Gibraltar Announces Second Quarter 2021 Financial Results
Q2 Revenue Increases 37%, including 14% Organic and 23% Growth from Acquisitions
GAAP and Adjusted EPS Up 8% and 7%, Respectively, to $0.80
Record Order Backlog Exceeds $400 Million, Led by Renewables
Reaffirming Full Year Revenue and EPS Guidance
Buffalo, New York, August 3, 2021 - Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading manufacturer and provider of products and services for the renewable energy, residential, agtech and infrastructure markets, today reported its financial results for the three-month period ended June 30, 2021.
'In the midst of a dynamic and inflationary market environment, we delivered solid performance with revenue growth of 37%, adjusted operating income growth of 8%, adjusted EPS growth of 7%, and order backlog increased 54%, or 32% on a proforma basis, to over $400 million, the highest level in the history of the company,' President and Chief Executive Officer Bill Bosway stated. 'Material cost inflation continued to accelerate as we exited the first quarter, and labor, freight, and logistics inflation and availability began to surface as we entered the second quarter. Working closely with customers and suppliers starting during fourth quarter 2020 and implementing ongoing pricing and productivity initiatives has helped us manage these dynamics and deliver this quarter's results. Additionally, the integrations of TerraSmart and Sunfig are on track, our Agtech business is recovering as planned, and overall demand is currently in line with expectations.'
Second Quarter 2021 Consolidated Results from Continuing Operations
Net sales from continuing operations increased 36.5% to $348.4 million, with organic growth contributing 14.0% and recent acquisitions 22.5%. Organic growth was driven by strong end market demand and participation gains in all four segments.
GAAP earnings increased 7.8% to $26.4 million, or $0.80 per share, and adjusted earnings increased 6.9% to $26.3 million, or $0.80 per share, the result of continued execution across the business segments, the TerraSmart acquisition, and 80/20 productivity initiatives, partially offset by timing and alignment of higher input costs and price increases, supply chain disruptions, and shifts in project timing in the Agtech and Renewables segments. Adjusted measures remove charges for restructuring initiatives, acquisition-related items, senior leadership transition costs, and other reclassifications, as further described in the appended reconciliation of adjusted financial measures.
Below are second quarter 2021 consolidated results from continuing operations:
Three Months Ended June 30,
$Millions, except EPS
GAAP
Adjusted
2021
2020
% Change
2021
2020
% Change
Net Sales
$348.4
$255.2
36.5%
$348.4
$255.2
36.5%
Net Income
$26.4
$24.5
7.8%
$26.3
$24.6
6.9%
Diluted EPS
$0.80
$0.74
8.1%
$0.80
$0.75
6.7%
Second Quarter Segment Results
Renewables
The headwinds impacting the solar industry in the first quarter, including steel inflation, supply chain challenges with panels, and the safe harbor ITC extension announced in December 2020, continued into the second quarter. Despite this, the Renewable business continued to accelerate, delivering year-over-year revenue growth of 92.5% through the combination of the legacy and TerraSmart businesses and pro forma organic growth of 25%. Growth was driven by strong demand across Gibraltar's broad offering of fixed tilt, tracker, canopy, and eBos product solutions serving the community and commercial and industrial market segments. Order backlog exceeded $218 million at the end of the quarter, up 54% from last year on a proforma basis, its highest level in the company's history. The integration of the legacy and TerraSmart businesses remains on track, and the combination of the two is resonating well in the market.
Adjusted operating income improved 45.2% while adjusted operating margin contracted 380 basis points, the majority of which was anticipated, and related to the integration of TerraSmart. The TerraSmart integration is delivering as expected with adjusted operating margins nearly doubling over the first quarter as demand continued to accelerate and 80/20 productivity initiatives were implemented, and TerraSmart's full-year margin plan remains on track. Of the remaining shortfall, approximately half was related to a one-time tariff credit received in Q2 2020, with the remaining the result of timing and alignment of price actions with input cost inflation and project movement related to supply chain schedule and logistics challenges.
For the second quarter, the Renewables segment reported:
Three Months Ended June 30,
$Millions
GAAP
Adjusted
2021
2020
% Change
2021
2020
% Change
Net Sales
$107.8
$56.0
92.5%
$107.8
$56.0
92.5%
Operating Income
$9.5
$8.4
13.1%
$12.2
$8.4
45.2%
Operating Margin
8.8%
15.1%
(630) bps
11.3%
15.1%
(380) bps
Residential
Revenue increased 17.7% with strong organic growth of 12% driven by increased pricing and volume, despite supply chain dynamics related to material, labor and logistics availability; Architectural Mailboxes, acquired in 2020, contributed 6% of the quarter's growth and integration remains on track.
The business delivered adjusted operating margin of 16.6%, a decrease versus last year, driven by the impact of accelerated inflation, material and labor availability, and the timing and alignment of price actions with input costs. Gibraltar has implemented multiple price increases, and will continue to do so until inflation subsides. In accordance with customer supply agreements, each price action will take time to align with accelerating inflation, with operating margin historically recovering within a one or two quarter period. In the near term, management will continue to maximize operating profit dollars with focus on execution and 80/20 productivity initiatives.
For the second quarter, the Residential segment reported:
Three Months Ended June 30,
$Millions
GAAP
Adjusted
2021
2020
% Change
2021
2020
% Change
Net Sales
$164.2
$139.5
17.7%
$164.2
$139.5
17.7%
Operating Income
$27.2
$28.0
(2.9%)
$27.2
$28.2
(3.5%)
Operating Margin
16.5%
20.0%
(350) bps
16.6%
20.2%
(360) bps
Agtech
Revenue increased 27.0% with solid activity across the produce, commercial, car wash, retail, and processing equipment segments. Although demand continued to improve, the business experienced project movement from the second quarter into the second half of 2021 as schedules have been impacted by permit delays, rescoping of projects, and supply chain disruptions. Order backlog experienced a slight and temporary contraction during the quarter due to rescoping of projects and the impact of supply chain disruptions. July customer order activity is accelerating backlog momentum, and the segment remains on track with expectations for the year.
Adjusted operating income was flat year-over-year and adjusted operating margin expanded 180 basis points on a sequential basis as the processing equipment business continued to improve along with continuing benefits of integration in the produce business. Adjusted operating margin contracted year-over-year due to business mix, the movement of certain abovementioned projects into the second half of the year, higher input costs and logistics challenges. These temporary headwinds were partially offset by improvements in legacy greenhouse structures, cannabis greenhouse structures, and cannabis and hemp processing equipment businesses.
For the second quarter, the Agtech segment reported:
Three Months Ended June 30,
$Millions
GAAP
Adjusted
2021
2020
% Change
2021
2020
% Change
Net Sales
$53.7
$42.3
27.0%
$53.7
$42.3
27.0%
Operating Income
$1.0
$0.8
25.0%
$2.3
$2.3
--
Operating Margin
1.8%
1.8%
-- bps
4.2%
5.5%
(130) bps
Infrastructure
Revenue increased 29.7% as demand for fabricated and non-fabricated products increased as State D.O.T. project funding improved with the strengthening of the U.S. economy. Order backlog increased 11% to more than $46 million during the quarter indicating growing strength across the business.
Improvement in adjusted operating margin was driven by mix of higher-margin non-fabricated products and solutions, strong execution on higher volumes, and continued investment in 80/20 productivity initiatives.
For the second quarter, the Infrastructure segment reported:
Three Months Ended June 30,
$Millions
GAAP
Adjusted
2021
2020
% Change
2021
2020
% Change
Net Sales
$22.7
$17.5
29.7%
$22.7
$17.5
29.7%
Operating Income
$4.2
$2.8
50.0%
$4.2
$2.8
50.0%
Operating Margin
18.4%
16.0%
240 bps
18.4%
16.0%
240 bps
Business Outlook
'We expect today's business environment, which has been very dynamic since the beginning of January, to remain so throughout the second half of 2021. We will continue to manage inflation, minimize supply chain disruptions, operate in a tight labor market, and continue with our COVID operating protocols. We are currently positioned well with solid end market demand, record order backlog, a very healthy balance sheet, and strong focus on daily execution, acquisition integrations, and further strengthening our organization and operating systems,' commented Mr. Bosway. 'We remain confident in our existing full year 2021 guidance for revenue and earnings. We base this on our performance to date in 2021, which is consistent with historical patterns, and our current outlook and initiatives for improving profitability across each business. Consolidated revenue is expected to range between $1.3 billion and $1.35 billion. GAAP EPS from continuing operations is expected to range between $2.78 and $2.95 compared to $2.53 in 2020, and adjusted EPS from continuing operations is expected to range between $3.30 and $3.47 compared to $2.73 in 2020.'
Second Quarter 2021 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 2021. Interested parties may access the webcast through the Investors section of the Company's website at www.gibraltar1.comor dial into the call at (877) 407-3088 or (201) 389-0927. For interested individuals unable to join the live conference call, a webcast replay will be available on the Company's website for one year.
About Gibraltar
Gibraltar Industries is a leading manufacturer and provider of products and services for the renewable energy, residential, agtech 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, 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.
Contact:
LHA Investor Relations
Jody Burfening/Carolyn Capaccio
(212) 838-3777
rock@lhai.com
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
Net Sales
$
348,389
$
255,184
$
635,981
$
470,585
Cost of sales
267,458
189,623
495,032
355,163
Gross profit
80,931
65,561
140,949
115,422
Selling, general, and administrative expense
49,522
34,813
96,725
71,897
Income from operations
31,409
30,748
44,224
43,525
Interest expense
245
222
689
266
Other income
(4,666)
(1,892)
(4,351)
(1,374)
Income before taxes
35,830
32,418
47,886
44,633
Provision for income taxes
9,457
7,961
11,017
10,274
Income from continuing operations
26,373
24,457
36,869
34,359
Discontinued operations:
(Loss) income before taxes
(502)
3,746
2,068
6,576
(Benefit of) provision for income taxes
(78)
911
226
1,584
(Loss) income from discontinued operations
(424)
2,835
1,842
4,992
Net income
$
25,949
$
27,292
$
38,711
$
39,351
Net earnings per share - Basic:
Income from continuing operations
$
0.80
$
0.75
$
1.12
$
1.05
(Loss) income from discontinued operations
(0.01)
0.09
0.06
0.16
Net income
$
0.79
$
0.84
$
1.18
$
1.21
Weighted average shares outstanding -- Basic
32,790
32,605
32,791
32,596
Net earnings per share - Diluted:
Income from continuing operations
$
0.80
$
0.74
$
1.11
$
1.05
(Loss) income from discontinued operations
(0.01)
0.09
0.06
0.15
Net income
$
0.79
$
0.83
$
1.17
$
1.20
Weighted average shares outstanding -- Diluted
33,056
32,860
33,071
32,868
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
June 30,
2021
December 31,
2020
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
16,963
$
32,054
Accounts receivable, net of allowance of $5,294 and $3,529
225,315
197,990
Inventories, net
133,625
98,307
Prepaid expenses and other current assets
23,641
19,671
Assets of discontinued operations
-
77,438
Total current assets
399,544
425,460
Property, plant, and equipment, net
95,837
89,562
Operating lease assets
21,651
25,229
Goodwill
508,857
514,279
Acquired intangibles
159,734
156,365
Other assets
510
1,599
$
1,186,133
$
1,212,494
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
168,917
$
134,738
Accrued expenses
68,677
83,505
Billings in excess of cost
49,215
34,702
Liabilities of discontinued operations
-
49,295
Total current liabilities
286,809
302,240
Long-term debt
32,309
85,636
Deferred income taxes
37,555
39,057
Non-current operating lease liabilities
14,391
17,730
Other non-current liabilities
27,461
24,026
Stockholders' equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding
-
-
Common stock, $0.01 par value; 100,000 and 50,000 shares authorized as June 30, 2021 and December 31, 2020, respectively; 33,718 shares and 33,568 shares issued and outstanding in 2021 and 2020
337
336
Additional paid-in capital
310,728
304,870
Retained earnings
508,654
469,943
Accumulated other comprehensive income (loss)
1,552
(2,461)
Cost of 1,083 and 1,028 common shares held in treasury in 2021 and 2020
(33,663)
(28,883)
Total stockholders' equity
787,608
743,805
$
1,186,133
$
1,212,494
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
June 30,
2021
2020
Cash Flows from Operating Activities
Net income
$
38,711
$
39,351
Income from discontinued operations
1,842
4,992
Income from continuing operations
36,869
34,359
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
16,014
9,942
Stock compensation expense
4,935
4,171
Gain on sale of business
-
(1,881)
Exit activity costs, non-cash
1,193
346
Benefit of deferred income taxes
(36)
(195)
Other, net
349
429
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable
(29,150)
(26,289)
Inventories
(42,686)
3,289
Other current assets and other assets
(611)
1,893
Accounts payable
35,174
(989)
Accrued expenses and other non-current liabilities
(9,274)
(36,042)
Net cash provided by (used in) operating activities of continuing operations
12,777
(10,967)
Net cash (used in) provided by operating activities of discontinued operations
(2,002)
3,712
Net cash provided by (used in) operating activities
10,775
(7,255)
Cash Flows from Investing Activities
Acquisitions, net of cash acquired
(2)
(54,385)
Net proceeds from sale of property and equipment
-
59
Purchases of property, plant, and equipment
(9,474)
(4,178)
Net proceeds from sale of business
39,991
704
Net cash provided by (used in) investing activities of continuing operations
30,515
(57,800)
Net cash used in investing activities of discontinued operations
(176)
(1,053)
Net cash provided by (used in) investing activities
30,339
(58,853)
Cash Flows from Financing Activities
Proceeds from long-term debt
31,200
-
Long-term debt payments
(83,636)
-
Purchase of treasury stock at market prices
(4,780)
(4,462)
Net proceeds from issuance of common stock
924
78
Net cash used in financing activities
(56,292)
(4,384)
Effect of exchange rate changes on cash
87
(12)
Net decrease in cash and cash equivalents
(15,091)
(70,504)
Cash and cash equivalents at beginning of year
32,054
191,363
Cash and cash equivalents at end of period
$
16,963
$
120,859
GIBRALTAR INDUSTRIES, INC.
Reconciliation of Adjusted Financial Measures
(in thousands, except per share data)
(unaudited)
Three Months Ended
June 30,2021
As Reported In GAAP Statements
Restructuring Charges
Senior Leadership Transition Costs
Acquisition Related Items
Adjusted Financial Measures
Net Sales
Renewables
$
107,751
-
-
-
$
107,751
Residential
164,209
-
-
-
164,209
Agtech
53,696
-
-
-
53,696
Infrastructure
22,733
-
-
-
22,733
Consolidated sales
348,389
-
-
-
348,389
Income from operations
Renewables
9,510
786
-
1,858
12,154
Residential
27,155
29
-
-
27,184
Agtech
977
1,287
-
-
2,264
Infrastructure
4,186
-
-
-
4,186
Segments Income
41,828
2,102
-
1,858
45,788
Unallocated corporate expense
(10,419)
59
18
32
(10,310)
Consolidated income from operations
31,409
2,161
18
1,890
35,478
Interest expense
245
-
-
-
245
Other (income) expense
(4,666)
-
-
4,747
81
Income before income taxes
35,830
2,161
18
(2,857)
35,152
Provision for income taxes
9,457
507
5
(1,149)
8,820
Income from continuing operations
$
26,373
$
1,654
$
13
$
(1,708)
$
26,332
Income from continuing operations per share - diluted
Income from continuing operations per share - diluted
$
1.05
$
0.09
$
0.05
$
(0.04)
$
1.15
Operating margin
Renewables
12.4
%
-
%
-
%
-
%
12.4
%
Residential
17.2
%
0.2
%
-
%
-
%
17.4
%
Agtech
2.3
%
0.4
%
2.4
%
-
%
5.1
%
Infrastructure
13.3
%
-
%
-
%
-
%
13.3
%
Segments Margin
13.0
%
0.2
%
0.5
%
-
%
13.6
%
Consolidated
9.2
%
0.7
%
0.5
%
-
%
10.5
%
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Gibraltar Industries Inc. published this content on 03 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 August 2021 22:15:28 UTC.
Gibraltar Industries, Inc. is a manufacturer and provider of products and services for the renewable energy, residential, agtech, and infrastructure markets. The Companyâs segments include Renewables, Residential, Agtech, and Infrastructure. The Renewables segment is engaged in designing, engineering, manufacturing and installation of solar racking and electrical balance of systems. The Residential segment includes products, such as roof and foundation ventilation products, single point and centralized mail systems and electronic package solutions, retractable awnings and gutter guards, and rain dispersion, trims and flashings, other accessories. The Agtech segment provides products and services, including the designing, engineering, manufacturing, construction, maintenance and support of greenhouses and indoor growing operations. The Infrastructure segment provides engineered solutions for bridges, highways and airfields, including structural bearings, expansion joints, and others.