Gibraltar’s Net Sales Increase 17% in First Quarter
BUFFALO, N.Y.--(BUSINESS WIRE)-- Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading manufacturer and distributor of products for building and industrial markets, today reported its financial results for the three months ended March 31, 2012. All financial metrics in this release reflect only the Company’s continuing operations unless otherwise noted.
“Gibraltar performed well in the first quarter, starting 2012 with 17% net sales growth despite persistently weak conditions in the construction markets,” said Chairman and Chief Executive Officer Brian Lipke. “Four percentage points of this growth were organic, with the other 13% driven by recent acquisitions. Our profitability benefited from earnings growth across nearly all businesses. However, those gains were more than offset by lower demand from the West Coast residential market affecting our integration of the Award Metals acquisition and an unfavorable comparison to low equity-compensation costs last year. Looking forward, we believe that our ability to drive continued internal growth in a challenging end market environment while also making accretive acquisitions bodes well for Gibraltar’s future earnings growth.”
“We believe that our success in combining non-residential diversification with a stronger presence in repair, remodeling and replacement in the majority of our markets is the key reason why Gibraltar has been able to generate top-line growth during an unprecedented downturn in the housing sector,” said Henning Kornbrekke, President and Chief Operating Officer. “Executing on this strategy through organic growth, acquisitions and divestitures during the past three years, we have expanded our presence in the nonresidential, industrial and infrastructure end markets to 50% of our current total sales from 30% in 2008. In the residential part of our business, the portion related to housing starts is now down to approximately 25%, with the other 75% being driven by home repair and remodeling activity.”
“We continued our operational improvement initiatives in the first quarter,” Kornbrekke said. “Driven by a strong ongoing commitment to lean initiatives, cost reduction and facilities consolidation, we continued to make progress toward our goal of delivering outstanding customer service while positioning Gibraltar as the low-cost global supplier in its markets. We continued to maintain low levels of working capital while improving our management of commodity costs. Initiatives in these areas during the past three years have enhanced both the operating leverage in our business model as well as the Company’s financial performance.”
Gibraltar’s net sales for the first quarter of 2012 increased 17% to $192.2 million, from $163.6 million for the first quarter of 2011. First-quarter 2012 adjusted net income was $2.6 million, or $0.09 per diluted-share, compared with $3.2 million, or $0.11 per diluted-share, in the first quarter of 2011. First-quarter 2012 adjusted results exclude after-tax special charges of $1.2 million, or $0.04 per diluted-share, resulting from acquisition-related costs and exit activity costs related to business restructuring. Adjusted net income for the first quarter of 2011 excluded after-tax special charges totaling $1.8 million, or $0.06 per diluted-share, primarily consisting of exit activity costs, acquisition costs and equity compensation surrendered by CEO Brian Lipke. Adjusting for these items, Gibraltar’s GAAP net income for both the first quarter of 2012 and 2011 was $1.4 million, or $0.05 per diluted-share.
Adjusted gross margin for the first quarter of 2012 of 19.4%, improved 50 basis points from the first quarter of 2011. Positive gross margin impacts of higher efficiencies and favorable product mix were partially offset by lower leverage related to decreased order volume from West Coast residential markets and costs related to acquisition integration in the West Coast region. Adjusted selling, general and administrative expense was $28.4 million for the first quarter of 2012, compared with $21.5 million a year earlier, primarily reflecting recent acquisitions and a favorable equity compensation benefit in the first quarter of 2011. The increase in accrued equity compensation expense this quarter compared to the accrued benefit in the first quarter last year resulted in a pre-tax change of $3.0 million, or $0.06 per diluted-share.
Liquidity and Capital Resources
“Our strategy since the beginning of the housing downturn has been to control as much of our own destiny as we can by reducing our cost structure and diversifying our business into higher margin-generating areas of activity with improved short and long term growth potential,” said Lipke. “Since late in 2007 we have essentially reconfigured the entire business and reduced our annual operating expenses by $60 million. We have improved our effectiveness in raw material management, while reducing our working capital by nearly half. Our operating footprint has been scaled down from 76 to 40 facilities, yet we still have manufacturing capacity in place and available to support future growth in sales to approximately $1.4 billion, based on our current capacity utilization of approximately 60%. At the same time, we have significantly accelerated our organic sales growth by expanding Gibraltar’s presence and product lines in nonresidential markets across the country.”
“We have also made progress in strengthening Gibraltar’s balance sheet,” Lipke said. “By paying off our bank debt we have reduced our net debt from $450 million over four years ago to $172 million at the end of March, significantly enhancing our liquidity. This has enabled us to supplement the Company’s organic growth with accretive acquisitions. The D.S. Brown and Pacific Award Metals businesses we acquired in 2011 made the contributions we expected to Gibraltar’s first-quarter growth, operating characteristics, product mix and profitability, and we continued to expand our pipeline of potential future acquisitions. Our strong sales growth in Q1, albeit with a slower start in earnings, bolsters our confidence in our expectation of reporting year-over-year improvement in Gibraltar’s financial results for 2012.”
First-Quarter Conference Call Details
Gibraltar has scheduled a conference call today to review its results for the first quarter of 2012, starting at 9:00 a.m. ET. 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.
Gibraltar Industries is a leading manufacturer and distributor of building products, focused on residential and nonresidential repair and remodeling, as well as construction of industrial facilities and public infrastructure. The Company generates more than 80% of its sales from products that hold the #1 or #2 positions in their markets, and serves customers across the U.S. and throughout the world from 40 facilities in 20 states, 4 provinces in Canada, England and Germany. 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 surrendered equity compensation. These adjustments are shown in the Non-GAAP reconciliation of adjusted operating results excluding special charges provided in the financial statements that accompany this news release. We believe 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, 2012, on August 2, 2012, and hold its earnings conference later that morning, starting at 9:00 a.m. ET.
KEYWORDS: United States North America New York
INDUSTRY KEYWORDS: Building Systems Construction & Property Commercial Building & Real Estate Residential Building & Real Estate