Gibraltar Industries, Inc. (NASDAQ: ROCK) today reported its sales and earnings for the quarter ended March 31, 2007. The Company also said that its business conditions began to strengthen significantly during the last two weeks of March, setting the stage for much stronger results in the second and third quarters.
Sales from continuing operations in the first quarter of 2007 were $318 million, a slight decrease from $323 million in the first quarter of 2006. Income from continuing operations before restructuring costs was $6.6 million in the quarter ended March 31, 2007, compared to $11.7 million in the first quarter of 2006, a decrease of approximately 43.6 percent. Earnings per share from continuing operations before restructuring costs were $.22 in the first quarter of 2007, within the range Gibraltar provided on April 17.
On a GAAP basis, income from continuing operations was $6.2 million and earnings per share from continuing operations amounted to $.21 in the first quarter of 2007. Restructuring costs, which primarily relate to the consolidation of Buffalo, New York-based facilities in the Processed Metal Products segment, amounted to $0.7 million pre-tax, or $.01 per share on an after-tax basis.
A number of factors combined to negatively impact results for the quarter, including softer-than-anticipated conditions in the new housing market, inventory control programs at a number of the Company’s retail sector customers, and adverse weather conditions that affected the overall construction market.
“As we said last week, our business began to improve in the second half of March, and we expect our results to strengthen considerably in the second quarter,” said Brian J. Lipke, Gibraltar’s Chairman and Chief Executive Officer. “Helping to offset the sharp downturn in the residential building market is continued strength in the commercial, industrial, and architectural markets, improving results in our Processed Metal Products segment, as well as the contributions from recent acquisitions.”
“While sales growth remains an important part of our strategic focus, we recognize that top-line gains are secondary to EPS growth, higher ROIC, margin improvements, and better cash flow. We use these measurements in our decision-making process when we look at internal and external growth opportunities,” said Mr. Lipke.
“We have taken a number of steps to streamline and consolidate our operations. We are in the process of combining two Buffalo-area steel-processing facilities into one location, which will significantly enhance the performance of that business, and we are aggressively taking steps to control and cut costs, drive down inventories, and extract efficiencies from all of our businesses,” said Henning N. Kornbrekke, Gibraltar’s President and Chief Operating Officer.
“While these steps will have an immediate impact, longer term they will enhance the core operating characteristics of the Company and better position Gibraltar for improved performance. When our sales return to more normalized levels, these actions will help us to generate higher margins, better returns, and stronger earnings,” said Mr. Kornbrekke.
In light of the operating environment discussed above, Mr. Kornbrekke said that, barring a significant change in business conditions, Gibraltar expects its second-quarter earnings per share before any unusual items will be in the range of $.43 to $.48.
Gibraltar Industries is a leading manufacturer, processor, and distributor of products for the building, industrial, and vehicular markets. The company serves customers in a variety of industries in all 50 states and throughout the world. It has approximately 4,000 employees and operates 85 facilities in 26 states, Canada, China, England, Germany, and Poland. Gibraltar’s common stock is a component of the S&P SmallCap 600 and the Russell 2000® Index.
Information contained in this release, other than historical information, should be considered forward-looking, and may be subject to a number of risk factors, including: general economic conditions; the impact of the availability and the effects of changing raw material prices on the Company’s results of operations; energy prices and usage; the ability to pass through cost increases to customers; changing demand for the Company’s products and services; risks associated with the integration of acquisitions; and changes in interest or tax rates.
Gibraltar will review its first-quarter results and discuss its outlook for the second quarter during its quarterly conference call, which will be held at 9 a.m. Eastern Time on April 26. Details of the call can be found on Gibraltar’s Web site, at http://www.gibraltar1.com.
Gibraltar’s news releases, along with comprehensive information about the Company, are available on the Internet, at http://www.gibraltar1.com.
GIBRALTAR INDUSTRIES, INC. Financial Highlights (in thousands, except per share data) | ||||||
| Three Months Ended | ||||||
| March 31, 2007 | March 31, 2006 | |||||
| Net sales | $ | 317,584 | $ | 322,637 | ||
| Income from continuing operations | $ | 6,168 | $ | 11,733 | ||
| Income per share from continuing operations - Basic | $ | .21 | $ | .40 | ||
| Weighted average shares outstanding - Basic | 29,844 | 29,652 | ||||
| Income per share from continuing operations - Diluted | $ | .21 | $ | .39 | ||
| Weighted average shares outstanding - Diluted | 30,056 | 29,944 | ||||
|
GIBRALTAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (in thousands, except per share data) | ||||||
March 31, | December 31, | |||||
| 2007 | 2006 | |||||
Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 20,675 | $ | 13,475 | ||
| Accounts receivable | 197,066 | 169,207 | ||||
| Inventories | 248,797 | 254,991 | ||||
| Other current assets | 19,082 | 18,107 | ||||
| Total current assets | 485,620 | 455,780 | ||||
| Property, plant and equipment, net | 245,189 | 243,138 | ||||
| Goodwill | 388,874 | 374,821 | ||||
| Acquired intangibles, net | 62,533 | 62,366 | ||||
| Investments in partnerships | 2,719 | 2,440 | ||||
| Other assets | 13,054 | 14,323 | ||||
| $ | 1,197,989 | $ | 1,152,868 | |||
Liabilities and Shareholders' Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 92,003 | $ | 71,308 | ||
| Accrued expenses | 47,255 | 50,771 | ||||
| Current maturities of long-term debt | 2,555 | 2,336 | ||||
| Total current liabilities | 141,813 | 124,415 | ||||
| Long-term debt | 418,174 | 398,217 | ||||
| Deferred income taxes | 71,320 | 70,981 | ||||
| Other non-current liabilities | 12,578 | 9,027 | ||||
| Shareholders’ equity: | ||||||
| Preferred stock, $.01 par value; authorized: 10,000,000 shares; none outstanding | - | - | ||||
| Common stock, $.01 par value; authorized 50,000,000 shares; issued 29,883,795 and 29,883,795 shares in 2007 and 2006, respectively | 299 | 299 | ||||
| Additional paid-in capital | 216,485 | 215,944 | ||||
| Retained earnings | 335,354 | 332,920 | ||||
| Accumulated other comprehensive income | 1,966 | 1,065 | ||||
| 554,104 | 550,228 | |||||
Less: cost of 44,100 and 42,600 common shares held in treasury in 2007 and 2006 | - | - | ||||
| Total shareholders’ equity | 554,104 | 550,228 | ||||
| $ | 1,197,989 | $ | 1,152,868 | |||
GIBRALTAR INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) | ||||||
|
Three Months Ended
March 31, | ||||||
| 2007 | 2006 | |||||
| Net sales | $ | 317,584 | $ | 322,637 | ||
| Cost of sales | 265,933 | 259,406 | ||||
| Gross profit | 51,651 | 63,231 | ||||
| Selling, general and administrative expense | 35,210 | 37,840 | ||||
| Income from operations | 16,441 | 25,391 | ||||
| Other (income) expense: | ||||||
Equity in partnerships’ income and other income | (362) | (686) | ||||
Interest expense | 7,237 | 6,779 | ||||
| Total other expense | 6,875 | 6,093 | ||||
| Income before taxes | 9,566 | 19,298 | ||||
| Provision for income taxes | 3,398 | 7,565 | ||||
| Income from continuing operations | 6,168 | 11,733 | ||||
| Discontinued operations: | ||||||
Income from discontinued operations before taxes | - | 4,303 | ||||
Income tax expense | - | 1,639 | ||||
| Income from discontinued operations | - | 2,664 | ||||
| Net income | $ | 6,168 | $ | 14,397 | ||
| Net income per share – Basic: | ||||||
Income from continuing operations | $ | .21 | $ | .40 | ||
Income from discontinued operations | .00 | .09 | ||||
| Net Income | $ | .21 | $ | .49 | ||
| Weighted average shares outstanding – Basic | 29,844 | 29,652 | ||||
| Net income per share – Diluted: | ||||||
Income from continuing operations | $ | .21 | $ | .39 | ||
Income from discontinued operations | .00 | .09 | ||||
| Net Income | $ | .21 | $ | .48 | ||
| Weighted average shares outstanding – Diluted | 30,056 | 29,944 | ||||
|
GIBRALTAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | ||||||
Three Months Ended March 31, | ||||||
| 2007 | 2006 | |||||
Cash flows from operating activities | ||||||
| Net income | $ | 6,168 | $ | 14,397 | ||
| Income from discontinued operations | - | 2,664 | ||||
| Income from continuing operations | 6,168 | 11,733 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||
| Depreciation and amortization | 7,461 | 6,789 | ||||
| Provision for deferred income taxes | (229) | - | ||||
| Equity in partnerships’ (loss) income | 279 | 131 | ||||
| Distributions from partnerships | - | 188 | ||||
| Stock compensation expense | 541 | 706 | ||||
| Other non-cash adjustments | 3 | 25 | ||||
Increase (decrease) in cash resulting from changes in (net of acquisitions): | ||||||
| Accounts receivable | (23,291) | (31,252) | ||||
| Inventories | 10,565 | (16,970) | ||||
| Other current assets and other assets | 384 | 73 | ||||
| Accounts payable | 17,822 | 15,420 | ||||
| Accrued expenses and other non-current liabilities | (2,986) | 4,056 | ||||
| Net cash provided by (used in) continuing operations | 16,717 | (9,101) | ||||
| Net cash provided by discontinued operations | - | 5,531 | ||||
| Net cash provided by (used in) operating activities | 16,717 | (3,570) | ||||
Cash flows from investing activities | ||||||
| Purchases of property, plant and equipment | (5,369) | (5,303) | ||||
| Net proceeds from sale of property and equipment | 445 | 36 | ||||
| Acquisitions, net of cash acquired | (22,492) | - | ||||
| Net cash used in investing activities for continuing operations | (27,416) | (5,267) | ||||
|
Net cash used in investing activities for
discontinued operations | - | (1,074) | ||||
| Net cash used in investing activities | (27,416) | (6,341) | ||||
Cash flows from financing activities | ||||||
| Long-term debt reduction | (3,675) | (8,320) | ||||
| Proceeds from long-term debt | 23,074 | - | ||||
| Payment of deferred financing costs | (8) | (161) | ||||
| Net proceeds from issuance of common stock | - | 552 | ||||
| Payment of dividends | (1,492) | (1,487) | ||||
| Tax benefit from stock options | - | 115 | ||||
| Net cash provided by (used in) financing activities | 17,899 | (9,301) | ||||
| Net increase (decrease) in cash and cash equivalents | 7,200 | (19,212) | ||||
| Cash and cash equivalents at beginning of year | 13,475 | 28,529 | ||||
| Cash and cash equivalents at end of period | $ | 20,675 | $ | 9,317 | ||
|
GIBRALTAR INDUSTRIES, INC.
Segment Information (in thousands) | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
| Increase (Decrease) | ||||||||||||
| 2007 | 2006 | $ | % | |||||||||
| Net Sales | ||||||||||||
| Building products | $ | 207,226 | $ | 214,742 | $ | (7,516) | (3.5%) | |||||
| Processed metal products | 110,358 | 107,895 | 2,463 | 2.3% | ||||||||
| Total Sales | $ | 317,584 | $ | 322,637 | $ | (5,053) | (1.6%) | |||||
| Income from Operations | ||||||||||||
| Building products | $ | 18,731 | $ | 31,271 | $ | (12,540) | (40.1%) | |||||
| Processed metal products | 4,427 | 5,819 | (1,392) | (23.9%) | ||||||||
| Corporate | (6,717) | (11,699) | 4,982 | (42.6%) | ||||||||
| Total Operating Income | $ | 16,441 | $ | 25,391 | $ | (8,950) | (35.2%) | |||||
| Operating Margin | ||||||||||||
| Building products | 9.0% | 14.6% | ||||||||||
| Processed metal products | 4.0% | 5.4% | ||||||||||
