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8-K - FORM 8-K - GIBRALTAR INDUSTRIES, INC.c24100e8vk.htm
         
Exhibit 99.1
Contact:
Kenneth Smith
Chief Financial Officer
716.826.6500 ext. 3217
kwsmith@gibraltar1.com.
Gibraltar Announces 30% Increase in Third Quarter Revenue
Sales Volume Leverage and Streamlined Cost Structure Drive Eightfold Increase in EPS
Buffalo, New York, November 2, 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 and nine months ended September 30, 2011.
Management Comments
“Gibraltar achieved another quarter of excellent top- and bottom-line results,” said Gibraltar Chairman and Chief Executive Officer Brian Lipke. “We grew sales 30%, including double-digit organic growth as well as a 17% increase from acquisitions. Our adjusted gross margin improved by 330 basis points, and we delivered 550% growth in adjusted income from continuing operations.”
“Gibraltar’s impressive performance reflects the success of our three-point growth strategy,” said Lipke. “This strategy includes focusing on operational excellence across the company, increasing our market share, and capitalizing on the strength of our balance sheet to make accretive acquisitions. As a result, we have been able to report consistently solid financial results in a challenging end-market environment.”
“Our long-term goal is to position Gibraltar as the low-cost global supplier,” said Gibraltar President and Chief Operating Officer Henning Kornbrekke. “We have made great strides toward that goal during the past few years through lean initiatives that have lowered our cost structure. At the same time, we have significantly reduced working capital and more effectively managed commodity costs. Our third-quarter financial performance is the result of these efforts, and we continued to make progress in each of these areas during the quarter.”
“In addition, we are aggressively executing on our organic growth strategy, which centers on launching new products, expanding our geographic market coverage, and leveraging our competitive strengths to penetrate new end markets adjacent to our core business,” said Kornbrekke. “As a result, we are continuing to shift Gibraltar’s overall business mix away from the residential building market and toward industrial construction and infrastructure, and our recent acquisitions have accelerated our progress in that direction.”

 

 


 

Financial Results
Net sales for the third quarter of 2011 increased 30% to $220.1 million from $169.7 million for the third quarter of 2010, including $28.9 million in revenues from two second-quarter 2011 acquisitions. GAAP income from continuing operations was $7.4 million, or $0.24 per diluted share, compared with $0.8 million, or $0.03 per diluted share for the third quarter last year. Results from the third quarter of 2011 and 2010 included after-tax special charges of $0.4 million for each period, resulting from acquisition-related costs and exit activity costs related to business restructuring. Adjusting for these items, Gibraltar’s third-quarter 2011 adjusted income from continuing operations increased 550% to $7.8 million, or $0.26 per diluted share, from $1.2 million, or $0.04 per diluted share, in the third quarter of 2010.
Adjusted gross margin increased to 19.8% in the third quarter of 2011 from 16.5% in the third quarter of 2010. The increase was primarily due to a more favorable alignment of raw material costs and customer selling prices, cost reductions, and the impact of the recent acquisitions. Adjusted selling, general and administrative expense increased 5% to $24.5 million for the third quarter of 2011 from $23.3 million a year earlier, primarily reflecting the net result of the addition of the acquisitions in the second quarter which were nearly offset by lower compensation costs. Adjusted selling, general, and administrative expenses were 11.1% of net sales, 260 basis points lower than the third quarter of 2010.
For the nine months ended September 30, total net sales increased 20% in 2011 to $592.5 million from $493.3 million in 2010. Gibraltar’s GAAP income from continuing operations for the first nine months of 2011 was $16.1 million, or $0.52 per diluted share, compared with $1.0 million, or $0.03 per diluted share, in 2010. Results for the first nine months of 2011 included after-tax special charges of $4.3 million for acquisition-related costs, exit activity costs related to business restructuring, and equity compensation declined by Mr. Lipke. After-tax special charges for the first nine months of 2010 included $1.5 million largely resulting from an ineffective interest rate swap and restructuring charges. Adjusting for these items, Gibraltar’s first nine months of 2011 adjusted income from continuing operations was $20.4 million, or $0.67 per diluted share, compared with adjusted income from continuing operations of $2.5 million, or $0.08 per diluted share, in 2010.
Liquidity and Capital Resources
  Gibraltar’s liquidity was $158 million as of September 30, 2011, including cash on hand of $33 million and availability under the revolving credit facility.
  The Company invested $12.1 million in working capital since December 31, 2010, as 20% sales growth in the first nine months of 2011 increased the investment in accounts receivable and inventories. Days of net working capital, which consists of accounts receivable, inventory and accounts payable, were 63 for the third quarter of 2011, sustaining the Company’s improvement in managing working capital.
  The Company used cash and debt available under its revolving credit facility to help finance the D.S. Brown and Pacific Award Metals acquisitions in the second quarter. The strong cash flow of the third quarter enabled the Company to fully repay all amounts drawn on the revolving credit facility in September.
  Subsequent to quarter end, the Company amended its Senior Credit Agreement to extend the due date of the $200 million revolving credit facility for five years as well as secure a $35 million term loan commitment, reduce Gibraltar’s cost of borrowing, and provide additional financial flexibility.

 

 


 

Outlook
“We are enthusiastic about our growth prospects going forward,” said Lipke. “We plan to maintain our focus on operational excellence and product leadership, while at the same time, strengthening our balance sheet and considering accretive acquisitions. We have been able to deliver solid financial results without a significant recovery in our end markets. If our end markets do begin improving, we have an excellent opportunity to leverage margin growth both from incremental sales and from portfolio management as we acquire new businesses that take us further up the value chain. Looking forward near term, we are confident that Gibraltar will continue to report significantly improved year-over-year financial results, keeping in mind the lower historical seasonal demand in the first and fourth quarters of each year.”
Third Quarter Conference Call Details
Gibraltar has scheduled a conference call to review its results for the third quarter of 2011 tomorrow, November 3, 2011, starting at 9:00 a.m. ET. Interested parties may access the call by dialing (877) 407-5790 or (201) 689-8328. The presentation slides that will be discussed in the conference call are expected to be available this evening, November 2, 2011. The slides may be downloaded from the Gibraltar website: http://www.gibraltar1.com. A web cast replay of the conference call and a copy of the transcript will be available on the website following the call.
About Gibraltar
Gibraltar Industries is a leading manufacturer and distributor of building products, focused on residential and nonresidential repair and remodeling, as well as construction of industrial facilities and public infrastructure. The Company generates more than 80% of its sales from products that hold the #1 or #2 positions in their markets, and serves customers across the U.S. and throughout the world from 42 facilities in 20 states, Canada, England and Germany. Gibraltar’s strategy is to grow organically by expanding its product portfolio and penetration of existing customer accounts, while broadening its market and geographic coverage through the acquisition of companies with leadership positions in adjacent 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 is 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 adjusted financial data in this news release. Adjusted financial data excluded special charges consisting of intangible asset impairment, restructuring primarily associated with the closing and consolidation of our facilities, acquisition-related costs, surrendered equity compensation, deferred tax valuation allowances, and interest expense recognized as a result of our interest rate swap becoming ineffective. These adjustments are shown in the Non-GAAP reconciliation of adjusted operating 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 adjusted measures should not be viewed as a substitute for our GAAP results, and may be different than adjusted measures used by other companies.
Next Earnings Announcement
Gibraltar expects to release its financial results for the three and twelve months ending December 31, 2011, on February 23, 2012, and hold its earnings conference call on February 24, 2012, starting at 9:00 a.m. ET.

 

 


 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2011     2010     2011     2010  
 
                               
Net sales
  $ 220,096     $ 169,741     $ 592,466     $ 493,339  
Cost of sales
    177,133       142,243       474,030       405,403  
 
                       
Gross profit
    42,963       27,498       118,436       87,936  
Selling, general, and administrative expense
    24,602       23,262       75,463       72,078  
 
                       
Income from operations
    18,361       4,236       42,973       15,858  
Interest expense
    (4,869 )     (4,429 )     (14,321 )     (15,351 )
Other (expense) income
    (15 )     30       46       161  
 
                       
 
                               
Income (loss) before taxes
    13,477       (163 )     28,698       668  
Provision for (benefit of) income taxes
    6,094       (944 )     12,628       (314 )
 
                       
Income from continuing operations
    7,383       781       16,070       982  
 
                               
Discontinued operations:
                               
(Loss) income before taxes
    (276 )     677       13,621       (27,949 )
Provision for (benefit of) income taxes
    193       261       6,563       (10,414 )
 
                       
(Loss) income from discontinued operations
    (469 )     416       7,058       (17,535 )
 
                       
 
                               
Net income (loss)
  $ 6,914     $ 1,197     $ 23,128     $ (16,553 )
 
                       
 
                               
Net income (loss) per share — Basic:
                               
Income from continuing operations
  $ 0.24     $ 0.03     $ 0.53     $ 0.03  
(Loss) income from discontinued operations
    (0.01 )     0.01       0.23       (0.58 )
 
                       
Net income (loss)
  $ 0.23     $ 0.04     $ 0.76     $ (0.55 )
 
                       
 
                               
Weighted average shares outstanding — Basic
    30,554       30,325       30,474       30,295  
 
                       
 
                               
Net income (loss) per share — Diluted:
                               
Income from continuing operations
  $ 0.24     $ 0.03     $ 0.52     $ 0.03  
(Loss) income from discontinued operations
    (0.01 )     0.01       0.24       (0.57 )
 
                       
Net income (loss)
  $ 0.23     $ 0.04     $ 0.76     $ (0.54 )
 
                       
 
                               
Weighted average shares outstanding — Diluted
    30,639       30,442       30,620       30,442  
 
                       

 

 


 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
                 
    September 30,     December 31,  
    2011     2010  
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 33,055     $ 60,866  
Accounts receivable, net of reserve of $4,298 and $3,504 in 2011 and 2010
    118,325       70,371  
Inventories
    110,967       77,848  
Other current assets
    24,352       20,229  
Assets of discontinued operations
          13,063  
 
           
Total current assets
    286,699       242,377  
 
               
Property, plant, and equipment, net
    154,483       145,783  
Goodwill
    348,551       298,346  
Acquired intangibles
    96,991       66,301  
Other assets
    6,915       16,766  
Equity method investment
          1,345  
Assets of discontinued operations
          39,972  
 
           
 
               
 
  $ 893,639     $ 810,890  
 
           
 
               
Liabilities and Shareholders’ Equity
               
Current liabilities:
               
Accounts payable
  $ 80,533     $ 56,775  
Accrued expenses
    66,774       36,785  
Current maturities of long-term debt
    408       408  
Liabilities of discontinued operations
          6,150  
 
           
Total current liabilities
    147,715       100,118  
 
               
Long-term debt
    206,667       206,789  
Deferred income taxes
    51,370       37,119  
Other non-current liabilities
    22,314       23,221  
Liabilities of discontinued operations
          2,790  
 
               
Shareholders’ equity:
               
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding
           
Common stock, $0.01 par value; authorized 50,000 shares; 30,700 and 30,516 shares issued in 2011 and 2010
    307       305  
Additional paid-in capital
    235,902       231,999  
Retained earnings
    236,042       212,914  
Accumulated other comprehensive loss
    (3,547 )     (2,060 )
Cost of 281 and 219 common shares held in treasury in 2011 and 2010
    (3,131 )     (2,305 )
 
           
Total shareholders’ equity
    465,573       440,853  
 
           
 
               
 
  $ 893,639     $ 810,890  
 
           

 

 


 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                 
    Nine Months Ended  
    September 30,  
    2011     2010  
Cash Flows from Operating Activities
               
Net income (loss)
  $ 23,128     $ (16,553 )
Income (loss) from discontinued operations
    7,058       (17,535 )
 
           
Income from continuing operations
    16,070       982  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    19,515       18,049  
Stock compensation expense
    3,895       3,599  
Non-cash charges to interest expense
    1,689       3,762  
Other non-cash adjustments
    1,437       1,167  
Increase (decrease) in cash resulting from changes in the following (excluding the effects of acquisitions):
               
Accounts receivable
    (35,041 )     (23,419 )
Inventories
    (11,449 )     (1,030 )
Other current assets and other assets
    9,606       7,348  
Accounts payable
    13,485       18,575  
Accrued expenses and other non-current liabilities
    11,331       3,670  
 
           
Net cash provided by operating activities of continuing operations
    30,538       32,703  
Net cash (used in) provided by operating activities of discontinued operations
    (3,491 )     21,725  
 
           
Net cash provided by operating activities
    27,047       54,428  
 
           
Cash Flows from Investing Activities
               
Cash paid for acquisitions, net of cash acquired
    (107,605 )      
Purchases of property, plant, and equipment
    (7,838 )     (6,264 )
Purchase of equity method investment
    (250 )     (1,000 )
Net proceeds from sale of property and equipment
    978       179  
Net proceeds from sale of businesses
    59,029       29,164  
 
           
Net cash (used in) provided by investing activities of continuing operations
    (55,686 )     22,079  
Net cash provided by (used in) investing activities of discontinued operations
    2,089       (427 )
 
           
Net cash (used in) provided by investing activities
    (53,597 )     21,652  
 
           
Cash Flows from Financing Activities
               
Long-term debt payments
    (74,260 )     (58,967 )
Proceeds from long-term debt
    73,849       8,559  
Purchase of treasury stock at market prices
    (826 )     (1,114 )
Payment of deferred financing fees
    (34 )     (164 )
Excess tax benefit from stock compensation
          55  
Net proceeds from issuance of common stock
    10       270  
 
           
Net cash used in financing activities
    (1,261 )     (51,361 )
 
           
 
               
Net (decrease) increase in cash and cash equivalents
    (27,811 )     24,719  
 
               
Cash and cash equivalents at beginning of year
    60,866       23,596  
 
           
 
               
Cash and cash equivalents at end of period
  $ 33,055     $ 48,315  
 
           

 

 


 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statement of Operations
(unaudited)
(in thousands, except per share data)
                                 
    Three Months Ended September 30, 2011  
    As Reported     Acquisition             Adjusted  
    In GAAP     Related     Restructuring     Statement of  
    Statements     Costs     Costs     Operations  
Net sales
  $ 220,096     $     $     $ 220,096  
Cost of sales
    177,133             (522 )     176,611  
 
                       
Gross profit
    42,963             522       43,485  
Selling, general, and administrative expense
    24,602       (156 )     7       24,453  
 
                       
Income from operations
    18,361       156       515       19,032  
Operating margin
    8.3 %     0.1 %     0.2 %     8.6 %
 
                               
Interest expense
    (4,869 )                 (4,869 )
Other expense
    (15 )                 (15 )
 
                       
Income before income taxes
    13,477       156       515       14,148  
Provision for income taxes
    6,094             240       6,334  
 
                       
Income from continuing operations
  $ 7,383     $ 156     $ 275     $ 7,814  
 
                       
Income from continuing operations per share — diluted
  $ 0.24     $ 0.01     $ 0.01     $ 0.26  
 
                       
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statement of Operations
(unaudited)
(in thousands, except per share data)
                                 
    Three Months Ended September 30, 2010  
    As Reported     Acquisition             Adjusted  
    In GAAP     Related     Restructuring     Statement of  
    Statements     Costs     Costs     Operations  
Net sales
  $ 169,741     $     $     $ 169,741  
Cost of sales
    142,243             (438 )     141,805  
 
                       
Gross profit
    27,498             438       27,936  
Selling, general, and administrative expense
    23,262                   23,262  
 
                       
Income from operations
    4,236             438       4,674  
Operating margin
    2.5 %     0.0 %     0.3 %     2.8 %
 
                               
Interest expense
    (4,429 )                 (4,429 )
Other expense
    30                   30  
 
                       
(Loss) income before income taxes
    (163 )           438       275  
Benefit of income taxes
    (944 )           12       (932 )
 
                       
Income from continuing operations
  $ 781     $     $ 426     $ 1,207  
 
                       
Income from continuing operations per share — diluted
  $ 0.03     $     $ 0.01     $ 0.04  
 
                       

 

 


 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statement of Operations
(unaudited)
(in thousands, except per share data)
                                         
    Nine Months Ended September 30, 2011  
    As Reported                             Adjusted  
    In GAAP     Acquisition     Surrendered     Restructuring     Statement of  
    Statements     Related Costs     Compensation     Costs     Operations  
Net sales
  $ 592,466     $     $     $     $ 592,466  
Cost of sales
    474,030       (2,467 )           (1,697 )     469,866  
 
                             
Gross profit
    118,436       2,467             1,697       122,600  
Selling, general, and administrative expense
    75,463       (770 )     (885 )     (476 )     73,332  
 
                             
Income from operations
    42,973       3,237       885       2,173       49,268  
Operating margin
    7.3 %     0.5 %     0.1 %     0.4 %     8.3 %
 
                                       
Interest expense
    (14,321 )                       (14,321 )
Other income
    46                         46  
 
                             
Income before income taxes
    28,698       3,237       885       2,173       34,993  
Provision for income taxes
    12,628       1,054             926       14,608  
 
                             
Income from continuing operations
  $ 16,070     $ 2,183     $ 885     $ 1,247     $ 20,385  
 
                             
Income from continuing operations per share — diluted
  $ 0.52     $ 0.08     $ 0.03     $ 0.04     $ 0.67  
 
                             
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statement of Operations
(unaudited)
(in thousands, except per share data)
                                         
    Nine Months Ended September 30, 2010  
    As Reported     Intangible     Ineffective             Adjusted  
    In GAAP     Asset     Interest Rate     Restructuring     Statement of  
    Statements     Impairment     Swap     Costs     Operations  
Net sales
  $ 493,339     $     $     $     $ 493,339  
Cost of sales
    405,403                   (902 )     404,501  
 
                             
Gross profit
    87,936                   902       88,838  
Selling, general, and administrative expense
    72,078       177             (77 )     72,178  
 
                             
Income from operations
    15,858       (177 )           979       16,660  
Operating margin
    3.2 %     0.0 %     0.0 %     0.2 %     3.4 %
 
                                       
Interest expense
    (15,351 )           1,424             (13,927 )
Other income
    161                         161  
 
                             
Income before income taxes
    668       (177 )     1,424       979       2,894  
(Benefit of) provision for income taxes
    (314 )     (73 )     520       260       393  
 
                             
Income from continuing operations
  $ 982     $ (104 )   $ 904     $ 719     $ 2,501  
 
                             
Income from continuing operations per share — diluted
  $ 0.03     $ (0.00 )   $ 0.03     $ 0.02     $ 0.08  
 
                             

 

 


 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statement of Operations
(unaudited)
(in thousands, except per share data)
                                         
    Three Months Ended December 31, 2010  
    As             Deferred              
    Reported     Exit     Tax     Intangible     Adjusted  
    In GAAP     Activity     Valuation     Asset     Statement of  
    Statements     Costs     Allowance     Impairment     Operations  
Net sales
  $ 144,115     $     $     $     $ 144,115  
Cost of sales
    128,183       (5,459 )                 122,724  
 
                             
Gross profit
    15,932       5,459                   21,391  
Selling, general, and administrative expense
    27,291       (647 )                 26,644  
Intangible asset impairment
    77,141                   (77,141 )      
 
                             
Loss from operations
    (88,500 )     6,106             77,141       (5,253 )
Operating margin
    (61.4 )%     4.3 %     0.0 %     53.5 %     (3.6 )%
 
                                       
Interest expense
    (4,363 )                       (4,363 )
Other expense
    (84 )                       (84 )
 
                             
Loss before income taxes
    (92,947 )     6,106             77,141       (9,700 )
Benefit of income taxes
    (16,609 )     1,374       (2,400 )     14,485       (3,150 )
 
                             
Loss from continuing operations
  $ (76,338 )   $ 4,732     $ 2,400     $ 62,656     $ (6,550 )
 
                             
Loss from continuing operations per share — diluted
  $ (2.52 )   $ 0.15     $ 0.08     $ 2.07     $ (0.22 )
 
                             
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statement of Operations
(unaudited)
(in thousands, except per share data)
                         
    Year Ended December 31, 2010  
    As                
    Reported             Adjusted  
    In GAAP     Special     Statement of  
    Statements     Charges     Operations  
Net sales
  $ 637,454     $     $ 637,454  
Cost of sales
    533,586       (6,361 )     527,225  
 
                 
Gross profit
    103,868       6,361       110,229  
Selling, general, and administrative expense
    99,546       (724 )     98,822  
Intangible asset impairment
    76,964       (76,964 )      
 
                 
(Loss) income from operations
    (72,642 )     84,049       11,407  
Operating margin
    (11.4 )%     13.2 %     1.8 %
 
                       
Interest expense
    (19,714 )     1,424       (18,290 )
Other income
    77             77  
 
                 
Loss before income taxes
    (92,279 )     85,473       (6,806 )
Benefit of income taxes
    (16,923 )     14,166       (2,757 )
 
                 
Loss from continuing operations
  $ (75,356 )   $ 71,307     $ (4,049 )
 
                 
Loss from continuing operations per share — diluted
  $ (2.49 )   $ 2.36     $ (0.13 )