Gibraltar Reports Second-Quarter Financial Results

Gibraltar Reports Second-Quarter Financial Results

BUFFALO, N.Y.--(BUSINESS WIRE)-- Gibraltar Industries, Inc. (NAS: ROCK) , a leading manufacturer and distributor of products for building and industrial markets, today reported its financial results for the three- and six-month periods ended June 30, 2013. All financial measures in this release reflect only the Company's continuing operations unless otherwise noted.

Second-Quarter Financial Results

Gibraltar's net sales for the second quarter of 2013 rose 2% to $224.5 million, compared with $219.7 million for the second quarter of 2012. Second-quarter 2013 adjusted net income was $8.2 million, or $0.26 per diluted share, compared with $8.7 million, or $0.28 per diluted share, in the second quarter of 2012. The adjusted second-quarter 2013 results exclude after-tax special charges of $0.5 million, or $0.01 per diluted share, resulting from exit activity costs related to business restructuring. The adjusted net income for the second quarter of 2012 excluded after-tax special charges totaling $0.8 million, or $0.02 per diluted share, consisting of exit activity and acquisition-related costs. Including these items in the respective periods, the second-quarter 2013 GAAP results were net income of $7.7 million, or $0.25 per diluted share, compared with net income of $7.9 million, or $0.26 per diluted share, in the second quarter of 2012.

Six-Month Financial Results

For the six months ended June 30, 2013, total net sales increased to $421.3 million, from $411.9 million in the comparable 2012 period, a 2% increase. Adjusted net income from continuing operations was $9.4 million, or $0.30 per diluted share, compared to $11.3 million, or $0.37 per diluted share, in the comparable period of 2012. The adjusted results for the first half of 2013 exclude after-tax special charges of $5.3 million, or $0.17 per diluted share, resulting primarily from costs related to the Company's successful re-financing of its senior subordinated notes during the first quarter, which lowered the interest rate by 175 basis points. Adjusted net income for the first six months of 2012 excludes after-tax special charges of $2.0 million, or $0.07 per diluted share, for exit activity costs related to business restructuring and acquisition-related costs. Including these items, the GAAP net income in the first six months of 2013 was $4.1 million, or $0.13 per diluted share, compared with $9.4 million, or $0.30 per diluted share, in the comparable period of 2012.

Management Comments

"We continued to see improvement as anticipated in some key areas of our business in the second quarter, but these positive developments were offset by lower-than-expected organic revenues," said Chairman and Chief Executive Officer Brian Lipke. "Our guidance for the quarter was for consolidated revenues to increase 9% year-over-year, led by incremental sales from our recent acquisitions. Although we did see the double-digit growth in the multi-family building market that we anticipated, sales in all of our other end markets were lower than our forecast. Growth in the infrastructure market was modestly slower as expected; however, industrial product revenues were significantly slower. Repair and remodel activity in the residential and low-rise commercial building markets also fell short of our expectations. As a result, our organic sales were down 5% year-over-year, and our total revenues grew only 2% from the second quarter last year."

"Several positive factors combined to partially offset the shortfall in organic revenue growth in terms of both our top and bottom lines," said Lipke. "The three acquisitions we completed during the fourth quarter of 2012 contributed meaningfully to our second-quarter sales and margins. These businesses are continuing to perform as expected, and their integration processes are continuing as planned. In addition, our West Coast operation continued to deliver on its margin improvement goals. We also continued to benefit from lower interest expense due to the refinancing of our notes in January of this year. Nonetheless, adjusted earnings per share for the quarter were below our guidance due to the revenue weakness."

"Sales of our products for single- and multi-family new home construction increased from the second quarter last year," said Henning Kornbrekke, President and Chief Operating Officer. "We clearly have entered a fundamentally solid long-term recovery in residential new construction, which represents about 10% of our business. Our largest revenue exposure for residential products is related to repair and remodeling where second-quarter activity continued to lag expectations and the prior year period."

"Residential roofing demand, in particular, did not increase as we had expected in the second quarter," Kornbrekke said. "We believe this was partly due to weather that was unfavorable for roofing in some parts of the country. It also reflected, we believe, continued reluctance among homeowners to commit to big-ticket remodeling projects. However, our infrastructure products business continued to perform well in the second quarter, driven by backlog, new orders and results from one of the businesses we acquired in the fourth quarter of 2012."

"Conditions in our industrial markets were similar to those we experienced in the first quarter," Kornbrekke said. "Industrial demand remained soft, primarily for products sold into the wholesale distribution channel, which ultimately serves a broad cross section of end markets. The reduced demand led to lower selling prices. These factors continued to affect our industrial product sales in North America, as well as in Europe where the ongoing recession continues to depress the automotive and construction markets that are a large part of our business."


"We continued to drive operational improvements across the company during the second quarter of 2013," said Lipke. "Given the margin leverage in our business model, we are optimistic about Gibraltar's prospects going forward. The fundamentals in the residential and low-rise commercial building markets are moving in a positive direction, but demand was not as strong as we had anticipated in the first half of 2013. Although we previously expected a second-half recovery in our industrial markets, which represent nearly 40% of our revenues, we now expect continued weakness in demand and pricing. As a result, we now expect that Gibraltar will deliver modest sales growth in 2013, led by the contributions from recent acquisitions, with slightly lower margins and earnings compared to 2012, with adjusted earnings per share in the range of $0.54 to $0.64 for the full year. Longer term, we believe that Gibraltar is well-positioned to deliver more significant improvement on both the top and bottom lines as our end markets resume their growth."

Second-Quarter Conference Call Details

Gibraltar has scheduled a conference call today to discuss its results for the second quarter of 2013, 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: 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 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

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 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 nine-month periods ending September 30, 2013, on Thursday, October 31, 2013, and hold its earnings conference call later that morning, starting at 9:00 a.m. ET.


(in thousands, except per share data)

Three Months Ended
June 30,


Six Months Ended
June 30,

2013  20122013  2012
Net sales$224,519$219,734$421,320$411,905
Cost of sales179,813178,008340,437334,698
Gross profit44,70641,72680,88377,207
Selling, general, and administrative expense28,42325,43359,40453,891
Income from operations16,28316,29321,47923,316

Interest expense

Other income(9)(315)(75)(346)
Income before taxes12,60211,9816,70414,361
Provision for income taxes4,8704,0662,6154,997
Income from continuing operations7,7327,9154,0899,364
Discontinued operations:
Loss before taxes-(16)(7)(153)
Benefit of income taxes-(7)(3)(57)
Loss from discontinued operations-(9)(4)(96)
Net income$7,732$7,906$4,085$9,268
Net earnings per share - Basic:
Income from continuing operations$0.25$0.26$0.13$0.30
Loss from discontinued operations----
Net income$0.25$0.26$0.13$0.30
Weighted average shares outstanding - Basic30,92530,73530,90130,726
Net earnings per share - Diluted:
Income from continuing operations$0.25$0.26$0.13$0.30
Loss from discontinued operations----
Net income$0.25$0.26$0.13$0.30
Weighted average shares outstanding - Diluted31,09930,815 31,07930,806
(in thousands, except per share data)

June 30,


December 31,

Current assets:
  Cash and cash equivalents$44,637$48,028
Accounts receivable, net of reserve121,85189,473
Other current assets 17,051 13,380
  Total current assets302,561267,238
Property, plant, and equipment, net144,412151,613
Acquired intangibles94,96698,759
Other assets 7,175 6,201
Total assets$907,985$883,674
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable$81,812$69,060
Accrued expenses43,97547,432
Current maturities of long-term debt 417 1,093
Total current liabilities126,204117,585
Long-term debt213,604206,710
Deferred income taxes56,93457,068
Other non-current liabilities32,81025,489
Shareholders' equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding--

Common stock, $0.01 par value; authorized 50,000 shares, 31,085 and 30,938 shares issued in 2013 and 2012

Additional paid-in capital242,127240,107
Retained earnings246,167242,082
Accumulated other comprehensive loss(5,434)(1,575)
Cost of 389 and 350 common shares held in treasury in 2013 and 2012 (4,737) (4,101)
Total shareholders' equity 478,433 476,822
Total liabilities & shareholders' equity$907,985$883,674
(in thousands)
    Six Months Ended June 30,
2013  2012
Cash Flows from Operating Activities
Net income$4,085$9,268
Loss from discontinued operations (4) (96)
Income from continuing operations4,0899,364
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization13,71613,292
Loss on early note redemption7,166-
Stock compensation expense1,6232,038
Non-cash charges to interest expense496789
Other non-cash adjustments1,6532,806

Increase (decrease) in cash resulting from changes in the following (excluding the effects of acquisitions):

Accounts receivable(34,296)(24,860)
Other current assets and other assets(3,206)805
Accounts payable13,48715,851
Accrued expenses and other non-current liabilities 4,169 (14,937)
Net cash provided by (used in) operating activities of continuing operations5,269(1,998)
Net cash used in operating activities of discontinued operations (7) (36)
Net cash provided by (used in) operating activities 5,262 (2,034)
Cash Flows from Investing Activities
Purchases of property, plant, and equipment(4,741)(4,562)
Cash paid for acquisitions, net of cash acquired(146)(2,705)
Net proceeds from sale of property and equipment 247 414
Net cash used in investing activities (4,640) (6,853)
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