Gibraltar’s Net Sales Increase 17% in First Quarter

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Gibraltar’s Net Sales Increase 17% in First Quarter

BUFFALO, N.Y.–(BUSINESS WIRE)–

Gibraltar Industries, Inc. (Nasdaq: ROCK – News), 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.

Management Comments

“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.”

Financial Results

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

  • Gibraltar’s liquidity increased again to $176 million as of March 31,
    2012, including cash on hand of $35 million and availability under the
    Company’s revolving credit facility.
  • Working capital management continued to be effective, as days of net
    working capital, which consists of accounts receivable, inventory and
    accounts payable, were 66 for the first quarter of 2012, compared with
    56 days for the first quarter a year earlier. The rise in working
    capital days primarily reflects a longer cash conversion cycle for the
    two businesses acquired in the second quarter of 2011.

Outlook

“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.

About Gibraltar

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.

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
     

 

Three Months Ended

March 31,
2012     2011
Net sales $ 192,171 $ 163,563
Cost of sales   156,690     133,518  
Gross profit 35,481 30,045
Selling, general, and administrative expense   28,458     22,823  
Income from operations   7,023     7,222  
 
Interest expense 4,674 4,454
Other income   (31 )   (23 )
Income before taxes 2,380 2,791
Provision for income taxes   931     1,350  
Income from continuing operations 1,449 1,441

Discontinued operations:

(Loss) income before taxes (137 ) 12,946
(Benefit of) provision for income taxes   (50 )   5,978  
(Loss) income from discontinued operations   (87 )   6,968  

Net income

$ 1,362   $ 8,409  
 
Net income per share – Basic:
Income from continuing operations $ 0.05 $ 0.05
(Loss) income from discontinued operations   (0.01 )   0.23  
Net income $ 0.04   $ 0.28  
Weighted average shares outstanding – Basic   30,718     30,425  
 
Net income per share – Diluted:
Income from continuing operations $ 0.05 $ 0.05

(Loss) income from discontinued operations

  (0.01 )   0.22  
Net income $ 0.04   $ 0.27  
Weighted average shares outstanding – Diluted   30,851     30,594  
 
 
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)
         
March 31, December 31,
2012 2011
Assets
Current assets:
Cash and cash equivalents $ 35,327 $ 54,117
Accounts receivable, net of reserve 105,783 90,595
Inventories 119,656 109,270
Other current assets   12,627     14,872  
Total current assets 273,393 268,854
 
Property, plant, and equipment, net 150,185 151,974
Goodwill 349,136 348,326
Acquired intangibles 94,174 95,265
Other assets   7,290     7,636  
 
Total Assets $ 874,178   $ 872,055  
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 79,124 $ 67,320
Accrued expenses 43,624 60,687
Current maturities of long-term debt   416     417  
Total current liabilities 123,164 128,424
 
Long-term debt 206,837 206,746
Deferred income taxes 55,914 55,801
Other non-current liabilities 24,472 21,148
 
Shareholders’ equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; none
outstanding

Common stock, $0.01 par value; authorized 50,000 shares, 30,879 and
  30,702
shares issued in 2012 and 2011

309 307
Additional paid-in capital 238,099 236,673
Retained earnings 230,799 229,437
Accumulated other comprehensive loss (1,397 ) (3,350 )

Cost of 343 and 281 common shares held in treasury in 2012 and 2011

  (4,019 )   (3,131 )
 
Total shareholders’ equity   463,791     459,936  
 
Total liabilities & shareholders’ equity $ 874,178   $ 872,055  
 
 

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
         
Three Months Ended March 31,
2012 2011
Cash Flows from Operating Activities
Net income $ 1,362 $ 8,409
(Loss) income from discontinued operations   (87 )   6,968  
Income from continuing operations 1,449 1,441

Adjustments to reconcile net income to net cash provided by
  operating
activities:

Depreciation and amortization 6,563 5,891
Stock compensation expense 1,330 2,276
Non-cash charges to interest expense 393 564
Other non-cash adjustments 277 537

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

Accounts receivable (15,131 ) (24,132 )
Inventories (7,964 ) (13,847 )
Other current assets and other assets 2,057 7,714
Accounts payable 12,014 14,577
Accrued expenses and other non-current liabilities   (14,037 )   (4,445 )
Net cash used in operating activities of continuing operations (13,049 ) (9,424 )
Net cash used in operating activities of discontinued operations   (31 )   (3,086 )
Net cash used in operating activities   (13,080 )   (12,510 )
 
Cash Flows from Investing Activities
Purchases of property, plant, and equipment (2,743 ) (1,785 )
Cash paid for acquisitions, net of cash received (2,705 )
Purchase of other investment (250 )
Net proceeds from sale of businesses 58,000
Net proceeds from sale of property and equipment 8   463  
Net cash (used in) provided by investing activities   (5,440 )   56,428  
 
Cash Flows from Financing Activities
Purchase of treasury stock at market prices (888 ) (730 )
Long-term debt payments (2 )
Excess tax benefit from stock compensation 98
Net proceeds from issuance of common stock       10  
Net cash used in financing activities   (792 )   (720 )
 
Effect of exchange rate changes on cash   522     440  
 
Net (decrease) increase in cash and cash equivalents (18,790 ) 43,638
 
Cash and cash equivalents at beginning of year   54,117     60,866  
 
Cash and cash equivalents at end of period $ 35,327   $ 104,504  
 
 
 
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statement of Operations
(unaudited)
(in thousands, except per share data)
 
      Three Months Ended March 31, 2012

As
Reported
In GAAP
Statements

 

Acquisition
Related Costs

 

Restructuring
Costs

 

Adjusted
Statement of
Operations

Net sales $ 192,171 $ $ $ 192,171
Cost of sales 156,690   (60 ) (1,766 ) 154,864  
Gross profit 35,481 60 1,766 37,307
Selling, general, and administrative expense 28,458   (80 ) (14 ) 28,364  
Income from operations 7,023 140 1,780 8,943
Operating margin 3.7 % 0.1 % 0.9 % 4.7 %
Interest expense 4,674 4,674
Other income (31 )     (31 )
Income before income taxes 2,380 140 1,780 4,300
Provision for income taxes 931   15   709   1,655  
Income from continuing operations $ 1,449   $ 125   $ 1,071   $ 2,645  
Income from continuing operations per share – diluted $ 0.05   $ 0.01   $ 0.03   $ 0.09  
 
 
 
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statement of Operations
(unaudited)
(in thousands, except per share data)
 
      Three Months Ended March 31, 2011

As
Reported
In GAAP
Statements

 

Acquisition
Related
Costs

 

Exit
Activity
Costs

 

Surrendered
Equity
Compensation

 

Adjusted
Statement of
Operations

Net sales $ 163,563 $ $ $ $ 163,563
Cost of sales 133,518     (858 )   132,660  
Gross profit 30,045 858 30,903
Selling, general, and administrative expense 22,823   (390 ) (10 ) (885 ) 21,538  
Income from operations 7,222 390 868 885 9,365
Operating margin 4.4 % 0.2 % 0.6 % 0.5 % 5.7 %
Interest expense 4,454 4,454
Other income (23 )       (23 )
Income before income taxes 2,791 390 868 885 4,934
Provision for income taxes 1,350     348     1,698  
Income from continuing operations $ 1,441   $ 390   $ 520   $ 885   $ 3,236  

Income from continuing operations per share – diluted

$ 0.05   $ 0.01   $ 0.02   $ 0.03   $ 0.11  
 
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statement of Operations
(unaudited)
(in thousands, except per share data)
 
      Three Months Ended December 31, 2011

As
Reported
In GAAP
Statements

 

Restructuring
Costs

 

Acquisition
Related
Costs

 

Adjusted
Statement of
Operations

Net sales $ 174,141 $ $ $ 174,141
Cost of sales 147,462   (2,219 )   145,243  
Gross profit 26,679 2,219 28,898
Selling, general, and administrative expense 33,494   (105 ) (216 ) 33,173  
Loss from operations (6,815 ) 2,324 216 (4,275 )
Operating margin (3.9 )% 1.3 % 0.1 % (2.5 )%
Interest expense 5,042 5,042
Other income (44 )     (44 )
Loss before income taxes (11,813 ) 2,324 216 (9,273 )
Benefit of income taxes (4,959 ) 757     (4,202 )
Loss from continuing operations $ (6,854 ) $ 1,567   $ 216   $ (5,071 )
Loss from continuing operations per share – diluted $ (0.22 ) $ 0.05   $ 0.00   $ (0.17 )
 

Refer http://finance.yahoo.com/news/gibraltar-net-sales-increase-17-113000065.html

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