Gibraltar's Third-Quarter Results Show Continued Improvement
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BUFFALO, N.Y.--(BUSINESS WIRE)-- Gibraltar Industries, Inc. (NASDAQ: ROCK), a leading manufacturer, processor, and distributor of products for the building, industrial, and vehicular markets, today reported continued improvement in its earnings and operating margins for the third quarter ended September 30, 2009, the result of its many steps to cut costs through the restructuring of its business, a further reduction of working capital, continued debt reduction, a smaller FIFO impact, and a modest sequential sales increase from the second quarter.
"We generated a 73 percent improvement in our operating income before special charges with a third-quarter sales increase of four percent compared to the second quarter. In each of the last two quarters, we have seen clear evidence that Gibraltar is able to leverage small increases in sales to drive significant improvements in margins and earnings. This improved performance was the cumulative result of the many steps we have taken to aggressively restructure our business, cut costs, reduce working capital, conserve cash, and pay down debt. All of these actions are part of our long-term focus to position Gibraltar as the low-cost producer of the products we manufacture," said Brian J. Lipke, Gibraltar's Chairman and Chief Executive Officer.
Even though business volumes in all of Gibraltar's major end markets were well below the levels of a year ago, third-quarter sales increased 4% to $225 million, compared to the second quarter of 2009, as the automotive market rebounded from historic lows and building product markets held steady. In the third quarter of 2009, income from continuing operations before special charges was $8.3 million, or $0.28 per diluted share, compared to a net loss of $0.3 million, or a $0.01 loss per diluted share, in the second quarter of 2009. Pre-tax special charges totaled $4.8 million, or $0.12 per diluted share, and $0.4 million, or $0.01 per diluted share, for the third and second quarters of 2009, respectively. Special charges included a write down of a vacated facility and exit activity costs related to the restructuring of our business along with a write down of deferred financing fees due to the amendment of our senior credit agreement on July 24. The sum of the items above resulted in GAAP earnings per diluted share from continuing operations of $0.16 for the third quarter of 2009, compared to a loss per diluted share of $0.02 for the second quarter of 2009.
In the first nine months of 2009, sales were $647 million, a decrease of 34% compared to the first nine months of 2008, primarily driven by large unit-volume declines resulting from sharply weaker end markets. The loss from continuing operations in the first nine months of 2009 was $3.7 million, a $0.12 loss per diluted share, excluding special charges. The Company incurred an after-tax non-cash goodwill impairment charge of $15.1 million, or $0.50 per diluted share, during the three months ended March 31, 2009 along with the special charges described above during the second and third quarters of 2009. The sum of the items above resulted in a GAAP loss per diluted share from continuing operations of $0.77 for the first nine months of 2009, compared to income of $1.44 per diluted share for the first nine months of 2008.
In the third quarter, Gibraltar closed another three locations, and it has now reduced its number of facilities by 40%, or 35 facilities, to 53 locations since the beginning of 2007. The Company also reduced working capital by another $32 million, or 18%, in the third quarter. The cash generated from operating activities was largely used to reduce its debt by another $40 million, or 13%, in the third quarter, and by $91 million, or 25%, since the beginning of 2009. The June 30, 2009 balance of $40.0 million on the revolving credit facility was paid in full during the third quarter.
"Both of our business segments generated continued improvements in their third-quarter results, even though they continue to operate at levels substantially below a year ago," said Henning N. Kornbrekke, Gibraltar's President and Chief Operating Officer. "Compared to the second quarter, the operating margin in our Building Products segment improved by 360 basis points excluding special charges on flat sequential revenues, the result of better alignment between product pricing and material costs, market share gains and new product introductions in targeted areas, and better leveraging from cost-cutting initiatives. In our Processed Metal segment, volumes improved in the third quarter as a result of increased automotive production, which spread over a much lower cost structure and a smaller FIFO impact, led to significantly improved operating results compared to the second quarter."
"Looking ahead to the fourth quarter, which is historically our slowest period, we anticipate the normal seasonal slowing of our business, even though conditions have stabilized in many of our markets and some - like automotive and residential building - have begun to show some signs of incremental, albeit modest improvement," said Mr. Kornbrekke.
"As we move through the balance of 2009 and into the early part of the new year, we will continue to focus on cash management, further de-levering of the balance sheet, continually driving down costs to further reduce our breakeven point, and carefully positioning all our businesses to optimize their results in the current operating environment. Based upon our experience in both the second and third quarters this year, we believe our current facility alignment and cost structure should allow for continuing gains in profitability with only marginal improvement in our end-market activity levels," said Mr. Lipke.
Gibraltar has scheduled a conference call to review its results for the third quarter of 2009 tomorrow, November 5, 2009, starting at 9:00 a.m. ET. A link to the call can be accessed on Gibraltar's Web site, at http://www.gibraltar1.com. The presentation slides that will be discussed during the call are expected to be available on Wednesday, November 4, by 6:00 p.m. ET. The slides may be downloaded from the Conference Calls page of the Investor Info section of the Gibraltar Web site: http://www.gibraltar1.com/investors/index.cfm?page=48. If you are not able to participate in the call, you may listen to a replay or review a copy of the prepared remarks via the link above. Both will be available on the Gibraltar Web site shortly following the call. The conference call replay link, presentation slides, and prepared remarks will remain on the Gibraltar Web site for one year.
Gibraltar Industries serves customers in a variety of industries in all 50 states and throughout the world. It has approximately 2,500 employees and operates 53 facilities in 22 states, Canada, England, Germany, and Poland. Gibraltar's common stock is a component of the S&P SmallCap 600 and the Russell 2000(R) Index.
To supplement Gibraltar's consolidated financial statements presented on a GAAP basis, Gibraltar also presented certain non-GAAP financial data in this news release. Non-GAAP financial data excluded special charges consisting of a goodwill impairment recorded during the quarter ended March 31, 2009, exit activity costs and related asset impairment charges primarily associated with the closing and consolidation of facilities, and the write down of deferred financing fees due to the amendment of our senior credit agreement. These non-GAAP adjustments are shown in the non-GAAP reconciliation of results excluding special charges provided in the financial statements that accompany this news release. We believe that presentation of results excluding special charges provides meaningful supplemental data to investors, as well as management, that is indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods as well as comparison with other companies. Special charges are excluded since they may not be considered directly related to our ongoing business operations. These non-GAAP measures should not be viewed as a substitute for our GAAP results, and may be different than non-GAAP measures used by other companies.
Information contained in this release, other than historical information, should be considered forward-looking and may be subject to a number of risk factors and uncertainties. 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 or 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.
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Net sales $ 225,152 $ 341,814 $ 647,050 $ 982,925
Cost of sales 178,732 266,106 550,166 776,403
Gross profit 46,420 75,708 96,884 206,522
Selling, general and 31,565 40,839 89,401 117,274
administrative expense
Goodwill impairment 25,501
Income (loss) from 14,855 34,869 (18,018 ) 89,248
operations
Other expense (income)
Interest expense 7,863 6,994 19,609 22,317
Equity in partnership's (56 ) (383 ) (163 ) (806 )
income and other income
Total other expense 7,807 6,611 19,446 21,511
Income (loss) before 7,048 28,258 (37,464 ) 67,737
taxes
Provision for (benefit 2,100 9,896 (14,276 ) 24,368
of) income taxes
Income (loss) from 4,948 18,362 (23,188 ) 43,369
continuing operations
Discontinued
operations:
(Loss) income from
discontinued operations (60 ) 1,176 448 3,500
before taxes
(Benefit of) provision (24 ) 304 (108 ) 822
for income taxes
(Loss) income from (36 ) 872 556 2,678
discontinued operations
Net income (loss) $ 4,912 $ 19,234 $ (22,632 ) $ 46,047
Net income (loss) per
share - Basic:
Income (loss) from $ 0.16 $ 0.61 $ (0.77 ) $ 1.45
continuing operations
(Loss) income from (0.00 ) 0.03 0.02 0.09
discontinued operations
Net income (loss) $ 0.16 $ 0.64 $ (0.75 ) $ 1.54
Weighted average shares 30,158 29,999 30,126 29,971
outstanding - Basic
Net income (loss) per
share - Diluted:
Income (loss) from $ 0.16 $ 0.61 $ (0.77 ) $ 1.44
continuing operations
(Loss) income from (0.00 ) 0.03 0.02 0.09
discontinued operations
Net income (loss) $ 0.16 $ 0.64 $ (0.75 ) $ 1.53
Weighted average shares 30,338 30,266 30,126 30,171
outstanding - Diluted
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
September 30, December 31,
2009 2008
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 15,101 $ 11,308
Accounts receivable, net of reserve of
$7,070 and
$6,713 in 2009 and 2008, respectively 120,890 123,272
Inventories 109,821 189,935
Other current assets 23,529 22,228
Assets of discontinued operations 1,410 1,486
Total current assets 270,751 348,229
Property, plant and equipment, net 231,649 243,619
Goodwill 425,572 443,925
Acquired intangibles 84,561 87,373
Investment in partnership 2,532 2,477
Other assets 18,147 20,736
$ 1,033,212 $ 1,146,359
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 79,760 $ 76,168
Accrued expenses 44,177 46,305
Current maturities of long-term debt 2,708 2,728
Total current liabilities 126,645 125,201
Long-term debt 262,661 353,644
Deferred income taxes 69,207 79,514
Other non-current liabilities 18,996 19,513
Shareholders' equity:
Preferred stock, $0.01 par value;
authorized: 10,000,000
shares; none outstanding
Common stock, $0.01 par value; authorized
50,000,000 shares;
30,290,059 and 30,061,550 shares issued and
outstanding at 303 301
September 30, 2009 and December 31, 2008,
respectively
Additional paid-in capital 226,336 223,561
Retained earnings 333,375 356,007
Accumulated other comprehensive loss (3,127 ) (10,825 )
556,887 569,044
Less: cost of 150,903 and 75,050 common
shares held in treasury at
September 30, 2009 and December 31, 2008, 1,184 557
respectively
Total shareholders' equity 555,703 568,487
$ 1,033,212 $ 1,146,359
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
2009 2008
Cash flows from operating activities
Net (loss) income $ (22,632 ) $ 46,047
Income from discontinued operations 556 2,678
(Loss) income from continuing operations (23,188 ) 43,369
Adjustments to reconcile net (loss) income to
net cash provided by
operating activities:
Depreciation and amortization 24,167 25,762
Goodwill impairment 25,501
Provision for deferred income taxes (10,749 ) (604 )
Equity in partnership's income and other income (55 ) (596 )
Distributions from partnership 609
Stock compensation expense 3,426 3,544
Noncash charges to interest expense 2,797 1,479
Other noncash adjustments 301 4,294
Increase (decrease) in cash resulting from
changes
in (net of dispositions):
Accounts receivable 6,847 (37,709 )
Inventories 82,531 (32,246 )
Other current assets and other assets (4,153 ) 361
Accounts payable 3,484 34,826
Accrued expenses and other non-current 164 23,577
liabilities
Net cash provided by operating activities from 111,073 66,666
continuing operations
Net cash provided by operating activities from 519 10,287
discontinued operations
Net cash provided by operating activities 111,592 76,953
Cash flows from investing activities
Additional consideration for acquisitions (4,354 ) (8,604 )
Purchases of property, plant and equipment (8,076 ) (13,617 )
Net proceeds from sale of property and equipment 273 2,096
Net cash used in investing activities for (12,157 ) (20,125 )
continuing operations
Net cash used in investing activities for (329 )
discontinued operations
Net cash used in investing activities (12,157 ) (20,454 )
Cash flows from financing activities
Long-term debt reduction (122,172 ) (111,952 )
Proceeds from long-term debt 30,948 52,991
Payment of deferred financing costs (2,292 ) (104 )
Payment of dividends (1,499 ) (4,491 )
Net proceeds from issuance of common stock 200
Purchase of treasury stock at market prices (627 ) (49 )
Tax benefit from equity compensation 262
Net cash used in financing activities for (95,642 ) (63,143 )
continuing operations
Net cash used in financing activities for (1,106 )
discontinued operations
Net cash used in financing activities (95,642 ) (64,249 )
Net increase (decrease) in cash and cash 3,793 (7,750 )
equivalents
Cash and cash equivalents at beginning of year 11,308 35,287
Cash and cash equivalents at end of period $ 15,101 $ 27,537
GIBRALTAR INDUSTRIES, INC.
Segment Information
(unaudited)
(in thousands)
Three Months Ended September 30,
Increase (Decrease)
2009 2008 $ %
Net Sales
Building Products $ 190,520 $ 277,494 $ (86,974 ) (31.3 )%
Processed Metal Products 34,632 64,320 (29,688 ) (46.2 )%
Consolidated $ 225,152 $ 341,814 $ (116,662 ) (34.1 )%
Income (Loss) from
Operations *
Building Products $ 23,287 $ 33,500 $ (10,213 ) (30.5 )%
Processed Metal Products (3,425 ) 10,708 (14,133 ) (132.0 )%
Corporate (5,007 ) (9,339 ) 4,332 (46.4 )%
Consolidated $ 14,855 $ 34,869 $ (20,014 ) (57.4 )%
Operating Margin *
Building Products 12.2 % 12.1 %
Processed Metal Products (9.9) % 16.6 %
Consolidated 6.6 % 10.2 %
Nine Months Ended September 30,
Increase (Decrease)
2009 2008 $ %
Net Sales
Building Products $ 547,661 $ 787,875 $ (240,214 ) (30.5 )%
Processed Metal Products 99,389 195,050 (95,661 ) (49.0 )%
Consolidated $ 647,050 $ 982,925 $ (335,875 ) (34.2 )%
Income (Loss) from
Operations *
Building Products $ 12,214 $ 93,938 $ (81,724 ) (87.0 )%
Processed Metal Products (16,685 ) 19,056 (35,741 ) (187.6 )%
Corporate (13,547 ) (23,746 ) 10,199 (43.0 )%
Consolidated $ (18,018 ) $ 89,248 $ (107,266 ) (120.2 )%
Operating Margin *
Building Products 2.2 % 11.9 %
Processed Metal Products (16.8) % 9.8 %
Consolidated (2.8) % 9.1 %
* Amounts include all special charges. See the following Non-GAAP Reconciliations that show certain financial data excluding special charges.
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
Three Months Ended September 30, 2009
(unaudited)
(in thousands, except per share data)
As Impairment Results
Reported And Exit Deferred Excluding
In GAAP Activity Financing Special
Statements Costs Costs Charges
Income (loss) from
operations
Building Products $ 23,287 $ 1,525 $ - $ 24,812
Processed Metal (3,425 ) 1,426 - (1,999 )
Products
Corporate (5,007 ) 293 379 (4,335 )
Consolidated 14,855 3,244 379 18,478
Interest expense 7,863 - (1,154 ) 6,709
Equity in
partnerships' income (56 ) - - (56 )
and
other income
Income before income 7,048 3,244 1,533 11,825
taxes
Provision for income 2,100 938 443 3,481
taxes
Income from $ 4,948 $ 2,306 $ 1,090 $ 8,344
continuing operations
Income from
continuing operations $ 0.16 $ 0.08 $ 0.04 $ 0.28
per share - diluted
Operating margin
Building Products 12.2 % 0.8 % 0.0 % 13.0 %
Processed Metal (9.9) % 4.1 % 0.0 % (5.8) %
Products
Consolidated 6.6 % 1.4 % 0.2 % 8.2 %
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
Nine Months Ended September 30, 2009
(unaudited)
(in thousands, except per share data)
As Impairment Results
Reported And Exit Deferred Excluding
In GAAP Activity Financing Goodwill Special
Statements Costs Costs Impairment Charges
Income (loss)
from
operations
Building $ 12,214 $ 2,174 $ - $ 25,501 $ 39,889
Products
Processed
Metal (16,685 ) 2,032 - - (14,653 )
Products
Corporate (13,547 ) 293 379 - (12,875 )
Consolidated (18,018 ) 4,499 379 25,501 12,361
Interest 19,609 - (1,154 ) - 18,455
expense
Equity in
partnerships'
income (163 ) - - - (163 )
and other
income
Loss before (37,464 ) 4,499 1,533 25,501 (5,931 )
income taxes
Benefit of (14,276 ) 1,242 423 10,416 (2,195 )
income taxes
Loss from
continuing $ (23,188 ) $ 3,257 $ 1,110 $ 15,085 $ (3,736 )
operations
Loss from
continuing
operations $ (0.77 ) $ 0.11 $ 0.04 $ 0.50 $ (0.12 )
per share -
diluted
Operating
margin
Building 2.2 % 0.4 % 0.0 % 4.7 % 7.3 %
Products
Processed
Metal (16.8) % 2.0 % 0.0 % 0.0 % (14.8) %
Products
Consolidated (2.8) % 0.7 % 0.1 % 3.9 % 1.9 %
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
Three Months Ended September 30, 2008
(unaudited)
(in thousands, except per share data)
As Impairments Results
Reported In And Exit Excluding
GAAP Activity Special
Statements Costs Charges
Income from operations
Building Products $ 33,500 $ 2,680 $ 36,180
Processed Metal Products 10,708 - 10,708
Corporate (9,339 ) 1,139 (8,200 )
Consolidated 34,869 3,819 38,688
Interest expense 6,994 - 6,994
Equity in partnerships' income and (383 ) - (383 )
other income
Income before income taxes 28,258 3,819 32,077
Provision for income taxes 9,896 1,337 11,233
Income from continuing operations $ 18,362 $ 2,482 $ 20,844
Income from continuing operations $ 0.61 $ 0.08 $ 0.69
per share - diluted
Operating margin
Building Products 12.1 % 1.0 % 13.1 %
Processed Metal Products 16.6 % 0.0 % 16.6 %
Consolidated 10.2 % 1.1 % 11.3 %
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
Nine Months Ended September 30, 2008
(unaudited)
(in thousands, except per share data)
As Impairments Results
Reported In And Exit Excluding
GAAP Activity Special
Statements Costs Charges
Income from operations
Building Products $ 93,938 $ 3,998 $ 97,936
Processed Metal Products 19,056 1,333 20,389
Corporate (23,746 ) 1,139 (22,607 )
Consolidated 89,248 6,470 95,718
Interest expense 22,317 - 22,317
Equity in partnerships' income and (806 ) - (806 )
other income
Income before income taxes 67,737 6,470 74,207
Provision for income taxes 24,368 2,329 26,697
Income from continuing operations $ 43,369 $ 4,141 $ 47,510
Income from continuing operations $ 1.44 $ 0.13 $ 1.57
per share - diluted
Operating margin
Building Products 11.9 % 0.5 % 12.4 %
Processed Metal Products 9.8 % 0.7 % 10.5 %
Consolidated 9.1 % 0.7 % 9.8 %
GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
Three Months Ended June 30, 2009
(unaudited)
(in thousands, except per share data)
As Impairments Results
Reported In And Exit Excluding
GAAP Activity Special
Statements Costs Charges
Income (loss) from operations
Building Products $ 17,548 $ 376 $ 17,924
Processed Metal Products (3,628 ) 47 (3,581 )
Corporate (3,625 ) - (3,625 )
Consolidated 10,295 423 10,718
Interest expense 5,779 - 5,779
Equity in partnerships' income and (126 ) - (126 )
other income
Income before income taxes 4,642 423 5,065
Provision for income taxes 5,226 119 5,345
Loss from continuing operations $ (584 ) $ 304 $ (280 )
Loss from continuing operations $ (0.02 ) $ 0.01 $ (0.01 )
per share - diluted
Operating margin
Building Products 9.2 % 0.2 % 9.4 %
Processed Metal Products (13.8) % 0.2 % (13.6) %
Consolidated 4.7 % 0.2 % 4.9 %
Source: Gibraltar Industries, Inc.
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