Gibraltar Industries, Inc. (NASDAQ: ROCK) today reported its sales and net income for the quarter and year ended December 31, 2007.
In 2007, sales from continuing operations increased by approximately six percent to $1.3 billion, from $1.2 billion in 2006. Income from continuing operations before special charges was $36.0 million, or $1.19 per share, in 2007. Reported income from continuing operations was $31.1 million, or $1.03 per share, in 2007, compared to 2006 income from continuing operations of $50.1 million, or $1.67 per share.
Sales from continuing operations in the fourth quarter of 2007 were $309 million, an increase of approximately 11 percent compared to $278 million in the fourth quarter of 2006. The 2007 sales increase in both the annual and quarterly periods was the result of acquired businesses. Exclusive of acquisitions, sales decreased by approximately five percent when compared to the fourth quarter of 2006 and six percent on an annual basis.
Exclusive of the items referred to below, fourth-quarter results from continuing operations amounted to $1.1 million, or $.03 per share. Quarterly results were negatively impacted by several income tax-related charges including a higher-than-projected tax rate for the year. As pre-tax income fell below levels projected at the end of the third quarter, the impact of permanent differences between book and taxable income caused an increase in the effective tax rate used in the quarter. The result of the tax adjustments reduced earnings by $.03 per share. Fourth-quarter income from continuing operations was also negatively impacted by inventory purchase accounting adjustments from the Noll/NorWesCo and Florence acquisitions. The impact of expensing these charges on a pre-tax basis amounted to approximately $0.7 million, or $.01 per share after tax. Reported fourth-quarter results from continuing operations, after the effect of these items, was a loss of $0.3 million, or ($.01) per share. In 2006 fourth-quarter income from continuing operations was a profit of $.01 per share.
“We initiated a number of actions in 2007 that will provide positive momentum in the year ahead,” said Brian J. Lipke, Gibraltar’s Chairman and Chief Executive Officer. “We acquired three companies – Dramex, Noll/NorWesCo, and Florence – which together added annualized sales of approximately $160 million of higher-margin sales, while further diversifying our portfolio by increasing our participation in the still-growing commercial and industrial building markets. We also divested businesses, like our Hubbell service center and a small bath cabinet line, and we will continue to focus our resources and capital on those areas that provide the best strategic fit and produce the highest returns for our shareholders.”
“In 2007, we took a number of steps to improve our operations, drive out costs, intensify our focus on asset management, and maximize our cash flow to pay down debt. Through facility consolidations (we have closed or consolidated 11 facilities since the beginning of 2007), improvements in our transportation and logistics, and ongoing cost reduction and lean manufacturing initiatives, we are significantly lowering our cost structure. We also have a number of initiatives underway to increase our share in targeted growth areas through new products, geographic expansion, and leveraging relationships with current customers,” said Henning N. Kornbrekke, Gibraltar’s President and Chief Operating Officer.
“Unfortunately, much of the progress we made in 2007 – through acquisitions, divestitures, improvements to our remaining businesses, and active asset and working capital management – has been obscured by lower volumes and adverse changes to our mix, which are solely the result of the sharp downturn in our two largest markets. Even though it is not fully apparent in this operating environment, our many activities to strengthen and strategically transform Gibraltar have better positioned the Company for new thresholds of performance as the markets we serve return to more normal levels of activity,” said Mr. Lipke.
“Even if difficult conditions do persist in our two primary markets – and our 2008 business forecast anticipates some additional softening in both the residential building and automotive markets – we see opportunities for improvement in the year ahead simply as a result of the stronger business platform we have built. Longer term, the actions we have taken have positioned us for significantly improved results once the markets we serve rebound and begin to move back toward more historic activity levels,” said Mr. Kornbrekke.
Looking ahead, Mr. Kornbrekke said that, in spite of current market conditions, Gibraltar’s ongoing efforts to make improvements in its business, along with many customers having worked through their year-end de-stocking actions, the Company expects its 2008 earnings per share from continuing operations will be in the range of $1.05 to $1.25 per share, compared to $1.03 in 2007, barring a significant change in business conditions.
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 78 facilities in 27 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 fourth-quarter results and discuss its outlook for the first quarter during its quarterly conference call, which will be held at 9 a.m. on February 19. 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 | ||||||||
|
December 31,
2007 |
December 31,
2006 | |||||||
| Net Sales | $ | 308,702 | $ | 277,605 | ||||
| (Loss) income from continuing operations | $ | (332 | ) | $ | 175 | |||
| (Loss) income from discontinued operations | $ | (994 | ) | $ | 1,388 | |||
| Net Income | $ | (1,326 | ) | $ | 1,563 | |||
| Net income per share - diluted | ||||||||
| Income from continuing operations | $ | (.01 | ) | $ | .01 | |||
| Income from discontinued operations | $ | (.03 | ) | $ | .04 | |||
| Net income | $ | (.04 | ) | $ | .05 | |||
| Twelve Months Ended | ||||||||
|
December 31,
2007 |
December 31,
2006 | |||||||
| Net Sales | $ | 1,311,818 | $ | 1,233,576 | ||||
| Income from continuing operations | $ | 31,104 | $ | 50,174 | ||||
| Income from discontinued operations | $ | (17,880 | ) | $ | 7,095 | |||
| Net Income | $ | 13,224 | $ | 57,269 | ||||
| Net income per share - diluted | ||||||||
| Income from continuing operations | $ | 1.03 | $ | 1.67 | ||||
| Income from discontinued operations | $ | (.59 | ) | $ | .24 | |||
| Net income | $ | .44 | $ | 1.91 | ||||
| Reconciliation of income per share - diluted from continuing operations to reflect special items: | ||||||||
| Income from continuing operations before adjustments | $ | 1.19 | $ | 1.87 | ||||
| Adjustments: | ||||||||
| Failed M & A transaction | $ | (.03 | ) | $ | - | |||
| Purchased inventory | $ | (.08 | ) | $ | (.01 | ) | ||
| Restructuring | $ | (.05 | ) | - | ||||
| Vacation accrual | $ | - | $ | .08 | ||||
| Impairment | $ | - | $ | (.27 | ) | |||
| Income from continuing operations | $ | 1.03 | $ | 1.67 | ||||
GIBRALTAR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (in thousands) | ||||||
December 31, | ||||||
| 2007 | 2006 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 35,287 | $ | 13,475 | ||
| Accounts receivable, net | 167,595 | 163,731 | ||||
| Inventories | 212,909 | 220,119 | ||||
| Other current assets | 20,362 | 18,099 | ||||
| Assets of discontinued operations | 4,592 | 40,356 | ||||
| Total current assets | 440,745 | 455,780 | ||||
| Property, plant and equipment, net | 273,283 | 233,249 | ||||
| Goodwill | 453,228 | 366,763 | ||||
| Acquired intangibles | 96,871 | 62,366 | ||||
| Investments in partnerships | 2,644 | 2,440 | ||||
| Other assets | 14,637 | 14,307 | ||||
| Assets of discontinued operations | - | 17,963 | ||||
| $ | 1,281,408 | $ | 1,152,868 | |||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 89,551 | $ | 69,040 | ||
| Accrued expenses | 41,062 | 50,279 | ||||
| Current maturities of long-term debt | 2,955 | 2,336 | ||||
| Liabilities of discontinued operations | 657 | 2,760 | ||||
| Total current liabilities | 134,225 | 124,415 | ||||
| Long-term debt | 485,654 | 398,217 | ||||
| Deferred income taxes | 78,071 | 70,981 | ||||
| Other non-current liabilities | 15,698 | 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 29,949,229 and 29,883,795 shares in 2007 and 2006, respectively | 300 | 299 | ||||
| Additional paid-in capital | 219,087 | 215,944 | ||||
| Retained earnings | 337,929 | 332,920 | ||||
| Accumulated other comprehensive income | 10,837 | 1,065 | ||||
| 568,153 | 550,228 | |||||
| Less: cost of 61,467 and 42,600 common shares held in treasury in 2007 and 2006, respectively | 393 | - | ||||
| Total shareholders’ equity | 567,760 | 550,228 | ||||
| $ | 1,281,408 | $ | 1,152,868 | |||
|
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) | |||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| 2007 | 2006 | 2007 | 2006 | ||||||||||||
| Net sales | $ | 308,702 | $ | 277,605 | $ | 1,311,818 | $ | 1,233,576 | |||||||
| Cost of sales | 260,884 | 227,140 | 1,082,423 | 976,835 | |||||||||||
Gross profit | 47,818 | 50,465 | 229,395 | 256,741 | |||||||||||
| Selling, general and administrative expense | 38,078 | 30,169 | 148,107 | 137,368 | |||||||||||
| Income from operations | 9,740 | 20,296 | 81,288 | 119,373 | |||||||||||
| Other (income) expense | |||||||||||||||
| Interest expense | 8,824 | 6,625 | 31,887 | 25,897 | |||||||||||
Equity in partnerships’ (income) loss and other (income) | (192 | ) | 13,490 | (1,215 | ) | 13,045 | |||||||||
| Total other expense | 8,632 | 20,115 | 30,672 | 38,942 | |||||||||||
| Income before taxes | 1,108 | 181 | 50,616 | 80,431 | |||||||||||
| Provision for income taxes | 1,440 | 6 | 19,512 | 30,257 | |||||||||||
(Loss) income from continuing operations | (332 | ) | 175 | 31,104 | 50,174 | ||||||||||
| Discontinued operations | |||||||||||||||
| (Loss) income from discontinued operations before taxes | (703 | ) | (412 | ) | (22,436 | ) | 8,777 | ||||||||
Income tax expense (benefit) | 291 | (1,800 | ) | (4,556 | ) | 1,682 | |||||||||
| (Loss) income from discontinued operations | (994 | ) | 1,388 | (17,880 | ) | 7,095 | |||||||||
Net (loss) income | $ | (1,326 | ) | $ | 1,563 | $ | 13,224 | $ | 57,269 | ||||||
Net (loss) income per share – Basic | |||||||||||||||
(Loss) income from continuing operations | $ | (.01 | ) | $ | .01 | $ | 1.04 | $ | 1.69 | ||||||
(Loss) income from discontinued operations | (.03 | ) | .04 | (.60 | ) | .24 | |||||||||
Net (loss) income | $ | (.04 | ) | $ | .05 | $ | .44 | $ | 1.93 | ||||||
| Weighted average shares outstanding - Basic | 29,879 | 29,772 | 29,867 | 29,712 | |||||||||||
Net (loss) income per share – Diluted | |||||||||||||||
(Loss) income from continuing operations | $ | (.01 | ) | $ | .01 | $ | 1.03 | $ | 1.67 | ||||||
(Loss) income from discontinued operations | (.03 | ) | .04 | (.59 | ) | .24 | |||||||||
Net (loss) income | $ | (.04 | ) | $ | .05 | $ | .44 | $ | 1.91 | ||||||
| Weighted average shares outstanding -Diluted | 30,111 | 30,040 | 30,116 | 30,006 | |||||||||||
GIBRALTAR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | ||||||||
| Year Ended December 31, | ||||||||
| 2007 | 2006 | |||||||
Cash flows from operating activities | ||||||||
| Net income | $ | 13,224 | $ | 57,269 | ||||
(Loss) income from discontinued operations | (17,880 | ) | 7,095 | |||||
| Income from continuing operations | 31,104 | 50,174 | ||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 33,057 | 26,706 | ||||||
| Provision for deferred income taxes | 5,283 | (28,953 | ) | |||||
Equity in partnerships’ (income) loss | (911 | ) | 13,884 | |||||
| Distributions from partnerships’ income | 712 | 1,149 | ||||||
| Stock compensation expense | 2,886 | 2,672 | ||||||
| Other non-cash adjustments | 177 | 750 | ||||||
| Increase (decrease) in cash resulting from changes in (net of acquisitions): | ||||||||
| Accounts receivable | 19,204 | 434 | ||||||
| Inventories | 42,668 | (34,839 | ) | |||||
| Other current assets and other assets | 3,258 | (4,799 | ) | |||||
| Accounts payable | 10,184 | (23,404 | ) | |||||
| Accrued expenses and other non-current liabilities | (11,112 | ) | (7,627 | ) | ||||
| Net cash provided by (used in) continuing operations | 136,510 | (3,853 | ) | |||||
| Net cash provided by (used in) discontinued operations | 22,303 | (9,411 | ) | |||||
| Net cash provided by (used in) operating activities | 158,813 | (13,264 | ) | |||||
Cash flows from investing activities | ||||||||
| Acquisitions, net of cash acquired | (206,608 | ) | (57,430 | ) | ||||
| Net proceeds from sale of business | 11,859 | 151,487 | ||||||
| Purchases of property, plant and equipment | (18,752 | ) | (21,737 | ) | ||||
| Net proceeds from sale of property and equipment | 3,657 | 349 | ||||||
| Net cash (used in) provided by investing activities for continuing operations | (209,844 | ) | 72,669 | |||||
| Net cash used in investing activities for discontinued operations | (69 | ) | (3,717 | ) | ||||
| Net cash (used in) provided by investing activities | (209,913 | ) | 68,952 | |||||
Cash flows from financing activities | ||||||||
| Long-term debt reduction | (119,558 | ) | (114,875 | ) | ||||
| Proceeds from long-term debt | 200,074 | 50,829 | ||||||
| Payment of deferred financing costs | (1,498 | ) | (768 | ) | ||||
| Payment of dividends | (5,971 | ) | (5,957 | ) | ||||
| Net proceeds from issuance of common stock | 137 | 1,174 | ||||||
| Tax benefit from equity compensation | 121 | 355 | ||||||
| Purchase of treasury stock | (393 | ) | - | |||||
| Net cash provided by (used in) financing activities for continuing operations | 72,912 | (69,242 | ) | |||||
| Net cash used in financing activities for discontinued operations | - | (1,500 | ) | |||||
| Net cash provided by (used in) financing activities | 72,912 | (70,742 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | 21,812 | (15,054 | ) | |||||
| Cash and cash equivalents at beginning of year | 13,475 | 28,529 | ||||||
| Cash and cash equivalents at end of year | $ | 35,287 | $ | 13,475 | ||||
GIBRALTAR INDUSTRIES, INC. Segment Information (in thousands) | |||||||||||||||
| Three Months Ended December 31, | |||||||||||||||
| Increase (Decrease) | |||||||||||||||
| 2007 | 2006 | $ | % | ||||||||||||
| Net Sales | |||||||||||||||
| Building Products | $ | 218,500 | $ | 190,223 | $ | 28,277 | 14.9 | % | |||||||
| Processed Metals | 90,202 | 87,382 | 2,820 | 3.2 | % | ||||||||||
| $ | 308,702 | $ | 277,605 | $ | 31,097 | 11.2 | % | ||||||||
Income from Continuing Operations | |||||||||||||||
| Building Products | $ | 13,207 | $ | 21,538 | $ | (8,331 | ) | -38.7 | % | ||||||
| Processed Metals | 5,668 | 4,725 | 943 | 20.0 | % | ||||||||||
| Corporate | (9,135 | ) | (5,967 | ) | (3,168 | ) | 53.1 | % | |||||||
| $ | 9,740 | $ | 20,296 | $ | (10,566 | ) | -52.0 | % | |||||||
Operating Margin | |||||||||||||||
| Building Products | 6.0 | % | 11.3 | % | |||||||||||
| Processed Metals | 6.3 | % | 5.4 | % | |||||||||||
| Twelve Months Ended December 31, | |||||||||||||||
| Increase (Decrease) | |||||||||||||||
| 2007 | 2006 | $ | % | ||||||||||||
| Net Sales | |||||||||||||||
| Building Products | $ | 929,022 | $ | 862,287 | $ | 66,735 | 7.7 | % | |||||||
| Processed Metals | 382,796 | 371,289 | 11,507 | 3.1 | % | ||||||||||
| $ | 1,311,818 | $ | 1,233,576 | $ | 78,242 | 6.3 | % | ||||||||
Income from Continuing Operations | |||||||||||||||
| Building Products | $ | 91,589 | $ | 127,701 | $ | (36,112 | ) | -28.3 | % | ||||||
| Processed Metals | 21,757 | 25,587 | (3,830 | ) | -15.0 | % | |||||||||
| Corporate | (32,058 | ) | (33,915 | ) | 1,857 | -5.5 | % | ||||||||
| $ | 81,288 | $ | 119,373 | $ | (38,085 | ) | -31.9 | % | |||||||
Operating Margin | |||||||||||||||
| Building Products | 9.9 | % | 14.8 | % | |||||||||||
| Processed Metals | 5.7 | % | 6.9 | % | |||||||||||
Contacts:
Kenneth P. Houseknecht, 716-826-6500
Vice
President of Communications and Investor Relations
khouseknecht@gibraltar1.com
