Gibraltar Industries, Inc. (NASDAQ: ROCK), a leading manufacturer, processor, and distributor of products for the building, industrial, and vehicular markets, today reported results for its first quarter ended March 31, 2008.
Sales from continuing operations in the first quarter of 2008 were $326 million, an increase of seven percent compared to $304 million in the first quarter of 2007. The sales increase was the result of acquisitions made over the last 12 months, which added higher-margin sales of $38 million. Exclusive of acquisitions, sales decreased five percent in the first quarter, primarily the result of lower activity levels in the residential housing and automotive markets.
Income from continuing operations increased to $7.1 million, or $0.24 per diluted share, compared to $7.0 million, or $0.23 per share, in the first quarter of 2007. The first quarter of 2008 included a $1.6 million pre-tax charge, or $0.03 per diluted share, related to the consolidation of manufacturing operations and separation payments. The first quarter of 2007 included a $0.7 million pre-tax charge, or $0.01 per diluted share, related to a facility consolidation. Excluding these charges, first-quarter EPS was $0.27 and $0.24 in 2008 and 2007, respectively.
“Our ability to generate higher first-quarter sales and earnings – in spite of housing starts off 30 percent and the North American auto build down nine percent compared to the first quarter of 2007 – is further evidence of the progress we are making in building a stronger business platform for Gibraltar,” said Brian J. Lipke, Gibraltar’s Chairman and Chief Executive Officer.
“The steps we have taken to diversify and broaden our business portfolio through our recent acquisitions – especially our growth in the commercial building, industrial, and international markets – the divestiture of underperforming assets and businesses, and the streamlining and strengthening of our existing operations are continuing to improve our core operating characteristics and have enhanced our ability to deliver improved results, even in a difficult operating environment,” said Mr. Lipke.
“We continue to make progress improving our operational efficiency, lowering our cost structure, and intensifying our focus on asset management. We further streamlined our operations in the first quarter with three additional facilities closed or consolidated, in addition to the 11 we completed in 2007, with others scheduled for the balance of the year. In spite of rapidly escalating raw material costs, we continued to focus on working capital management and that, coupled with our earnings, allowed us to pay down an additional $26 million in debt during the quarter, on top of the $65 million of debt we repaid in the fourth quarter,” said Henning N. Kornbrekke, Gibraltar’s President and Chief Operating Officer.
“Even though the residential building market continues to operate well below its historic levels, as housing starts have fallen by nearly 60 percent over the last 2-½ years, we expect to see a seasonal increase in activity as we move through the second and third quarters, which are consistently Gibraltar’s strongest periods,” said Mr. Kornbrekke.
“The current operating environment is tough and it may get even tougher before it begins to level off and improve. In spite of these difficult conditions, we are managing our business to generate an improved performance in 2008 compared to last year. Longer term, our progress in restructuring our business has clearly set the stage for significantly improved results as the markets we serve begin to move back toward more normal activity levels,” said Mr. Lipke.
Looking ahead, Mr. Kornbrekke reiterated that the Company still expects its 2008 earnings per share from continuing operations will be in the range of $1.05 to $1.25 per diluted share, compared to $1.03 in 2007, barring a significant change in business conditions.
Gibraltar has scheduled a conference call to review its first-quarter results and discuss its outlook for 2008 on May 8, at 9:00 a.m. ET. Details of the call can be found on Gibraltar’s Web site, at http://www.gibraltar1.com. If you are not able to participate in the call, you can listen to a replay on the Gibraltar Web site. The presentation slides that will be discussed during the call are expected to be available on Wednesday, May 7, by 6:00 p.m. ET. The slides may be downloaded from the Conference Calls page of the Investor Info section of the Gibraltar website: http://www.gibraltar1.com/investors/index.cfm?page=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 3,700 employees and operates 81 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. 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 publicly 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.
| GIBRALTAR INDUSTRIES, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (unaudited) | ||||||||
| (in thousands) | ||||||||
|
Three Months Ended
March 31, | ||||||||
| 2008 | 2007 | |||||||
| Net sales | $ | 325,548 | $ | 304,338 | ||||
| Cost of sales | 269,798 | 252,587 | ||||||
| Gross profit | 55,750 | 51,751 | ||||||
| Selling, general and administrative expense | 37,448 | 34,336 | ||||||
| Income from operations | 18,302 | 17,415 | ||||||
| Other (income) expense: | ||||||||
| Equity in partnership income and other income | (94 | ) | (362 | ) | ||||
| Interest expense | 7,790 | 6,841 | ||||||
| Total other expense | 7,696 | 6,479 | ||||||
| Income before taxes | 10,606 | 10,936 | ||||||
| Provision for income taxes | 3,488 | 3,897 | ||||||
| Income from continuing operations | 7,118 | 7,039 | ||||||
| Discontinued operations: | ||||||||
| Income from discontinued operations before taxes | (663 | ) | (1,370 | ) | ||||
| Income tax benefit | (245 | ) | (499 | ) | ||||
| Loss from discontinued operations | (418 | ) | (871 | ) | ||||
| Net income | $ | 6,700 | $ | 6,168 | ||||
| Net income per share - Basic: | ||||||||
| Income from continuing operations | $ | 0.24 | $ | 0.24 | ||||
| Income from discontinued operations | (0.02 | ) | (0.03 | ) | ||||
| Net income | $ | 0.22 | $ | 0.21 | ||||
| Weighted average shares outstanding – Basic | 29,917 | 29,844 | ||||||
| Net income per share - Diluted: | ||||||||
| Income from continuing operations | $ | 0.24 | $ | 0.23 | ||||
| Income from discontinued operations | (0.02 | ) | (0.02 | ) | ||||
| Net income | $ | 0.22 | $ | 0.21 | ||||
| Weighted average shares outstanding – Diluted | 30,090 | 30,056 | ||||||
| GIBRALTAR INDUSTRIES, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (unaudited) | ||||||||
| (in thousands) | ||||||||
|
Three Months Ended
March 31, | ||||||||
| 2008 | 2007 | |||||||
Cash flows from operating activities | ||||||||
| Net income | $ | 6,700 | $ | 6,168 | ||||
| Loss from discontinued operations | (418 | ) | (871 | ) | ||||
| Income from continuing operations | 7,118 | 7,039 | ||||||
|
Adjustments to reconcile net income to net cash provided by (used in)
operating activities: | ||||||||
| Depreciation and amortization | 9,267 | 7,266 | ||||||
| Provision for deferred income taxes | (452 | ) | (229 | ) | ||||
| Equity in partnerships (income) loss | (71 | ) | 279 | |||||
| Stock compensation expense | 1,477 | 541 | ||||||
| Other non-cash adjustments | 5 | 6 | ||||||
| Increase (decrease) in cash resulting from changes in (net of acquisitions): | ||||||||
| Accounts receivable | (25,476 | ) | (22,262 | ) | ||||
| Inventories | 9,121 | 7,066 | ||||||
| Other current assets and other assets | 637 | 360 | ||||||
| Accounts payable | 23,799 | 16,308 | ||||||
| Accrued expenses and other non-current liabilities | 5,100 | (2,874 | ) | |||||
| Net cash provided by continuing operations | 30,525 | 13,500 | ||||||
| Net cash provided by discontinued operations | 1,365 | 3,217 | ||||||
| Net cash provided by operating activities | 31,890 | 16,717 | ||||||
Cash flows from investing activities | ||||||||
| Purchases of property, plant and equipment | (4,707 | ) | (5,349 | ) | ||||
| Net proceeds from sale of property and equipment | - | 445 | ||||||
| Acquisitions, net of cash acquired | (187 | ) | (22,492 | ) | ||||
| Net cash used in investing activities for continuing operations | (4,894 | ) | (27,396 | ) | ||||
| Net cash provided by (used in) investing activities for discontinued operations | 161 | (20 | ) | |||||
| Net cash used in investing activities | (4,733 | ) | (27,416 | ) | ||||
Cash flows from financing activities | ||||||||
| Long-term debt reduction | (59,367 | ) | (885 | ) | ||||
| Proceeds from long-term debt | 33,430 | 20,284 | ||||||
| Payment of deferred financing costs | (4 | ) | (8 | ) | ||||
| Payment of dividends | (1,495 | ) | (1,492 | ) | ||||
| Tax benefit from equity compensation | 122 | - | ||||||
| Purchase of treasury stock | (23 | ) | - | |||||
| Net cash (used in) provided by financing activities operations | (27,337 | ) | 17,899 | |||||
| Net (decrease) increase in cash and cash equivalents | (180 | ) | 7,200 | |||||
| Cash and cash equivalents at beginning of year | 35,287 | 13,475 | ||||||
| Cash and cash equivalents at end of period | $ | 35,107 | $ | 20,675 | ||||
| GIBRALTAR INDUSTRIES, INC. | ||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| (unaudited) | ||||||
| (in thousands) | ||||||
March 31, | December 31, | |||||
| 2008 | 2007 | |||||
Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 35,107 | $ | 35,287 | ||
| Accounts receivable, net | 192,943 | 167,595 | ||||
| Inventories | 203,843 | 212,909 | ||||
| Other current assets | 19,427 | 20,362 | ||||
| Assets of discontinued operations | 1,804 | 4,592 | ||||
| Total current assets | 453,124 | 440,745 | ||||
| Property, plant and equipment, net | 271,441 | 273,283 | ||||
| Goodwill | 450,190 | 453,228 | ||||
| Acquired intangibles | 99,871 | 96,871 | ||||
| Investments in partnerships | 2,714 | 2,644 | ||||
| Other assets | 14,505 | 14,637 | ||||
| $ | 1,291,845 | $ | 1,281,408 | |||
Liabilities and Shareholders' Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 113,251 | $ | 89,551 | ||
| Accrued expenses | 47,404 | 41,062 | ||||
| Current maturities of long-term debt | 2,946 | 2,955 | ||||
| Liabilities of discontinued operations | 12 | 657 | ||||
| Total current liabilities | 163,613 | 134,225 | ||||
| Long-term debt | 459,836 | 485,654 | ||||
| Deferred income taxes | 78,384 | 78,071 | ||||
| Other non-current liabilities | 18,539 | 15,698 | ||||
| Shareholders’ equity: | ||||||
Preferred stock, $.01 par value; authorized: 10,000,000 shares; | - | - | ||||
Common stock, $.01 par value; authorized 50,000,000 shares; | 300 | 300 | ||||
| Additional paid-in capital | 220,686 | 219,087 | ||||
| Retained earnings | 343,134 | 337,929 | ||||
| Accumulated other comprehensive income | 7,769 | 10,837 | ||||
| 571,889 | 568,153 | |||||
Less: cost of 63,011 and 61,467 common shares held in treasury in 2008 and 2007 | 416 | 393 | ||||
| Total shareholders’ equity | 571,473 | 567,760 | ||||
| $ | 1,291,845 | $ | 1,281,408 | |||
| GIBRALTAR INDUSTRIES, INC. | |||||||||||||||
| Segment Information | |||||||||||||||
| (unaudited) | |||||||||||||||
| (in thousands) | |||||||||||||||
Three Months Ended March 31, | |||||||||||||||
| Increase (Decrease) | |||||||||||||||
| 2008 | 2007 | $ | % | ||||||||||||
| Net Sales | |||||||||||||||
| Building Products | $ | 229,323 | $ | 205,138 | $ | 24,185 | 11.8 | % | |||||||
| Processed Metal Products | 96,225 | 99,200 | (2,975 | ) | (3.0 | )% | |||||||||
| Total Sales | 325,548 | 304,338 | 21,210 | 7.0 | % | ||||||||||
| Income from Operations | |||||||||||||||
| Building Products | $ | 20,800 | $ | 18,713 | $ | 2,087 | 11.2 | % | |||||||
| Processed Metal Products | 4,236 | 5,338 | (1,102 | ) | (20.6 | )% | |||||||||
| Corporate | (6,734 | ) | (6,636 | ) | (98 | ) | 1.5 | % | |||||||
| Total Income from Operations | $ | 18,302 | $ | 17,415 | $ | 887 | 5.1 | % | |||||||
| Operating Margin | |||||||||||||||
| Building Products | 9.1 | % | 9.1 | % | |||||||||||
| Processed Metal Products | 4.4 | % | 5.4 | % | |||||||||||
Contacts:
Kenneth P. Houseknecht, 716-826-6500
Vice
President of Communications and Investor Relations
khouseknecht@gibraltar1.com
