Document

Table of Contents

 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 gibindcolorlogonotaga02.gif
 
FORM 10-Q
 
 
 
(Mark one)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 0-22462
 
 
GIBRALTAR INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
 
 
 
Delaware
 
16-1445150
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
3556 Lake Shore Road, P.O. Box 2028
Buffalo, New York
 
14219-0228
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (716) 826-6500
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
¨
 
 
 
 
 
 
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.).    Yes  ¨    No  x
As of July 25, 2017, the number of common shares outstanding was: 31,601,117.



Table of Contents

GIBRALTAR INDUSTRIES, INC.
INDEX
 
 
PAGE NUMBER
PART I.
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8-32
Item 2.
 
33-42
Item 3.
 
Item 4.
 
PART II.
 
 
Item 1.
 
Item 1A.
 
Item 2.
 
Item 3.
 
Item 4.
 
Item 5.
 
Item 6.
 


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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Net Sales
$
247,627

 
$
265,738

 
$
454,232

 
$
503,409

Cost of sales
185,802

 
196,895

 
343,152

 
380,416

Gross profit
61,825

 
68,843

 
111,080

 
122,993

Selling, general, and administrative expense
36,895

 
40,267

 
76,471

 
76,656

Income from operations
24,930

 
28,576

 
34,609

 
46,337

Interest expense
3,550

 
3,666

 
7,126

 
7,357

Other expense
353

 
8,195

 
407

 
8,160

Income before taxes
21,027

 
16,715

 
27,076

 
30,820

Provision for (benefit of) income taxes
7,853

 
(1,897
)
 
9,906

 
3,179

Income from continuing operations
13,174

 
18,612

 
17,170

 
27,641

Discontinued operations:
 
 
 
 
 
 
 
Loss before taxes
(644
)
 

 
(644
)
 

Benefit of income taxes
(239
)
 

 
(239
)
 

Loss from discontinued operations
(405
)
 

 
(405
)
 

Net income
$
12,769

 
$
18,612

 
$
16,765

 
$
27,641

Net earnings per share – Basic:
 
 
 
 
 
 
 
Income from continuing operations
$
0.41

 
$
0.59

 
$
0.54

 
$
0.88

Loss from discontinued operations
(0.01
)
 

 
(0.01
)
 

Net income
$
0.40

 
$
0.59

 
$
0.53

 
$
0.88

Weighted average shares outstanding – Basic
31,709

 
31,475

 
31,698

 
31,447

Net earnings per share – Diluted:
 
 
 
 
 
 
 
Income from continuing operations
$
0.41

 
$
0.58

 
$
0.53

 
$
0.87

Loss from discontinued operations
(0.01
)
 

 
(0.01
)
 

Net income
$
0.40

 
$
0.58

 
$
0.52

 
$
0.87

Weighted average shares outstanding – Diluted
32,183

 
32,007

 
32,219

 
31,916

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
12,769

 
$
18,612

 
$
16,765

 
$
27,641

Other comprehensive income (loss):
 
 
 
 
 
 
 
Foreign currency translation adjustment
1,091

 
7,753

 
1,770

 
10,831

Adjustment to retirement benefit liability, net of tax
(3
)
 
(1
)
 
(6
)
 
(2
)
Adjustment to post employment health care benefit liability, net of tax
30

 
38

 
59

 
76

Other comprehensive income
1,118

 
7,790

 
1,823

 
10,905

Total comprehensive income
$
13,887

 
$
26,402

 
$
18,588

 
$
38,546

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

 
June 30,
2017
 
December 31,
2016
 
(unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
182,379

 
$
170,177

Accounts receivable, net
138,871

 
124,072

Inventories
86,065

 
89,612

Other current assets
8,351

 
7,336

Total current assets
415,666

 
391,197

Property, plant, and equipment, net
95,869

 
108,304

Goodwill
320,848

 
304,032

Acquired intangibles
110,325

 
110,790

Other assets
4,750

 
3,922

 
$
947,458

 
$
918,245

Liabilities and Shareholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
88,007

 
$
69,944

Accrued expenses
69,389

 
70,392

Billings in excess of cost
13,963

 
11,352

Current maturities of long-term debt
400

 
400

Total current liabilities
171,759

 
152,088

Long-term debt
209,229

 
209,237

Deferred income taxes
38,203

 
38,002

Other non-current liabilities
46,364

 
58,038

Shareholders’ equity:
 
 
 
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding

 

Common stock, $0.01 par value; authorized 50,000 shares; 32,155 shares and 32,085 shares issued and outstanding in 2017 and 2016
321

 
320

Additional paid-in capital
267,601

 
264,418

Retained earnings
228,767

 
211,748

Accumulated other comprehensive loss
(5,898
)
 
(7,721
)
Cost of 554 and 530 common shares held in treasury in 2017 and 2016
(8,888
)
 
(7,885
)
Total shareholders’ equity
481,903

 
460,880

 
$
947,458

 
$
918,245

See accompanying notes to consolidated financial statements.

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Table of Contents

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited) 
 
Six Months Ended 
 June 30,
 
2017
 
2016
Cash Flows from Operating Activities
 
 
 
Net income
$
16,765

 
$
27,641

Loss from discontinued operations
(405
)
 

Income from continuing operations
17,170

 
27,641

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
11,006

 
11,856

Stock compensation expense
3,191

 
3,218

Net gain on sale of assets
(39
)
 
(198
)
Loss on sale of business

 
8,533

Exit activity (recoveries) costs, non-cash
(2,737
)
 
1,074

Provision for deferred income taxes

 
196

Other, net
628

 
(449
)
Changes in operating assets and liabilities, excluding the effects of acquisitions:
 
 
 
Accounts receivable
(14,446
)
 
9,145

Inventories
2,245

 
4,988

Other current assets and other assets
(2,174
)
 
(4,333
)
Accounts payable
16,962

 
(2,427
)
Accrued expenses and other non-current liabilities
(10,086
)
 
(9,803
)
Net cash provided by operating activities
21,720

 
49,441

Cash Flows from Investing Activities
 
 
 
Cash paid for acquisitions, net of cash acquired
(18,494
)
 
(2,314
)
Net proceeds from sale of property and equipment
12,778

 
162

Purchases of property, plant, and equipment
(3,274
)
 
(4,035
)
Net proceeds from sale of business

 
8,479

Other, net

 
1,118

Net cash (used in) provided by investing activities
(8,990
)
 
3,410

Cash Flows from Financing Activities
 
 
 
Long-term debt payments
(400
)
 
(400
)
Payment of debt issuance costs

 
(54
)
Purchase of treasury stock at market prices
(1,003
)
 
(462
)
Net proceeds from issuance of common stock
247

 
2,057

Net cash (used in) provided by financing activities
(1,156
)
 
1,141

Effect of exchange rate changes on cash
628

 
1,264

Net increase in cash and cash equivalents
12,202

 
55,256

Cash and cash equivalents at beginning of year
170,177

 
68,858

Cash and cash equivalents at end of period
$
182,379

 
$
124,114

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(in thousands)
(unaudited)
 
 
Common Stock
 
Additional
Paid-In Capital
 
Retained Earnings
 
Accumulated
Other
Comprehensive Loss
 
Treasury Stock
 
Total
Shareholders’ Equity
 
Shares
 
Amount
 
 
 
 
Shares
 
Amount
 
Balance at December 31, 2016
32,085

 
$
320

 
$
264,418

 
$
211,748

 
$
(7,721
)
 
530

 
$
(7,885
)
 
$
460,880

Net income

 

 

 
16,765

 

 

 

 
16,765

Foreign currency translation adjustment

 

 

 

 
1,770

 

 

 
1,770

Adjustment to retirement benefit liability, net of taxes of ($3)

 

 

 

 
(6
)
 

 

 
(6
)
Adjustment to post employment health care benefit liability, net of taxes of $36

 

 

 

 
59

 

 

 
59

Stock compensation expense

 

 
3,191

 

 

 

 

 
3,191

Cumulative effect of accounting change (see Note 2)

 

 
(254
)
 
254

 

 

 

 

Stock options exercised
16

 

 
247

 

 

 

 

 
247

Issuance of restricted stock
2

 

 

 

 

 

 

 

Net settlement of restricted stock units
52

 
1

 
(1
)
 

 

 
24

 
(1,003
)
 
(1,003
)
Balance at June 30, 2017
32,155

 
$
321

 
$
267,601

 
$
228,767

 
$
(5,898
)
 
554

 
$
(8,888
)
 
$
481,903

See accompanying notes to consolidated financial statements.

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Table of Contents

GIBRALTAR INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been prepared by management in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting of normal recurring adjustments considered necessary for the fair presentation of results for the interim period have been included. The results of operations for the three and six month periods ended June 30, 2017 are not necessarily indicative of the results expected for the full year. The Company is subject to reduced activity in the first and fourth quarters as colder, inclement weather reduces order rates from end markets it serves. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our annual Form 10-K for the year ended December 31, 2016.

Certain prior year amounts have been reclassified to conform to current year's presentation. Refer to Note 2 for a summary of ASUs we adopted during 2017 and the related financial statement impact.

Immaterial Adjustment to Previously Reported Interim Period

For the three and six month periods ended June 30, 2016, immaterial differences were identified between amounts presented in prior quarterly reports on Form 10-Q and amounts required to be recorded in accordance with U.S. generally accepted accounting principles due to errors in the Company's accounting for estimated total contract costs at completion as it is related to revenue recognition under the percentage of completion accounting method. Refer to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 for a complete description of these differences. The corrected amounts for the three and six month periods ended June 30, 2016, are presented in the accompanying consolidated statements of operations, comprehensive income and cash flows.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements Adopted
Standard
Description
Financial Statement Effect or Other Significant Matters
ASU No. 2016-09
Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
The standard simplifies the accounting for share-based payment award transactions including: income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The provisions of this standard are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted.
The Company has adopted all amendments included in this standard under each required transition method.  The Company concluded there were no material changes to prior periods, except for the following: the Company (a) reclassified its prior interim period excess tax benefit for stock compensation of $292,000 on its consolidated statement of cash flows from a financing activity to an operating activity; and (b) recognized a cumulative-effect adjustment of $254,000 as an increase to retained earnings and decrease to additional paid-in capital on the Company's consolidated statement of shareholders' equity as of January 1, 2017 to reflect the change in value for a restricted stock unit liability award as of December 31, 2016, as if the award had been classified as an equity award since its respective grant date.

Date of adoption: Q1 2017

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Table of Contents

Standard
Description
Financial Statement Effect or Other Significant Matters
ASU No. 2017-04
Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
The standard eliminates the "Step 2" analysis to determine the amount of impairment realized when a reporting unit's carrying amount exceeds its fair value in its "Step 1" analysis of accounting for impairment of goodwill. The impairment charge would be the amount determined in "Step 1." The provisions of this standard are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.
The Company has adopted this standard and it did not have any impact on the Company's consolidated financial statements.








Date of Adoption: Q1 2017
ASU No. 2017-07
Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
The standard requires an employer to recognize the service cost component of net periodic pension costs and net periodic postretirement benefit costs in the same line item(s) as other compensation costs from services rendered by pertinent employees during the period. Other components of net benefit cost are required to be presented separately from the service cost component and outside a subtotal of income from operations. The provisions of this standard are effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance.
The Company has adopted this standard and has applied it retrospectively for the presentation of the service cost component, as well as, other components of net periodic pension cost and net periodic postretirement benefit cost in our statement of operations. The adoption decreased selling, general, and administrative expense by $160,000 for the three months ended June 30, 2016 and $320,000 for the six months ended June 30, 2016, and comparably increased other expense by the same amounts, respectively. This guidance did not have any impact on our balance sheet or our statement of cash flows.

Date of Adoption: Q1 2017
Recent Accounting Pronouncements Not Yet Adopted
Standard
Description
Financial Statement Effect or Other Significant Matters
ASU No. 2014-09
Revenue from Contracts with Customers (Topic 606)
And All Related ASUs
The standard requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires additional disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and assets recognized from costs incurred to obtain or fulfill a contract. The provisions of the standard, as well as all subsequently issued clarifications to the standard, are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The standard can be adopted using either a full retrospective or modified retrospective approach.
The Company currently believes the most significant impact of this standard upon adoption relates to the revenue recognition for custom fabricated products within the Company's Industrial and Infrastructure Products segment. Under this standard, the Company expects to recognize revenue on an over time basis on custom fabricated products in the Industrial and Infrastructure Products segment which is a change from our current revenue recognition policy of point-in-time basis. The Company expects revenue recognition related to the remaining Industrial and Infrastructure Products segment, Residential Products segment and Renewable Energy and Conservation segment to remain substantially unchanged upon adoption of this standard. The Company has identified and is in the process of implementing appropriate changes to the Company's business processes, systems and internal controls to support recognition and disclosure under this standard. The Company currently anticipates adopting the modified retrospective transition method approach. The Company has not yet completed the process of quantifying the effects of any changes that will result from adoption.

Planned date of adoption: Q1 2018

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Standard
Description
Financial Statement Effect or Other Significant Matters
ASU No. 2016-02
Leases (Topic 842)
The standard requires lessees to recognize most leases as assets and liabilities on the balance sheet, but record expenses on the statement of operations in a manner similar to current accounting. For lessors, the guidance modifies the classification criteria and accounting for sales-type and direct financing leases. The standard also requires additional disclosures about leasing arrangements and requires a modified retrospective transition approach for existing leases, whereby the standard will be applied to the earliest year presented. The provisions of the standard are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted.
The Company is currently evaluating the impact of this standard on the Company's consolidated financial statements and related disclosures, including the impact on the Company's current lease portfolio from both a lessor and lessee perspective. The adoption of this standard will primarily result in an increase in the assets and liabilities on the Company's consolidated balance sheet and related disclosures.





Planned date of adoption: Q1 2019
ASU No. 2016-15
Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
The standard provides guidance on eight specific cash flow issues to reduce diversity in reporting. The provisions of this standard are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted.
The Company is currently evaluating the requirements of this standard and has not yet determined its impact on the Company's consolidated financial statements.

Planned date of adoption: Q1 2018
ASU No. 2016-16
Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory
The standard allows an entity to recognize income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The provisions of this standard are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance.
The Company is currently evaluating the requirements of this standard and has not yet determined its impact on the Company's consolidated financial statements.







Planned date of adoption: Q1 2018

3. ACCOUNTS RECEIVABLE, NET
Accounts receivable consists of the following (in thousands):
 
June 30, 2017
 
December 31, 2016
Trade accounts receivable
$
101,578

 
$
81,193

Contract receivables:
 
 
 
Amounts billed
35,658

 
41,569

Costs in excess of billings
7,007

 
6,582

Total contract receivables
42,665

 
48,151

Total accounts receivable
144,243

 
129,344

Less allowance for doubtful accounts
(5,372
)
 
(5,272
)
Accounts receivable
$
138,871

 
$
124,072

Contract receivables are primarily associated with developers, contractors and customers in connection with the Renewable Energy and Conservation segment. Costs in excess of billings principally represent revenues recognized on contracts that were not billable as of the balance sheet date. These amounts will be billed in accordance with contract terms, generally as certain milestones are reached or upon shipment. All of the costs in excess of billings are expected to be collected within one year. In situations where billings exceed revenues recognized, the excess is included in billings in excess of cost in the Consolidated Balance Sheet.

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4. INVENTORIES
Inventories consist of the following (in thousands):
 
June 30, 2017
 
December 31, 2016
Raw material
$
42,528

 
$
41,758

Work-in-process
12,580

 
12,268

Finished goods
30,957

 
35,586

Total inventories
$
86,065

 
$
89,612


5. ACQUISITIONS
On February 22, 2017, the Company acquired all of the outstanding stock of Package Concierge. Package Concierge is a leading provider of multifamily electronic package delivery locker systems in the United States.

The acquisition of Package Concierge is expected to enable the Company to expand its position in the fast-growing package delivery solutions market. The results of Package Concierge have been included in the Company's consolidated financial results since the date of acquisition (within the Company's Residential Products segment). The final aggregate purchase consideration for the acquisition of Package Concierge was $18,917,000, which includes a working capital adjustment of $67,000 received by the Company during the second quarter of 2017 and certain other adjustments provided for in the stock purchase agreement.

The purchase price for the acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values. The excess consideration was recorded as goodwill and approximated $16,931,000, which is not deductible for tax purposes. Goodwill represents future economic benefits arising from other assets acquired that could not be individually identified including workforce additions, growth opportunities, and increased presence in the building products markets.

The allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed is as follows as of the date of the acquisition (in thousands):
Cash
$
590

Working capital
(2,071
)
Property, plant and equipment
55

Acquired intangible assets
3,600

Other assets
8

Deferred income taxes
(196
)
Goodwill
16,931

Fair value of purchase consideration
$
18,917


The intangible assets acquired in this acquisition consisted of the following (in thousands):
 
Fair Value
 
Estimated
Useful Life
Trademarks
$
600

 
Indefinite
Technology
1,300

 
10 years
Customer relationships
1,700

 
7 years
Total
$
3,600

 
 

On October 11, 2016, the Company acquired all of the outstanding stock of Nexus Corporation ("Nexus"). Nexus is a leading provider of commercial-scale greenhouses to customers in the United States.


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Table of Contents

The acquisition of Nexus is expected to enable the Company to strengthen its position in the commercial greenhouse market in the United States. The results of Nexus have been included in the Company's consolidated financial results since the date of acquisition (within the Company's Renewable Energy and Conservation segment). The final aggregate purchase consideration for the acquisition of Nexus was $23,762,000, which includes a working capital adjustment and certain other adjustments provided for in the stock purchase agreement. The remaining estimated purchase adjustment accrued as of December 31, 2016 of $1,000,000 was reduced to $167,000 and was paid by the Company during the first quarter of 2017.

The purchase price for the acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values. The excess consideration was recorded as goodwill and approximated $11,451,000, of which all is deductible for tax purposes.

The allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed is as follows as of the date of the acquisition (in thousands):
Cash
$
2,495

Working capital
(1,109
)
Property, plant and equipment
4,702

Acquired intangible assets
6,200

Other assets
23

Goodwill
11,451

Fair value of purchase consideration
$
23,762


The intangible assets acquired in this acquisition consisted of the following (in thousands):
 
Fair Value
 
Estimated
Useful Life
Trademarks
$
3,200

 
Indefinite
Technology
1,300

 
15 years
Customer relationships
800

 
11 years
Backlog
900

 
0.25 years
Total
$
6,200

 
 

The acquisitions of Package Concierge and Nexus were funded from available cash on hand. The Company incurred certain acquisition-related costs composed of legal and consulting fees, and these costs were recognized as a component of selling, general and administrative expenses in the consolidated statements of operations.

The following table summarizes acquisition-related costs for the three and six months ended June 30 (in thousands):
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Acquisition-related costs
$
13

 
$

 
$
115

 
$
31




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6. GOODWILL AND RELATED INTANGIBLE ASSETS
Goodwill
The changes in the carrying amount of goodwill for the six months ended June 30, 2017 are as follows (in thousands):
 
Residential
Products
 
Industrial and
Infrastructure
Products
 
Renewable Energy & Conservation
 
Total
Balance at December 31, 2016
$
181,285

 
$
53,884

 
$
68,863

 
$
304,032

Acquired goodwill
16,931

 

 

 
16,931

Adjustments to prior year acquisitions

 

 
(832
)
 
(832
)
Foreign currency translation

 
197

 
520

 
717

Balance at June 30, 2017
$
198,216

 
$
54,081

 
$
68,551

 
$
320,848

Goodwill is recognized net of accumulated impairment losses of $235,419,000 as of June 30, 2017 and December 31, 2016.
Acquired Intangible Assets
Acquired intangible assets consist of the following (in thousands):
 
June 30, 2017
 
December 31, 2016
 
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Estimated Life
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
Trademarks
$
45,352

 
$

 
$
44,720

 
$

 
Indefinite
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
Trademarks
5,842

 
2,749

 
5,808

 
2,427

 
5 to 15 Years
Unpatented technology
28,020

 
11,030

 
26,720

 
10,041

 
5 to 20 Years
Customer relationships
80,644

 
36,626

 
78,569

 
33,585

 
5 to 17 Years
Non-compete agreements
1,649

 
777

 
1,649

 
623

 
4 to 10 Years
Backlog

 

 
900

 
900

 
0.25 Years
 
116,155

 
51,182

 
113,646

 
47,576

 
 
Total acquired intangible assets
$
161,507

 
$
51,182

 
$
158,366

 
$
47,576

 
 
The following table summarizes the acquired intangible asset amortization expense for the three and six months ended June 30 (in thousands):
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Amortization expense
$
2,230

 
$
2,201

 
$
4,392

 
$
4,382

Amortization expense related to acquired intangible assets for the remainder of fiscal 2017 and the next five years thereafter is estimated as follows (in thousands):
2017
$4,363
2018
$8,286
2019
$7,615
2020
$7,103
2021
$6,501
2022
$6,090

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7. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
 
June 30, 2017
 
December 31, 2016
Senior Subordinated 6.25% Notes
$
210,000

 
$
210,000

Other debt
2,400

 
2,800

Less unamortized debt issuance costs
(2,771
)
 
(3,163
)
Total debt
209,629

 
209,637

Less current maturities
400

 
400

Total long-term debt
$
209,229

 
$
209,237

The Company's Fifth Amended and Restated Credit Agreement dated December 9, 2015 (the "Senior Credit Agreement") was amended to convert our secured asset based credit facility into a secured cash flow revolver, and terminates on December 9, 2020.
The Senior Credit Agreement provides for a revolving credit facility and letters of credit in an aggregate amount of $300 million. The Company has the option to request additional financing from the banks to either increase the revolving credit facility to $500 million or to provide a term loan of up to $200 million. The Senior Credit Agreement contains financial covenants. As of June 30, 2017, the Company is in compliance with all covenants.
Borrowings under the Senior Credit Agreement are secured by the trade receivables, inventory, personal property, equipment, and certain real property of the Company’s significant domestic subsidiaries. Interest rates on the revolving credit facility are based on the LIBOR plus an additional margin that ranges from 1.25% to 2.25% for LIBOR loans based on the Total Leverage Ratio.
In addition, the revolving credit facility is subject to an undrawn commitment fee ranging between 0.20% and 0.30% based on the Total Leverage Ratio and the daily average undrawn balance.
Standby letters of credit of $11,081,000 have been issued under the Senior Credit Agreement on behalf of the Company as of June 30, 2017. These letters of credit reduce the amount otherwise available under the revolving credit facility. As of June 30, 2017, the Company had $288,919,000 of availability under the revolving credit facility. No borrowings were outstanding under the revolving credit facility at June 30, 2017 and December 31, 2016.
On January 31, 2013, the Company issued $210 million of 6.25% Senior Subordinated Notes (6.25% Notes) due February 1, 2021.The provisions of the 6.25% Notes include, without limitation, restrictions on indebtedness, liens, and distributions from restricted subsidiaries, asset sales, affiliate transactions, dividends, and other restricted payments. Dividend payments are subject to annual limits and interest is paid semiannually on February 1 and August 1 of each year.

8. RELATED PARTY TRANSACTIONS
An officer of one of the Company's operating segments is the owner of certain real estate properties leased for manufacturing and distribution purposes by that operating segment. The leases are in effect until June 2018 and June 2020. For the three and six months ended June 30, 2017 and 2016, the Company incurred the following lease expense for these properties.
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
2017
 
2016
 
2017
 
2016
Cost of sales
 
$
263

 
$
235

 
$
525

 
$
452



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9. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
The cumulative balance of each component of accumulated other comprehensive loss, net of tax, is as follows (in thousands):
 
Foreign Currency Translation Adjustment
 
Minimum Pension
Liability
Adjustment
 
Unamortized Post Retirement Health
Care Costs
 
Total Pre-Tax Amount
 
Tax (Benefit) Expense
 
Accumulated  Other
Comprehensive
(Loss) Income
Balance at December 31, 2016
$
(5,848
)
 
$
197

 
$
(3,150
)
 
$
(8,801
)
 
$
(1,080
)
 
$
(7,721
)
Minimum pension and post retirement health care plan adjustments

 
(9
)
 
95

 
86

 
33

 
53

Foreign currency translation adjustment
1,770

 

 

 
1,770

 

 
1,770

Balance at June 30, 2017
$
(4,078
)
 
$
188

 
$
(3,055
)

$
(6,945
)

$
(1,047
)
 
$
(5,898
)
The realized adjustments relating to the Company’s minimum pension liability and post retirement health care costs were reclassified from accumulated other comprehensive loss and included in other expense in the consolidated statements of operations.

10. EQUITY-BASED COMPENSATION
On May 6, 2016, the shareholders of the Company authorized the Gibraltar Industries, Inc. 2016 Stock Plan for Non-Employee Directors ("Non-Employee Directors Plan"). The Non-Employee Directors Plan is a compensation plan that allows the Company to grant awards of shares of the Company's common stock to non-employee Directors of the Company. In connection with the Non-Employee Directors Plan, the Company adopted a new stock deferral plan, the Gibraltar Industries, Inc. Non-Employee Director Stock Deferral Plan ("Deferral Plan"). The Deferral Plan permits non-employee Directors of the Company to defer receipt of shares of common stock which the non-employee Director is entitled to receive pursuant to the terms of the Non-Employee Directors Plan.
On May 7, 2015, the shareholders of the Company authorized the Gibraltar Industries, Inc. 2015 Equity Incentive Plan (the "Plan") and simultaneously amended the 2005 Equity Incentive Plan (the "Prior Plan") to terminate issuance of further awards from the Prior Plan. The Plan is an incentive compensation plan that allows the Company to grant equity-based incentive compensation awards to eligible participants. Awards under the Plan may be in the form of options, restricted shares, restricted units, performance shares, performance stock units, and rights.
Equity Based Awards - Settled in Stock
The following table provides the number of stock unit awards granted which will convert to shares upon vesting during the six months ended June 30, along with the weighted average grant date fair values:
 
2017
 
2016
Awards
Number of
Awards
 
Weighted
Average
Grant Date
Fair Value
 
Number of
Awards
 
Weighted
Average
Grant Date
Fair Value
Performance stock units
108,748

 
$
42.72

 

 
$

Restricted stock units
74,292

 
$
42.39

 
109,210

 
$
21.44

Options
25,000

 
$
42.35

 

 
$

Deferred stock units
10,170

 
$
34.42

 
11,945

 
$
29.30

Restricted shares
2,034

 
$
34.42

 
3,185

 
$
29.30

Included in the performance stock units disclosed above are 78,482 units awarded in February 2017 and 5,266 units award in April 2017 for which the final number of units that will convert to shares will be determined based on the Company’s actual return on invested capital (ROIC) relative to the ROIC targeted for the performance period ended December 31, 2017. Additionally, included in the performance stock units disclosed above, there were 20,000 units awarded in February 2017 and 5,000 units award in April 2017. For these awards, the final number of shares to be issued to the recipient will be determined based upon the ranking of the Company’s total shareholder return over a three (3) year performance period ended February 1, 2020 compared to the total shareholder return of companies in the S&P Small Cap Industrial Sector over such period.

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Table of Contents

Performance Stock Units - Settled in Cash
The Company awarded performance stock units ("PSUs") that will convert to cash after three years based upon a one year performance period in 2016 and 2015. The cost of these awards is recognized over the requisite vesting period. The PSUs earned over the performance period are determined based on the Company’s actual return on invested capital (ROIC) relative to the ROIC targeted for the performance period.
During the 2016 performance period, the participants earned an aggregate of 256,000 PSUs, representing 200% of the targeted
2016 award of 128,000. This award will convert to cash payable in January 2019.
During the 2015 performance period, the participants earned an aggregate of 438,000 PSUs, representing 200% of the targeted 2015 award of 219,000. This award will convert to cash payable in January 2018.
The following table summarizes the compensation expense recognized for the PSUs which will convert to cash for the three and six months ended June 30, (in thousands):
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
2017
 
2016
 
2017
 
2016
Performance stock unit compensation expense
$
341

 
$
2,916

 
$
2,078

 
$
3,741

Management Stock Purchase Plan
The Management Stock Purchase Plan ("MSPP") provides participants the ability to defer a portion of their compensation, which deferral is converted to restricted stock units, and credited to an account. Under the MSPP, the Company provides a matching award in restricted stock units equal to a percentage of the employees' compensation. Matching awards are not provided to directors. The account represents a share-based liability converted to and settled in cash which is payable to participants upon retirement or a termination of their service to the Company.
The following table provides the number of restricted stock units credited to active participant accounts and the payments made with respect to restricted stock units issued under the MSPP during the six months ended June 30,
 
2017
 
2016
Restricted stock units credited
88,344

 
185,685

Share-based liabilities paid (in $1000s)
$
2,353

 
$
1,984


11. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement as follows:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than quoted prices in active markets for similar assets and liabilities.
Level 3 - Inputs that are unobservable inputs for the asset or liability.
The Company had no financial assets or liabilities measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016. The Company’s only financial instrument for which the carrying value differs from its fair value is long-term debt. At June 30, 2017 and December 31, 2016, the fair value of outstanding debt net of unamortized debt issuance costs was $219,750,000 and $219,898,000, respectively, compared to its carrying value of $209,629,000 and $209,637,000, respectively.  The fair value of the Company’s Senior Subordinated 6.25% Notes is classified as Level 2 within the fair value hierarchy and was estimated based on quoted market prices adjusted for unamortized debt issuance costs. 
  
12. DISCONTINUED OPERATIONS

For certain divestiture transactions completed in prior years, the Company has agreed to indemnify the buyer for various liabilities that may arise after the disposal date, subject to limits of time and amount. The Company is a party to certain claims made under these indemnification provisions. As of June 30, 2017, the Company has a contingent liability recorded for such provisions related to discontinued operations. Management does not believe that the outcome of this claim, or other claims, would significantly affect the Company's financial condition or results of operation.

13. EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS

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Table of Contents

The Company is in its third year of a five year planned transformation strategy formulated to transform its operations and improve its financial results over this five year period. This strategy includes an 80/20 simplification initiative which, in part, focuses the Company’s internal resources on further increasing the value provided to our customers. A result of this initiative was the identification of low-volume, low margin, internally-produced products which have been or will be outsourced or discontinued. Portfolio management, another key part of the strategy and a natural adjunct to the 80/20 initiative, is another initiative in which management conducts strategic reviews of our current portfolio for future profitable growth and greater shareholder returns. This initiative has resulted in the sale and exiting of less profitable businesses or products lines in order to enable the Company to re-allocate leadership, time, capital and resources to the highest potential platforms and businesses. Exit activity costs and asset impairment charges were incurred as a result of these initiatives.
Exit activity costs were incurred during the six months ended June 30, 2017 which related to contract termination costs, severance costs, and other moving and closing costs. These costs were the result of the closing and consolidation of facilities, relocation of inventory and equipment at those facilities and the reduction of workforce associated with the discontinued products and closed facilities. During the six months ended June 30, 2017, asset impairment charges incurred were more than offset by a gain on sale of assets previously impaired in 2016 as a result of businesses and product lines discontinued. Specifically, the exit of both the Company's small European residential solar racking business and the exit of the Company's U.S. bar grating product line, which commenced during the fourth quarter of 2016, transacted sales of assets during the six months ended June 30, 2017 which resulted in a net gain. These exits were completed in the first half of 2017. During the six months ended June 30, 2017, asset impairment charges were incurred related to the write-down of inventory and impairment of machinery and equipment associated with either discontinued product lines or the reduction of manufactured goods offered within a product line. These assets were written down to their sale or scrap value, and were subsequently sold or disposed of. During the six months ended June 30, 2017, the company closed three facilities as a result of these initiatives.
During the six months ended June 30, 2016, the Company incurred asset impairment charges and exit activity costs resulting from the above initiatives as well. As a result of these initiatives, the Company sold its European industrial manufacturing business to a third party in April 2016, as well as closed one other facility during the first half of 2016.
The following tables set forth the asset impairment charges and exit activity costs incurred by segment during the three and six months ended June 30, related to the restructuring activities described above (in thousands):
 
Three Months Ended 
 June 30,
 
2017
 
2016
 
Inventory write-downs &/or asset impairment recoveries, net
 
Exit activity costs
 
Total
 
Inventory write-downs &/or asset impairment charges
 
Exit activity costs
 
Total
Residential Products
$
(126
)
 
$
207

 
$
81

 
$
118

 
$
140

 
$
258

Industrial & Infrastructure Products
(1,694
)
 
315

 
(1,379
)
 
46

 
805

 
851

Renewable Energy & Conservation

 
1,369

 
1,369

 

 

 

Corporate

 
135

 
135

 

 

 

Total exit activity costs & asset impairments
$
(1,820
)
 
$
2,026

 
$
206

 
$
164

 
$
945

 
$
1,109

 
Six Months Ended 
 June 30,
 
2017
 
2016
 
Inventory write-downs &/or asset impairment recoveries, net
 
Exit activity costs
 
Total
 
Inventory write-downs &/or asset impairment charges
 
Exit activity costs
 
Total
Residential Products
$
(147
)
 
$
392

 
$
245

 
$
806

 
$
470

 
$
1,276

Industrial & Infrastructure Products
(2,590
)
 
2,971

 
381

 
268

 
1,263

 
1,531

Renewable Energy & Conservation

 
2,419

 
2,419

 

 

 

Corporate

 
163

 
163

 

 

 

Total exit activity costs & asset impairments
$
(2,737
)
 
$
5,945

 
$
3,208

 
$
1,074

 
$
1,733

 
$
2,807



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Table of Contents

The following table provides a summary of where the asset impairments and exit activity costs were recorded in the statement of operations for the three and six months ended June 30, (in thousands):
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Cost of sales
$
(1,472
)
 
$
560

 
$
(478
)
 
$
1,678

Selling, general, and administrative expense
1,678

 
549

 
3,686

 
1,129

Net asset impairment and exit activity charges
$
206

 
$
1,109

 
$
3,208

 
$
2,807


The following table reconciles the beginning and ending liability for exit activity costs relating to the Company’s facility consolidation efforts (in thousands):
 
2017
 
2016
Balance at January 1
$
3,744

 
$
603

Exit activity costs recognized
5,945

 
1,733

Cash payments
(8,288
)
 
(1,527
)
Balance at June 30
$
1,401

 
$
809


As noted above, the Company sold its European industrial manufacturing business to a third party on April 15, 2016 from its Industrial and Infrastructure Products segment. This divestiture did not meet the criteria to be reported as a discontinued operation as it does not represent a strategic shift that has or will have a major effect on the Company’s operations. Therefore, prior period results of continuing operations have not been restated to exclude the impact of the divested business’s financial results. The pretax loss on disposal is presented within other expense (income) in the consolidated statement of operations. Neither the exiting of the Company’s small European residential solar racking business nor its U.S. bar grating product line met the criteria to be reported as a discontinued operation as well.

14. INCOME TAXES
The following table summarizes the provision for income taxes for continuing operations (in thousands) for the three and six months ended June 30, and the applicable effective tax rates:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Provision for income taxes
$
7,853

 
$
(1,897
)
 
$
9,906

 
$
3,179

Effective tax rate
37.3
%
 
(11.3
)%
 
36.6
%
 
10.3
%
The effective tax rate for the three months and six months ended June 30, 2017 was greater than the U.S. federal statutory rate of 35% due to state taxes and $2.0 million of pretax losses generated by the European residential solar racking business for which no tax benefit has been recorded as such benefit is not expected to be realizable partially offset by net deductible permanent differences and favorable discrete items. The effective tax rate for the three and six months ended June 30, 2016 was less than the U.S. federal statutory rate of 35% due to net deductible permanent differences and favorable discrete items partially offset by state taxes.
The Company recorded a discrete tax benefit of $11.4 million during the three months ended June 30, 2016 due to the effect of a worthless stock deduction and an associated bad debt deduction of inter-company debt resulting from the sale of its European industrial manufacturing business to a third party. The amount of this benefit was subsequently adjusted in the fourth quarter of 2016.


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Table of Contents

15. EARNINGS PER SHARE
Basic earnings and diluted weighted-average shares outstanding are as follows for the three and six months ended June 30, (in thousands):
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Numerator:
 
 
 
 
 
 
 
Income from continuing operations
$
13,174

 
$
18,612

 
$
17,170

 
$
27,641

Loss from discontinued operations
(405
)
 

 
(405
)
 

Net income available to common shareholders
$
12,769

 
$
18,612

 
$
16,765

 
$
27,641

Denominator for basic earnings per share:
 
 
 
 
 
 
 
Weighted average shares outstanding
31,709

 
31,475

 
31,698

 
31,447

Denominator for diluted earnings per share:
 
 
 
 
 
 
 
Weighted average shares outstanding
31,709

 
31,475

 
31,698

 
31,447

Common stock options and restricted stock
474

 
532

 
521

 
469

Weighted average shares and conversions
$
32,183

 
$
32,007

 
$
32,219

 
$
31,916

The weighted average number of diluted shares does not include potential anti-dilutive common shares aggregating 556,000 and 764,000 for the three months ended June 30, 2017 and 2016, respectively, and 541,000 and 724,000 for the six months ended June 30, 2017 and 2016, respectively .

16. SEGMENT INFORMATION
The Company is organized into three reportable segments on the basis of the production process and products and services provided by each segment, identified as follows:
(i)
Residential Products, which primarily includes roof and foundation ventilation products, mail and package storage products, rain dispersion products and roofing accessories;
(ii)
Industrial and Infrastructure Products, which primarily includes expanded and perforated metal, expansion joints and structural bearings; and
(iii)
Renewable Energy and Conservation, which primarily includes designing, engineering, manufacturing and installation of solar racking systems and greenhouse structures.
When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics.

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Table of Contents

The following table illustrates certain measurements used by management to assess performance of the segments described above for the three and six months ended June 30, (in thousands):
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Net sales:
 
 
 
 
 
 
 
Residential Products
$
127,252

 
$
119,965

 
$
231,803

 
$
220,112

Renewable Energy and Conservation
62,763

 
64,766

 
114,555

 
122,640

Industrial and Infrastructure Products
57,926

 
81,380

 
108,644

 
161,397

Less: Intersegment sales
(314
)
 
(373
)
 
(770
)
 
(740
)
Net Industrial and Infrastructure Products
57,612

 
81,007

 
107,874

 
160,657

Total consolidated net sales
$
247,627

 
$
265,738

 
$
454,232

 
$
503,409

 
 
 
 
 
 
 
 
Income from operations:
 
 
 
 
 
 
 
Residential Products
$
22,579

 
$
20,725

 
$
38,220

 
$
32,956

Renewable Energy and Conservation
3,492

 
10,296

 
6,832

 
18,603

Industrial and Infrastructure Products
3,397

 
6,190

 
3,360

 
9,516

Unallocated Corporate Expenses
(4,538
)
 
(8,635
)
 
(13,803
)
 
(14,738
)
Total income from operations
$
24,930

 
$
28,576

 
$
34,609

 
$
46,337


17. SUPPLEMENTAL FINANCIAL INFORMATION
The following information sets forth the consolidating summary financial statements of the issuer (Gibraltar Industries, Inc.) and guarantors, which guarantee the Senior Subordinated 6.25% Notes due February 1, 2021, and the non-guarantors. The guarantors are 100% owned domestic subsidiaries of the issuer and the guarantees are full, unconditional, joint and several.
Investments in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor subsidiaries and non-guarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.



























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Table of Contents

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2017
(in thousands)
 
 
Gibraltar
Industries, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
Net sales
$

 
$
238,652

 
$
10,627

 
$
(1,652
)
 
$
247,627

Cost of sales

 
178,779

 
8,739

 
(1,716
)
 
185,802

Gross profit

 
59,873

 
1,888

 
64

 
61,825

Selling, general, and administrative expense
34

 
33,681

 
3,180

 

 
36,895

(Loss) income from operations
(34
)
 
26,192

 
(1,292
)
 
64

 
24,930

Interest expense (income)
3,403

 
162

 
(15
)
 

 
3,550

Other expense

 
115

 
238

 

 
353

(Loss) income before taxes
(3,437
)
 
25,915

 
(1,515
)
 
64

 
21,027

(Benefit of) provision for income taxes
(1,340
)
 
9,360

 
(167
)
 

 
7,853

(Loss) income from continuing operations
(2,097
)
 
16,555

 
(1,348
)
 
64

 
13,174

Discontinued operations:
 
 
 
 
 
 
 
 
 
Loss from discontinued operations before taxes

 
(644
)
 

 

 
(644
)
Benefit of income taxes

 
(239
)
 

 

 
(239
)
Loss from discontinued operations

 
(405
)
 

 

 
(405
)
Equity in earnings (loss) from subsidiaries
14,802

 
(1,348
)
 

 
(13,454
)
 

Net income (loss)
$
12,705

 
$
14,802

 
$
(1,348
)
 
$
(13,390
)
 
$
12,769































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Table of Contents

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2016
(in thousands)
 
 
Gibraltar
Industries, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
Net sales
$

 
$
247,912

 
$
19,922

 
$
(2,096
)
 
$
265,738

Cost of sales

 
183,557

 
15,075

 
(1,737
)
 
196,895

Gross profit

 
64,355

 
4,847

 
(359
)
 
68,843

Selling, general, and administrative expense
14,134

 
29,206

 
(3,073
)
 

 
40,267

(Loss) income from operations
(14,134
)
 
35,149

 
7,920

 
(359
)
 
28,576

Interest expense (income)
3,401

 
285

 
(20
)
 

 
3,666

Other expense (income)
8,533

 
225

 
(563
)
 

 
8,195

(Loss) income before taxes
(26,068
)
 
34,639

 
8,503

 
(359
)
 
16,715

(Benefit of) provision for income taxes
(8,275
)
 
5,293

 
1,085

 

 
(1,897
)
Equity in earnings from subsidiaries
36,764

 
7,418

 

 
(44,182
)
 

Net income
$
18,971

 
$
36,764

 
$
7,418

 
$
(44,541
)
 
$
18,612






































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Table of Contents

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2017
(in thousands)
 
 
Gibraltar
Industries, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
Net sales
$

 
$
436,400

 
$
21,869

 
$
(4,037
)
 
$
454,232

Cost of sales

 
329,286

 
17,721

 
(3,855
)
 
343,152

Gross profit

 
107,114

 
4,148

 
(182
)
 
111,080

Selling, general, and administrative expense
77

 
70,187

 
6,207

 

 
76,471

(Loss) income from operations
(77
)
 
36,927

 
(2,059
)
 
(182
)
 
34,609

Interest expense (income)
6,805

 
354

 
(33
)
 

 
7,126

Other expense

 
245

 
162

 

 
407

(Loss) income before taxes
(6,882
)
 
36,328

 
(2,188
)
 
(182
)
 
27,076

(Benefit of) provision for income taxes
(2,684
)
 
12,738

 
(148
)
 

 
9,906

(Loss) income from continuing operations
(4,198
)
 
23,590

 
(2,040
)
 
(182
)
 
17,170

Discontinued operations:
 
 
 
 
 
 
 
 
 
Loss from discontinued operations before taxes

 
(644
)
 

 

 
(644
)
Benefit of income taxes

 
(239
)
 

 

 
(239
)
Loss from discontinued operations

 
(405
)
 

 

 
(405
)
Equity in earnings (loss) from subsidiaries
21,145

 
(2,040
)
 

 
(19,105
)
 

Net income (loss)
$
16,947

 
$
21,145

 
$
(2,040
)
 
$
(19,287
)
 
$
16,765































23


Table of Contents

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2016
(in thousands)
 
 
Gibraltar
Industries, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
Net sales
$

 
$
463,125

 
$
47,215

 
$
(6,931
)
 
$
503,409

Cost of sales

 
348,996

 
37,715

 
(6,295
)
 
380,416

Gross profit

 
114,129

 
9,500

 
(636
)
 
122,993

Selling, general, and administrative expense
14,174

 
61,117

 
1,365

 

 
76,656

(Loss) income from operations
(14,174
)
 
53,012

 
8,135

 
(636
)
 
46,337

Interest expense (income)
6,804

 
595

 
(42
)
 

 
7,357

Other expense (income)
8,487

 
441

 
(768
)
 

 
8,160

(Loss) income before taxes
(29,465
)
 
51,976

 
8,945

 
(636
)
 
30,820

(Benefit of) provision for income taxes
(9,482
)
 
11,385

 
1,276

 

 
3,179

Equity in earnings from subsidiaries
48,260

 
7,669

 

 
(55,929
)
 

Net income
$
28,277

 
$
48,260

 
$
7,669

 
$
(56,565
)
 
$
27,641






































24


Table of Contents

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
THREE MONTHS ENDED JUNE 30, 2017
(in thousands)
 
 
Gibraltar
Industries, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
Net income (loss)
$
12,705

 
$
14,802

 
$
(1,348
)
 
$
(13,390
)
 
$
12,769

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment

 

 
1,091

 

 
1,091

Adjustment to retirement benefit liability, net of tax

 
(3
)
 

 

 
(3
)
Adjustment to post employment health care benefit liability, net of tax

 
30

 

 

 
30

Other comprehensive income

 
27

 
1,091

 

 
1,118

Total comprehensive income (loss)
$
12,705

 
$
14,829

 
$
(257
)
 
$
(13,390
)
 
$
13,887









































25


Table of Contents

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
THREE MONTHS ENDED JUNE 30, 2016
(in thousands)
 
 
Gibraltar
Industries, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
Net income
$
18,971

 
$
36,764