Business Wire | Aug 5, 2020 07:30AM EDT

Gibraltar Announces Second-Quarter 2020 Financial Results

Aug. 05, 2020

BUFFALO, N.Y.--(BUSINESS WIRE)--Aug. 05, 2020--Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading manufacturer and provider of products and services for the renewable energy, conservation, residential, industrial and infrastructure markets, today reported its financial results for the three-month period ended June 30, 2020.

"Our organization responded well to a better than expected demand profile in our Residential Products and Renewable Energy & Conservation end markets during the quarter. Despite the continuous challenge of the pandemic, our decision to keep our team intact enabled us to deliver revenue growth and adjusted EPS growth of 8.8% and 15.1%, respectively," said President and Chief Executive Officer Bill Bosway. "As important, our GAAP and adjusted operating margins improved 200 and 130 basis points, respectively, supporting our continued investment in our business. We are gaining momentum and starting to see more consistent performance across our businesses, with our backlog continuing to build, up 14% to $277 million."

Second Quarter 2020 Consolidated Results

Gibraltar reported the following consolidated results:

Three Months Ended June 30,

Dollars in millions, except GAAP AdjustedEPS

2020 2019 % 2020 2019 % Change Change

Net Sales $285.8 $262.7 8.8% $285.8 $262.7 8.8%

Net Income $27.3 $19.9 37.2% $27.7 $23.7 16.9%

Diluted EPS $0.83 $0.61 36.1% $0.84 $0.73 15.1%

Second quarter 2020 net sales increased 8.8% to $285.8 million, driven by the Residential Products and Renewable Energy & Conservation segments. Of the 8.8% increase, organic growth was 1.6%, and recent acquisitions contributed 7.2%.

GAAP earnings increased 37.2% to $27.3 million, or $0.83 per share, while adjusted earnings increased 16.9% to $27.7 million, or $0.84 per share, the result of organic growth in both Residential Products and Renewable Energy and Conservation, marked margin expansion in Residential and Industrial & Infrastructure Products, continued execution in all core businesses, product and services mix, favorable alignment of price to material costs, and ongoing benefits from operational excellence initiatives. Special items removed from both the second quarters of 2020 and 2019 are further described in the appended reconciliation of adjusted financial measures.

Mr. Bosway stated, "We continue to execute our operating playbook as we deal with the pandemic and make necessary adjustments as the current environment evolves. Our top priorities remain our organization, keeping them and their families as safe and healthy as possible, ensuring our supply chain operates well, and maintaining a high level of responsiveness to customers."

Second Quarter Segment Results

Renewable Energy & Conservation

For the second quarter, the Renewable Energy & Conservation segment reported:

Three Months Ended June 30,

Dollars in millions GAAP Adjusted

2020 2019 % Change 2020 2019 % Change

Net Sales $98.3 $76.0 29.3% $98.3 $76.0 29.3%

Operating Margin 9.4% 12.7% (330) bps 10.9% 12.6% (170) bps

Renewable Energy & Conservation revenues increased 29.3%, with organic growth of 4.2%, and inorganic growth of 25.1% resulting from the acquisitions of Apeks Supercritical, Thermo Energy Solutions and Delta Separations. Segment backlog increased, up 15% versus 2019, the result of good market dynamics and participation gains, particularly in renewable energy, and the impact of recent acquisitions.

The segment's core business continued to grow, driven by renewable energy, and delivered improved operating results driven by participation gains, product and service mix, strong execution, and continued improved solar tracker field performance. These benefits were partly offset by slower market demand for cannabis growing solutions. The impact on margins from acquisitions was consistent with expectations, with the pandemic creating near-term cannabis processing end market demand challenges, and while there have been a few integration challenges, integration overall is expected to be completed on time to deliver targeted returns in year three. Adjusted operating margin for the second quarter of 2020 and 2019 removes special charges for acquisition related items and restructuring initiatives, as further described in the appended reconciliation of adjusted financial measures.

Residential Products

For the second quarter, the Residential Products segment reported:

Three Months Ended June 30,

Dollars in millions GAAP Adjusted

2020 2019 % Change 2020 2019 % Change

Net Sales $139.5 $130.4 7.0% $139.5 $130.4 7.0%

Operating Margin 20.0% 15.9% 410 bps 20.2% 16.2% 400 bps

Residential Products revenue increased 7.0% due to strong repair and remodel activity as homeowners started to "nest" during the pandemic and through participation gains across key product lines and customers. Adjusted operating margin increased due to consistent execution, better price and material cost management, product mix, 80/20 initiatives, and volume leverage. Adjusted operating margin for the second quarters of 2020 and 2019 removes the special charges for restructuring initiatives under the 80/20 program as further described in the appended reconciliation of adjusted financial measures.

Industrial & Infrastructure Products

For the second quarter, the Industrial & Infrastructure Products segment reported:

Three Months Ended June 30,

Dollars in millions GAAP Adjusted

2020 2019 % Change 2020 2019 % Change

Net Sales $48.1 $56.2 (14.4)% $48.1 $56.2 (14.4)%

Operating Margin 13.8% 7.2% 660 bps 14.5% 9.6% 490 bps

Segment revenue decreased 14.4%, driven by lower demand for core industrial products during the pandemic. The infrastructure business was comparable with the prior year's quarter, and its backlog continued to grow.

The increase in adjusted operating margin was driven by continued improvement in execution in our industrial business, a more favorable alignment of price to material costs, mix and continued benefits from 80/20 profit improvement initiatives. Adjusted operating margin for the second quarters of 2020 and 2019 removes special charges for restructuring initiatives as further described in the appended reconciliation of adjusted financial measures.

Business Outlook

Although the Company delivered strong financial performance in the first half of 2020 and continues to experience a growing backlog, the uncertain pace and strength of an economic recovery in the current environment continue to make providing reliable quantitative guidance difficult.

Bill Bosway commented, "Our momentum and current market trends support a solid outlook for the remainder of the year and give us confidence that our second half of the year will be stronger than the first half. However, the current status of the pandemic across the country, and understanding its potential impact on our markets, makes it challenging to provide an outlook and guidance with reliable precision. Therefore, we will continue with suspension of quantitative guidance and will revisit this practice in three months. In the near term, we will continue to focus on what is in front of us and on what we can control. The resiliency inherent in our business model and our strong balance sheet position us to continue investing in our business and strengthening our position in the markets we serve."

Second Quarter 2020 Conference Call Details

Gibraltar will host a conference call today starting at 9:00 a.m. ET to review its results for the second quarter of 2020. Interested parties may access the webcast through the Investor Info section of the Company's website at www.gibraltar1.com or dial into the call at (877) 407-3088 or (201) 389-0927. Presentation slides referenced during the conference call will be available for download on the website. 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 provider of products and services for the renewable energy, conservation, residential, industrial, and infrastructure markets. With a three-pillar strategy focused on business systems, portfolio management, and organization and talent development, Gibraltar's mission is to create compounding and sustainable value with strong leadership positions in higher growth, profitable end markets. Gibraltar serves customers primarily throughout North America. Comprehensive information about Gibraltar can be found on its website at www.gibraltar1.com.

Forward-Looking Statements

Certain information set forth in this news release, other than historical statements, contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are based, in whole or in part, on current expectations, estimates, forecasts, and projections about the Company's business, and management's beliefs about future operations, results, and financial position. These statements are not guarantees of future performance and are subject to a number of risk factors, uncertainties, and assumptions. Actual events, performance, or results could differ materially from the anticipated events, performance, or results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from current expectations include, among other things, the impacts of COVID-19 on the global economy and on our customers, suppliers, employees, operations, business, liquidity and cash flows, other general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, our ability to realize synergies from newly acquired businesses, and our ability to derive expected benefits from restructuring, productivity initiatives, liquidity enhancing actions, and other cost reduction actions. Before making any investment decisions regarding our company, we strongly advise you to read the section entitled "Risk Factors" in our most recent annual report on Form 10-K which can be accessed under the "SEC Filings" link of the "Investor Info" page of our website at www.Gibraltar1.com. 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.

Adjusted Financial Measures

To supplement Gibraltar's consolidated financial statements presented on a GAAP basis, Gibraltar also presented certain adjusted financial measures in this news release. Adjusted financial measures exclude special charges consisting of restructuring costs primarily associated with 80/20 simplification initiatives, senior leadership transition costs, early debt repayment, acquisition related costs, and other reclassifications. These adjustments are shown in the reconciliation of adjusted financial measures excluding special charges provided in the supplemental financial schedules that accompany this news release. The Company believes 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 the Company's ongoing business operations. These adjusted measures should not be viewed as a substitute for the Company's GAAP results and may be different than adjusted measures used by other companies.

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

Three Months Ended Six Months Ended June 30, June 30,

2020 2019 2020 2019

Net Sales $ 285,814 $ 262,655 $ 535,253 $ 490,072

Cost of sales 213,556 199,097 406,608 382,614

Gross profit 72,258 63,558 128,645 107,458

Selling, general,and administrative 37,667 36,952 78,864 70,286 expense

Income from 34,591 26,606 49,781 37,172 operations

Interest expense 214 219 167 2,280

Other (income) (1,787 ) (13 ) (1,595 ) 576 expense

Income before 36,164 26,400 51,209 34,316 taxes

Provision for 8,872 6,487 11,858 8,058 income taxes

Net income $ 27,292 $ 19,913 $ 39,351 $ 26,258



Net earnings per share:

Basic $ 0.84 $ 0.62 $ 1.21 $ 0.81

Diluted $ 0.83 $ 0.61 $ 1.20 $ 0.80

Weighted averageshares outstanding:

Basic 32,605 32,321 32,596 32,300

Diluted 32,860 32,642 32,868 32,630

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

June 30, December 31, 2020 2019

(unaudited)

Assets

Current assets:

Cash and cash equivalents $ 120,859 $ 191,363

Accounts receivable, net of allowance of 193,609 147,515 $6,270 and $6,330

Inventories 79,058 78,476

Prepaid expenses and other current assets 22,849 19,748

Total current assets 416,375 437,102

Property, plant, and equipment, net 94,723 95,409

Operating lease assets 33,383 27,662

Goodwill 378,740 329,705

Acquired intangibles 110,481 92,592

Other assets 1,794 1,980

$ 1,035,496 $ 984,450

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable $ 116,853 $ 83,136

Accrued expenses 94,009 98,463

Billings in excess of cost 29,281 47,598

Total current liabilities 240,143 229,197

Deferred income taxes 40,022 40,334

Non-current operating lease liabilities 24,400 19,669

Other non-current liabilities 21,167 21,286

Shareholders' equity:

Preferred stock, $0.01 par value; authorized - - 10,000 shares; none outstanding

Common stock, $0.01 par value; authorized50,000 shares; 33,413 shares and 33,192 shares 334 332 issued and outstanding in 2020 and 2019

Additional paid-in capital 299,829 295,582

Retained earnings 444,728 405,668

Accumulated other comprehensive loss (8,438 ) (5,391 )

Cost of 993 and 906 common shares held in (26,689 ) (22,227 ) treasury in 2020 and 2019

Total shareholders' equity 709,764 673,964

$ 1,035,496 $ 984,450

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Six Months Ended June 30,

2020 2019

Cash Flows from Operating Activities

Net income $ 39,351 $ 26,258

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization 11,054 9,892

Stock compensation expense 4,171 6,091

Gain on sale of business (1,881 ) -

Exit activity costs, non-cash 346 -

(Benefit of) provision for deferred income taxes (216 ) 278

Other, net 1,018 2,437

Changes in operating assets and liabilities, excluding the effects of acquisitions:

Accounts receivable (25,842 ) (41,156 )

Inventories 5,661 13,464

Other current assets and other assets 1,996 (4,983 )

Accounts payable (1,732 ) 4,012

Accrued expenses and other non-current (41,181 ) (9,807 ) liabilities

Net cash (used in) / provided by operating (7,255 ) 6,486 activities

Cash Flows from Investing Activities

Acquisitions, net of cash acquired (54,385 ) (264 )

Net proceeds from sale of property and equipment 59 60

Purchases of property, plant, and equipment (5,231 ) (6,265 )

Net proceeds from sale of business 704 -

Net cash used in investing activities (58,853 ) (6,469 )

Cash Flows from Financing Activities

Long-term debt payments - (212,000 )

Payment of debt issuance costs - (1,235 )

Purchase of treasury stock at market prices (4,462 ) (3,149 )

Net proceeds from issuance of common stock 78 208

Net cash used in financing activities (4,384 ) (216,176 )

Effect of exchange rate changes on cash (12 ) 1,035

Net decrease in cash and cash equivalents (70,504 ) (215,124 )

Cash and cash equivalents at beginning of year 191,363 297,006

Cash and cash equivalents at end of period $ 120,859 $ 81,882

GIBRALTAR INDUSTRIES, INC.

Reconciliation of Adjusted Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months Ended June 30, 2020

As Reported Senior Acquisition Adjusted Restructuring Leadership Related Gain on Sale Financial In GAAP Charges Transition Items of Business Measures Statements Costs

Net Sales

RenewableEnergy & $ 98,259 $ - $ - $ - $ - $ 98,259 Conservation

Residential 139,472 - - - - 139,472 Products

Industrial &Infrastructure 48,263 - - - - 48,263 Products

LessInter-Segment (180 ) - - - - (180 ) Sales

48,083 - - - - 48,083

Consolidated 285,814 - - - - 285,814 sales



Income from operations

RenewableEnergy & 9,188 388 - 1,172 - 10,748 Conservation

Residential 27,964 263 - - - 28,227 Products

Industrial &Infrastructure 6,644 314 - - - 6,958 Products

Segments 43,796 965 - 1,172 - 45,933 Income

Unallocatedcorporate (9,205 ) 45 116 50 - (8,994 ) expense

Consolidatedincome from 34,591 1,010 116 1,222 - 36,939 operations



Interest 214 - - - - 214 expense

Other (income) (1,787 ) - - - 1,881 94 expense

Income before 36,164 1,010 116 1,222 (1,881 ) 36,631 income taxes

Provision for 8,872 236 - 274 (469 ) 8,913 income taxes

Net income $ 27,292 $ 774 $ 116 $ 948 $ (1,412 ) $ 27,718

Net earningsper share - $ 0.83 $ 0.02 $ - $ 0.03 $ (0.04 ) $ 0.84 diluted



Operating margin

RenewableEnergy & 9.4 % 0.4 % - % 1.2 % - % 10.9 %Conservation

Residential 20.0 % 0.2 % - % - % - % 20.2 %Products

Industrial &Infrastructure 13.8 % 0.7 % - % - % - % 14.5 %Products

Segments 15.3 % 0.3 % - % 0.4 % - % 16.1 %Margin

Consolidated 12.1 % 0.4 % - % 0.4 % - % 12.9 %

GIBRALTAR INDUSTRIES, INC.

Reconciliation of Adjusted Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months Ended June 30, 2019

As Reported Restructuring Senior Adjusted In GAAP and Leadership Debt Financial Statements Acquisition Transition Repayment Measures Related Items Costs

Net Sales

RenewableEnergy & $ 76,004 $ - $ - $ - $ 76,004 Conservation

Residential 130,433 - - - 130,433 Products

Industrial &Infrastructure 56,547 - - - 56,547 Products

LessInter-Segment (329 ) - - - (329 ) Sales

56,218 - - - 56,218

Consolidated 262,655 - - - 262,655 sales



Income from operations

RenewableEnergy & 9,649 (95 ) - - 9,554 Conservation

Residential 20,778 219 78 - 21,075 Products

Industrial &Infrastructure 4,069 1,346 - - 5,415 Products

Segments 34,496 1,470 78 - 36,044 income

Unallocatedcorporate (7,890 ) 670 1,770 - (5,450 ) expense

Consolidatedincome from 26,606 2,140 1,848 - 30,594 operations



Interest 219 - - (38 ) 181 expense

Other income (13 ) - - - (13 )

Income before 26,400 2,140 1,848 38 30,426 income taxes

Provision for 6,487 533 (301 ) 9 6,728 income taxes

Net income $ 19,913 $ 1,607 $ 2,149 $ 29 $ 23,698

Net earningsper share - $ 0.61 $ 0.05 $ 0.07 $ - $ 0.73 diluted



Operating margin

RenewableEnergy & 12.7 % (0.1 ) % - % - % 12.6 %Conservation

Residential 15.9 % 0.2 % 0.1 % - % 16.2 %Products

Industrial &Infrastructure 7.2 % 2.4 % - % - % 9.6 %Products

Segments 13.1 % 0.6 % - % - % 13.7 %margin

Consolidated 10.1 % 0.8 % 0.7 % - % 11.6 %

GIBRALTAR INDUSTRIES, INC.

Reconciliation of Adjusted Financial Measures

(in thousands, except per share data)

(unaudited)

Six Months Ended June 30, 2020

As Senior Acquisition Adjusted Reported Restructuring Leadership Related Gain on Sale Financial Charges Transition Items of Business Measures In GAAP Costs Statements

Net Sales

RenewableEnergy & $ 194,756 $ - $ - $ - $ - $ 194,756 Conservation

Residential 242,891 - - - - 242,891 Products

Industrial &Infrastructure 98,064 - - - - 98,064 Products

LessInter-Segment (458 ) - - - - (458 ) Sales

97,606 - - - - 97,606

Consolidated 535,253 - - - - 535,253 sales



Income from operations

RenewableEnergy & 14,887 406 - 2,173 - 17,466 Conservation

Residential 41,689 484 - - - 42,173 Products

Industrial &Infrastructure 10,633 312 - - - 10,945 Products

Segments 67,209 1,202 - 2,173 - 70,584 Income

Unallocatedcorporate (17,428 ) 99 2,342 309 - (14,678 ) expense

Consolidatedincome from 49,781 1,301 2,342 2,482 - 55,906 operations



Interest 167 - - - - 167 expense

Other (income) (1,595 ) - - - 1,881 286 expense

Income before 51,209 1,301 2,342 2,482 (1,881 ) 55,453 income taxes

Provision for 11,858 309 - 590 (469 ) 12,288 income taxes

Net income $ 39,351 $ 992 $ 2,342 $ 1,892 $ (1,412 ) $ 43,165

Net earningsper share - $ 1.20 $ 0.03 $ 0.07 $ 0.05 $ (0.04 ) $ 1.31 diluted



Operating margin

RenewableEnergy & 7.6 % 0.2 % - % 1.1 % - % 9.0 %Conservation

Residential 17.2 % 0.2 % - % - % - % 17.4 %Products

Industrial &Infrastructure 10.9 % 0.3 % - % - % - % 11.2 %Products

Segments 12.6 % 0.2 % - % 0.4 % - % 13.2 %Margin

Consolidated 9.3 % 0.2 % 0.4 % 0.5 % - % 10.4 %

GIBRALTAR INDUSTRIES, INC.

Reconciliation of Adjusted Financial Measures

(in thousands, except per share data)

(unaudited)

Six Months Ended June 30, 2019

As Reported Restructuring Senior Adjusted In GAAP and Leadership Debt Financial Statements Acquisition Transition Repayment Measures Related Items Costs

Net Sales

RenewableEnergy & $ 144,841 $ - $ - $ - $ 144,841 Conservation

Residential 234,142 - - - 234,142 Products

Industrial &Infrastructure 111,735 - - - 111,735 Products

LessInter-Segment (646 ) - - - (646 ) Sales

111,089 - - - 111,089

Consolidated 490,072 - - - 490,072 sales



Income from operations

RenewableEnergy & 11,281 (1 ) - - 11,280 Conservation

Residential 32,868 370 78 - 33,316 Products

Industrial &Infrastructure 8,198 1,313 - - 9,511 Products

Segments 52,347 1,682 78 - 54,107 income

Unallocatedcorporate (15,175 ) 677 4,265 - (10,233 ) expense

Consolidatedincome from 37,172 2,359 4,343 - 43,874 operations



Interest 2,280 - - (1,079 ) 1,201 expense

Other expense 576 - - - 576

Income before 34,316 2,359 4,343 1,079 42,097 income taxes

Provision for 8,058 587 320 269 9,234 income taxes

Net income $ 26,258 $ 1,772 $ 4,023 $ 810 $ 32,863

Net earningsper share - $ 0.80 $ 0.06 $ 0.12 $ 0.03 $ 1.01 diluted



Operating margin

RenewableEnergy & 7.8 % - % - % - % 7.8 %Conservation

Residential 14.0 % 0.2 % - % - % 14.2 %Products

Industrial &Infrastructure 7.4 % 1.2 % - % - % 8.6 %Products

Segments 10.7 % 0.3 % - % - % 11.0 %margin

Consolidated 7.6 % 0.5 % 0.9 % - % 9.0 %

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CONTACT: LHA Investor Relations Jody Burfening/Carolyn Capaccio (212) 838-3777 rock@lhai.com