GIBRALTAR INDUSTRIES, INC. - FORM 8-K - EX-99.1 - NEWS RELEASE

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8-K - FORM 8-K - GIBRALTAR INDUSTRIES, INC.	d431715d8k.htm

Exhibit 99.1

Contact:

Kenneth Smith

Chief Financial Officer

716.826.6500 ext. 3217

kwsmith@gibraltar1.com

Gibraltar Reports Third-Quarter Financial Results

Buffalo, New York, November 1, 2012 – 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 month periods ended September 30, 2012. All financial metrics in this release reflect only the Company’s continuing operations unless otherwise noted.

Third Quarter Financial Results

Gibraltar’s net sales for the third quarter of 2012 were $205.5 million compared to $220.1 million for the third quarter of 2011. Net income was $7.0 million, or $0.23 per diluted share, compared with $7.4 million, or $0.24 per diluted share, in the third quarter of 2011. The third-quarter 2012 results include after-tax special charges of $0.4 million, or $0.01 per diluted share, resulting primarily from exit activity costs related to business restructuring. Net income for the third quarter of 2011 included after-tax special charges totaling $0.4 million, or $0.02 per diluted share, primarily consisting of exit activity costs and acquisition costs. Excluding these items, third-quarter 2012 adjusted net income was $7.4 million, or $0.24 per diluted share, compared with $7.8 million, or $0.26 per diluted share, in the third quarter of 2011.

Management Comments

“We continued to experience sluggish economic conditions and an uneven, regional recovery across North America, while Euro-zone economies showed continuing weakness in the third quarter,” said Chairman and Chief Executive Officer Brian Lipke. “While these conditions are expected to improve, they did weigh on our third quarter results. Nonetheless, we continued to improve the operating efficiencies across the Company, including those associated with the consolidation of our West Coast operations.

“Our top-line results this quarter reflected mixed conditions in the markets we serve,” said Henning Kornbrekke, President and Chief Operating Officer. “Slow residential repair and remodeling activity coupled with unusual weather patterns had a negative effect on the building industry, including roofing activity, which impacted our business in the third quarter. Growth in non-residential construction also moderated and weak economic conditions in Europe lowered demand for our filtration and other industrial products. While housing starts are rebounding and forecasts suggest a continued pickup in the new housing market, many of our residential products are ordered at later stages of a home’s completion. And while residential repair and remodeling activity remains relatively unchanged, consumers are expected to become more active in the market as economic uncertainty is lifted.”

“We continued to capitalize on pockets of growth in the third quarter,” Kornbrekke said. “Our public infrastructure business continues to perform well. Funding remains positive for the road and highway construction industry, providing the basis for higher levels of activity. We have already seen an increase in quoting activity and we anticipate an increase in the size of projects in our sales pipeline as we move into 2013. At the same time, our businesses that serve the North American oil and gas and industrial markets continue to see solid customer demand.”

Nine Month Financial Results

For the nine months ended September 30, 2012, total net sales were $617.4 million, compared to $592.5 million in the comparable 2011 period. Net income was $16.4 million, or $0.53 per diluted share, compared with $16.1 million, or $0.52 per diluted share, in the comparable period of 2011. The results for the first nine months of 2012 include after-tax special charges of $2.4 million, or $0.08 per diluted share, for acquisition-related costs and exit activity costs related to business restructuring. Net income for the first nine months of 2011 included after-tax special charges of $4.3 million, or $0.15 per diluted share, for acquisition-related costs, exit activity costs related to business restructuring, and equity compensation declined by Mr. Lipke. Excluding these items, adjusted net income in the first nine months of 2012 was $18.7 million, or $0.61 per diluted share, compared with $20.4 million, or $0.67 per diluted share, in the comparable period of 2011.

Liquidity and Capital Resources

•

Gibraltar’s liquidity increased again to $211 million as of September 30, 2012, a combination of cash on hand of $71 million and availability under the Company’s undrawn revolving credit facility.

•

Working capital management continued to be effective, as days of net working capital, which consists of accounts receivable, inventory and accounts payable, were 65 for the third quarter of 2012, compared with 62 days for the third quarter last year.

Outlook

“Gibraltar is well-positioned to resume its top-line growth when more of our end markets begin to experience meaningful recovery,” said Kornbrekke. “Our focus on providing our customers with new products, innovative marketing programs and outstanding customer service has enabled us to maintain or grow our market share in major product categories. In addition, over the past 18 months we have acquired new product lines that should enable us to penetrate a broader range of markets and channels, adding value to national customers.”

“With the costs of our West Coast business integration increasingly behind us, we are also well-positioned to deliver stronger profitability,” said Lipke. “We are continuing to execute on the strategy we put in place at the beginning of the housing downturn. This strategy is focused on improving our underlying operations, tightly controlling costs, and increasing the margin leverage in our business so that we can continue to deliver solid margins even at low demand levels in our major end markets.”

“Since late 2007 we have essentially reconfigured the business, reduced our annual operating expenses, managed commodity costs more effectively, and lowered our working capital by nearly half,” Lipke said. “At the same time, our positive cash flow has allowed us to reduce our borrowings by nearly half as well. Our strong balance sheet and liquidity have enabled us to rationalize and refocus Gibraltar’s business portfolio and product lines through strategic divestitures and acquisitions, and we are well-positioned to continue pursuing acquisition-driven growth. Despite the challenging conditions in our end markets, we continue to expect to deliver stronger financial results in 2012 than we did in 2011.”

Third-quarter Conference Call Details

Gibraltar has scheduled a conference call today to review its results for the third quarter of 2012, 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 morning, prior to the start of the call. The slides may be downloaded from the Gibraltar website: http://www.gibraltar1.com. A webcast 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 North America and Europe. 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 restructuring primarily associated with the closing and consolidation of our facilities, acquisition-related costs, and surrendered equity compensation. 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-month periods ending December 31, 2012, on Friday, February 22, 2013, and hold its earnings conference call later that morning, starting at 9:00 a.m. ET.

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED INCOME STATEMENTS

(in thousands, except per share data)

(unaudited)


	Three Months Ended September 30,						Nine months Ended September 30,
	2012			2011			2012			2011
Net sales	$	205,514		$	220,096		$	617,419		$	592,466
Cost of sales		165,286			177,133			499,984			474,030

Gross profit		40,228			42,963			117,435			118,436
Selling, general, and administrative expense		24,479			24,602			78,370			75,463

Income from operations		15,749			18,361			39,065			42,973
Interest expense		4,688			4,869			13,989			14,321
Other (income) expense		(55	)		15			(401	)		(46	)

Income before taxes		11,116			13,477			25,477			28,698
Provision for income taxes		4,094			6,094			9,091			12,628

Income from continuing operations		7,022			7,383			16,386			16,070
Discontinued operations:
Income (loss) before taxes		162			(276	)		9			13,621
(Benefit of) provision for income taxes		(117	)		193			(174	)		6,563

Income (loss) from discontinued operations		279			(469	)		183			7,058

Net income	$	7,301		$	6,914		$	16,569		$	23,128

Net income per share – Basic:
Income from continuing operations	$	0.23		$	0.24		$	0.53		$	0.53
Income (loss) from discontinued operations		0.01			(0.01	)		0.01			0.23

Net income	$	0.24		$	0.23		$	0.54		$	0.76

Weighted average shares outstanding – Basic		30,765			30,554			30,739			30,474

Net income per share – Diluted:
Income from continuing operations	$	0.23		$	0.24		$	0.53		$	0.52
Income (loss) from discontinued operations		0.01			(0.01	)		0.01			0.24

Net income	$	0.24		$	0.23		$	0.54		$	0.76

Weighted average shares outstanding – Diluted		30,838			30,639			30,834			30,620

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)


	September 30, 2012			December 31, 2011
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	71,127		$	54,117
Accounts receivable, net of reserve		110,605			90,595
Inventories		109,239			109,270
Other current assets		12,828			14,872

Total current assets		303,799			268,854
Property, plant, and equipment, net		142,875			151,974
Goodwill		348,943			348,326
Acquired intangibles		90,680			95,265
Other assets		6,299			7,636

Total assets	$	892,596		$	872,055

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	73,217		$	67,320
Accrued expenses		52,298			60,687
Current maturities of long-term debt		417			417

Total current liabilities		125,932			128,424
Long-term debt		206,614			206,746
Deferred income taxes		56,150			55,801
Other non-current liabilities		23,568			21,148
Shareholders’ equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding		—			—
Common stock, $0.01 par value; authorized 50,000 shares, 30,915 and 30,702 shares issued in 2012 and 2011		309			307
Additional paid-in capital		239,447			236,673
Retained earnings		246,006			229,437
Accumulated other comprehensive loss		(1,329	)		(3,350	)
Cost of 350 and 281 common shares held in treasury in 2012 and 2011		(4,101	)		(3,131	)

Total shareholders’ equity		480,332			459,936

Total liabilities & shareholders’ equity	$	892,596		$	872,055

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended September 30,
	2012			2011
Cash Flows from Operating Activities
Net income	$	16,569		$	23,128
Income from discontinued operations		183			7,058

Income from continuing operations		16,386			16,070
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		19,838			19,515
Stock compensation expense		2,710			3,895
Non-cash charges to interest expense		1,186			1,689
Other non-cash adjustments		3,370			1,437
Increase (decrease) in cash resulting from changes in the following (excluding the effects of acquisitions):
Accounts receivable		(19,410	)		(35,126	)
Inventories		(646	)		(11,503	)
Other current assets and other assets		2,305			9,509
Accounts payable		6,134			13,898
Accrued expenses and other non-current liabilities		(5,257	)		11,826

Net cash provided by operating activities of continuing operations		26,616			31,210
Net cash provided by (used in) operating activities of discontinued operations		119			(3,491	)

Net cash provided by operating activities		26,735			27,719

Cash Flows from Investing Activities
Purchases of property, plant, and equipment		(6,852	)		(7,838	)
Cash paid for acquisitions, net of cash received		(2,705	)		(107,605	)
Purchase of other investment		—			(250	)
Net proceeds from sale of businesses		—			59,029
Net proceeds from sale of property and equipment		417			978

Net cash used in investing activities of continuing operations		(9,140	)		(55,686	)
Net cash provided by investing activities of discontinued operations		—			2,089

Net cash used in investing activities		(9,140	)		(53,597	)

Cash Flows from Financing Activities
Proceeds from long-term debt		—			73,849
Long-term debt payments		(414	)		(74,260	)
Excess tax benefit from stock compensation		14			–
Net proceeds from issuance of common stock		52			10
Payment of deferred financing fees		(18	)		(34	)
Purchase of treasury stock at market prices		(970	)		(826	)

Net cash used in financing activities		(1,336	)		(1,261	)

Effect of exchange rate changes on cash		751			(672	)

Net increase (decrease) in cash and cash equivalents		17,010			(27,811	)
Cash and cash equivalents at beginning of year		54,117			60,866

Cash and cash equivalents at end of period	$	71,127		$	33,055

GIBRALTAR INDUSTRIES, INC.

Non-GAAP Reconciliation of Adjusted Statement of Operations

(unaudited)

(in thousands, except per share data)


	Three Months Ended September 30, 2012
	As Reported In GAAP Statements			Acquisition Related Costs			Restructuring Costs			Adjusted Statement of Operations
Net sales	$	205,514		$	—		$	—		$	205,514
Cost of sales		165,286			(58	)		(201	)		165,027

Gross profit		40,228			58			201			40,487
Selling, general, and administrative expense		24,479			(81	)		(141	)		24,257

Income from operations		15,749			139			342			16,230
Operating margin		7.7	%		0.1	%		0.2	%		7.9	%
Interest expense		4,688			—			—			4,688
Other income		(55	)		—			—			(55	)

Income before income taxes		11,116			139			342			11,597
Provision for income taxes		4,094			81			17			4,192

Income from continuing operations	$	7,022		$	58		$	325		$	7,405

Income from continuing operations per share – diluted	$	0.23		$	—		$	0.01		$	0.24

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 In GAAP Statements			Acquisition Related Costs			Restructuring Costs			Adjusted Statement of 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)


	Nine Months Ended September 30, 2012
	As Reported In GAAP Statements			Acquisition Related Costs			Restructuring Costs			Adjusted Statement of Operations
Net sales	$	617,419		$	—		$	—		$	617,419
Cost of sales		499,984			(207	)		(3,080	)		496,697

Gross profit		117,435			207			3,080			120,722
Selling, general, and administrative expense		78,370			(193	)		(159	)		78,018

Income from operations		39,065			400			3,239			42,704
Operating margin		6.3	%		0.1	%		0.5	%		6.9	%
Interest expense		13,989			—			—			13,989
Other income		(401	)		—			—			(401	)

Income before income taxes		25,477			400			3,239			29,116
Provision for income taxes		9,091			141			1,145			10,377

Income from continuing operations	$	16,386		$	259		$	2,094		$	18,739

Income from continuing operations per share – diluted	$	0.53		$	0.01		$	0.07		$	0.61

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 In GAAP Statements			Acquisition Related Costs			Surrendered Equity Compensation			Restructuring Costs			Adjusted Statement of 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)


	Three Months Ended June 30, 2012
	As Reported In GAAP Statements			Acquisition Related Costs			Restructuring Costs			Adjusted Statement of Operations
Net sales	$	219,734		$	—		$	—		$	219,734
Cost of sales		178,008			(89	)		(1,113	)		176,806

Gross profit		41,726			89			1,113			42,928
Selling, general, and administrative expense		25,433			(32	)		(4	)		25,397

Income from operations		16,293			121			1,117			17,531
Operating margin		7.4	%		0.1	%		0.5	%		8.0	%
Interest expense		4,627			—			—			4,627
Other income		(315	)		—			—			(315	)

Income before income taxes		11,981			121			1,117			13,219
Provision for income taxes		4,066			45			419			4,530

Income from continuing operations	$	7,915		$	76		$	698		$	8,689

Income from continuing operations per share – diluted	$	0.26		$	—		$	0.02		$	0.28

GIBRALTAR INDUSTRIES, INC. - FORM 8-K - EX-99.1 - NEWS RELEASE - November 1, 2012

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GIBRALTAR INDUSTRIES, INC. Reports