EX-99.1 2 l40442exv99w1.htm EX-99.1 exv99w1
         
Exhibit 99.1
For Immediate Release
August 4, 2010
GIBRALTAR REPORTS SECOND-QUARTER EPS OF $0.12
  •   Second Quarter EPS Increases 71% From Prior Year
 
  •   Net Debt Reduced and Liquidity Increases to $143 Million
 
  •   Expects to Generate Profit in Third Quarter and Full Year
     BUFFALO, NEW YORK (August 4, 2010) — Gibraltar Industries, Inc. (NASDAQ: ROCK), a leading manufacturer and distributor of products for building markets, today reported its financial results for the three months and six months ended June 30, 2010.
     Sales from continuing operations in the second quarter of 2010 were $192 million, essentially unchanged from the second quarter of 2009. Income from continuing operations before special charges in the second quarter of 2010 increased to $4.1 million, or $0.13 per diluted share, an improvement from $2.2 million, or $0.07 per diluted share, for the second quarter of 2009. The increased profitability from the prior-year period was largely a result of a higher gross margin from improved operational efficiencies, along with lower interest costs and income taxes. After-tax special charges consisted of $0.3 million, or $0.01 per diluted share, of restructuring charges during the second quarter of 2010 and $0.1 million of restructuring charges during the prior year quarter. The effect of the restructuring charges above resulted in GAAP income from continuing operations of $3.8 million, or $0.12 per diluted share, for the second quarter of 2010 compared to $2.1 million, or $0.07 per diluted share, for the second quarter of 2009.
     “Our second-quarter results are further evidence that the strategic transformation of Gibraltar through our many steps to aggressively restructure our operations, improve operational efficiency, cut costs, and reduce working capital and debt has put us in a position where we can be profitable even at these historically low levels of business activity in our major markets and we are well positioned to expand our margins on any incremental sales,” said Brian Lipke, Gibraltar’s Chairman and Chief Executive Officer. “After experiencing improved order levels in March and April, we expected even stronger results in the second quarter. However, the expiration of the federal tax credit for first-time homebuyers, persistently high unemployment, and weakening consumer confidence lowered activity levels in May and June.”
     For the first six months of 2010, sales from continuing operations were $349 million, a decrease of 2% compared to the first half of 2009. The decrease was primarily due to a slow and uneven recovery in the residential building market and continued weakness in the non-residential building and industrial markets. In spite of lower sales in 2010, the Company generated a sharp increase in income from continuing operations before special charges to $2.6 million, or $0.09 per diluted share, compared to a loss of $3.6 million, or $0.12 per diluted share, in the first half of 2009. The improved results for the first six months of 2010 were a result of improved operating efficiencies, cost reductions, and better management of working capital. After-tax special charges amounted to $1.1 million, or $0.04 per diluted share, and $15.3 million, or $0.51 per diluted share, during the first six months of 2010 and 2009,
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Gibraltar Reports Second-Quarter EPS of $0.12
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respectively. These charges included intangible asset impairment and restructuring charges during both periods and accelerated interest expense of $0.9 million recognized during 2010. The effect of the special charges above resulted in GAAP income from continuing operations of $1.5 million, or $0.05 per diluted share, for the first half of 2010, compared to a loss of $18.9 million, or $0.63 per diluted share, for the first half of 2009.
     Cash generated from operating activities continued to be strong during the six months ended June 30, 2010. The Company generated free cash flow of $26.4 million during the first half of 2010 consisting of cash flow generated by operations of $30.8 million less capital expenditures of $4.4 million. As a result of cash generated from operations and proceeds from the divestiture of its Processed Metal Products business, the Company had no outstanding draws against its revolver and a debt-to-capitalization ratio of 29% as of June 30, 2010. With cash on hand of nearly $27 million, the Company’s liquidity increased to $143 million.
     “We have continued to strengthen our product leadership positions and gain share in targeted markets, both with existing customers and new accounts, in spite of historically low demand levels in our end markets. The building markets we serve are large and fragmented, with many of our customers looking to consolidate their supply base, and we have capitalized on numerous growth opportunities created by the turbulence of the last few years,” said Henning Kornbrekke, Gibraltar’s President and Chief Operating Officer.
     “Consistent with our strategy of growing through product leadership positions and share gains, we also are driving to be a global low-cost producer. We have continued to keep a tight rein on spending and we are finding additional ways to further reduce our expenses, aided by our multi-year investments in ERP systems. We have also continued to improve our working capital efficiency by accelerating inventory turns which, in turn, has helped us generate free cash flow at a solid rate of 8% of sales in the first half of 2010. Looking ahead, we continue to move through the strongest seasonal period of the year for our business and we expect to generate income from continuing operations before special charges in the third quarter and for the full year, in spite of uncertainty as to when the markets we serve will recover. We remain confident in the long-term fundamentals and our strategic positioning in the markets we serve,” said Mr. Kornbrekke.
     “During 2009 and in the first half of 2010, activity levels in the markets we serve — including residential and commercial building and industrial — were 45% of their peak four years earlier and only 52% of their average over the last 60 years, levels that we believe are unsustainably low over the long term. While market activity is at a low point, acquisitions continue to be an important part of our growth strategy and we continue to search for the right opportunities, targeting businesses and product lines that strengthen or expand our product leadership positions, further diversify our business mix, and improve our margins, earnings, and returns,” said Mr. Lipke.
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Gibraltar Reports Second-Quarter EPS of $0.12
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     As announced on February 1, 2010, Gibraltar completed its exit from the steel-processing business by selling the majority of the assets of its Processed Metal Products segment. The operating results of this business have been reclassified to discontinued operations in the financial results being reported.
     Gibraltar has scheduled a conference call to review its results for the second quarter of 2010 tomorrow, August 5, 2010, starting at 9:00 am EST. 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, August 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 from facilities in the United States, Canada, England, Germany, and Poland. Gibraltar’s common stock is a component of the S&P SmallCap 600 and the Russell 2000® 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 intangible asset impairment charges, restructuring charges primarily associated with the closing and consolidation of our facilities, and interest expense costs recognized as a result of our interest rate swap becoming ineffective. 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.
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Gibraltar Reports Second-Quarter EPS of $0.12
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     Information contained in this release, other than historical information, contains forward-looking statements and may be 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 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.
CONTACT: Kenneth P. Houseknecht, Investor Relations, at 716/826-6500, ext. 3229,
khouseknecht@gibraltar1.com.
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GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
Net sales
   $ 191,771     $ 190,802     $ 349,299     $ 357,141  
Cost of sales
     152,705       152,852       280,818       300,589  
 
                        
Gross profit
     39,066       37,950       68,481       56,552  
Selling, general, and administrative expense
     27,373       24,027       54,386       50,664  
Intangible asset impairment (recovery)
     —       —       (177 )     25,501  
 
                        
Income (loss) from operations
     11,693       13,923       14,272       (19,613 )
Interest expense
     (4,686 )     (5,144 )     (11,737 )     (10,385 )
Equity in partnership’s income and other income
     60       126       131       107  
 
                        
Income (loss) before taxes
     7,067       8,905       2,666       (29,891 )
Provision for (benefit of) income taxes
     3,279       6,804       1,194       (10,966 )
 
                        
Income (loss) from continuing operations
     3,788       2,101       1,472       (18,925 )
Discontinued operations:
                                
Loss before taxes
     (463 )     (3,651 )     (30,461 )     (14,113 )
Benefit of income taxes
     (156 )     (1,622 )     (11,239 )     (5,494 )
 
                        
Loss from discontinued operations
     (307 )     (2,029 )     (19,222 )     (8,619 )
 
                                
 
                                
Net income (loss)
   $ 3,481     $ 72     $ (17,750 )   $ (27,544 )
 
                        
 
                                
Net income (loss) per share — Basic:
                                
Income (loss) from continuing operations
   $ 0.13     $ 0.07     $ 0.05     $ (0.63 )
Loss from discontinued operations
     (0.01 )     (0.07 )     (0.64 )     (0.28 )
 
                        
Net income (loss)
   $ 0.12     $ 0.00     $ (0.59 )   $ (0.91 )
 
                        
Weighted average shares outstanding — Basic
     30,297       30,142       30,279       30,108  
 
                        
 
                                
Net income (loss) per share — Diluted:
                                
Income (loss) from continuing operations
   $ 0.12     $ 0.07     $ 0.05     $ (0.63 )
Loss from discontinued operations
     (0.01 )     (0.07 )     (0.63 )     (0.28 )
 
                        
Net income (loss)
   $ 0.11     $ 0.00     $ (0.58 )   $ (0.91 )
 
                        
Weighted average shares outstanding — Diluted
     30,459       30,262       30,442       30,108  
 
                        

 

 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
                 
    June 30,     December 31,  
    2010     2009  
Assets
                
Current assets:
                
Cash and cash equivalents
   $ 26,817     $ 23,596  
Accounts receivable, net of reserve of $3,525 and $3,853 in 2010 and 2009, respectively
     103,013       71,782  
Inventories
     94,846       86,296  
Other current assets
     17,691       25,513  
Assets of discontinued operations
     5,359       44,938  
 
            
Total current assets
     247,726       252,125  
 
                
Property, plant, and equipment, net
     168,420       174,704  
Goodwill
     391,660       392,704  
Acquired intangibles
     78,779       82,182  
Investment in partnership
     147       2,474  
Other assets
     17,098       17,811  
Assets of discontinued operations
     —       52,942  
 
            
 
   $ 903,830     $ 974,942  
 
            
 
                
Liabilities and Shareholders’ Equity
                
Current liabilities:
                
Accounts payable
   $ 74,477     $ 47,383  
Accrued expenses
     37,893       38,757  
Current maturities of long-term debt
     408       408  
Liabilities of discontinued operations
     4,853       22,468  
 
            
Total current liabilities
     117,631       109,016  
 
                
Long-term debt
     206,632       256,874  
Deferred income taxes
     52,255       51,818  
Other non-current liabilities
     18,906       16,791  
Liabilities of discontinued operations
     —       12,217  
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; 30,512,822 and 30,295,084 shares issued at June 30, 2010 and December 31, 2009, respectively
     305       303  
Additional paid-in capital
     230,374       227,362  
Retained earnings
     286,232       303,982  
Accumulated other comprehensive loss
     (6,206 )     (2,230 )
Cost of 218,234 and 150,903 common shares held in treasury at June 30, 2010 and December 31, 2009, respectively
     (2,299 )     (1,191 )
 
            
Total shareholders’ equity
     508,406       528,226  
 
            
 
   $ 903,830     $ 974,942  
 
            

 

 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                 
    Six Months Ended  
    June 30,  
    2010     2009  
Cash Flows from Operating Activities
                
Net loss
   $ (17,750 )   $ (27,544 )
Loss from discontinued operations
     (19,222 )     (8,619 )
 
            
Income (loss) from continuing operations
     1,472       (18,925 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                
Depreciation and amortization
     13,341       13,045  
Intangible asset impairment (recovery)
     (177 )     25,501  
Provision for deferred income taxes
     250       (10,749 )
Equity in partnership’s income
     (43 )     (29 )
Stock compensation expense
     2,681       2,520  
Non-cash charges to interest expense
     3,146       1,045  
Other non-cash adjustments
     1,166       1,335  
Increase (decrease) in cash resulting from changes in:
                
Accounts receivable
     (33,519 )     (8,269 )
Inventories
     (6,965 )     43,867  
Other current assets and other assets
     7,150       (7,757 )
Accounts payable
     26,950       5,509  
Accrued expenses and other non-current liabilities
     424       (2,518 )
 
            
Net cash provided by operating activities of continuing operations
     15,876       44,575  
Net cash provided by operating activities of discontinued operations
     14,916       20,565  
 
            
Net cash provided by operating activities
     30,792       65,140  
 
            
 
                
Cash Flows from Investing Activities
                
Net proceeds from sale of business
     29,164       —  
Net proceeds from sale of property and equipment
     91       222  
Additional consideration for acquisitions
     —       (354 )
Purchase of investment in partnership
     (750 )     —  
Purchases of property, plant, and equipment
     (4,402 )     (6,103 )
 
            
Net cash provided by (used in) investing activities of continuing operations
     24,103       (6,235 )
Net cash used in investing activities of discontinued operations
     (435 )     (325 )
 
            
Net cash provided by (used in) investing activities
     23,668       (6,560 )
 
            
 
                
Cash Flows from Financing Activities
                
Long-term debt payments
     (58,959 )     (81,449 )
Proceeds from long-term debt
     8,559       30,800  
Purchase of treasury stock at market prices
     (1,108 )     (625 )
Payment of deferred financing fees
     (64 )     —  
Payment of dividends
     —       (1,499 )
Excess tax benefit from stock compensation
     63       —  
Net proceeds from issuance of common stock
     270       —  
 
            
Net cash used in financing activities
     (51,239 )     (52,773 )
 
            
 
                
Net increase in cash and cash equivalents
     3,221       5,807  
 
                
Cash and cash equivalents at beginning of year
     23,596       11,308  
 
            
 
                
Cash and cash equivalents at end of period
   $ 26,817     $ 17,115  
 
            

 

 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
(unaudited)
(in thousands, except per share data)
                         
    Three Months Ended June 30, 2010  
    As Reported     Impairment     Results  
    In GAAP     And Exit     Excluding  
    Statements     Activity Costs     Special Charges  
Net sales
   $ 191,771     $ —     $ 191,771  
Cost of sales
     152,705       (417 )     152,288  
 
                  
Gross profit
     39,066       417       39,483  
Selling, general, and administrative expense
     27,373       (83 )     27,290  
 
                  
Income from operations
     11,693       500       12,193  
Operating margin
     6.1 %     0.3 %     6.4 %
 
                        
Interest expense
     (4,686 )     —       (4,686 )
Equity in partnership’s income and other income
     60       —       60  
 
                  
Income before income taxes
     7,067       500       7,567  
Provision for income taxes
     3,279       232       3,511  
 
                  
Income from continuing operations
   $ 3,788     $ 268     $ 4,056  
 
                  
Income from continuing operations per share — diluted
   $ 0.12     $ 0.01     $ 0.13  
 
                  
                         
    Three Months Ended June 30, 2009  
    As Reported     Impairment     Result  
    In GAAP     And Exit     Excluding  
    Statements     Activity Costs     Special Charges  
Net sales
   $ 190,802     $ —     $ 190,802  
Cost of sales
     152,852       (376 )     152,476  
 
                  
Gross profit
     37,950       376       38,326  
Selling, general, and administrative expense
     24,027       —       24,027  
 
                  
Income from operations
     13,923       376       14,299  
Operating margin
     7.3 %     0.2 %     7.5 %
 
                        
Interest expense
     (5,144 )     —       (5,144 )
Equity in partnership’s income and other income
     126       —       126  
 
                  
Income before income taxes
     8,905       376       9,281  
Provision for income taxes
     6,804       286       7,090  
 
                  
Income from continuing operations
   $ 2,101     $ 90     $ 2,191  
 
                  
Income from continuing operations per share — diluted
   $ 0.07     $ 0.00     $ 0.07  
 
                  

 

 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
(unaudited)
(in thousands, except per share data)
                                         
    Six Months Ended June 30, 2010  
    As     Intangible             Impairment     Results  
    Reported     Asset     Ineffective     And Exit     Excluding  
    In GAAP Statements     Impairment Recovery     Interest Rate Swap     Activity Costs     Special Charges  
Net sales
   $ 349,299     $ —     $ —     $ —     $ 349,299  
Cost of sales
     280,818       —       —       (464 )     280,354  
 
                              
Gross profit
     68,481       —       —       464       68,945  
Selling, general, and administrative expense
     54,386       —       —       (164 )     54,222  
Intangible asset impairment recovery
     (177 )     177       —       —       —  
 
                              
Income from operations
     14,272       (177 )     —       628       14,723  
Operating margin
     4.1 %     (0.1 )%     0.0 %     0.2 %     4.2 %
 
                                        
Interest expense
     (11,737 )     —       1,424       —       (10,313 )
Equity in partnership’s income and other income
     131       —       —       —       131  
 
                              
Income before income taxes
     2,666       (177 )     1,424       628       4,541  
Provision for income taxes
     1,194       (73 )     520       285       1,926  
 
                              
Income from continuing operations
   $ 1,472     $ (104 )   $ 904     $ 343     $ 2,615  
 
                              
Income from continuing operations per share — diluted
   $ 0.05     $ (0.00 )   $ 0.03     $ 0.01     $ 0.09  
 
                              
                                         
    Six Months Ended June 30, 2009  
    As                     Impairment     Results  
    Reported     Intangible     Ineffective     And Exit     Excluding  
    In GAAP Statements     Asset Impairment     Interest Rate Swap     Activity Costs     Special Charges  
Net sales
   $ 357,141     $ —     $ —     $ —     $ 357,141  
Cost of sales
     300,589       —       —       (580 )     300,009  
 
                              
Gross profit
     56,552       —       —       580       57,132  
Selling, general, and administrative expense
     50,664       —       —       (68 )     50,596  
Intangible asset impairment
     25,501       (25,501 )     —       —       —  
 
                              
(Loss) income from operations
     (19,613 )     25,501       —       648       6,536  
Operating margin
     (5.5 )%     7.1 %     0.0 %     0.2 %     1.8 %
 
                                        
Interest expense
     (10,385 )     —       —       —       (10,385 )
Equity in partnership’s income and other income
     107       —       —       —       107  
 
                              
Loss before income taxes
     (29,891 )     25,501       —       648       (3,742 )
Benefit of income taxes
     (10,966 )     10,416       —       411       (139 )
 
                              
Loss from continuing operations
   $ (18,925 )   $ 15,085     $ —     $ 237     $ (3,603 )
 
                              
Loss from continuing operations per share — diluted
   $ (0.63 )   $ 0.50     $ 0.00     $ 0.01     $ (0.12 )