Gibraltar Announces Fourth-Quarter and Full-Year 2018 Financial Results
BUFFALO, N.Y.--(BUSINESS WIRE)--Feb 21, 2019--Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading manufacturer and distributor of building products for the residential, industrial, infrastructure, and renewable energy and conservation markets, today reported its financial results for the three- and twelve-month periods ended December 31, 2018. All financial metrics in this release reflect only the Company’s continuing operations unless otherwise noted.
Fourth-quarter Consolidated Results
Gibraltar reported the following consolidated results:
The Company reported fourth-quarter 2018 net sales of $240.9 million, in line with its guidance as noted in its third-quarter 2018 earnings release. The 6.7 percent decrease was mainly due to unfavorable year-over-year comparisons in the Residential Products and Renewable Energy & Conservation segments as favorable weather last year extended construction seasons into the fourth quarter of 2017.
GAAP and adjusted earnings exceeded guidance provided in the Company’s third-quarter 2018 earnings release, reflecting growth in the Industrial and Infrastructure segment, effective price-material cost management and ongoing benefits from 80/20 simplification initiatives. The adjusted amounts for the fourth quarter of 2018 and 2017 remove special items from both periods, as described in the appended reconciliation of adjusted financial measures.
As previously announced, as part of the Company’s planned succession strategy, effective January 2, 2019, William T. Bosway was appointed as President and Chief Executive Officer, and Director. Frank Heard remains with the Company in the newly created role of Vice Chairman of the Board through March 3, 2020, with the principal responsibility of ensuring a smooth leadership transition.
During the fourth quarter, the Company announced the repayment of its Senior Subordinated 6.25% Notes, which were due February 1, 2021. Gibraltar anticipates annualized savings of $13 million in interest payments from the repayment of the Notes, which occurred on February 1, 2019. For 2019, the reduced interest expense will result in a $0.22 increase to diluted earnings per share.
In January, the Company announced that it had closed on a new $400 million five-year revolving credit facility, which replaces a $300 million secured revolving credit agreement due to mature in December 2020. The Company has the option to increase the size of the facility by up to an additional $300 million, subject to certain conditions. The new agreement reduces costs and relaxes certain restrictions related to acquisitions and capital distributions, providing enhanced flexibility for capital allocation.
“We closed the fourth year of our transformation of Gibraltar delivering fourth-quarter revenues in line with our expectations and GAAP and adjusted earnings that exceeded our guidance,” said Vice Chairman Frank Heard. “By executing on our four-pillar strategy, we recovered increased material costs, benefitted from higher-margin innovative products and drove profitable growth in the Industrial & Infrastructure segment.
“For the fourth year in a row we delivered on our promise of making more money at a higher rate of return with a more efficient use of capital. For the full year, revenues of $1 billion were in line with our guidance, while GAAP earnings of $1.96 and adjusted earnings of $2.14 exceeded our expectations. Furthermore, we managed price cost relationships well during a period of significant material cost volatility, continued to benefit from 80/20 simplification initiatives, increased the percentage of higher-margin patented products, and positioned the Company for the next step in its transformation by repaying our outstanding notes and bringing on a new CEO with proven expertise in achieving organic and M&A growth.
“Bill comes to Gibraltar with significant experience leading complex businesses at Fortune 500 global industrial companies, and valuable expertise in driving organic growth accelerated by strategic acquisitions as well as proficiency in manufacturing operations. He is uniquely qualified to lead Gibraltar in its next phase of growth,” concluded Heard.
“My focus will be on accelerating organic growth through innovative products and strategic acquisitions, while enhancing our 80/20 simplification strategy,” said President and Chief Executive Officer William Bosway. “The Company has achieved tremendous progress in the past four years of transformation, and those successes have created even greater opportunities ahead. Through executing our four-pillar strategy, our businesses have more upside potential and little downside risk. Now, with the recent repayment of our notes, we enter year five of Gibraltar’s transformation with a strong platform to accelerate growth through innovation and acquisitions and create long-term value for our shareholders.”
Fourth-quarter Segment Results
For the fourth quarter, the Residential Products segment reported:
Fourth-quarter 2018 revenues in Gibraltar’s Residential Products segment were down 3 percent versus prior year, primarily due to an unfavorable year-over-year comparison as a higher level of storm-related activity and subsequent milder weather last year extended the roofing activity season into the fourth quarter of 2017.
The lower fourth-quarter operating margin resulted from unfavorable product mix, and to a lesser extent, volume leverage, partially offset by benefits from 80/20 simplification initiatives. The adjusted operating margin for the fourth quarter of 2018 and 2017 removes the special charges for restructuring initiatives under the 80/20 program from both periods.
Industrial & Infrastructure Products
For the fourth quarter, the Industrial & Infrastructure Products segment reported:
Fourth-quarter 2018 revenues in Gibraltar’s Industrial & Infrastructure Products segment were up 3 percent year over year, driven by increased activity in the Infrastructure business.
GAAP and adjusted operating margin improvement for the segment resulted from more favorable product mix, effective management of material costs to customer selling prices, and the continued benefit from 80/20 simplification initiatives. This segment’s adjusted operating margin for the fourth quarter of 2018 and 2017 removes the special charges for restructuring initiatives under the 80/20 program and portfolio management activities.
Renewable Energy & Conservation
For the fourth quarter, the Renewable Energy & Conservation segment reported:
Renewable Energy & Conservation segment revenues were down 15 percent year over year as continued demand for its innovative tracker solution was more than offset by a difficult comparison resulting from an extended construction season last year due to favorable weather in the fourth quarter of 2017.
On the bottom line, volume and product mix, partially offset by ongoing benefits from 80/20 simplification initiatives and effective material cost to customer price management, contributed to the decrease in fourth-quarter 2018 GAAP and adjusted operating margins. This segment’s adjusted operating margin for the fourth quarter of 2018 and 2017 removes the special charges for restructuring initiatives and portfolio management activities.
“We enter 2019 with confidence in the end markets we target across our businesses but are cautious about the general economy and continued volatility in material costs,” said Bosway. “Our plan is to accelerate innovative product development, continue to drive 80/20, and seek acquisitions in attractive end markets. At the end of the year, we expect to deliver increased profits and make excellent progress in establishing a robust platform for sustainable organic growth.”
Gibraltar is providing its guidance for revenues and earnings for the full year 2019. Gibraltar expects 2019 consolidated revenues to be in excess of $1 billion. GAAP EPS for full year 2019 are expected to be between $1.95 and $2.10, or $2.40 to $2.55 on an adjusted basis, compared with $1.96 and $2.14, respectively, in 2018.
For the first quarter of 2019, the Company is expecting revenue in the range of $218 million to $224 million. GAAP EPS for the first quarter 2019 are expected to be between $0.14 and $0.19, or $0.27 to $0.32 on an adjusted basis.
Fourth-quarter Conference Call Details
Gibraltar has scheduled a conference call today starting at 9:00 a.m. ET to review its results for the fourth quarter of 2018. Interested parties may access the call by dialing (877) 407-5790 or (201) 689-8328. The presentation slides that will be discussed in the conference call are expected to be available this morning, prior to the start of the call. The slides may be downloaded from the Gibraltar website: www.gibraltar1.com. A webcast replay of the conference call and a copy of the transcript will be available on the website following the call.
Gibraltar Industries is a leading manufacturer and distributor of building products for the residential, industrial, infrastructure, and renewable energy and conservation markets. With a four-pillar strategy focused on operational improvement, product innovation, portfolio management and acquisitions, Gibraltar’s mission is to drive best-in-class performance. Gibraltar serves customers primarily throughout North America and to a lesser extent Asia. Comprehensive information about Gibraltar can be found on its website at www.gibraltar1.com.
Safe Harbor Statement
Information contained in this news release, other than historical information, contains forward-looking statements and is 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 and performance of acquisitions; and changes in interest and tax rates. In addition, such forward-looking statements could also be affected by general industry and market conditions, as well as macroeconomic factors including government monetary and trade policies, such as tariffs and expiration of tax credits along with currency fluctuations and general political conditions. Other risks and uncertainties that arise from time to time are described in Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K. 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 the 80/20 simplification initiative and portfolio management actions, acquisition-related items, 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.
Next Earnings Announcement
Gibraltar expects to release its financial results for the three-month period ending March 31, 2019, on Friday, May 3, 2019, and hold its earnings conference call later that morning, starting at 9:00 a.m. ET.
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CONTACT: Timothy Murphy
Chief Financial Officer
(716) 826-6500 ext. 3277
KEYWORD: UNITED STATES NORTH AMERICA NEW YORK
INDUSTRY KEYWORD: BUILDING SYSTEMS ENERGY ALTERNATIVE ENERGY OTHER ENERGY MANUFACTURING ENGINEERING OTHER MANUFACTURING ENVIRONMENT CONSTRUCTION & PROPERTY COMMERCIAL BUILDING & REAL ESTATE RESIDENTIAL BUILDING & REAL ESTATE
SOURCE: Gibraltar Industries, Inc.
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PUB: 02/21/2019 07:30 AM/DISC: 02/21/2019 07:31 AM