Gibraltar Industries, Inc. (NASDAQ: ROCK), a leading manufacturer, processor, and distributor of products for the building, industrial, and vehicular markets, today reported results for the quarter and six months ended June 30, 2008.
Sales from continuing operations in the second quarter of 2008 were $379 million, an increase of six percent compared to $356 million in the second quarter of 2007. Income from continuing operations increased by 56 percent to $20.3 million in the second quarter of 2008, or $0.67 per diluted share, compared to $13.0 million, or $0.43 per diluted share, in the second quarter of 2007.
In the first six months of 2008, sales from continuing operations were $705 million, up seven percent from $661 million in the first half of 2007. Income from continuing operations in the first six months of 2008 increased by 36 percent to $27.4 million, or $0.91 per diluted share, from $20.1 million, or $0.67 per diluted share, in the first six months of 2007.
Gibraltar’s 2007 acquisition activity allowed it to increase sales despite significantly weaker market conditions in 2008 compared to a year earlier, as these acquisitions added sales of $22 million in the second quarter and $59 million in the first six months of 2008.
“During the second quarter, we built on the progress achieved in the first three months of the year. We continued to reduce cost, generated higher sales, drove strong earnings growth, and further strengthened our balance sheet. All of this was accomplished in spite of additional weakening in two of our primary markets, with housing starts off 32 percent and the North American auto build down 16 percent compared to the second quarter of 2007,” said Brian J. Lipke, Gibraltar’s Chairman and Chief Executive Officer.
“Our many initiatives to reduce costs, consolidate and streamline our operations, reduce working capital, and lower our debt allowed us to produce much stronger second-quarter results, even in an extremely difficult operating environment. In the last 18 months, we have closed or consolidated 18 facilities, including four in the second quarter. Over that same time, our operational efficiencies have resulted in improvements in margins, improved our customer service, and helped to reduce working capital, resulting in reductions in debt of $24 million during the second quarter, $50 million in the first six months of 2008, and approximately $115 million in the last nine months,” said Henning N. Kornbrekke, Gibraltar’s President and Chief Operating Officer.
“We have continued to strategically transform Gibraltar, broadening and diversifying our business portfolio by increasing our participation in the commercial building, industrial, and international markets and strengthening our product leadership positions in targeted niche markets, all of which have improved our core operating characteristics and enhanced our ability to generate stronger and more consistent results,” said Mr. Lipke.
“By aggressively lowering Gibraltar’s cost structure and continuing to improve our margins, we have been able to offset lower volumes in two of our primary markets. As these markets stabilize and begin to move back toward more normal activity levels, we are positioned to generate even stronger results,” said Mr. Kornbrekke.
Looking ahead, Mr. Kornbrekke said that the Company expects the normal seasonal slowing in the second half of the year and that, in light of its strong performance in the first six months of the year and the momentum from its many operational improvements, its 2008 earnings per share from continuing operations are now expected to be in the range of $1.50 to $1.65 per share, compared to previous guidance of $1.05 to $1.25, and $1.03 in 2007, barring a significant change in current business conditions.
Gibraltar has scheduled a conference call to review its second-quarter results and discuss its outlook for 2008 on August 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 Thursday, August 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 3,800 employees and operates 71 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 BALANCE SHEETS | |||||
(in thousands) | |||||
June 30, | December 31, | ||||
2008 | 2007 | ||||
(unaudited) | |||||
Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 26,692 | $ | 35,287 | |
Accounts receivable, net of reserve of $4,039 and $3,482 in 2008 and 2007, respectively | 214,008 | 167,595 | |||
| Inventories | 228,745 | 212,909 | |||
| Other current assets | 19,193 | 20,362 | |||
| Assets of discontinued operations | 1,536 | 4,592 | |||
| Total current assets | 490,174 | 440,745 | |||
| Property, plant and equipment, net | 266,791 | 273,283 | |||
| Goodwill | 458,386 | 453,228 | |||
| Acquired intangibles | 98,398 | 96,871 | |||
| Investments in partnerships | 2,891 | 2,644 | |||
| Other assets | 14,687 | 14,637 | |||
| $ | 1,331,327 | $ | 1,281,408 | ||
Liabilities and Shareholders' Equity | |||||
| Current liabilities: | |||||
| Accounts payable | $ | 150,412 | $ | 89,551 | |
| Accrued expenses | 54,292 | 41,062 | |||
| Current maturities of long-term debt | 2,728 | 2,955 | |||
| Liabilities of discontinued operations | - | 657 | |||
| Total current liabilities | 207,432 | 134,225 | |||
| Long-term debt | 435,583 | 485,654 | |||
| Deferred income taxes | 78,993 | 78,071 | |||
| Other non-current liabilities | 16,315 | 15,698 | |||
| Shareholders’ equity: | |||||
| Preferred stock, $0.01 par value; authorized: 10,000,000 shares; none outstanding | - | - | |||
| Common stock, $0.01 par value; authorized 50,000,000 shares; issued 30,007,494 and 29,949,229 shares in 2008 and 2007 | 300 | 300 | |||
| Additional paid-in capital | 221,921 | 219,087 | |||
| Retained earnings | 361,749 | 337,929 | |||
| Accumulated other comprehensive income | 9,462 | 10,837 | |||
| 593,432 | 568,153 | ||||
Less: cost of 64,154 and 61,467 common shares held in treasury in 2008 and 2007 | 428 | 393 | |||
| Total shareholders’ equity | 593,004 | 567,760 | |||
| $ | 1,331,327 | $ | 1,281,408 | ||
GIBRALTAR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands) | ||||||||||||
|
Three Months Ended
June 30, |
Six Months Ended
June 30, | |||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||
| Net sales | $ | 379,208 | $ | 356,208 | $ | 704,756 | $ | 660,546 | ||||
| Cost of sales | 296,617 | 290,156 | 566,415 | 542,743 | ||||||||
| Gross profit | 82,591 | 66,052 | 138,341 | 117,803 | ||||||||
| Selling, general and administrative expense | 43,816 | 37,284 | 81,264 | 71,620 | ||||||||
| Income from operations | 38,775 | 28,768 | 57,077 | 46,183 | ||||||||
| Other (income) expense: | ||||||||||||
| Equity in partnerships’ income and other income | (267 | ) | (305 | ) | (361 | ) | (667 | ) | ||||
| Interest expense | 6,932 | 7,850 | 14,722 | 14,691 | ||||||||
| Total other expense | 6,665 | 7,545 | 14,361 | 14,024 | ||||||||
| Income before taxes | 32,110 | 21,223 | 42,716 | 32,159 | ||||||||
| Provision for income taxes | 11,839 | 8,193 | 15,327 | 12,090 | ||||||||
| Income from continuing operations | 20,271 | 13,030 | 27,389 | 20,069 | ||||||||
| Discontinued operations: | ||||||||||||
| Loss from discontinued operations before taxes | (250 | ) | (1,773 | ) | (913 | ) | (3,143 | ) | ||||
| Income tax benefit | (92 | ) | (669 | ) | (337 | ) | (1,168 | ) | ||||
| Loss from discontinued operations | (158 | ) | (1,104 | ) | (576 | ) | (1,975 | ) | ||||
| Net income | $ | 20,113 | $ | 11,926 | $ | 26,813 | $ | 18,094 | ||||
| Net income per share - Basic: | ||||||||||||
Income from continuing operations | $ | .68 | $ | .44 | $ | .91 | $ | .67 | ||||
Loss from discontinued operations | (.01 | ) | (.04 | ) | (.02 | ) | (.06 | ) | ||||
| Net income | $ | .67 | $ | .40 | $ | .89 | $ | .61 | ||||
| . | ||||||||||||
| Weighted average shares outstanding – Basic | 29,980 | 29,863 | 29,963 | 29,850 | ||||||||
Net income per share - Diluted: | ||||||||||||
Income from continuing operations | $ | .67 | $ | .43 | $ | .91 | $ | .67 | ||||
Loss from discontinued operations | - | (.03 | ) | (.02 | ) | (.07 | ) | |||||
| Net income | $ | .67 | $ | .40 | $ | .89 | $ | .60 | ||||
| Weighted average shares outstanding – Diluted | 30,139 | 30,144 | 30,129 | 30,096 | ||||||||
GIBRALTAR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) | ||||||||
Six Months Ended June 30, | ||||||||
| 2008 | 2007 | |||||||
Cash flows from operating activities | ||||||||
| Net income | $ | 26,813 | $ | 18,094 | ||||
| Loss from discontinued operations | (576 | ) | (1,975 | ) | ||||
| Income from continuing operations | 27,389 | 20,069 | ||||||
|
Adjustments to reconcile net income to net cash provided by
operating activities: | ||||||||
| Depreciation and amortization | 18,133 | 15,570 | ||||||
| Provision for deferred income taxes | (952 | ) | (229 | ) | ||||
| Equity in partnerships’ loss (income) and other income | (270 | ) | (576 | ) | ||||
| Distributions from partnerships | 264 | 493 | ||||||
| Stock compensation expense | 2,712 | 1,254 | ||||||
| Other noncash adjustments | 1,251 | 528 | ||||||
Increase (decrease) in cash resulting from changes in (net of acquisitions and dispositions): | ||||||||
| Accounts receivable | (46,990 | ) | (28,627 | ) | ||||
| Inventories | (16,046 | ) | 14,539 | |||||
| Other current assets and other assets | 1,180 | 1,221 | ||||||
| Accounts payable | 60,060 | 25,668 | ||||||
| Accrued expenses and other non-current liabilities | 13,366 | (2,946 | ) | |||||
| Net cash provided by continuing operations | 60,097 | 46,964 | ||||||
| Net cash provided by discontinued operations | 1,662 | 7,892 | ||||||
| Net cash provided by operating activities | 61,759 | 54,856 | ||||||
Cash flows from investing activities | ||||||||
| Acquisitions, net of cash acquired | (8,222 | ) | (84,424 | ) | ||||
| Purchases of property, plant and equipment | (9,440 | ) | (9,254 | ) | ||||
| Net proceeds from sale of property and equipment | 540 | 373 | ||||||
| Net cash used in investing activities from continuing operations | (17,122 | ) | (93,305 | ) | ||||
| Net cash provided by (used in) investing activities for discontinued operations | 161 | (38 | ) | |||||
| Net cash used in investing activities | (16,961 | ) | (93,343 | ) | ||||
Cash flows from financing activities | ||||||||
| Long-term debt reduction | (93,922 | ) | (1,654 | ) | ||||
| Proceeds from long-term debt | 43,439 | 52,485 | ||||||
| Payment of deferred financing costs | (4 | ) | (8 | ) | ||||
| Payment of dividends | (2,993 | ) | (2,983 | ) | ||||
| Purchase of treasury stock | (35 | ) | - | |||||
| Net proceeds from issuance of common stock | - | 93 | ||||||
| Tax benefit from equity compensation | 122 | - | ||||||
| Net cash (used in) provided by financing activities | (53,393 | ) | 47,933 | |||||
| Net (decrease) increase in cash and cash equivalents | (8,595 | ) | 9,446 | |||||
| Cash and cash equivalents at beginning of year | 35,287 | 13,475 | ||||||
| Cash and cash equivalents at end of period | $ | 26,692 | $ | 22,921 | ||||
|
GIBRALTAR INDUSTRIES, INC.
Segment Information (unaudited) (in thousands) | |||||||||||||
Three Months Ended June 30, | |||||||||||||
| Increase (Decrease) | |||||||||||||
| 2008 | 2007 | $ | % | ||||||||||
| Net Sales | |||||||||||||
| Building Products | $ | 281,058 | $ | 258,209 | $ | 22,849 | 8.8 | % | |||||
| Processed Metal Products | 98,150 | 97,999 | 151 | 0.2 | % | ||||||||
| Total Sales | 379,208 | 356,208 | 23,000 | 6.5 | % | ||||||||
| Income from Operations | |||||||||||||
| Building Products | $ | 39,638 | $ | 31,172 | $ | 8,466 | 27.2 | % | |||||
| Processed Metal Products | 8,425 | 5,211 | 3,214 | 61.7 | % | ||||||||
| Corporate | (9,288 | ) | (7,615 | ) | (1,673 | ) | 22.0 | % | |||||
| Total Income from Operations | $ | 38,775 | $ | 28,768 | $ | 10,007 | 34.8 | % | |||||
| Operating Margin | |||||||||||||
| Building Products | 14.1 | % | 12.1 | % | |||||||||
| Processed Metal Products | 8.6 | % | 5.3 | % | |||||||||
Six Months Ended June 30, | |||||||||||||
| Increase (Decrease) | |||||||||||||
| 2008 | 2007 | $ | % | ||||||||||
| Net Sales | |||||||||||||
| Building Products | $ | 510,381 | $ | 463,347 | $ | 47,034 | 10.2 | % | |||||
| Processed Metal Products | 194,375 | 197,199 | (2,824 | ) | (1.4 | %) | |||||||
| Total Sales | 704,756 | 660,546 | 44,210 | 6.7 | % | ||||||||
| Income from Operations | |||||||||||||
| Building Products | $ | 60,438 | $ | 49,885 | $ | 10,553 | 21.2 | % | |||||
| Processed Metal Products | 12,661 | 10,549 | 2,112 | 20.0 | % | ||||||||
| Corporate | (16,022 | ) | (14,251 | ) | (1,771 | ) | 12.4 | % | |||||
| Total Income from Operations | $ | 57,077 | $ | 46,183 | $ | 10,894 | 23.6 | % | |||||
| Operating Margin | |||||||||||||
| Building Products | 11.8 | % | 10.8 | % | |||||||||
| Processed Metal Products | 6.5 | % | 5.3 | % | |||||||||
Contacts:
Kenneth P. Houseknecht, Vice President
of Communications
and Investor Relations, 716-826-6500
khouseknecht@gibraltar1.com
