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 nine months ended September 30, 2008.
Sales from continuing operations in the third quarter of 2008 were $377 million, an increase of ten percent compared to $343 million in the third quarter of 2007. Income from continuing operations increased by 69 percent to $19.3 million in the third quarter of 2008, or $0.64 per diluted share, compared to $11.4 million, or $0.38 per diluted share, in the third quarter of 2007.
In the first nine months of 2008, sales from continuing operations were $1.082 billion, up eight percent from $1.003 billion in the first nine months of 2007. Income from continuing operations in the first nine months of 2008 increased by 48 percent to $46.7 million, or $1.55 per diluted share, from $31.4 million, or $1.04 per diluted share, in the first nine months of 2007.
Gibraltar’s acquisition activity in 2007 allowed it to increase sales despite significantly weaker market conditions in 2008 compared to a year earlier, as acquisitions added sales of $14 million in the third quarter and $73 million in the first nine months of 2008. The Company also benefited from the continued strength of its businesses that sell to the commercial building, industrial, architectural, and international markets.
Brian J. Lipke, Gibraltar’s Chairman and Chief Executive Officer, stated, “We continued to lower our cost structure and de-lever our balance sheet. Our continued efforts to reshape and reposition Gibraltar contributed to our improved sales, margins, and EPS growth in the third quarter and first nine months of the year.”
Henning N. Kornbrekke, Gibraltar’s President and Chief Operating Officer, added, “During the quarter, we benefited from our many efforts to increase our operating efficiency, including 22 facility consolidations since January 2007, providing optimal results at the lower current volumes and positioning the business for improved performance as the end markets we serve return to normal levels. On October 3, 2008, we entered into a definitive agreement to sell our powder metals business, SCM Metal Products (SCM), which has been reported in our Processed Metal Products segment. We closed on the sale on November 5, 2008. We expect to continue focusing our resources and capital on those areas that we expect to provide the best long-term strategic fit.”
Looking ahead, Mr. Kornbrekke said that the Company expects a more significant seasonal slowdown in sales volume during the fourth quarter primarily driven by the overall volatility of the U.S. economy. He expects 2008 earnings per share from continuing operations to be in the range of $1.61 to $1.68 per diluted share if the sale of SCM had not occurred, compared to previous guidance of $1.50 to $1.65, and $1.03 in 2007, barring a significant change in current business conditions. However, we closed the SCM transaction on November 5; therefore, the results of SCM will be reclassified to discontinued operations for all periods presented. As a result, we expect 2008 earnings per share from continuing operations in the range of $1.47 to $1.54 per diluted share, compared to $0.89 per diluted share for 2007. The reduction of 2008 and 2007 earnings per share from continuing operations includes the reclassification to discontinued operations of SCM’s profits plus a portion of interest expense related to SCM’s net assets.
Gibraltar has scheduled a conference call on November 6, at 9:00 a.m. ET to review its third-quarter results and discuss its outlook for the balance of 2008. 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, November 5, 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 3,500 employees and operates 64 facilities in 25 states, Canada, 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 regulatory changes. 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, except per share data) | ||||||
September 30, | December 31, | |||||
| 2008 | 2007 | |||||
| (unaudited) | ||||||
Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 27,537 | $ | 35,287 | ||
Accounts receivable, net of reserve of $3,940 and $3,482 in 2008 and 2007, respectively | 205,573 | 167,595 | ||||
| Inventories | 244,454 | 212,909 | ||||
| Other current assets | 18,194 | 20,362 | ||||
| Assets of discontinued operations | 1,511 | 4,592 | ||||
| Total current assets | 497,269 | 440,745 | ||||
| Property, plant and equipment, net | 259,746 | 273,283 | ||||
| Goodwill | 455,204 | 453,228 | ||||
| Acquired intangibles | 95,931 | 96,871 | ||||
| Investment in partnership | 2,856 | 2,644 | ||||
| Other assets | 14,666 | 14,637 | ||||
| $ | 1,325,672 | $ | 1,281,408 | |||
Liabilities and Shareholders' Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 132,145 | $ | 89,551 | ||
| Accrued expenses | 64,108 | 41,062 | ||||
| Current maturities of long-term debt | 2,728 | 2,955 | ||||
| Liabilities of discontinued operations | - | 657 | ||||
| Total current liabilities | 198,981 | 134,225 | ||||
| Long-term debt | 426,069 | 485,654 | ||||
| Deferred income taxes | 78,471 | 78,071 | ||||
| Other non-current liabilities | 17,421 | 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 30,031,124 and 29,949,229 shares in 2008 and 2007 | 300 | 300 | ||||
| Additional paid-in capital | 223,093 | 219,087 | ||||
| Retained earnings | 379,485 | 337,929 | ||||
| Accumulated other comprehensive income | 2,294 | 10,837 | ||||
| 605,172 | 568,153 | |||||
Less: cost of 64,777 and 61,467 common shares held in treasury in 2008 and 2007 | 442 | 393 | ||||
| Total shareholders’ equity | 604,730 | 567,760 | ||||
| $ | 1,325,672 | $ | 1,281,408 | |||
GIBRALTAR INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited) | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||
| Net sales | $ | 377,121 | $ | 342,570 | $ | 1,081,877 | $ | 1,003,116 | ||||
| Cost of sales | 298,210 | 278,796 | 864,625 | 821,539 | ||||||||
| Gross profit | 78,911 | 63,774 | 217,252 | 181,577 | ||||||||
| Selling, general and administrative expense | 43,405 | 38,409 | 124,669 | 110,029 | ||||||||
| Income from operations | 35,506 | 25,365 | 92,583 | 71,548 | ||||||||
| Other (income) expense: | ||||||||||||
| Equity in partnership’s income and other income | (612) | (356) | (973) | (1,023) | ||||||||
| Interest expense | 6,629 | 8,372 | 21,351 | 23,063 | ||||||||
| Total other expense | 6,017 | 8,016 | 20,378 | 22,040 | ||||||||
| Income before taxes | 29,489 | 17,349 | 72,205 | 49,508 | ||||||||
| Provision for income taxes | 10,222 | 5,982 | 25,549 | 18,072 | ||||||||
| Income from continuing operations | 19,267 | 11,367 | 46,656 | 31,436 | ||||||||
| Discontinued operations: | ||||||||||||
| Loss from discontinued operations before taxes | (55) | (18,590) | (968) | (21,733) | ||||||||
| Income tax benefit | (22) | (3,679) | (359) | (4,847) | ||||||||
| Loss from discontinued operations | (33) | (14,911) | (609) | (16,886) | ||||||||
| Net income (loss) | $ | 19,234 | $ | (3,544) | $ | 46,047 | $ | 14,550 | ||||
| Net income per share - Basic: | ||||||||||||
| Income from continuing operations | $ | .64 | $ | .38 | $ | 1.56 | $ | 1.05 | ||||
| Loss from discontinued operations | - | (.50) | (.02) | (.56) | ||||||||
| Net income (loss) | $ | .64 | $ | (.12) | $ | 1.54 | $ | .49 | ||||
| Weighted average shares outstanding – Basic | 29,999 | 29,873 | 29,971 | 29,847 | ||||||||
| Net income per share - Diluted: | ||||||||||||
| Income from continuing operations | $ | .64 | $ | .38 | $ | 1.55 | $ | 1.04 | ||||
| Loss from discontinued operations | - | (.50) | (.02) | (.56) | ||||||||
| Net income (loss) | $ | .64 | $ | (.12) | $ | 1.53 | $ | .48 | ||||
| Weighted average shares outstanding – Diluted | 30,266 | 30,147 | 30,171 | 30,103 | ||||||||
GIBRALTAR INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) | ||||||
|
Nine Months Ended
September 30, | ||||||
| 2008 | 2007 | |||||
Cash flows from operating activities | ||||||
| Net income | $ | 46,047 | $ | 14,550 | ||
| Loss from discontinued operations | (609) | (16,886) | ||||
| Income from continuing operations | 46,656 | 31,436 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 27,430 | 23,789 | ||||
| Provision for deferred income taxes | (610) | 797 | ||||
| Equity in partnership’s income and other income | (596) | (778) | ||||
| Distributions from partnerships | 609 | 603 | ||||
| Stock compensation expense | 3,544 | 2,043 | ||||
| Noncash charges related to property, plant and equipment and other | 4,294 | 551 | ||||
Increase (decrease) in cash resulting from changes in (net of acquisitions and dispositions): | ||||||
| Accounts receivable | (39,529) | (22,360) | ||||
| Inventories | (32,682) | 27,701 | ||||
| Other current assets and other assets | 1,363 | 1,463 | ||||
| Accounts payable | 41,057 | 13,628 | ||||
| Accrued expenses and other non-current liabilities | 23,764 | (2,977) | ||||
| Net cash provided by continuing operations | 75,300 | 75,896 | ||||
| Net cash provided by discontinued operations | 1,653 | 15,955 | ||||
| Net cash provided by operating activities | 76,953 | 91,851 | ||||
Cash flows from investing activities | ||||||
| Acquisitions, net of cash acquired | (8,604) | (203,980) | ||||
| Purchases of property, plant and equipment | (14,107) | (12,826) | ||||
| Net proceeds from sale of property and equipment | 2,096 | 2,734 | ||||
| Net proceeds from sale of business | - | 1,680 | ||||
| Net cash used in investing activities from continuing operations | (20,615) | (212,392) | ||||
| Net cash provided by (used in) investing activities for discontinued operations | 161 | (69) | ||||
| Net cash used in investing activities | (20,454) | (212,461) | ||||
Cash flows from financing activities | ||||||
| Long-term debt reduction | (113,506) | (2,128) | ||||
| Proceeds from long-term debt | 53,439 | 147,768 | ||||
| Payment of deferred financing costs | (104) | (1,440) | ||||
| Payment of dividends | (4,491) | (4,476) | ||||
| Purchase of treasury stock | (49) | - | ||||
| Net proceeds from issuance of common stock | 200 | 136 | ||||
| Tax benefit from equity compensation | 262 | - | ||||
| Net cash (used in) provided by financing activities | (64,249) | 139,860 | ||||
| Net (decrease) increase in cash and cash equivalents | (7,750) | 19,250 | ||||
| Cash and cash equivalents at beginning of year | 35,287 | 13,475 | ||||
| Cash and cash equivalents at end of period | $ | 27,537 | $ | 32,725 | ||
|
GIBRALTAR INDUSTRIES, INC.
Segment Information (unaudited) (in thousands) | |||||||||||
| Three Months Ended September 30, | |||||||||||
| Increase (Decrease) | |||||||||||
| 2008 | 2007 | $ | % | ||||||||
| Net Sales | |||||||||||
| Building Products | $ | 277,494 | $ | 247,175 | $ | 30,319 | 12.3% | ||||
| Processed Metal Products | 99,627 | 95,395 | 4,232 | 4.4% | |||||||
| Total Sales | 377,121 | 342,570 | 34,551 | 10.1% | |||||||
| Income from Operations | |||||||||||
| Building Products | $ | 33,500 | $ | 28,497 | $ | 5,003 | 17.6% | ||||
| Processed Metal Products | 12,165 | 5,540 | 6,625 | 119.6% | |||||||
| Corporate | (10,159) | (8,672) | (1,487) | 17.1% | |||||||
| Total Income from Operations | $ | 35,506 | $ | 25,365 | $ | 10,141 | 40.0% | ||||
| Operating Margin | |||||||||||
| Building Products | 12.1% | 11.5% | |||||||||
| Processed Metal Products | 12.2% | 5.8% | |||||||||
| Nine Months Ended September 30, | |||||||||||
| Increase (Decrease) | |||||||||||
| 2008 | 2007 | $ | % | ||||||||
| Net Sales | |||||||||||
| Building Products | $ | 787,8775 | $ | 710,522 | $ | 77,353 | 10.9% | ||||
| Processed Metal Products | 294,002 | 292,594 | 1,408 | 0.5% | |||||||
| Total Sales | 1,081,877 | 1,003,116 | 78,761 | 7.9% | |||||||
| Income from Operations | |||||||||||
| Building Products | $ | 93,938 | $ | 78,382 | $ | 15,556 | 19.8% | ||||
| Processed Metal Products | 24,826 | 16,089 | 8,737 | 54.3% | |||||||
| Corporate | (26,181) | (22,923) | (3,258) | 14.2% | |||||||
| Total Income from Operations | $ | 92,583 | $ | 71,548 | $ | 21,035 | 29.4% | ||||
| Operating Margin | |||||||||||
| Building Products | 11.9% | 11.0% | |||||||||
| Processed Metal Products | 8.4% | 5.5% | |||||||||
Contacts:
Kenneth P. Houseknecht, 716-826-6500,
ext. 3229
Investor Relations
khouseknecht@gibraltar1.com
