FORM 10-Q
              SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C. 20549
                                     
                                     
                                     
                                     
    (Mark one)
    ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934
        
    For the quarterly period ended June 30, 1997
        
                            OR
                                     
    (  ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934
        
    For the transition period from _________ to _________
        
        
    Commission file number  0-22462
        
                Gibraltar Steel Corporation
    (Exact name of Registrant as specified in its charter)
        
            Delaware                          16-1445150
    (State or other jurisdiction of        (I.R.S. Employer
     incorporation or organization)         Identification No.)
        
    3556 Lake Shore Road, P.O. Box 2028, Buffalo, New York 14219-0228
                (Address of principal executive offices)
        
                       (716)  826-6500
    (Registrant's telephone number, including area code)
        
        
        
        
    Indicate by check mark whether the Registrant (1) has filed all
    reports required to be filed by Section 13 or 15(d) of the
    Securities Exchange Act of 1934 during the preceding 12 months
    (or for such shorter period that the Registrant was required to
    file such reports), and (2) has been subject to such filing
    requirements for the past 90 days.  Yes  X .  No    .
        
        
    As of June 30, 1997, the number of common shares outstanding
    was:  12,329,899.


                              1 of 12
                                     
                                     
                        GIBRALTAR STEEL CORPORATION
                                   INDEX
                                     
        
                                                        PAGE NUMBER
    PART I. FINANCIAL INFORMATION
        
    Item 1. Financial Statements
            Condensed Consolidated Balance Sheets
            June 30, 1997 (unaudited) and
            December 31, 1996 (audited)                        3
        
            Condensed Consolidated Statements of Income
            Three months and six months ended
            June 30, 1997 and 1996 (unaudited)                 4
        
            Condensed Consolidated Statements of Cash Flows
            Six months ended June 30, 1997 and 1996
            (unaudited)                                        5
        
            Notes to Condensed Consolidated Financial
            Statements (unaudited)                           6 - 8
        
        
    Item 2. Management's Discussion and Analysis of
            Financial Condition and Results of Operations    9 - 10
        
    PART II. OTHER INFORMATION                                 11


                                  2 of 12
                                     
                      PART I.  FINANCIAL INFORMATION
                       Item 1. Financial Statements
                                     
                        GIBRALTAR STEEL CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEET
                               (in thousands)
June 30, December 31, 1997 1996 (unaudited) (audited) Assets Current assets: Cash and cash equivalents $ 4,638 $ 5,545 Accounts receivable 57,088 40,106 Inventories 79,779 62,351 Other current assets 2,876 1,524 --------- --------- Total current assets 144,381 109,526 Property, plant and equipment, net 110,566 88,670 Other assets 34,968 24,311 --------- --------- $ 289,915 $ 222,507 ========= ========= Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 38,466 $ 35,397 Accrued expenses 5,418 4,238 Current maturities of long-term debt 1,222 1,218 --------- --------- Total current liabilities 45,106 40,853 Long-term debt 98,011 48,623 Deferred income taxes 14,328 10,364 Other non-current liabilities 1,136 923 Shareholders' equity Preferred shares - - Common shares 123 123 Additional paid-in capital 64,754 64,307 Retained earnings 66,457 57,314 --------- --------- Total shareholders' equity 131,334 121,744 --------- --------- $ 289,915 $ 222,507 ======== ========
See accompanying notes to financial statements 3 of 12 GIBRALTAR STEEL CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (in thousands, except share and per share data)
Three Months Ended Six Months Ended June 30, June 30, 1997 1996 1997 1996 (unaudited) (unaudited) Net sales $ 119,213 $ 86,476 $ 227,490 $ 168,510 Cost of sales 99,296 70,609 188,875 138,614 --------- --------- --------- --------- Gross profit 19,917 15,867 38,615 29,896 Selling, general and administrative expense 10,576 7,614 20,652 14,968 --------- --------- --------- --------- Income from operations 9,341 8,253 17,963 14,928 Interest expense 1,448 1,270 2,597 2,343 --------- --------- --------- --------- Income before taxes 7,893 6,983 15,366 12,585 Provision for income taxes 3,196 2,828 6,223 5,096 --------- --------- --------- --------- Net income $ 4,697 $ 4,155 $ 9,143 $ 7,489 ========= ========= ========= ========= Net income per share $ .38 $ .40 $ .74 $ .73 ========= ========= ========= ========= Weighted average number of shares outstanding 12,325,909 10,286,537 12,325,255 10,230,219 ========== ========== ========== ==========
See accompanying notes to financial statements 4 of 12 GIBRALTAR STEEL CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands)
Six Months Ended June 30, 1997 1996 (unaudited) Cash flows from operating activities Net income $ 9,143 $ 7,489 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,053 2,973 Provision for deferred income taxes 766 406 Undistributed equity investment income (220) (307) (Gain) loss on disposition of property and equipment (11) 8 Increase (decrease) in cash resulting from changes in (net of acquisitions): Accounts receivable (8,113) (7,128) Inventories (1,471) (7,771) Other current assets (561) (228) Accounts payable and accrued expenses (799) 7,670 Other assets (257) (51) --------- --------- Net cash provided by operating activities 2,530 3,061 --------- --------- Cash flows from investing activities Acquisitions, net of cash acquired (26,475) (23,715) Purchases of property, plant and equipment (11,776) (8,544) Proceeds from sale of property and equipment 73 107 --------- --------- Net cash used in investing activities (38,178) (32,152) --------- --------- Cash flows from financing activities Long-term debt reduction (43,701) (56,587) Proceeds from long-term debt 78,365 49,906 Proceeds from issuance of common stock 77 34,455 --------- --------- Net cash provided by financing activities 34,741 27,774 --------- --------- Net decrease in cash and cash equivalents (907) (1,317) Cash and cash equivalents at beginning of year 5,545 4,123 --------- --------- Cash and cash equivalents at end of period $ 4,638 $ 2,806 ========= =========
See accompanying notes to financial statements 5 of 12 GIBRALTAR STEEL CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The accompanying condensed consolidated financial statements as of June 30, 1997 and 1996 have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations and cash flows at June 30, 1997 and 1996 have been included. Certain information and footnote disclosures including significant accounting policies normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements included in the Company's Annual Report to Shareholders for the year ended December 31, 1996. The results of operations for the six month period ended June 30, 1997 are not necessarily indicative of the results to be expected for the full year. 2. INVENTORIES Inventories consist of the following: (in thousands) June 30, December 31, 1997 1996 (unaudited) (audited) Raw material $ 57,427 $ 45,258 Finished goods and work-in-process 22,352 17,093 -------- -------- Total inventories $ 79,779 $ 62,351 ======== ======== 6 of 12 3. STOCKHOLDERS' EQUITY The changes in stockholders' equity consist of:
(in thousands, except share data) Additional Common Shares Paid-in Retained Shares Amount Capital Earnings December 31, 1996 12,322,400 $ 123 $ 64,307 $ 57,314 Net income - - - 9,143 Stock options exercised and related tax benefit 7,499 - 447 - ---------- ------- --------- --------- June 30, 1997 12,329,899 $ 123 $ 64,754 $ 66,457 ========== ======= ========= =========
Additional paid-in capital increased approximately $77,000 through the exercise of stock options and approximately $370,000 through a realized tax benefit from the disposition of certain stock options. This benefit also resulted in a corresponding decrease in current income taxes payable. 4. EARNINGS PER SHARE Net income per share for the three and six months ended June 30, 1997 and 1996 was computed by dividing net income by the weighted average number of common shares outstanding. 5. ACQUISITIONS On February 14, 1996, the Company purchased all of the outstanding capital stock of Carolina Commercial Heat Treating, Inc. (CCHT) for approximately $25 million in cash. CCHT, headquartered in Charlotte, North Carolina, provides heat treating, brazing and related metal-processing services to a broad range of industries, including the automotive, hand tools, construction equipment and industrial machinery industries. On January 31, 1997, the Company purchased all of the outstanding capital stock of Southeastern Metals Manufacturing Company, Inc. (SEMCO) for approximately $25 million in cash. SEMCO manufactures a wide array of metal products for the residential and commercial construction markets. 7 of 12 These acquisitions have been accounted for under the purchase method. Results of operations of CCHT and SEMCO have been consolidated with the Company's results of operations from the respective acquisition dates. The excess of the aggregate purchase price over the fair market value of net assets of CCHT and SEMCO approximated $12 million and $10 million, respectively, and is being amortized over 35 years from the acquisition dates using the straight-line method. The following information presents the pro forma consolidated condensed results of operations as if the acquisitions had occurred on January 1, 1996. The pro forma amounts may not be indicative of the results that actually would have been achieved had the acquisitions occurred as of January 1, 1996 and are not necessarily indicative of future results of the combined companies. (in thousands, except per share data) Six Months Ended June 30, 1997 1996 (unaudited) Net sales $ 234,014 $ 213,602 ========= ========= Income before taxes $ 15,076 $ 12,886 ========= ========= Net income $ 8,961 $ 7,592 ========= ========= Net income per share $ .73 $ .74 ========= ========= 8 of 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales of $119.2 million for the second quarter ended June 30, 1997 increased 38% from sales of $86.5 million for the prior year's second quarter. Net sales of $227.5 million for the six months ended June 30, 1997 increased 35% from net sales of $168.5 million in the first half of 1996. These increases primarily resulted from including net sales of SEMCO (acquired January 31, 1997) and sales growth at existing operations. Cost of sales increased to 83.3% of net sales for the second quarter and to 83.0% for the first six months of 1997. Gross profit decreased to 16.7% and 17.0% for the second quarter and the six months ended June 30, 1997 from 18.3% and 17.7% for the comparable periods in 1996. This decrease is primarily due to higher raw material costs which were not fully passed through to customers, offset partially by the inclusion of SEMCO's results. SEMCO's sales historically have generated higher margins than the Company's other products and services. Selling, general and administrative expenses as a percentage of net sales increased to 8.9% and 9.1% for the second quarter and six months ended June 30, 1997, respectively, from 8.8% and 8.9% for the same periods of 1996. These increases were primarily due to higher costs as a percentage of sales attributable to SEMCO and performance based compensation linked to the Company's sales and profitability. Interest expense increased by $.2 million for the quarter and $.3 million for the six months ended June 30, 1997 primarily due to higher average borrowings as a result of the SEMCO acquisition. As a result of the above, income before taxes increased by $.9 million and $2.8 million for the quarter and six months ended June 30, 1997. Income taxes for the six months ended June 30, 1997 approximated $3.2 million and were based on a 40.5% effective tax rate for both 1997 and 1996. 9 of 12 Liquidity and Capital Resources During the first six months of 1997, the Company increased its working capital to $99.3 million. Additionally, shareholders' equity increased to $131.3 million at June 30, 1997. The Company's principal capital requirements are to fund its operations, including working capital, the purchase and funding of improvements to its facilities, machinery and equipment and to fund acquisitions. Net income of $9.1 million and depreciation and amortization of $4.1 million provided cash of $13.2 million. This was offset by increases in accounts receivable and inventory (net of acquisitions) of $8.1 million and $1.5 million, respectively, to service increased sales levels and by a decrease in accounts payable and accrued expenses of $.8 million. The resulting net cash provided by operations of $2.5 million combined with an additional $34.7 million in net cash provided by financing activities funded the $26.5 million used for acquisitions and $11.8 million for capital expenditures. At June 30, 1997, the Company's aggregate credit facilities available totaled approximately $131 million. The Company had total borrowings of approximately $99 million under these credit facilities and an additional availability of approximately $32 million. The Company believes that availability under its credit facilities together with funds generated from operations will be sufficient to provide the Company with the liquidity and capital resources necessary to support its operations and anticipated capital expenditures for the next twelve months. 10 of 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. 1. Exhibits - Exhibit 27 Financial Data Schedule 2. Reports on Form 8-K. There were no reports on Form 8-K during the three months ended June 30, 1997. 11 of 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GIBRALTAR STEEL CORPORATION (Registrant) By /x/ Brian J. Lipke Brian J. Lipke President, Chief Executive Officer and Chairman of the Board By /x/ Walter T. Erazmus Walter T. Erazmus Treasurer and Chief Financial Officer (Principal Financial and Chief Accounting Officer) July 25, 1997 12 of 12
 

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 US DOLLARS 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1 4,638 0 58,359 1,271 79,779 144,381 143,378 32,812 289,915 45,106 98,011 0 0 123 131,211 289,915 227,490 227,490 188,875 188,875 20,652 0 2,597 15,366 6,223 9,143 0 0 0 9,143 .74 .74