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Gibraltar Announces Third Quarter 2022 Financial Results

Revenue: GAAP up 5.9%, Adjusted up 6.4%

EPS: GAAP up 28.6%, Adjusted up 19.1%

Raising Lower End and Narrowing Range of GAAP and Adjusted EPS Outlook

BUFFALO, N.Y., November 03, 2022--(BUSINESS WIRE)--Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading manufacturer and provider of products and services for the renewable energy, residential, agtech and infrastructure markets, today reported its financial results for the three-month period ended September 30, 2022.

"2022 is unfolding in line with our expectations as our focus on simplifying operations and margin recovery pays off. Our operating performance across our businesses was strong in the third quarter, with our Renewables and Agtech businesses showing continuing margin improvement as we anticipated, and the Residential and Infrastructure businesses both generating solid revenue and margin results," stated Chairman and CEO Bill Bosway.

Third Quarter 2022 Consolidated Results from Continuing Operations

Below are third quarter 2022 consolidated results from continuing operations:

Three Months Ended September 30, 2022

$Millions, except EPS

GAAP

Adjusted

2022

2021

% Change

2022

2021

% Change

Net Sales

$391.3

$369.4

5.9%

$389.0

$365.5

6.4%

Net Income

$34.3

$27.9

22.9%

$35.7

$31.2

14.4%

Diluted EPS

$1.08

$0.84

28.6%

$1.12

$0.94

19.1%

Revenue increased 5.9% to $391.3 million and adjusted revenue increased 6.4% to $389.0 million. Approximately half of the increase was organic growth with the remainder from the acquisition of Quality Aluminum Products (QAP). Revenue growth was driven by participation gains, price management, and the acquisition of Quality Aluminum Products in the Residential segment, offset by continuing end market supply chain challenges and project delays in the Renewables and Agtech segments.

GAAP earnings increased 22.9% to $34.3 million, or $1.08 per share, and adjusted earnings increased 14.4% to $35.7 million, or $1.12 per share. EPS growth of 28.6% and 19.1% in the quarter on a GAAP and adjusted basis, respectively, was driven by participation gains, price management, business mix, and 80/20 initiatives and the share repurchase program.

Adjusted measures exclude charges for restructuring initiatives, acquisition-related items, senior leadership transition costs, and the results of the Processing business, which was classified as held for sale in the first quarter of 2022, as further described in the appended reconciliation of adjusted financial measures.

Third Quarter Segment Results

Renewables

For the third quarter, the Renewables segment reported:

Three Months Ended September 30, 2022

$Millions

GAAP

Adjusted

2022

2021

% Change

2022

2021

% Change

Net Sales

$111.1

$130.2

(14.7)%

$111.1

$130.2

(14.7)%

Operating Income

$14.2

$12.2

16.4%

$14.3

$14.8

(3.4)%

Operating Margin

12.8%

9.4%

340 bps

12.9%

11.4%

150 bps

Segment revenue was down 14.7% and backlog decreased 9%. The timing and progress of solar projects depend upon the supply of solar panels, and solar installations continue to be impacted by supply constraints due to the Uyghur Forced Labor Prevention Act (UFLPA), which was enacted in June, and a three-month delay by the U.S. Department of Commerce for its preliminary ruling on its solar panel anti-dumping / countervailing duties (AD/CVD) anticircumvention investigation.

Despite the effects of this trade environment, adjusted operating margin improved as expected, increasing 150 basis points year-over-year and 590 basis points sequentially, driven by improved project management, price / cost alignment, and field operations efficiencies.

Residential

For the third quarter, the Residential segment reported:

Three Months Ended September 30, 2022

$Millions

GAAP

Adjusted

2022

2021

% Change

2022

2021

% Change

Net Sales

$215.6

$171.5

25.7%

$215.6

$171.5

25.7%

Operating Income

$35.8

$29.5

21.4%

$36.3

$29.6

22.6%

Operating Margin

16.6%

17.2%

(60) bps

16.8%

17.2%

(40) bps

Revenue increased 25.7%, the segment’s ninth consecutive quarter of double-digit growth, with organic revenue up 19.0% and the acquisition of Quality Aluminum Products contributing 6.7% of the growth. Organic revenue growth was driven by pricing, participation gains and market demand.

Adjusted operating income grew 22.6% and adjusted operating margin was flat on an organic basis. The recent acquisition of Quality Aluminum Products drove the 40 basis point decrease to 16.8%. We expect QAP margins to improve as 80/20 is implemented.

Agtech

For the third quarter, the Agtech segment reported:

Three Months Ended September 30, 2022

$Millions

GAAP

Adjusted

2022

2021

% Change

2022

2021

% Change

Net Sales

$44.2

$49.0

(9.8)%

$41.9

$45.2

(7.3)%

Operating Income

$3.8

$2.2

72.7%

$4.5

$3.9

15.4%

Operating Margin

8.5%

4.5%

400 bps

10.7%

8.7%

200 bps

GAAP revenue decreased 9.8%, with adjusted revenue down 7.3% due to Produce project movement partially offset by strong Commercial business. While quote activity remains robust, backlog decreased 7% on a challenging year-over-year comparison.

GAAP operating margin improved 400 basis points and adjusted operating margin 200 basis points. On a sequential basis, adjusted operating margin improved 400 basis points. Margin performance was driven by good business mix, improving price / cost management, supply chain improvement, and 80/20 initiatives.

Infrastructure

For the third quarter, the Infrastructure segment reported:

Three Months Ended September 30, 2022

$Millions

GAAP

Adjusted

2022

2021

% Change

2022

2021

% Change

Net Sales

$20.4

$18.7

9.1%

$20.4

$18.7

9.1%

Operating Income

$2.6

$1.6

62.5%

$2.6

$1.6

62.5%

Operating Margin

12.6%

8.8%

380 bps

12.6%

8.8%

380 bps

Revenue increased 9.1% as bidding activity remained very strong and backlog increased 11%. Management expects continued positive impact from increased infrastructure spending related to the Infrastructure Investment and Jobs Act through the end of this year and into 2023.

Operating income increased 62.5% and operating margins improved 380 basis points driven by price material cost alignment, volume leverage, positive mix and improved operating execution.

Business Outlook

Gibraltar is raising the lower end and narrowing the range of its EPS outlook for the full year 2022, with consolidated revenue still expected to range between $1.38 billion and $1.43 billion. GAAP EPS is expected to be between $2.90 and $3.00, and adjusted EPS expected to be between $3.30 and $3.40. Previous GAAP and Adjusted EPS guidance ranges were $2.80 to $3.00 and $3.20 to $3.40, respectively.

"Given our performance to date and our demand profile entering the fourth quarter, we remain confident in delivering our full-year EPS outlook. We remain very focused on simplifying our operations, executing for our customers and controlling the things we can control," said Mr. Bosway.

Third Quarter 2022 Conference Call Details

Gibraltar will host a conference call today starting at 9:00 a.m. ET to review its results for the third quarter of 2022. Interested parties may access the webcast through the Investors section of the Company’s website at www.gibraltar1.com, where related presentation materials will also be posted prior to the conference call. The call may also be accessed by dialing into the call at (877) 407-3088 or (201) 389-0927. For interested individuals unable to join the live conference call, a webcast replay will be available on the Company’s website for one year.

About Gibraltar

Gibraltar is a leading manufacturer and provider of products and services for the renewable energy, residential, agtech, and infrastructure markets. Gibraltar’s mission, to make life better for people and the planet, is fueled by advancing the disciplines of engineering, science, and technology. Gibraltar is innovating to reshape critical markets in comfortable living, sustainable power, and productive growing throughout North America. For more please visit www.gibraltar1.com.

Forward-Looking Statements

Certain information set forth in this news release, other than historical statements, contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are based, in whole or in part, on current expectations, estimates, forecasts, and projections about the Company’s business, and management’s beliefs about future operations, results, and financial position. These statements are not guarantees of future performance and are subject to a number of risk factors, uncertainties, and assumptions. Actual events, performance, or results could differ materially from the anticipated events, performance, or results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from current expectations include, among other things, the availability and pricing of our principal raw materials and component parts, supply chain challenges causing project delays and field operations inefficiencies and disruptions, availability of labor at our manufacturing and distribution facilities or on our project sites, further impacts of COVID-19 on our customers, suppliers, employees, operations, business, liquidity and cash flows, the loss of any key customers, adverse effects of inflation, other general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, our ability to realize synergies from newly acquired businesses, disruptions to our IT systems, the impact of regulation (including the Department of Commerce’s solar panel anti-circumvention investigation and the Uyghur Forced Labor Prevention Act (UFLPA)), rebates, credits and incentives and variations in government spending and our ability to derive expected benefits from restructuring, productivity initiatives, liquidity enhancing actions, and other cost reduction actions. Before making any investment decisions regarding our company, we strongly advise you to read the section entitled "Risk Factors" in our most recent annual report on Form 10-K and Quarterly Report on Form 10-Q which can be accessed under the "SEC Filings" link of the "Investor Info" page of our website at www.Gibraltar1.com. 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.

Adjusted Financial Measures

To supplement Gibraltar’s consolidated financial statements presented on a GAAP basis, Gibraltar also presented certain adjusted financial measures in this news release, including adjusted revenues, adjusted operating income and margin, adjusted net income, adjusted earnings per share (EPS) and adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) each a non-GAAP financial measure. Adjusted revenue reflects the removal of revenue associated with our Processing business, which has been classified as held-for-sale. Adjusted net income, operating income and margin excludes special charges consisting of restructuring costs primarily associated with 80/20 simplification or lean initiatives, senior leadership transition costs, acquisition related costs and the operating losses generated by our processing business that has been classified as held-for-sale. These special charges are excluded since they may not be considered directly related to the Company’s ongoing business operations. The adjusted measures now exclude the results of the Processing business since it was classified as held for sale as of March 31, 2022. Our adjusted financial measures as of and for the three-month and nine-month periods ending September 30, 2021 have been recast to reflect this additional adjustment as detailed in the appended reconciliation of adjusted financial measures. The results of the Processing business are considered non-recurring due to the Company’s commitment during the first quarter of 2022 to a plan to sell the Processing business. The aforementioned exclusions along with other adjustments to other income below operating profit are excluded from adjusted EPS. Adjusted EBITDA further excludes depreciation, amortization and stock compensation. In evaluating its business, the Company considers and uses these non-GAAP financial measures as supplemental measures of its operating performance. The Company believes that the presentation of results excluding these items provides meaningful supplemental data to investors 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. Adjusted EBITDA is also a useful measure of the Company’s ability to service debt and is one of the measures used for determining the Company’s debt covenant compliance.

Adjustments to the most directly comparable financial measures presented on a GAAP basis are quantified in the reconciliation of adjusted financial measures excluding special charges provided in the supplemental financial schedules that accompany this news release. These adjusted measures should not be viewed as a substitute for the Company’s GAAP results and may be different than adjusted measures used by other companies and our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Reconciliations of non-GAAP measures related to full-year 2022 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations due to the high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations.

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2022

2021

2022

2021

Net sales

$

391,291

$

369,353

$

1,076,105

$

1,005,334

Cost of sales

296,735

286,101

826,434

781,133

Gross profit

94,556

83,252

249,671

224,201

Selling, general, and administrative expense

47,160

45,274

140,941

141,999

Income from operations

47,396

37,978

108,730

82,202

Interest expense

1,048

491

2,189

1,180

Other expense (income)

363

72

797

(4,279

)

Income before taxes

45,985

37,415

105,744

85,301

Provision for income taxes

11,690

9,561

26,686

20,578

Income from continuing operations

34,295

27,854

79,058

64,723

Discontinued operations:

(Loss) income before taxes

(201

)

1,867

Provision for income taxes

97

323

(Loss) income from discontinued operations

(298

)

1,544

Net income

$

34,295

$

27,556

$

79,058

$

66,267

Net earnings per share – Basic:

Income from continuing operations

$

1.08

$

0.85

$

2.44

$

1.97

(Loss) income from discontinued operations

(0.01

)

0.05

Net income

$

1.08

$

0.84

$

2.44

$

2.02

Weighted average shares outstanding – Basic

31,707

32,802

32,396

32,791

Net earnings per share – Diluted:

Income from continuing operations

$

1.08

$

0.84

$

2.43

$

1.96

(Loss) income from discontinued operations

(0.01

)

0.05

Net income

$

1.08

$

0.83

$

2.43

$

2.01

Weighted average shares outstanding – Diluted

31,812

33,050

32,503

33,055

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

September 30,
2022

December 31,
2021

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

21,919

$

12,849

Accounts receivable, net of allowance of $3,847 and $3,738, respectively

275,704

236,444

Inventories, net

204,000

176,207

Prepaid expenses and other current assets

37,578

21,467

Total current assets

539,201

446,967

Property, plant, and equipment, net

105,097

96,885

Operating lease assets

24,850

18,120

Goodwill

510,866

510,942

Acquired intangibles

145,374

141,504

Other assets

875

483

$

1,326,263

$

1,214,901

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

157,167

$

172,286

Accrued expenses and other current liabilities

82,789

67,993

Billings in excess of cost

42,412

46,711

Total current liabilities

282,368

286,990

Long-term debt

121,840

23,781

Deferred income taxes

40,257

40,278

Non-current operating lease liabilities

17,956

11,390

Other non-current liabilities

20,351

27,204

Stockholders’ equity:

Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding

Common stock, $0.01 par value; authorized 100,000 shares in 2022 and 2021;

34,034 shares and 33,799 shares issued and outstanding in 2022 and 2021

340

338

Additional paid-in capital

320,428

314,541

Retained earnings

624,630

545,572

Accumulated other comprehensive (loss) income

(6,769

)

187

Treasury stock, at cost, 2,530 and 1,107 shares in 2022 and 2021

(95,138

)

(35,380

)

Total stockholders’ equity

843,491

825,258

$

1,326,263

$

1,214,901

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Nine Months Ended

September 30,

2022

2021

Cash Flows from Operating Activities

Net income

$

79,058

$

66,267

Income from discontinued operations

1,544

Income from continuing operations

79,058

64,723

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization

19,192

23,958

Stock compensation expense

5,889

6,769

Exit activity costs, non-cash

1,427

1,193

Provision for (benefit of) deferred income taxes

181

(689

)

Other, net

3,620

1,274

Changes in operating assets and liabilities, excluding the effects of acquisitions:

Accounts receivable

(25,538

)

(65,297

)

Inventories

(19,840

)

(65,906

)

Other current assets and other assets

393

(316

)

Accounts payable

(24,756

)

32,029

Accrued expenses and other non-current liabilities

(1,065

)

(12,261

)

Net cash provided by (used in) operating activities of continuing operations

38,561

(14,523

)

Net cash used in operating activities of discontinued operations

(2,002

)

Net cash provided by (used in) operating activities

38,561

(16,525

)

Cash Flows from Investing Activities

Acquisitions, net of cash acquired

(51,621

)

4,143

Purchases of property, plant, and equipment

(15,704

)

(13,251

)

Net proceeds from sale of business

38,062

Net cash (used in) provided by investing activities of continuing operations

(67,325

)

28,954

Net cash used in investing activities of discontinued operations

(176

)

Net cash (used in) provided by investing activities

(67,325

)

28,778

Cash Flows from Financing Activities

Proceeds from long-term debt

197,800

58,500

Long-term debt payments

(100,000

)

(83,636

)

Purchase of common stock at market prices

(58,125

)

(6,161

)

Net proceeds from issuance of common stock

1,021

Net cash provided by (used in) financing activities

39,675

(30,276

)

Effect of exchange rate changes on cash

(1,841

)

(97

)

Net increase (decrease) in cash and cash equivalents

9,070

(18,120

)

Cash and cash equivalents at beginning of year

12,849

32,054

Cash and cash equivalents at end of period

$

21,919

$

13,934

GIBRALTAR INDUSTRIES, INC.

Reconciliation of Adjusted Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months Ended

September 30,2022

As Reported

In GAAP

Statements

Restructuring

& Senior

Leadership

Transition

Costs

Acquisition

Related

Items

Portfolio

Management

Adjusted

Financial

Measures

Net Sales

Renewables

$

111,119

$

$

$

$

111,119

Residential

215,592

215,592

Agtech

44,217