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8-K - FORM 8-K - GIBRALTAR INDUSTRIES, INC.l42610e8vk.htm
Exhibit 99.1
Contact:
Kenneth Smith
Chief Financial Officer
716.826.6500 ext. 3217
kwsmith@gibraltar1.com.
Gibraltar Announces First-Quarter Results
Sales up 12% Year over Year; Operating Margin Before Special Charges Rises 430 bps
Non-GAAP EPS of $0.11 versus Prior-Year Loss
Buffalo, New York, May 4, 2011 — Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading manufacturer and distributor of products for building and industrial markets, today reported its financial results for the three months ended March 31, 2011. As announced on March 10, 2011, Gibraltar completed its sale of the United Steel Products connector business. The operating results of this business have been reclassified to discontinued operations in the financial results being reported. Also, Gibraltar’s acquisition of The D.S. Brown Company was closed April 1, 2011, and, therefore, its financial position and results are not reported in Gibraltar’s financial results as of and for the three months ended March 31, 2011, but will be going forward.
Management Comments on Financial Results
“Our first-quarter 2011 results were in alignment with our expectations and, as we discussed last quarter, we capitalized on the ongoing improvements we have made in our businesses,” said Gibraltar Chairman and Chief Executive Officer Brian Lipke. “Although activity in our end-markets remained generally weak, our first-quarter sales and profits were up both sequentially and year-over-year compared with the first quarter of 2010. We executed well on our plans to get deeper product penetration with our customers, and Gibraltar’s sales continued to grow faster than the market as a whole. Our focus on repair, remodel and replacement segments of both the residential and non-residential markets across the broad geographic areas we serve helped our order rates despite weak new build housing activity.”
“Gibraltar’s improved top-line results for the first quarter included a shift in our business mix toward sales of products for the nonresidential market,” said Gibraltar President and Chief Operating Officer Henning Kornbrekke. “Our sales into industrial markets, in particular, were a bright spot in what otherwise remained an environment of very slow and uneven market growth in the first quarter. From a small base, we have been steadily increasing our industrial market penetration and these gains contributed to our first-quarter results.”

 


 

“During the first quarter, we closed two facilities in Europe, and are now servicing customers from our remaining European facilities,” said Kornbrekke. “Adopting lean manufacturing techniques across the company have allowed to us shorten our production lead times while freeing up space in our existing facilities, making such consolidations possible. Along with eliminating the inventories associated with closed facilities, we completed key investments in IT systems in 2010 that are enhancing our supply chain planning and procurement processes and inventory management capabilities.”
“These improvements have enabled us to successfully manage the recent volatility in raw material costs,” Kornbrekke said. “Although commodity volatility is likely to continue in the second and third quarters of this year, we expect to be able to manage this volatility with less impact on margins in 2011 than in 2010. These efforts will continue to center primarily on the cost side of the equation. We remain focused on providing outstanding service to our customers, and we are dedicated to providing them with competitive pricing.”
For the first quarter of 2011, net sales increased 12% to $163.6 million from $146.7 million for the first quarter of 2010. The Company’s GAAP income from continuing operations for the first quarter of 2011 was $1.4 million, or $0.05 per diluted share, compared with a loss of $2.4 million, or $0.08 per diluted share, for the first quarter of 2010. GAAP income from continuing operations for the first quarter of 2011 included after-tax special charges of $1.8 million, or $0.06 per diluted share, resulting from acquisition costs, exit activity costs related to business restructuring, and equity compensation declined by Mr. Lipke. After-tax special charges for the first quarter of 2010 included $0.8 million largely for an ineffective interest rate swap.
The Company’s first quarter 2011 non-GAAP income from continuing operations before special charges was $3.2 million, or $0.11 per share, compared with a loss of $1.6 million, or $0.05 per share, in the first quarter of 2010.
Gross margin before special charges increased to 19% in the first quarter of 2011 from 18% in the first quarter of 2010. The increase was primarily due to higher unit sales volume and operating efficiency.
Selling, general and administrative expense before special charges decreased 12% to $21.5 million for the first quarter of 2011 from $24.4 million in the first quarter of 2010. The decrease was primarily the result of lower variable compensation and wages on reduced staffing levels.
Liquidity and Capital Resources
  Gibraltar’s liquidity increased to $208 million as of March 31, 2011, including cash on hand of $105 million. Cash on hand included $58 million received on March 10, 2011, from the sale of the United Steel Products connectors business.
  The Company’s net working capital increased by $24.3 million since December 31, 2010, as 12% sales growth in Q1 2011 increased the investment in accounts receivable while days of net working capital improved to 56. We define working capital to consist of accounts receivable, inventory, and accounts payable.
  As a result, Gibraltar reduced its net debt outstanding by $43.5 million, or 30%, to $102.8 million as of March 31, 2011, from $146.3 million as of December 31, 2010.

 


 

Outlook
“With the work we have done to consolidate our footprint and improve our underlying operations and our success at obtaining market share gains, Gibraltar is in an excellent position to deliver improved sales and profitability in 2011,” Lipke said. “At the same time, with faster working capital turns and a good record of generating cash from operations, we are also in a position to supplement our organic growth with growth from accretive acquisitions.”
“Although the signs of end-market recovery have been inconsistent and modest at best, we have, in fact, seen some evidence of improvement,” said Lipke. “We entered 2011 with more efficient, centralized manufacturing and distribution facilities, as well as enhanced customer service capabilities aided by past restructuring activities. As a result, we are confident in our ability to report continued profitability improvement in the second quarter and full year.”
First quarter Conference Call Details
Gibraltar has scheduled a conference call to review its results for the first quarter of 2011 tomorrow, May 5, 2011, starting at 9:00 a.m. ET. Interested parties may access the call by dialing (866) 730-5768 or (857) 350-1592. Participants are required to provide the pass code: 97664508. The presentation slides that will be discussed in the conference call are expected to be available on the evening of Wednesday, May 4, 2011. 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. A replay of the conference call and a copy of the transcript will be available on the Gibraltar website following the call.
About Gibraltar
Gibraltar Industries is North America’s leading manufacturer and distributor of ventilation products, mail storage (single and cluster), rain dispersion, bar grating, expanded metal, metal lath, expansion joints, and structural bearing products. The Company serves customers in a variety of industries in all 50 states and throughout the world from 36 facilities in 19 states, Canada, England, and Germany and holds leadership positions in major product categories. Comprehensive information about Gibraltar can be found on its website, at http://www.gibraltar1.com.
Safe Harbor Statement
Information contained in this news release, other than historical information, contains forward-looking statements and are subject to a number of risk factors, uncertainties, and assumptions. Risk factors that could affect these statements include, but are not limited to, the following: the availability of raw materials and the effects of changing raw material prices on the Company’s results of operations; energy prices and usage; changing demand for the Company’s products and services; changes in the liquidity of the capital and credit markets; risks associated with the integration of acquisitions; and changes in interest and 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 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.

 


 

Non-GAAP Financial Data
To supplement Gibraltar’s consolidated financial statements presented on a GAAP basis, Gibraltar also presented certain non-GAAP financial data in this news release. Non-GAAP financial data excluded special charges consisting of intangible asset impairment, restructuring primarily associated with the closing and consolidation of our facilities, acquisition costs, surrendered equity compensation, deferred tax valuation allowances, and interest expense recognized as a result of our interest rate swap becoming ineffective. These non-GAAP adjustments are shown in the non-GAAP reconciliation of results excluding special charges provided in the financial statements that accompany this news release. We believe that the presentation of results excluding special charges provides meaningful supplemental data to investors, as well as management, that are indicative of the Company’s core operating results and facilitates comparison of operating results across reporting periods as well as comparison with other companies. Special charges are excluded since they may not be considered directly related to our ongoing business operations. These non-GAAP measures should not be viewed as a substitute for our GAAP results, and may be different than non-GAAP measures used by other companies.
Next Earnings Announcement
Gibraltar expects to release its financial results for the three months ending June 30, 2011, on Wednesday, August 3, 2011, and hold its earnings conference call on Thursday, August 4, 2011, starting at 9:00 a.m. ET.

 


 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                 
    Three Months Ended  
    March 31  
    2011     2010  
Net sales
  $ 163,563     $ 146,674  
Cost of sales
    133,518       120,217  
 
           
Gross profit
    30,045       26,457  
Selling, general, and administrative expense
    22,823       24,272  
 
           
Income from operations
    7,222       2,185  
Interest expense
    (4,454 )     (6,570 )
Equity in partnership’s income and other income
    23       71  
 
           
Income (loss) before taxes
    2,791       (4,314 )
Provision for (benefit of) income taxes
    1,350       (1,922 )
 
           
Income (loss) from continuing operations
    1,441       (2,392 )
Discontinued operations:
               
Income (loss) before taxes
    12,946       (30,085 )
Provision for (benefit of) income taxes
    5,978       (11,246 )
 
           
Income (loss) from discontinued operations
    6,968       (18,839 )
 
           
 
               
Net income (loss)
  $ 8,409     $ (21,231 )
 
           
 
               
Net income (loss) per share — Basic:
               
Income (loss) from continuing operations
  $ 0.05     $ (0.08 )
Income (loss) from discontinued operations
    0.23       (0.62 )
 
           
Net income (loss)
  $ 0.28     $ (0.70 )
 
           
Weighted average shares outstanding — Basic
    30,425       30,261  
 
           
 
               
Net income (loss) per share — Diluted:
               
Income (loss) from continuing operations
  $ 0.05     $ (0.08 )
Income (loss) from discontinued operations
    0.22       (0.62 )
 
           
Net income (loss)
  $ 0.27     $ (0.70 )
 
           
Weighted average shares outstanding — Diluted
    30,594       30,261  
 
           

 


 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
                 
    March 31,     December 31,  
    2011     2010  
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 104,504     $ 60,866  
Accounts receivable, net of reserve of $3,626 and $3,504 in 2011 and 2010, respectively
    95,308       70,371  
Inventories
    92,346       77,848  
Other current assets
    21,307       20,229  
Assets of discontinued operations
    2,576       13,063  
 
           
Total current assets
    316,041       242,377  
 
               
Property, plant, and equipment, net
    142,634       145,783  
Goodwill
    299,463       298,346  
Acquired intangibles
    65,539       66,301  
Equity method investment
          1,345  
Other assets
    8,067       16,766  
Assets of discontinued operations
          39,972  
 
           
 
  $ 831,744     $ 810,890  
 
           
 
               
Liabilities and Shareholders’ Equity
               
Current liabilities:
               
Accounts payable
  $ 71,874     $ 56,775  
Accrued expenses
    40,623       36,785  
Current maturities of long-term debt
    408       408  
Liabilities of discontinued operations
    52       6,150  
 
           
Total current liabilities
    112,957       100,118  
 
               
Long-term debt
    206,874       206,789  
Deferred income taxes
    38,669       37,119  
Other non-current liabilities
    19,804       23,221  
Liabilities of discontinued operations
          2,790  
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; 30,670,993 and 30,516,197 shares issued at March 31, 2011 and December 31, 2010, respectively
    307       305  
Additional paid-in capital
    234,283       231,999  
Retained earnings
    221,323       212,914  
Accumulated other comprehensive income (loss)
    562       (2,060 )
Cost of 272,697 and 218,894 common shares held in treasury at March 31, 2011 and December 31, 2010, respectively
    (3,035 )     (2,305 )
 
           
Total shareholders’ equity
    453,440       440,853  
 
           
 
  $ 831,744     $ 810,890  
 
           

 


 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Cash Flows from Operating Activities
               
Net income (loss)
  $ 8,409     $ (21,231 )
Income (loss) from discontinued operations
    6,968       (18,839 )
 
           
Income (loss) from continuing operations
    1,441       (2,392 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
               
Depreciation and amortization
    5,891       6,076  
Provision for deferred income taxes
          125  
Equity in partnership’s loss (income)
    14       (43 )
Stock compensation expense
    2,276       1,679  
Non-cash charges to interest expense
    564       2,407  
Other non-cash adjustments
    523       (434 )
Increase (decrease) in cash resulting from changes in:
               
Accounts receivable
    (24,610 )     (15,378 )
Inventories
    (14,054 )     (6,757 )
Other current assets and other assets
    7,686       (1,753 )
Accounts payable
    15,790       18,362  
Accrued expenses and other non-current liabilities
    (4,755 )     1,531  
 
           
Net cash (used in) provided by operating activities of continuing operations
    (9,234 )     3,423  
Net cash (used in) provided by operating activities of discontinued operations
    (3,086 )     15,411  
 
           
Net cash (used in) provided by operating activities
    (12,320 )     18,834  
 
           
 
               
Cash Flows from Investing Activities
               
Net proceeds from sale of business
    58,000       30,100  
Net proceeds from sale of property and equipment
    463       7  
Purchases of property, plant, and equipment
    (1,785 )     (1,519 )
 
           
Net cash provided by investing activities of continuing operations
    56,678       28,588  
Net cash used in investing activities of discontinued operations
          (286 )
 
           
Net cash provided by investing activities
    56,678       28,302  
 
           
 
               
Cash Flows from Financing Activities
               
Long-term debt payments
          (50,000 )
Purchase of treasury stock at market prices
    (730 )     (991 )
Payment of deferred financing fees
          (48 )
Excess tax benefit from stock compensation
          106  
Net proceeds from issuance of common stock
    10        
 
           
Net cash used in financing activities
    (720 )     (50,933 )
 
           
 
               
Net increase (decrease) in cash and cash equivalents
    43,638       (3,797 )
 
               
Cash and cash equivalents at beginning of year
    60,866       23,596  
 
           
 
               
Cash and cash equivalents at end of period
  $ 104,504     $ 19,799  
 
           

 


 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
(unaudited)
(in thousands, except per share data)
                                         
    Three Months Ended March 31, 2011  
    As                             Results  
    Reported             Surrendered     Exit     Excluding  
    In GAAP     Acquisition     Equity     Activity     Special  
    Statements     Costs     Compensation     Costs     Charges  
Net sales
  $ 163,563     $     $     $     $ 163,563  
Cost of sales
    133,518                   (858 )     132,660  
 
                             
Gross profit
    30,045                   858       30,903  
Selling, general, and administrative expense
    22,823       (390 )     (885 )     (10 )     21,538  
 
                             
Income from operations
    7,222       390       885       868       9,365  
Operating margin
    4.4 %     0.2 %     0.5 %     0.6 %     5.7 %
 
                                       
Interest expense
    (4,454 )                       (4,454 )
 
                                       
Equity in partnership’s income and other income
    23                         23  
 
                             
Income before income taxes
    2,791       390       885       868       4,934  
Provision for income taxes
    1,350                   348       1,698  
 
                             
Income from continuing operations
  $ 1,441     $ 390     $ 885     $ 520     $ 3,236  
 
                             
Income from continuing operations per share — diluted
  $ 0.05     $ 0.01     $ 0.03     $ 0.02     $ 0.11  
 
                             
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
(unaudited)
(in thousands, except per share data)
                                                         
    Three Months Ended March 31, 2010  
            Disconti     As                              
            nued     Reported                              
            Operatio     In     Intangible                     Results  
    As     ns     GAAP     Asset     Ineffective     Exit     Excluding  
    Reported     Restate     Statem     Impairment     Interest     Activity     Special  
    Previously     ment     ents     Adjustment     Rate Swap     Costs     Charges  
Net sales
  $ 157,528     $ (10,854 )   $ 146,674     $     $     $     $ 146,674  
 
                                                       
Cost of sales
    128,113       (7,896 )     120,217                   (47 )     120,170  
 
                                         
Gross profit
    29,415       (2,958 )     26,457                   47       26,504  
Selling, general, and administrative expense
    26,836       (2,564 )     24,272       177                   24,449  
 
                                         
Income from operations
    2,579       (394 )     2,185       (177 )           47       2,055  
Operating margin
    1.6 %             1.5 %     (0.1 )%     0.0 %     0.0 %     1.4 %
 
                                                       
Interest expense
    (7,051 )     481       (6,570 )           1,424             (5,146 )
 
                                                       
Equity in partnership’s income and other income
    71             71                         71  
 
                                         
Loss before income taxes
    (4,401 )     87       (4,314 )     (177 )     1,424       47       (3,020 )
Benefit of income taxes
    (2,085 )     163       (1,922 )     (73 )     520       19       (1,456 )
 
                                         
Loss from continuing operations
  $ (2,316 )   $ (76 )   $ (2,392 )   $ (104 )   $ 904     $ 28     $ (1,564 )
 
                                         
Loss from continuing operations per share — diluted
  $ (0.08 )   $ (0.00 )   $ (0.08 )   $ (0.00 )   $ 0.03     $ 0.00     $ (0.05 )
 
                                         

 


 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
(unaudited)
(in thousands, except per share data)
                                         
    Three Months Ended June 30, 2010  
                    As             Results  
    As     Discontinued     Reported     Exit     Excluding  
    Reported     Operations     In GAAP     Activity     Special  
    Previously     Restatement     Statements     Costs     Charges  
Net sales
  $ 191,771     $ (14,847 )   $ 176,924     $     $ 176,924  
Cost of sales
    152,705       (9,762 )     142,943       (417 )     142,526  
 
                             
Gross profit
    39,066       (5,085 )     33,981       417       34,398  
Selling, general, and administrative expense
    27,373       (2,829 )     24,544       (77 )     24,467  
 
                             
Income from operations
    11,693       (2,256 )     9,437       494       9,931  
Operating margin
    6.1 %             5.3 %     0.3 %     5.6 %
 
                                       
Interest expense
    (4,686 )     334       (4,352 )           (4,352 )
 
                                       
Equity in partnership’s income and other income
    60             60             60  
 
                             
Income before income taxes
    7,067       (1,922 )     5,145       494       5,639  
Provision for income taxes
    3,279       (727 )     2,552       229       2,781  
 
                             
Income from continuing operations
  $ 3,788     $ (1,195 )   $ 2,593     $ 265     $ 2,858  
 
                             
Income from continuing operations per share — diluted
  $ 0.12     $ (0.03 )   $ 0.09     $ 0.00     $ 0.09  
 
                             
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
(unaudited)
(in thousands, except per share data)
                                         
    Three Months Ended September 30, 2010  
                      As             Results  
    As     Discontinued     Reported     Exit     Excluding  
    Reported     Operations     In GAAP     Activity     Special  
    Previously     Restatement     Statements     Costs     Charges  
Net sales
  $ 182,061     $ (12,320 )   $ 169,741     $     $ 169,741  
Cost of sales
    150,758       (8,515 )     142,243       (438 )     141,805  
 
                             
Gross profit
    31,303       (3,805 )     27,498       438       27,936  
Selling, general, and administrative expense
    25,840       (2,578 )     23,262             23,262  
 
                             
Income from operations
    5,463       (1,227 )     4,236       438       4,674  
Operating margin
    3.0 %             2.5 %     0.3 %     2.8 %
 
                                       
Interest expense
    (4,746 )     317       (4,429 )           (4,429 )
 
                                       
Equity in partnership’s income and other income
    33       (3 )     30             30  
 
                             
Income (loss) before income taxes
    750       (913 )     (163 )     438       275  
Benefit of income taxes
    (592 )     (352 )     (944 )     12       (932 )
 
                             
Income from continuing operations
  $ 1,342     $ (561 )   $ 781     $ 426     $ 1,207  
 
                             
Income from continuing operations per share — diluted
  $ 0.04     $ (0.01 )   $ 0.03     $ 0.01     $ 0.04  
 
                             

 


 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
(unaudited)
(in thousands, except per share data)
                                                         
    Three Months Ended December 31, 2010  
                    As             Deferred             Results  
    As     Discontinued     Reported     Intangible     Tax     Exit     Excluding  
    Reported     Operations     In GAAP     Asset     Valuation     Activity     Special  
    Previously     Restatement     Statements     Impairment     Allowance     Costs     Charges  
Net sales
  $ 153,708     $ (9,593 )   $ 144,115     $     $     $     $ 144,115  
Cost of sales
    135,097       (6,914 )     128,183                   (5,459 )     122,724  
 
                                         
Gross profit
    18,611       (2,679 )     15,932                   5,459       21,391  
Selling, general, and administrative expense
    29,311       (2,020 )     27,291                   (647 )     26,644  
Intangible asset impairment
    77,141             77,141       (77,141 )                  
 
                                         
Loss from operations
    (87,841 )     (659 )     (88,500 )     77,141             6,106       (5,253 )
Operating margin
    (57.1 )%             (61.4 )%     53.5 %     0.0 %     4.3 %     (3.6 )%
 
                                                       
Interest expense
    (4,677 )     314       (4,363 )                       (4,363 )
 
                                                       
Equity in partnership’s loss and other loss
    (83 )     (1 )     (84 )                       (84 )
 
                                         
Loss before income taxes
    (92,601 )     (346 )     (92,947 )     77,141             6,106       (9,700 )
Benefit of income taxes
    (16,391 )     (218 )     (16,609 )     14,485       (2,400 )     1,374       (3,150 )
 
                                         
Loss from continuing operations
  $ (76,210 )   $ (128 )   $ (76,338 )   $ 62,656     $ 2,400     $ 4,732     $ (6,550 )
 
                                         
Loss from continuing operations per share — diluted
  $ (2.51 )   $ (0.01 )   $ (2.52 )   $ 2.07     $ 0.08     $ 0.15     $ (0.22 )
 
                                         
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
(unaudited)
(in thousands, except per share data)
                                         
    Year Ended December 31, 2010  
                    As             Results  
    As     Discontinued     Reported             Excluding  
    Reported     Operations     In GAAP     Special     Special  
    Previously     Restatement     Statements     Charges     Charges  
Net sales
  $ 685,068     $ (47,614 )   $ 637,454     $     $ 637,454  
Cost of sales
    566,673       (33,087 )     533,586       (6,361 )     527,225  
 
                             
Gross profit
    118,395       (14,527 )     103,868       6,361       110,229  
Selling, general, and administrative expense
    109,537       (9,991 )     99,546       (724 )     98,822  
Intangible asset impairment
    76,964             76,964       (76,964 )      
 
                             
(Loss) income from operations
    (68,106 )     (4,536 )     (72,642 )     84,049       11,407  
Operating margin
    (9.9 )%             (11.4 )%     13.2 %     1.8 %
 
                                       
Interest expense
    (21,160 )     1,446       (19,714 )     1,424       (18,290 )
 
                                       
Equity in partnership’s income and other income
    81       (4 )     77             77  
 
                             
Loss before income taxes
    (89,185 )     (3,094 )     (92,279 )     85,473       (6,806 )
Benefit of income taxes
    (15,789 )     (1,134 )     (16,923 )     14,166       (2,757 )
 
                             
Loss from continuing operations
  $ (73,396 )   $ (1,960 )   $ (75,356 )   $ 71,307     $ (4,049 )
 
                             
Loss from continuing operations per share — diluted
  $ (2.42 )   $ (0.07 )   $ (2.49 )   $ 2.36     $ (0.13 )