Gibraltar Reports Third Quarter Financial Results

  Gibraltar Reports Third Quarter Financial Results

Business Wire

BUFFALO, N.Y. -- November 01, 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              Nine months Ended
                   September 30,                   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         24,479         24,602         78,370         75,463  
administrative
expense
Income from          15,749          18,361          39,065          42,973
operations
Interest             4,688           4,869           13,989          14,321
expense
Other (income)       (55     )       15             (401    )       (46     )
expense
Income before        11,116          13,477          25,477          28,698
taxes
Provision for        4,094          6,094          9,091          12,628  
income taxes
Income from
continuing           7,022           7,383           16,386          16,070
operations
Discontinued
operations:
Income (loss)        162             (276    )       9               13,621
before taxes
(Benefit of)
provision for        (117    )       193            (174    )       6,563   
income taxes
Income (loss)
from                 279            (469    )       183            7,058   
discontinued
operations
                                                                     
Net income         $ 7,301        $ 6,914        $ 16,569       $ 23,128  
                                                                     
Net income per
share – Basic:
Income from
continuing         $ 0.23          $ 0.24          $ 0.53          $ 0.53
operations
Income (loss)
from                 0.01           (0.01   )       0.01           0.23    
discontinued
operations
Net income         $ 0.24         $ 0.23         $ 0.54         $ 0.76    
Weighted
average shares       30,765         30,554         30,739         30,474  
outstanding –
Basic
                                                                     
Net income per
share –
Diluted:
Income from
continuing         $ 0.23          $ 0.24          $ 0.53          $ 0.52
operations
Income (loss)
from                 0.01           (0.01   )       0.01           0.24    
discontinued
operations
Net income         $ 0.24         $ 0.23         $ 0.54         $ 0.76    
Weighted
average shares       30,838         30,639         30,834         30,620  
outstanding –
Diluted

                                                             
                                                                     
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
                                                                     
                                                September 30,     December 31,
                                                2012              2011
Assets                                          (unaudited)
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                          309               307

30,702 shares issued in 2012 and 2011
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         (4,101   )       (3,131  )
treasury in 2012 and 2011
                                                                     
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           (5,257   )       11,826   
liabilities
Net cash provided by operating activities         26,616            31,210
of continuing operations
Net cash provided by (used in) operating
activities of discontinued                       119             (3,491   )
operations
Net cash provided by operating activities        26,735          27,719   
                                                                    
Cash Flows from Investing Activities
Purchases of property, plant, and                 (6,852   )        (7,838   )
equipment
Cash paid for acquisitions, net of cash           (2,705   )        (107,605 )
received
Purchase of other investment                      -                 (250     )
Net proceeds from sale of businesses              -                 59,029
Net proceeds from sale of property and           417             978      
equipment
Net cash used in investing activities of          (9,140   )        (55,686  )
continuing operations
Net cash provided by investing activities        -               2,089    
of discontinued operations
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             (970     )       (826     )
prices
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          17,010            (27,811  )
equivalents
                                                                    
Cash and cash equivalents at beginning of        54,117          60,866   
year
                                                                    
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
                                  Acquisition                       Adjusted
                   Reported       Related         Restructuring     Statement
                                  Costs           Costs             of
                   In GAAP                                          Operations
                   Statements
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       24,479        (81    )        (141     )        24,257   
administrative
expense
Income from        15,749         139             342               16,230
operations
Operating          7.7      %     0.1    %        0.2      %        7.9      %
margin
                                                                    
Interest           4,688          —               —                 4,688
expense
Other income       (55      )     —              —                (55      )
Income before      11,116         139             342               11,597
income taxes
Provision for      4,094         81             17               4,192    
income taxes
Income from
continuing       $ 7,022       $ 58           $ 325            $ 7,405    
operations
Income from
continuing
operations per   $ 0.23        $ —            $ 0.01           $ 0.24     
share –
diluted

                                                             
                                                                    
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
                                  Acquisition                       Adjusted
                   Reported       Related         Restructuring     Statement
                                  Costs           Costs             of
                   In GAAP                                          Operations
                   Statements
Net sales        $ 220,096      $ —             $ —               $ 220,096
Cost of sales      177,133       —              (522     )        176,611  
Gross profit       42,963         —               522               43,485
Selling,
general, and       24,602        (156    )       7                24,453   
administrative
expense
Income from        18,361         156             515               19,032
operations
Operating          8.3      %     0.1     %       0.2      %        8.6      %
margin
                                                                    
Interest           4,869          —               —                 4,869
expense
Other expense      15            —              —                15       
Income before      13,477         156             515               14,148
income taxes
Provision for      6,094         —              240              6,334    
income taxes
Income from
continuing       $ 7,383       $ 156          $ 275            $ 7,814    
operations
Income from
continuing
operations per   $ 0.24        $ 0.01         $ 0.01           $ 0.26     
share –
diluted



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
                                 Acquisition                     Adjusted
                   Reported       Related         Restructuring     Statement
                                  Costs           Costs             of
                   In GAAP                                          Operations
                   Statements
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       78,370        (193    )       (159      )       78,018   
administrative
expense
Income from        39,065         400             3,239             42,704
operations
Operating          6.3      %     0.1     %       0.5       %       6.9      %
margin
                                                                    
Interest           13,989         —               —                 13,989
expense
Other income       (401     )     —              —                (401     )
Income before      25,477         400             3,239             29,116
income taxes
Provision for      9,091         141            1,145            10,377   
income taxes
Income from
continuing       $ 16,386      $ 259          $ 2,094          $ 18,739   
operations
Income from
continuing
operations per   $ 0.53        $ 0.01         $ 0.07           $ 0.61     
share –
diluted

                                                                             
                                                                                     
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
                                  Acquisition     Surrendered                        Adjusted
                   Reported       Related                          Restructuring     Statement
                                  Costs           Equity           Costs             of
                   In GAAP                        Compensation                       Operations
                   Statements
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       75,463         (770)           (885)            (476)             73,332
administrative
expense
Income from        42,973         3,237           885              2,173             49,268
operations
Operating          7.3%           0.5%            0.1%             0.4%              8.3%
margin
                                                                                     
Interest           14,321         —               —                —                 14,321
expense
Other income       (46)           —               —                —                 (46)
Income before      28,698         3,237           885              2,173             34,993
income taxes
Provision for      12,628         1,054           —                926               14,608
income taxes
Income from
continuing       $ 16,070       $ 2,183         $ 885            $ 1,247           $ 20,385
operations
Income from
continuing
operations per   $ 0.52         $ 0.08          $ 0.03           $ 0.04            $ 0.67
share –
diluted

                                                             
                                                                    
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
                                  Acquisition                       Adjusted
                   Reported       Related         Restructuring     Statement
                                  Costs           Costs             of
                   In GAAP                                          Operations
                   Statements
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       25,433        (32    )        (4        )       25,397   
administrative
expense
Income from        16,293         121             1,117             17,531
operations
Operating          7.4      %     0.1    %        0.5       %       8.0      %
margin
                                                                    
Interest           4,627          —               —                 4,627
expense
Other income       (315     )     —              —                (315     )
Income before      11,981         121             1,117             13,219
income taxes
Provision for      4,066         45             419              4,530    
income taxes
Income from
continuing       $ 7,915       $ 76           $ 698            $ 8,689    
operations
Income from
continuing
operations per   $ 0.26        $ —            $ 0.02           $ 0.28     
share –
diluted

Contact:

Gibraltar Industries, Inc.
Kenneth Smith, 716-826-6500 ext. 3217
Chief Financial Officer
kwsmith@gibraltar1.com
 
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