News Release

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May 2, 2014 at 7:30 AM EDT

Gibraltar Reports First-Quarter Financial Results

  • Sales and Adjusted EPS were $191M and $(0.05), Adversely Affected by Weather
  • Full Year Revenue and Earnings Guidance Reaffirmed
  • Increasing Order Rates in March and April

BUFFALO, N.Y.--(BUSINESS WIRE)--May 2, 2014-- 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-month period ended March 31, 2014. 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 2014 were $191.0 million compared with $196.8 million for the first quarter of 2013. First-quarter 2014 adjusted net loss was $1.7 million, or $0.05 per share, compared with adjusted net income of $1.2 million, or $0.04 per diluted share, in the first quarter of 2013. The adjusted first-quarter 2014 results exclude special items with an after-tax net charge totaling $0.4 million, or $0.02 per diluted share, resulting primarily from acquisition-related costs and exit activity costs related to business restructuring. The adjusted net income for the first quarter of 2013 excluded after-tax special charges of $4.9 million, or $0.16 per diluted share, resulting primarily from bond re-financing costs. Including these items in the respective periods, the first-quarter 2014 GAAP results were a net loss of $2.1 million, or $0.07 per share, compared with a loss of $3.6 million, or $0.12 per share, in the first quarter of 2013.

Management Comments

“Although Gibraltar’s first-quarter sales were lower than expected due to the prolonged winter season in most parts of the country, we believe underlying conditions in our end markets remain positive,” said Chairman and Chief Executive Officer Brian Lipke. “In addition, driven by improving order rates in April, we are reaffirming our adjusted EPS guidance for 2014 despite the slow start to the early part of the year. The increased order rates were primarily generated by increased demand for our centralized postal storage products which we believe will lead to strong sales growth for our residential products segment throughout 2014.”

“Our revenue for the first quarter decreased 3% from the same period last year, as adverse weather delayed the normal seasonal ramp we see in our order rates toward the end of the quarter,” Lipke said. “Moreover, our results for the first quarter last year benefited from a stronger product mix in both our Residential and Industrial & Infrastructure Products segments. On the bottom-line, our results reflected the weather-driven decline in orders and shipment volumes along with product mix and price adjustments, primarily in our Industrial & Infrastructure Products segment.”

First-Quarter Segment Results

Residential Products

First-quarter 2014 net sales in Gibraltar’s Residential Products segment decreased 3% to $87.0 million, compared with $89.7 million for the first quarter of 2013. First-quarter 2014 adjusted operating margin decreased 440 basis points year-over-year to 3.0%. Sales in the segment reflected decreased demand in residential new construction as well as repair and remodeling applications. The segment’s lower adjusted operating margin reflected the result of weather-affected lower volume and higher raw materials costs. Operating margins were reduced further from pricing adjustments provided in certain product lines.

Industrial & Infrastructure Products

First-quarter 2014 net sales in Gibraltar’s Industrial & Infrastructure Products segment decreased 3% to $104.3 million, compared with $107.5 million for the first quarter of 2013. First-quarter 2014 adjusted operating margin decreased 300 basis points year-over-year to 3.1%. Sales in the segment reflected lower shipment volumes to the transportation infrastructure market with stable pricing in the Company’s North American industrial markets. Sales in the quarter also reflected slightly improved product demand in the Company’s European markets. Segment adjusted operating margin reflected lower infrastructure shipments, less favorable mix compared with the year-earlier quarter, and production inefficiencies related to inclement weather.

Outlook

“Based on positive trends in recent incoming order rates, we believe the challenges we faced in the first quarter will prove to be temporary,” said Lipke. “As a result, we continue to expect Gibraltar will deliver sales growth between 4% and 7% in 2014. We expect this growth will be led by momentum in residential demand, bolstered by improving demand for postal products, while increases in demand for our industrial and infrastructure products should be favorable for the year but weighted toward the second half.”

“At the same time, our continuing operational initiatives position Gibraltar for another year of bottom-line improvement in 2014. With margin expansion on full-year sales growth, we continue to expect adjusted earnings per share for 2014 in the range of $0.76 to $0.90 which compares with $0.69 reported for 2013, with 2014 GAAP earnings per share of $0.73 to $0.87. In the short term, we expect our results for the second quarter of 2014 to be favorable both sequentially and year-over-year led by seasonally stronger residential construction activity bolstered by improving order rates for our residential products, with equivalent results in our industrial and transportation infrastructure markets,” Lipke concluded.

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 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 costs, 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 six month periods ending June 30, 2014, on Tuesday, August 5, 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
March 31,

2014

2013
Net sales $ 191,032 $ 196,801
Cost of sales 161,168 160,624
Gross profit 29,864 36,177
Selling, general, and administrative expense 29,531 30,981
Income from operations 333 5,196
Interest expense 3,640 11,160
Other expense (income) 30 (66)
Loss before taxes (3,337) (5,898)
Benefit of income taxes (1,251) (2,255)
Loss from continuing operations (2,086)

(3,643)

Discontinued operations:
Loss before taxes (7)
Benefit of income taxes (3)
Loss from discontinued operations (4)
 
Net loss $ (2,086) $ (3,647)
 
Net earnings per share – Basic:
Loss from continuing operations $ (0.07) $ (0.12)
Loss from discontinued operations
Net loss $ (0.07) $ (0.12)
Weighted average shares outstanding – Basic 31,034 30,877
 
Net earnings per share – Diluted:
Loss from continuing operations $ (0.07) $ (0.12)
Loss from discontinued operations
Net loss $ (0.07) $ (0.12)
Weighted average shares outstanding – Diluted 31,034 30,877
 
 

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
  March 31,   December 31,
2014 2013
Assets
Current assets:
Cash and cash equivalents $ 78,186 $ 97,039
Accounts receivable, net of reserve 106,639 90,082
Inventories 127,200 121,152
Other current assets   16,803   14,127
Total current assets 328,828 322,400
 
Property, plant, and equipment, net 130,476 131,752
Goodwill 340,942 341,174
Acquired intangibles 90,294 91,777
Other assets   6,495   7,059
 
Total assets $ 897,035 $ 894,162
 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 82,813 $ 69,625
Accrued expenses 42,739 49,879
Current maturities of long-term debt   405   409
Total current liabilities 125,957 119,913
 
Long-term debt 213,600 213,598
Deferred income taxes 55,113 55,124
Other non-current liabilities 32,877 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, 31,219 and 31,131 shares issued in 2014 and 2013 312 311
Additional paid-in capital 244,504 243,389
Retained earnings 234,363 236,449
Accumulated other comprehensive loss (4,468) (3,585)
Cost of 417 and 395 common shares held in treasury in 2014 and 2013   (5,223)   (4,815)
 
Total shareholders’ equity   469,488   471,749
 
Total liabilities & shareholders’ equity $ 897,035 $ 894,162
 
 
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
   
Three Months Ended March 31,
2014 2013
Cash Flows from Operating Activities
Net loss $ (2,086) $ (3,647)
Loss from discontinued operations   -   (4)
Loss from continuing operations (2,086) (3,643)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 6,566 6,904
Stock compensation expense 660 973
Non-cash charges to interest expense 261 273
Loss on early note redemption - 7,166
Other non-cash adjustments 550 425
Increase (decrease) in cash resulting from changes in the following (excluding the effects of acquisitions):
Accounts receivable (17,107) (22,813)
Inventories (6,266) (9,802)
Other current assets and other assets (2,248) 232
Accounts payable 13,060 13,277
Accrued expenses and other non-current liabilities   (8,016)   (5,679)
Net cash used in operating activities of continuing operations (14,626) (12,687)
Net cash used in operating activities of discontinued operations   -   (7)
Net cash used in operating activities   (14,626)   (12,694)
 
Cash Flows from Investing Activities
Purchases of property, plant, and equipment (4,056) (1,979)
Net proceeds from sale of property and equipment   137   127
Net cash used in investing activities   (3,919)   (1,852)
 
Cash Flows from Financing Activities
Proceeds from long-term debt - 210,000
Long-term debt payments (2) (204,678)
Net proceeds from issuance of common stock 365 327
Excess tax benefit from stock compensation 91 83
Payment of note redemption fees - (3,702)
Payment of deferred financing fees - (3,711)
Purchase of treasury stock at market prices   (408)   (636)
Net cash provided by (used in) financing activities   46   (2,317)
 
Effect of exchange rate changes on cash   (354)  
(877)
 
Net decrease in cash and cash equivalents (18,853) (17,740)
 
Cash and cash equivalents at beginning of period   97,039   48,028
 
Cash and cash equivalents at end of period $ 78,186 $ 30,288
 
 

GIBRALTAR INDUSTRIES, INC.

Non-GAAP Reconciliation of Adjusted Statements of Operations

(in thousands, except per share data)

(Unaudited)

  Three Months Ended March 31, 2014

As
Reported
In GAAP
Statements

 

Acquisition
Related Costs

 

Restructuring
Costs

 

Adjusted
Statement of
Operations

Net Sales
Residential Products $ 86,983 $ $ $ 86,983
Industrial & Infrastructure Products 104,346 104,346
Less Inter-Segment Sales (297) (297)
104,049 104,049
Consolidated sales 191,032 191,032
 
Income from operations
Residential Products 2,093 206 327 2,626
Industrial & Infrastructure Products 3,108 102 3,210
Segments Income 5,201 206 429 5,836
Unallocated corporate expense (4,868) 2 (4,866)
Consolidated income from operations 333 208 429 970
 
Interest expense 3,640 3,640
Other expense 30 30
(Loss) income before income taxes (3,337) 208 429 (2,700)
(Benefit of) provision for income taxes (1,251) 78 161 (1,012)
(Loss) income from continuing operations $ (2,086) $ 130 $ 268 $ (1,688)
(Loss) income from continuing operations per share – diluted $ (0.07) $ 0.01 $ 0.01 $ (0.05)
 
Operating margin
Residential Products 2.4% 0.2% 0.4% 3.0%
Industrial & Infrastructure Products 3.0% 0.1% 3.1%
Segments Margin 2.7% 0.1% 0.2% 3.1%
Consolidated 0.2% 0.1% 0.2% 0.5%
 
 
Three Months Ended March 31, 2013

As
Reported
In GAAP
Statements

 

Acquisition
Related
Costs

 

Note
Refinancing

 

Restructuring
Costs

 

Adjusted
Statement of
Operations

Net Sales
Residential Products $ 89,664 $ $ $ $ 89,664
Industrial & Infrastructure Products 107,467 107,467
Less Inter-Segment Sales (330) (330)
107,137       107,137
Consolidated sales 196,801 196,801
 
Income from operations
Residential Products 6,638 31 6,669
Industrial & Infrastructure Products 6,327 206 6,533
Segment Income 12,965 206 31 13,202
Unallocated corporate expense (7,769) 114 125 (7,530)
Consolidated income from operations 5,196 320 156 5,672
 
Interest expense 11,160 (7,166) 3,994
Other income (66) (66)
(Loss) income before income taxes (5,898) 320 7,166 156 1,744
(Benefit of) provision for income taxes (2,255) 117 2,616 57 535
(Loss) income from continuing operations (3,643) $ 203 $ 4,550 $ 99 $ 1,209
(Loss) income from continuing operations per share – diluted $ (0.12) $ 0.01 $ 0.15 $ $ 0.04
 
Operating margin
Residential Products 7.4% 7.4%
Industrial & Infrastructure Products 5.9% 0.2% 6.1%
Segment Margin 6.6% 0.1% 6.7%
Consolidated 2.6% 0.2% 0.1% 2.9%

Source: Gibraltar Industries

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


Investor Contact
Timothy F. Murphy
Gibraltar Industries, Inc.
3556 Lake Shore Rd.
Buffalo, NY 14219
tfmurphy@gibraltar1.com

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