Gibraltar Reports First-Quarter Financial Results

  Gibraltar Reports First-Quarter Financial Results

Business Wire

BUFFALO, N.Y. -- May 02, 2013

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 month period ended March 31, 2013. All
financial metrics in this release reflect only the Company’s continuing
operations unless otherwise noted.

First-Quarter Financial Results

Gibraltar’s net sales for the first quarter of 2013 rose 2.4% to $196.8
million, compared with $192.2 million for the first quarter of 2012.
First-quarter 2013 adjusted net income was $1.2 million, or $0.04 per diluted
share, compared with $2.6 million, or $0.09 per diluted share, in the first
quarter of 2012. The adjusted first-quarter 2013 results exclude after-tax
special charges of $4.9 million, or $0.16 per diluted share, resulting
primarily from costs related to the Company’s successful re-financing of its
senior subordinated notes, which lowered the interest rate by 175 basis
points. The adjusted net income for the first quarter of 2012 excluded
after-tax special charges totaling $1.2 million, or $0.04 per diluted share,
primarily consisting of exit activity and acquisition-related costs. Including
these items in the respective periods, the first-quarter 2013 GAAP results
were a net loss of $3.6 million, or $0.12 per diluted share, compared with
GAAP net income of $1.4 million, or $0.05 per diluted share, in the first
quarter of 2012.

Management Comments

“We experienced positive developments in some key areas of our business in the
first quarter as expected,” said Chairman and Chief Executive Officer Brian
Lipke. “However, the unusually cold and stormy weather patterns that affected
many parts of the country, particularly in March, along with increased pricing
pressures in some of our industrial markets and tighter inventory control in
some of our sales channels, resulted in a slower start in 2013 than we had
expected. As a result, despite increased sales from recent acquisitions,
Gibraltar’s 2.4% net sales growth for the quarter fell two percentage points
short of our guidance. Although the year started more slowly than we
anticipated, we continue to be optimistic that 2013 will show solid full-year
improvement over 2012 as basic fundamentals in several of our end markets
continue to move in a positive direction.”

“There were mixed sales results in our markets during the first quarter,” said
Henning Kornbrekke, President and Chief Operating Officer. “Industrial demand
weakened more than we expected in March, primarily in the wholesale
distribution channel which ultimately serves a broad cross section of end
markets. In addition, selling prices were lower, driven by the weaker demand
levels. These factors affected our sales in North America as well as in
Europe, where the depressed automotive and construction markets we serve are a
large part of our business. Product demand also was softer than we had
expected in the residential and low-rise building markets, including repair
and remodeling, due to unfavorable weather across large parts of the U.S.
during the latter half of the quarter. This was a solid quarter for us,
however, in the multi-family building market and in our infrastructure
products business. Our revenue outlook in both of these important markets
continues to be favorable, and we expect continued growth in 2013. We expect
the industrial end markets we serve to see improved pricing and margins as the
environment for end-user demand improves in the second half of the year.”

“Our strategy during the past five years has been to improve our underlying
operations and expand margins in every part of the business with the goal of
leveraging even modest levels of end-market growth into stronger
profitability,” said Kornbrekke. “We have worked to position our businesses to
be the low cost supplier with excellent customer service – to be consistently
competitive in even the most challenging market environments. A result of
these efforts was the expected margin improvement in our West Coast operations
reported in the quarter.”

“In 2012 we essentially completed the restructuring and integration of our
West Coast operations by combining four separate businesses into one unit and
implementing a range of operational initiatives,” said Kornbrekke. “The
resulting West Coast performance improvement contributed adjusted earnings of
$0.03 per share in the quarter. We expect further performance improvement in
our West Coast operations as 2013 unfolds, driven in part by our exit from a
major facility by year-end. At the same time, our stronger retail and
wholesale delivery platform in this region of the country will support the
growth in sales that we anticipate.”

Outlook

“In spite of the current industrial end market weakness which is expected to
continue into the third quarter of 2013 and the slower-than-expected start to
the year, we continue to expect 2013 revenues and earnings to be an
improvement over 2012 as we benefit from our fourth-quarter 2012 acquisition
activity, lower interest expense, improved West Coast operational performance
and overall end-market demand improvement,” said Lipke.

First-Quarter Conference Call Details

Gibraltar has scheduled a conference call today to discuss its results for the
first quarter of 2013, 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 low-rise commercial building markets, as
well as industrial and infrastructure markets. The Company generates more than
80% of its sales from products that hold leading 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 note re-financing costs. 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 six month
periods ending June 30, 2013, on Thursday, August 1, 2013, and hold its
earnings conference call later that morning, starting at 9:00 a.m. ET.


GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                                                         
                                                            
                                                Three Months Ended
                                                March 31,
                                                  2013        2012
Net sales                                       $ 196,801   $ 192,171
Cost of sales                                     160,624     156,690
Gross profit                                      36,177      35,481
Selling, general, and administrative expense      30,981      28,458
Income from operations                            5,196       7,023
Interest expense                                  11,160      4,674
Other income                                      (66)        (31)
(Loss) income before taxes                        (5,898)     2,380
(Benefit of) provision for income taxes           (2,255)     931
(Loss) income from continuing operations          (3,643)     1,449
Discontinued operations:
Loss before taxes                                 (7)         (137)
Benefit of income taxes                           (3)         (50)
Loss from discontinued operations                 (4)         (87)
                                                              
Net (loss) income                               $ (3,647)   $ 1,362
                                                              
Net earnings per share – Basic:
(Loss) income from continuing operations        $ (0.12)    $ 0.05
Loss from discontinued operations                 –           (0.01)
Net (loss) income                               $ (0.12)    $ 0.04
Weighted average shares outstanding – Basic       30,877      30,718
                                                              
Net earnings per share – Diluted:
(Loss) income from continuing operations        $ (0.12)    $ 0.05
Loss from discontinued operations                 –           (0.01)
Net (loss) income                               $ (0.12)    $ 0.04
Weighted average shares outstanding – Diluted     30,877      30,851
                                                              


GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
                                                               
                                                      March 31,   December 31,
                                                      2013        2012
Assets
Current assets:
Cash and cash equivalents                             $ 30,288    $   48,028
Accounts receivable, net of reserve                     111,532       89,473
Inventories                                             125,439       116,357
Other current assets                                   13,625       13,380
Total current assets                                    280,884       267,238
                                                                      
Property, plant, and equipment, net                     147,628       151,613
Goodwill                                                358,934       359,863
Acquired intangibles                                    96,709        98,759
Other assets                                           7,376        6,201
                                                                      
Total assets                                          $ 891,531   $   883,674
                                                                      
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable                                      $ 81,934    $   69,060
Accrued expenses                                        36,561        47,432
Current maturities of long-term debt                   417          1,093
Total current liabilities                               118,912       117,585
                                                                      
Long-term debt                                          214,006       206,710
Deferred income taxes                                   56,960        57,068
Other non-current liabilities                           30,788        25,489
                                                                      
Shareholders’ equity:
Preferred stock, $0.01 par value; authorized 10,000     –             –
shares; none outstanding
Common stock, $0.01 par value; authorized 50,000
shares, 31,071 and                                      310           309

30,938 shares issued in 2013 and 2012
Additional paid-in capital                              241,489       240,107
Retained earnings                                       238,435       242,082
Accumulated other comprehensive loss                    (4,632)       (1,575)
Cost of 389 and 350 common shares held in treasury     (4,737)      (4,101)
in 2013 and 2012
                                                                      
Total shareholders’ equity                             470,865      476,822
                                                                      
Total liabilities & shareholders’ equity              $ 891,531   $   883,674
                                                                      


GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                               
                                                  Three Months Ended March 31,
                                                  2013             2012
Cash Flows from Operating Activities
Net (loss) income                                 $  (3,647)       $  1,362
Loss from discontinued operations                   (4)             (87)
(Loss) income from continuing operations             (3,643)          1,449
Adjustments to reconcile net (loss) income to
net cash used in operating activities:
Loss on early note redemption                        7,166            –
Depreciation and amortization                        6,904            6,563
Stock compensation expense                           973              1,330
Non-cash charges to interest expense                 273              393
Other non-cash adjustments                           425              277
Increase (decrease) in cash resulting from
changes in the following (excluding the effects
of acquisitions):
Accounts receivable                                  (22,813)         (15,131)
Inventories                                          (9,802)          (7,964)
Other current assets and other assets                232              2,057
Accounts payable                                     13,277           12,014
Accrued expenses and other non-current              (5,679)         (14,037)
liabilities
Net cash used in operating activities of             (12,687)         (13,049)
continuing operations
Net cash used in operating activities of            (7)             (31)
discontinued operations
Net cash used in operating activities               (12,694)        (13,080)
                                                                      
Cash Flows from Investing Activities
Purchases of property, plant, and equipment          (1,979)          (2,743)
Cash paid for acquisitions, net of cash              –                (2,705)
acquired
Net proceeds from sale of property and              127             8
equipment
Net cash used in investing activities               (1,852)         (5,440)
                                                                      
Cash Flows from Financing Activities
Proceeds from long-term debt                         210,000          –
Long-term debt payments                              (204,678)        (2)
Payment of deferred financing fees                   (3,711)          –
Payment of note redemption fees                      (3,702)          –
Purchase of treasury stock at market prices          (636)            (888)
Net proceeds from issuance of common stock           327              –
Excess tax benefit from stock compensation          83              98
Net cash used in financing activities               (2,317)         (792)
                                                                      
Effect of exchange rate changes on cash             (877)           522
                                                                      
Net decrease in cash and cash equivalents            (17,740)         (18,790)
                                                                      
Cash and cash equivalents at beginning of year      48,028          54,117
                                                                      
Cash and cash equivalents at end of period        $  30,288        $  35,327
                                                                      


GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statement of Operations
(unaudited)
(in thousands, except per share data)

                  Three Months Ended March 31, 2013
                   As            Acquisition                                     Adjusted
                   Reported       Related         Note             Restructuring     Statement
                   In GAAP        Costs           Re-Financing     Costs             of
                   Statements                                                        Operations
Net sales        $ 196,801      $               $ —              $ —               $ 196,801
Cost of sales      160,624        (203)           —                (29)              160,392
Gross profit       36,177         203             —                29                36,409
Selling,
general, and       30,981         (117)           —                (127)             30,737
administrative
expense
Income from        5,196          320             —                156               5,672
operations
Operating          2.6%           0.2%                             0.1%              2.9%
margin
                                                                                     
Interest           11,160         —               (7,166)          —                 3,994
expense
Other income       (66)           —               —                —                 (66)
(Loss) income
before income      (5,898)        320             7,166            156               1,744
taxes
(Benefit of)
provision for      (2,255)        117             2,616            57                535
income taxes
(Loss) income
from             $ (3,643)      $ 203           $ 4,550          $ 99              $ 1,209
continuing
operations
(Loss) income
from
continuing       $ (0.12)       $ 0.01          $ 0.15           $ —               $ 0.04
operations per
share –
diluted
                                                                                     


GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Adjusted Statement of Operations
(unaudited)
(in thousands, except per share data)

                  Three Months Ended March 31, 2012
                   As            Acquisition                     Adjusted
                   Reported       Related         Restructuring     Statement
                   In GAAP        Costs           Costs             of
                   Statements                                       Operations
Net sales        $ 192,171      $ —             $ —               $ 192,171
Cost of sales      156,690        (60)            (1,766)           154,864
Gross profit       35,481         60              1,766             37,307
Selling,
general, and       28,458         (80)            (14)              28,364
administrative
expense
Income from        7,023          140             1,780             8,943
operations
Operating          3.7%           0.1%            0.9%              4.7%
margin
                                                                    
Interest           4,674          —               —                 4,674
expense
Other income       (31)           —               —                 (31)
Income before      2,380          140             1,780             4,300
income taxes
Provision for      931            15              709               1,655
income taxes
Income from
continuing       $ 1,449        $ 125           $ 1,071           $ 2,645
operations
Income from
continuing
operations per   $ 0.05         $ 0.01          $ 0.03            $ 0.09
share –
diluted

Contact:

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