Gibraltar Reports Third-Quarter Financial Results

Business Wire

BUFFALO, N.Y.--(BUSINESS WIRE)--

Gibraltar Industries, Inc. (ROCK), a leading manufacturer and distributor of products for building and industrial markets, today reported its financial results for the three- and nine-month periods ended September 30, 2013. All financial measures in this release reflect only the Company’s continuing operations unless otherwise noted.

Third-Quarter Financial Results

Gibraltar’s net sales for the third quarter of 2013 rose 6% to $217.4 million, compared with $205.5 million for the third quarter of 2012. Third-quarter 2013 adjusted net income was $9.6 million, or $0.31 per diluted share, compared with $7.4 million, or $0.24 per diluted share, in the third quarter of 2012. The adjusted third-quarter 2013 results exclude after-tax special charges of $23.3 million, or $0.75 per diluted share, including $22.4 million in impairment charges primarily relating to the Company’s European business. The adjusted net income for the third quarter of 2012 excluded after-tax special charges totaling $0.4 million, or $0.01 per diluted share, consisting of exit activity and acquisition-related costs. Including these items in the respective periods, the third-quarter 2013 GAAP result was a net loss of $13.7 million, or $0.44 per share, compared with net income of $7.0 million, or $0.23 per diluted share, in the third quarter of 2012.

Nine Month Financial Results

For the nine months ended September 30, 2013, total net sales increased 3% to $638.7 million, from $617.4 million in the comparable 2012 period. Adjusted net income from continuing operations was $19.0 million, or $0.61 per diluted share, compared with $18.7 million, or $0.61 per diluted share, in the comparable period of 2012. The adjusted results for the first nine months of 2013 exclude after-tax special charges of $28.6 million, or $0.92 per diluted share, resulting primarily from impairment charges and costs related to the Company’s successful re-financing of its senior subordinated notes during the first quarter, which lowered the interest rate by 200 basis points. Adjusted net income for the first nine months of 2012 excludes after-tax special charges of $2.4 million, or $0.08 per diluted share, for exit activity costs related to business restructuring and acquisition-related costs. Including these items, the GAAP net loss for the first nine months of 2013 was $9.6 million, or $0.31 per diluted share, compared with net income of $16.4 million, or $0.53 per diluted share, in the comparable period of 2012.

Management Comments

“Gibraltar performed well this quarter on both the top and bottom lines,” said Chairman and Chief Executive Officer Brian Lipke. “Consolidated revenues increased 6% year-over-year driven by incremental sales from our recent acquisitions. Sales to the residential new construction market improved, as we expected, with multi-family continuing to be the bright spot. Weakness in the industrial and infrastructure markets continued to weigh on our organic sales, which were down slightly compared to the third quarter last year. Repair and remodeling activity in the residential and low-rise commercial building markets remained equivalent to last year.”

“The Company’s operational performance improved over our expectations for the quarter,” said Lipke. “Adjusted earnings per share for the quarter exceeded our guidance, mainly due to lower-than-expected healthcare and performance-based compensation costs. We also continued to see the positive effect of improved profitability in our West Coast operations, plus the contribution from our recently acquired businesses. Our financial results also reflect the ongoing benefit of lower interest expense due to the refinancing of our notes in January of this year.”

Outlook

“Given the current conditions in our end markets, we now expect that Gibraltar will deliver sales growth approximating 4.5% in 2013, led by the contributions from recent acquisitions, with margins comparable to 2012,” Lipke said. “Reflecting the Company’s improved financial performance in the third quarter, we now expect to report adjusted earnings per share at the upper end of our previous guidance, and in the range of $0.63 to $0.66 for the full year, which compares to $0.65 reported for 2012.”

“Looking forward to 2014, a number of economic indicators suggest a strengthening in demand for building products compared to conditions in 2013,” Lipke said. “With the operational enhancements that we have implemented this past year, we are well-positioned to capitalize on resumed end-market growth and deliver improved financial results in the year ahead.”

Third-Quarter Conference Call Details

Gibraltar has scheduled a conference call today to discuss its results for the third 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: 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 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 intangible asset impairments, 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. 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 12-month periods ending December 31, 2013, on Thursday, February 20, 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

September 30,

      Nine Months Ended

September 30,

2013         2012   2013         2012  
Net sales $ 217,412 $ 205,514 $ 638,732 $ 617,419
Cost of sales   175,650     165,286     516,087     499,984  
Gross profit 41,762 40,228 122,645 117,435
Selling, general, and administrative expense 24,754 24,479 84,158 78,370
Intangible asset impairment   23,160         23,160      
(Loss) income from operations (6,152 ) 15,749 15,327 39,065
Interest Expense 3,828 4,688 18,678 13,989
Other income   (66 )   (55 )   (141 )   (401 )
(Loss) income before taxes (9,914 ) 11,116 (3,210 ) 25,477
Provision for income taxes   3,813     4,094     6,428     9,091  
(Loss) income from continuing operations (13,727 ) 7,022 (9,638 ) 16,386
Discontinued operations:
Income (loss) before taxes 162 (7 ) 9
Benefit of income taxes       (117 )   (3 )   (174 )
Income (loss) from discontinued operations       279     (4 )   183  
 
Net (loss) income $ (13,727 ) $ 7,301   $ (9,642 ) $ 16,569  
 
Net earnings per share – Basic:
(Loss) income from continuing operations $ (0.44 ) $ 0.23 $ (0.31 ) $ 0.53
Income from discontinued operations       0.01         0.01  
Net (loss) income $ (0.44 ) $ 0.24   $ (0.31 ) $ 0.54  
Weighted average shares outstanding - Basic   30,946     30,765     30,916     30,739  
 
Net earnings per share – Diluted:
(Loss) income from continuing operations $ (0.44 ) $ 0.23 $ (0.31 ) $ 0.53
Income from discontinued operations       0.01         0.01  
Net (loss) income $ (0.44 ) $ 0.24   $ (0.31 ) $ 0.54  
Weighted average shares outstanding - Diluted   30,946     30,838     30,916     30,834  
 
 
 
 
GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(Unaudited)

 
 
   

September 30,

2013

         

December 31,
2012

Assets
Current assets:
  Cash and cash equivalents $ 80,848 $ 48,028
Accounts receivable, net of reserve 114,541 89,473
Inventories 116,899 116,357
Other current assets   15,290     13,380  
  Total current assets 327,578 267,238
 
Property, plant, and equipment, net 130,877 151,613
Goodwill 341,445 359,863
Acquired intangibles 93,332 98,759
Other assets   6,202     6,201  
Total assets $ 899,434   $ 883,674  
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 81,158 $ 69,060
Accrued expenses 46,528 47,432
Current maturities of long-term debt   417     1,093  
Total current liabilities 128,103 117,585
 
Long-term debt 213,601 206,710
Deferred income taxes 56,334 57,068
Other non-current liabilities 33,615 25,489
 
Shareholders’ equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding
Common stock, $0.01 par value; authorized 50,000 shares; 31,087 and 30,938

shares issued in 2013 and 2012

310 309
Additional paid-in capital 242,648 240,107
Retained earnings 232,440 242,082
Accumulated other comprehensive loss (2,874 ) (1,575 )
Cost of 390 and 350 common shares held in treasury in 2013 and 2012   (4,743 )   (4,101 )
Total shareholders’ equity   467,781     476,822  
Total liabilities & shareholders’ equity $ 899,434   $ 883,674  
 
 
 
 
GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 
  Nine Months Ended September 30,
2013         2012  
Cash Flows from Operating Activities
Net (loss) income $ (9,642 ) $ 16,569
(Loss) income from discontinued operations   (4 )   183  
(Loss) income from continuing operations (9,638 ) 16,386
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 20,396 19,838
Intangible asset impairment 23,160
Loss on early note redemption 7,166
Provision for deferred income taxes 33 214
Stock compensation expense 2,138 2,710
Non-cash charges to interest expense 736 1,186
Other non-cash adjustments 4,002 3,156
Increase (decrease) in cash resulting from changes in the following

(excluding the effects of acquisitions):

Accounts receivable (25,352 ) (19,410 )
Inventories (211 ) (646 )
Other current assets and other assets (602 ) 2,305
Accounts payable 11,919 6,134
Accrued expenses and other non-current liabilities   4,169     (5,257 )
Net cash provided by operating activities of continuing operations 37,916 26,616
Net cash (used in) provided by operating activities of discontinued operations   (9 )   119  
Net cash provided by operating activities   37,907     26,735  
 
Cash Flows from Investing Activities
Purchases of property, plant, and equipment (8,816 ) (6,852 )
Cash paid for acquisitions, net of cash received (5,344 ) (2,705 )
Net proceeds from sale of property and equipment   12,447     417  
Net cash used in investing activities   (1,713 )   (9,140 )
 
Cash Flows from Financing Activities
Proceeds from long-term debt 210,000
Long-term debt payments (205,084 ) (414 )
Payment of note redemption fees (3,702 )
Payment of deferred financing fees (3,858 ) (18 )
Excess tax benefit from stock compensation 62 14
Net proceeds from issuance of common stock 342 52
Purchase of treasury stock at market prices   (642 )   (970 )
Net cash used in financing activities   (2,882 )   (1,336 )
Effect of exchange rate changes on cash   (492 )   751  
Net increase in cash and cash equivalents 32,820 17,010
Cash and cash equivalents at beginning of year   48,028     54,117  
Cash and cash equivalents at end of period $ 80,848   $ 71,127  
 
 
 
 
GIBRALTAR INDUSTRIES, INC.

Non-GAAP Reconciliation of Adjusted Statement of Operations

(Unaudited)

(in thousands, except per share data)

       
Three Months Ended September 30, 2013
As

Reported

In GAAP

Statements

Intangible Asset
Impairment

Restructuring Costs Acquisition Related Costs Adjusted

Statement of

Operations

Net sales $ 217,412 $ $ $ $ 217,412
Cost of sales 175,650     (1,341 ) (69 ) 174,240  
Gross profit 41,762 1,341 69 43,172
Selling, general, and administrative expense 24,754 (76 ) 24,678
Intangible asset impairment 23,160   (23,160 )      
(Loss) income from operations (6,152 ) 23,160 1,341 145 18,494
Operating margin (2.8 )% 10.7 % 0.6 % 0.1 % 8.5 %
 
Interest expense 3,828 3,828
Other income (66 )       (66 )
(Loss) income before income taxes (9,914 ) 23,160 1,341 145 14,732
Provision for income taxes 3,813   753   541   64   5,171  
(Loss) income from continuing operations $ (13,727 ) 22,407   800   81   9,561  
(Loss) income from continuing operations per share - diluted $ (0.44 ) $ 0.72   $ 0.03   $   $ 0.31  
 
 
 
 
GIBRALTAR INDUSTRIES, INC.

Non-GAAP Reconciliation of Adjusted Statement of Operations

(Unaudited)

(in thousands, except per share data)

       
Three Months Ended September 30, 2012
As

Reported

In GAAP

Statements

Restructuring

Costs

Acquisition

Related Costs

Adjusted

Statement of

Operations

Net sales $ 205,514 $ $ $ 205,514
Cost of sales 165,286   (201 ) (58 ) 165,027  
Gross profit 40,228 201 58 40,487
Selling, general, and administrative expense 24,479   (141 ) (81 ) 24,257  
Income from operations 15,749 342 139 16,230
Operating margin 7.7 % 0.2 % 0.1 % 7.9 %
 
Interest expense 4,688 4,688
Other income (55 )     (55 )
Income before income taxes 11,116 342 139 11,597
Provision for income taxes 4,094   17   81   4,192  
Income from continuing operations $ 7,022   325   58   7,405  
Income from continuing operations per share - diluted $ 0.23   $ 0.01   $   $ 0.24  
 
 
 
 
GIBRALTAR INDUSTRIES, INC.

Non-GAAP Reconciliation of Adjusted Statement of Operations

(Unaudited)

(in thousands, except per share data)

                   
Nine Months Ended September 30, 2013
As

Reported

In GAAP

Statements

Intangible Asset
Impairment

Restructuring

Costs

Acquisition

Related Costs

Note

Re-Financing

Adjusted

Statement of

Operations

Net sales $ 638,732 $ $ $ $ $ 638,732
Cost of sales 516,087 (2,051) (272) 513,764
Gross profit 122,645 2,051 272 124,968
Selling, general, and administrative expense 84,158 (202) (196) 83,760
Intangible asset impairment 23,160 (23,160)
Income from operations 15,327 23,160 2,253 468 41,208
Operating margin 2.4% 3.6% 0.4% 0.1% 6.5%
 
Interest expense 18,678 (7,166) 11,512
Other income (141) (141)
(Loss) income before income taxes (3,210) 23,160 2,253 468 7,166 29,837
Provision for income taxes 6,428 753 876 182 2,616 10,855
(Loss) income from continuing operations $ (9,638) 22,407 1,377 286 4,550 18,982
(Loss) income from continuing operations per share - diluted $ (0.31) $ 0.72 $ 0.04 $ 0.01 $ 0.15 $ 0.61
 
 
 
 
GIBRALTAR INDUSTRIES, INC.

Non-GAAP Reconciliation of Adjusted Statement of Operations

(Unaudited)

(in thousands, except per share data)

       
Nine Months Ended September 30, 2012
As

Reported

In GAAP

Statements

Restructuring

Costs

Acquisition

Related Costs

Adjusted

Statement of

Operations

Net sales $ 617,419 $ $ $ 617,419
Cost of sales 499,984   (3,080 ) (207 ) 496,697  
Gross profit 117,435 3,080 207 120,722
Selling, general, and administrative expense 78,370   (159 ) (193 ) 78,018  
Income from operations 39,065 3,239 400 42,704
Operating margin 6.3 % 0.5 % 0.1 % 6.9 %
 
Interest expense 13,989 13,989
Other income (401 )     (401 )
Income before income taxes 25,477 3,239 400 29,116
Provision for income taxes 9,091   1,145   141   10,377  
Income from continuing operations $ 16,386   2,094   259   18,739  
Income from continuing operations per share - diluted $ 0.53   $ 0.07   $ 0.01   $ 0.61  
 
 

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

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