roofing activity in the third quarter of 2017, and
softness in the commercial and multi-family construction markets.
Steady customer demand for rain management products partially
offset those factors.
Lower operating margin resulted from unfavorable product mix,
and to a lesser extent, volume leverage. The adjusted operating
margin for the third quarter of 2018 and 2017 removes the special
charges for restructuring initiatives under the 80/20 program from
both periods.
Industrial & Infrastructure Products
For the third quarter, the Industrial & Infrastructure
Products segment reported:
Three Months Ended September 30, Dollars in
millions
GAAP Adjusted
2018
2017
%
Change
2018
2017
%
Change
Net Sales $55.8 $56.9 (1.9)% $55.8 $56.9 (1.9)% Operating Margin
5.2% 4.5% 70 bps 8.4% 5.1% 330 bps
Third-quarter 2018 revenues in Gibraltar’s Industrial &
Infrastructure Products segment were down 2 percent year over year
as strong performance from the Industrial business was more than
offset by lower demand in the Infrastructure business. The Company
expects continued demand for innovative products in its Industrial
business and growing demand in its Infrastructure business.
GAAP and adjusted operating margin improvement for the segment
resulted from demand for higher-margin innovative products, the
continued benefit from 80/20 simplification initiatives and
effective price-material cost management. This segment’s adjusted
operating margin for the third quarter of 2018 and 2017 removes the
special charges for restructuring initiatives under the 80/20
program, portfolio management activities, and senior leadership
transition costs.
Renewable Energy & Conservation
For the third quarter, the Renewable Energy & Conservation
segment reported:
Three Months Ended September 30, Dollars in
millions
GAAP Adjusted
2018
2017
%
Change
2018
2017
%
Change
Net Sales $98.5 $88.1 11.8% $98.5 $88.1 11.8% Operating Margin
15.3% 13.1% 220 bps 15.1% 13.6% 150 bps
Renewable Energy & Conservation segment revenues were up 12
percent year over year, driven by strong domestic demand, continued
growth in innovative products, and a contribution from the recently
acquired SolarBos.
The third-quarter 2018 GAAP and adjusted operating margin
improvement reflected the continued benefit from 80/20
simplification initiatives and leverage from the continued strong
demand for our renewable energy and conservation products and
services. This segment’s adjusted operating margin for the third
quarter of 2018 and 2017 removes the special charges for
restructuring initiatives and portfolio management activities.
Business Outlook
“We continue to be optimistic about innovative products driving
organic growth across all of our segments, and we are confident in
the end markets these products are targeting,” said Heard. “We also
are excited about our growth momentum in the Renewable Energy &
Conservation segment.”
“For the fourth quarter, our goals are to drive sustainable
growth through the acceleration of new product development
initiatives, to work with our customers to manage cost volatility,
to implement 80/20 simplification projects, and to seek value-added
acquisitions in attractive end markets. For the full year, we
expect to continue to deliver on our promise to make more money at
a higher rate of return with a more efficient use of capital, and
create long-term value creation for our shareholders,” concluded
Heard.
Gibraltar continues to expect 2018 consolidated revenues to
exceed $1 billion, but is lowering its revenue growth expectations
from 2-4% growth to 1-2% growth, considering current activity
levels across the Company’s end markets. At the same time,
Gibraltar is narrowing its full-year 2018 earnings guidance to the
high end of the previous range. GAAP EPS for the full year 2018 are
now expected to be in the range of $1.82 to $1.87, or $2.03 to
$2.08 on an adjusted basis, compared with $1.95 and $1.71,
respectively, in 2017.
For the fourth quarter of 2018, the Company is expecting revenue
in the range of $239 million to $249 million. GAAP EPS for the
fourth quarter 2018 are expected to be between $0.26 and $0.31, or
$0.35 to $0.40 on an adjusted basis.
FY 2018
Guidance
Gibraltar Industries Dollars in millions,
except EPS
Operating
IncomeTaxes
NetIncome
DilutedEarningsPer
Share
Income Margin GAAP Measures $ 90-92
9.1-9.2 % $ 19-20 $ 58-60 $
1.82-1.87 Restructuring Costs 10 1% 2 8 0.21
Adjusted Measures
$ 100-102 10.1-10.2% $ 21-22 $ 66-68
$ 2.03-2.08
Third-quarter Conference Call Details
Gibraltar has scheduled a conference call today starting at 9:00
a.m. ET to review its results for the third quarter of 2018.
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 the residential, industrial,
infrastructure, and renewable energy and conservation markets. With
a four-pillar strategy focused on operational improvement, product
innovation, portfolio management and acquisitions, Gibraltar’s
mission is to drive best-in-class performance. Gibraltar serves
customers primarily throughout North America and to a lesser extent
Asia. 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 macroeconomic factors including government
monetary and trade policies, such as tariffs and expiration of tax
credits along with currency fluctuations and general political
conditions. Other risks and uncertainties that arise from time to
time are described in Item 1A “Risk Factors” of the Company’s
Annual Report on Form 10-K. 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.
Adjusted Financial Measures
To supplement Gibraltar’s consolidated financial statements
presented on a GAAP basis, Gibraltar also presented certain
adjusted financial measures in this news release. Adjusted
financial measures exclude special charges consisting of
restructuring costs primarily associated with the 80/20
simplification initiative and portfolio management actions,
acquisition-related items, and other reclassifications. These
adjustments are shown in the reconciliation of adjusted financial
measures excluding special charges provided in the supplemental
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 the Company’s ongoing business operations.
These adjusted measures should not be viewed as a substitute for
the Company’s 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 twelve-month period ending December 31, 2018, on
Thursday, February 21, 2019, 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 EndedSeptember 30, Nine Months
EndedSeptember 30, 2018 2017 2018 2017 Net Sales $
280,086 $ 274,574 $ 761,459 $ 728,806 Cost of sales 209,807
205,839 572,359 548,991
Gross profit
70,279 68,735 189,100 179,815 Selling, general, and administrative
expense 40,875 33,042 113,579 109,513
Income from operations 29,404 35,693 75,521 70,302 Interest expense
2,906 3,486 9,305 10,612 Other expense (income) 522 404
(50 ) 811 Income before taxes 25,976 31,803 66,266
58,879 Provision for income taxes 6,473 11,184 15,574
21,090 Income from continuing operations 19,503
20,619 50,692 37,789 Discontinued operations: Loss before taxes — —
— (644 ) Benefit of income taxes — — — (239 )
Loss from discontinued operations — — — (405 )
Net income $ 19,503 $ 20,619 $ 50,692 $ 37,384
Net earnings per share – Basic: Income from continuing
operations $ 0.61 $ 0.65 $ 1.59 $ 1.19 Loss from discontinued
operations — — — (0.01 ) Net income $ 0.61
$ 0.65 $ 1.59 $ 1.18
Weighted average shares outstanding –
Basic
32,115 31,703 31,922 31,700
Net earnings per share – Diluted:
Income from continuing operations $ 0.60 $ 0.64 $ 1.56 $ 1.17 Loss
from discontinued operations — — — (0.01 ) Net
income $ 0.60 $ 0.64 $ 1.56 $ 1.16
Weighted average shares outstanding –
Diluted
32,571 32,210 32,524 32,216
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
September 30,2018 December 31,2017 (unaudited)
Assets Current assets: Cash and cash equivalents $ 245,413 $
222,280 Accounts receivable, net 180,875 145,385 Inventories 97,486
86,372 Other current assets 8,949 8,727 Total current
assets 532,723 462,764 Property, plant, and equipment, net 93,718
97,098 Goodwill 323,321 321,074 Acquired intangibles 99,545 105,768
Other assets 4,480 4,681 $ 1,053,787 $ 991,385
Liabilities and Shareholders’ Equity Current
liabilities: Accounts payable $ 92,997 $ 82,387 Accrued expenses
76,268 75,467 Billings in excess of cost 21,900 12,779 Current
maturities of long-term debt 400 400 Total current
liabilities 191,565 171,033 Long-term debt 209,809 209,621 Deferred
income taxes 32,110 31,237 Other non-current liabilities 37,428
47,775 Shareholders’ equity: Preferred stock, $0.01 par value;
authorized 10,000 shares; none outstanding — — Common stock, $0.01
par value; authorized 50,000 shares; 32,842 shares and 32,332
shares issued and outstanding in 2018 and 2017 328 323 Additional
paid-in capital 280,149 271,957 Retained earnings 325,878 274,562
Accumulated other comprehensive loss (6,174 ) (4,366 ) Cost of 778
and 615 common shares held in treasury in 2018 and 2017 (17,306 )
(10,757 ) Total shareholders’ equity 582,875 531,719
$ 1,053,787 $ 991,385
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months EndedSeptember 30, 2018 2017
Cash Flows from Operating Activities Net income $ 50,692 $
37,384 Loss from discontinued operations — (405 ) Income
from continuing operations 50,692 37,789 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization 15,449 16,427 Stock compensation
expense 6,854 5,069 Net gain on sale of assets (203 ) (139 ) Exit
activity costs (recoveries), non-cash 1,088 (1,931 ) Benefit of
deferred income taxes — (136 ) Other, net 1,317 1,411 Changes in
operating assets and liabilities, excluding the effects of
acquisitions: Accounts receivable (30,534 ) (42,310 ) Inventories
(16,263 ) 2,016 Other current assets and other assets 1,052 (2,002
) Accounts payable 9,237 25,134 Accrued expenses and other
non-current liabilities (479 ) 7,503 Net cash provided by
operating activities 38,210 48,831
Cash Flows from
Investing Activities Cash paid for acquisitions, net of cash
acquired (5,241 ) (18,494 ) Net proceeds from sale of property and
equipment 3,147 12,935 Purchases of property, plant, and equipment
(6,767 ) (5,152 ) Net cash used in investing activities (8,861 )
(10,711 )
Cash Flows from Financing Activities Long-term
debt payments (400 ) (400 ) Purchase of treasury stock at market
prices (6,549 ) (1,982 ) Net proceeds from issuance of common stock
1,343 649 Net cash used in financing activities
(5,606 ) (1,733 ) Effect of exchange rate changes on cash (610 )
1,468 Net increase in cash and cash equivalents 23,133
37,855 Cash and cash equivalents at beginning of year 222,280
170,177 Cash and cash equivalents at end of period $
245,413 $ 208,032
GIBRALTAR INDUSTRIES, INC.
Reconciliation of Adjusted Financial
Measures
(in thousands, except per share data)
(unaudited)
Three Months EndedSeptember 30, 2018
AsReportedIn GAAPStatements
RestructuringCharges
SeniorLeadershipTransitionCosts
AcquisitionRelatedItems
TaxReform
AdjustedFinancialMeasures
Net Sales Residential Products $ 125,839 $ — $ — $ — $ — $ 125,839
Industrial & Infrastructure Products 56,033 — — — — 56,033 Less
Inter-Segment Sales (272 ) — — — — (272
) 55,761 — — — — 55,761 Renewable Energy & Conservation 98,486
— — — — 98,486
Consolidated sales 280,086 — — — — 280,086 Income from
operations Residential Products 20,138 1,877 — — — 22,015
Industrial & Infrastructure Products 2,892 1,775 — — — 4,667
Renewable Energy & Conservation 15,072 (156 ) — —
— 14,916 Segments Income 38,102 3,496 — — —
41,598 Unallocated corporate expense (8,698 ) 164 386
471 — (7,677 ) Consolidated income from operations
29,404 3,660 386 471 — 33,921 Interest expense 2,906 — — — —
2,906 Other expense 522 — — — —
522 Income before income taxes 25,976 3,660 386 471 — 30,493
Provision for income taxes 6,473 904 91 113
(245 ) 7,336 Income from continuing operations $
19,503 $ 2,756 $ 295 $ 358 $ 245
$ 23,157 Income from continuing operations per share -
diluted $ 0.60 $ 0.08 $ 0.01 $ 0.01 $
0.01 $ 0.71 Operating margin Residential
Products 16.0 % 1.5 % — % — % — % 17.5 % Industrial &
Infrastructure Products 5.2 % 3.2 % — % — % — % 8.4 % Renewable
Energy & Conservation 15.3 % (0.2 )% — % — % — % 15.1 %
Segments Margin 13.6 % 1.3 % — % — % — % 14.9 % Consolidated 10.5 %
1.3 % 0.1 % 0.2 % — % 12.1 %
GIBRALTAR INDUSTRIES, INC.
Reconciliation of Adjusted Financial
Measures
(in thousands, except per share data)
(unaudited)
Three Months EndedSeptember 30, 2017
AsReportedIn GAAPStatements
Acquisition&RestructuringCharges
SeniorLeadershipTransitionCosts
PortfolioManagement
AdjustedFinancialMeasures
Net Sales Residential Products $ 129,501 $ — $ — $ — $ 129,501
Industrial & Infrastructure Products 57,162 — — — 57,162 Less
Inter-Segment Sales (224 ) — — — (224 ) 56,938
— — — 56,938 Renewable Energy & Conservation 88,135 —
— — 88,135 Consolidated sales 274,574 —
— — 274,574 Income from operations Residential Products
23,764 1,008 — — 24,772 Industrial & Infrastructure Products
2,554 (15 ) 260 101 2,900 Renewable Energy & Conservation
11,549 534 — (77 ) 12,006 Segments
income 37,867 1,527 260 24 39,678 Unallocated corporate expense
(2,174 ) 47 (762 ) — (2,889 ) Consolidated income
from operations 35,693 1,574 (502 ) 24 36,789 Interest
expense 3,486 — — — 3,486 Other expense 404 — —
— 404 Income before income taxes 31,803 1,574
(502 ) 24 32,899 Provision for income taxes 11,184 618
(183 ) (267 ) 11,352 Income from continuing
operations $ 20,619 $ 956 $ (319 ) $ 291 $
21,547 Income from continuing operations per share - diluted
$ 0.64 $ 0.03 $ (0.01 ) $ 0.01 $ 0.67
Operating margin Residential Products 18.4 % 0.8 % — % — %
19.1 % Industrial & Infrastructure Products 4.5 % — % 0.5 % 0.2
% 5.1 % Renewable Energy & Conservation 13.1 % 0.6 % — % (0.1
)% 13.6 % Segments margin 13.8 % 0.6 % 0.1 % — % 14.5 %
Consolidated 13.0 % 0.6 % (0.2 )% — % 13.4 %
GIBRALTAR INDUSTRIES, INC.
Reconciliation of Adjusted Financial
Measures
(in thousands, except per share data)
(unaudited)
Nine Months EndedSeptember 30, 2018
As ReportedIn GAAPStatements
RestructuringCharges
SeniorLeadershipTransitionCosts
AcquisitionRelatedItems
TaxReform
AdjustedFinancialMeasures
Net Sales Residential Products $ 360,915 $ — $ — $ — $ — $ 360,915
Industrial & Infrastructure Products 172,218 — — — — 172,218
Less Inter-Segment Sales (861 ) — — — —
(861 ) 171,357 — — — — 171,357 Renewable Energy & Conservation
229,187 — — — — 229,187
Consolidated sales 761,459 — — — — 761,459 Income from
operations Residential Products 57,572 1,682 — — — 59,254
Industrial & Infrastructure Products 12,098 1,262 — — — 13,360
Renewable Energy & Conservation 28,690 (23 ) 178
— — 28,845 Segments Income 98,360 2,921 178 —
— 101,459 Unallocated corporate expense (22,839 ) 431 844
471 — (21,093 ) Consolidated income from
operations 75,521 3,352 1,022 471 — 80,366 Interest expense
9,305 — — — — 9,305 Other income (50 ) — — — —
(50 ) Income before income taxes 66,266 3,352 1,022 471 —
71,111 Provision for income taxes 15,574 798 264
113 (177 ) 16,572 Income from continuing
operations $ 50,692 $ 2,554 $ 758 $ 358
$ 177 $ 54,539 Income from continuing operations per
share – diluted $ 1.56 $ 0.08 $ 0.02 $ 0.01
$ 0.01 $ 1.68 Operating margin
Residential Products 16.0 % 0.5 % — % — % — % 16.4 % Industrial
& Infrastructure Products 7.1 % 0.7 % — % — % — % 7.8 %
Renewable Energy & Conservation 12.5 % — % 0.1 % — % — % 12.6 %
Segments Margin 12.9 % 0.4 % — % — % — % 13.3 % Consolidated 9.9 %
0.5 % 0.1 % 0.1 % — % 10.6 %
GIBRALTAR INDUSTRIES, INC.
Reconciliation of Adjusted Financial
Measures
(in thousands, except per share data)
(unaudited)
Nine Months EndedSeptember 30, 2017
As Reported InGAAPStatements
Acquisition &RestructuringCharges
SeniorLeadershipTransitionCosts
PortfolioManagement
AdjustedFinancialMeasures
Net Sales Residential Products $ 361,304 $ — $ — $ — $ 361,304
Industrial & Infrastructure Products 165,806 — — — 165,806 Less
Inter-Segment Sales (994 ) — — — (994 )
164,812 — — — 164,812 Renewable Energy & Conservation 202,690
— — — 202,690 Consolidated sales
728,806 — — — 728,806 Income from operations Residential
Products 61,984 1,253 — — 63,237 Industrial & Infrastructure
Products 5,914 (15 ) 260 482 6,641 Renewable Energy &
Conservation 18,381 534 252 2,342
21,509 Segments income 86,279 1,772 512 2,824 91,387
Unallocated corporate expense (15,977 ) 325 (342 ) —
(15,994 ) Consolidated income from operations 70,302 2,097 170
2,824 75,393 Interest expense 10,612 — — — 10,612 Other
expense 811 — — — 811 Income
before income taxes 58,879 2,097 170 2,824 63,970 Provision for
income taxes 21,090 813 69 (70 ) 21,902
Income from continuing operations $ 37,789 $ 1,284 $
101 $ 2,894 $ 42,068 Income from continuing
operations per share - diluted $ 1.17 $ 0.04 $ —
$ 0.10 $ 1.31 Operating margin
Residential Products 17.2 % 0.3 % — % — % 17.5 % Industrial &
Infrastructure Products 3.6 % — % 0.2 % 0.3 % 4.0 % Renewable
Energy & Conservation 9.1 % 0.3 % 0.1 % 1.2 % 10.6 % Segments
margin 11.8 % 0.2 % 0.1 % 0.4 % 12.5 % Consolidated 9.6 % 0.2 % — %
0.4 % 10.3 %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181101005526/en/
Gibraltar Industries, Inc.Timothy Murphy, 716-826-6500 ext.
3277Chief Financial Officertfmurphy@gibraltar1.com
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