Premium steel & iron company, Gibraltar Industries, Inc. ROCK reported robust second-quarter 2015 results. The sound results were supported by the company’s current strategy of value-creation as well as successful returns accrued from its recently acquired business, Rough Brothers (‘‘RBI”).
Adjusted earnings of 25 cents per share surpassed the Zacks Consensus Estimate of 22 cents and were up 31.6% year over year.
Gibraltar Industries’ net sales were $253.2 million in the quarter, up 7.8% year over year. The increase in revenues was primarily attributable to strong growth in residential market demand, which boosted sales of centralized postal storage and roofing-related products. The company’s top-line results also surpassed the Zacks Consensus Estimate of $247 million.
Gross profit margin increased 30 basis points (bps) to 17.4%. Selling, general and administrative (SG&A) expenses were $32.9 million, up from $25.4 million recorded in the prior-year quarter.
Gibraltar Industries reported an adjusted operating margin of 6.8% in the quarter, up 80 bps year over year.
Segmental Details
Residential Products segment generated revenues of $134.7 million, up 14.7% year over year, supported by increased demand for roofing-related and postal storage products. Adjusted operating margin was 11.3%, up 200 bps year over year. The improvement came on the back of greater operational efficiency as well as favorable volume.
Industrial and Infrastructure Products segment yielded revenues of $101.9 million, down 13.6% year over year. The decline was witnessed due to appreciation of the U.S. dollar with respect to
European and Canadian currencies, and lower energy as well as mining activities led by weaker oil prices and persistent uncertainties in the Federal Funding programs. The segment’s adjusted operating margin was 5.3%, down 10 bps year over year. The decline in revenues weighed on the segmental margin.
Other Financial Aspects
Exiting second-quarter 2015, Gibraltar Industries’ cash and cash equivalents were approximately $39.4 million, down from $110.6 million recorded at 2014-end. Long-term debt was $242.8 million, up 13.9% from the value recorded on Dec 31, 2014.
In the quarter under review, Gibraltar Industries generated $11.8 million of cash from operating activities compared with $3.8 million utilized in the year-ago period. Capital expenditure was $4.6 million, down from $11.5 million incurred in the year-ago quarter.
Outlook
Gibraltar Industries attempts to improve its business on the back of tactical cost-reduction programs, better product pricing, lower overhead costs and increased operational efficiency. The company looks forward to realize three goals in the second half of 2015, namely, earnings enhancement, effective capital deployment and increasing shareholders’ utility.
The company has raised its full-year 2015 earnings guidance to a range of 78–88 cents from the prior projection of 55–65 cents. Revenues for full-year 2015 are expected within $980–$990 million, up 14% from $862 million earned at 2014-end. Of the aggregate revenue figure, the company’s acquired business RBI will likely contribute $130–$140 million.
Other Stocks to Consider
Gibraltar Industries currently carries a Zacks Rank #2 (Buy). Other well-ranked stocks in the industry include Quanex Building Products Corporation NX, PGT, Inc. PGTI and Wolseley plc WOSYY. While Quanex Building Products Corporation sports a Zacks Rank #1 (Strong Buy), both PGT, Inc. and Wolseley plc hold the same Zacks Rank as Gibraltar Industries.
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