Gibraltar Announces Third Quarter 2022 Financial Results

Revenue: GAAP up 5.9%, Adjusted up 6.4%

EPS: GAAP up 28.6%, Adjusted up 19.1%

Raising Lower End and Narrowing Range of GAAP and Adjusted EPS Outlook

BUFFALO, N.Y.–(BUSINESS WIRE)–$ROCK #ROCK–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 September 30, 2022.

“2022 is unfolding in line with our expectations as our focus on simplifying operations and margin recovery pays off. Our operating performance across our businesses was strong in the third quarter, with our Renewables and Agtech businesses showing continuing margin improvement as we anticipated, and the Residential and Infrastructure businesses both generating solid revenue and margin results,” stated Chairman and CEO Bill Bosway.

Third Quarter 2022 Consolidated Results from Continuing Operations

Below are third quarter 2022 consolidated results from continuing operations:

		Three Months Ended September 30, 2022
$Millions, except EPS		GAAP						Adjusted
		2022		2021		% Change		2022		2021		% Change
Net Sales		$391.3		$369.4		5.9%		$389.0		$365.5		6.4%
Net Income		$34.3		$27.9		22.9%		$35.7		$31.2		14.4%
Diluted EPS		$1.08		$0.84		28.6%		$1.12		$0.94		19.1%

Revenue increased 5.9% to $391.3 million and adjusted revenue increased 6.4% to $389.0 million. Approximately half of the increase was organic growth with the remainder from the acquisition of Quality Aluminum Products (QAP). Revenue growth was driven by participation gains, price management, and the acquisition of Quality Aluminum Products in the Residential segment, offset by continuing end market supply chain challenges and project delays in the Renewables and Agtech segments.

GAAP earnings increased 22.9% to $34.3 million, or $1.08 per share, and adjusted earnings increased 14.4% to $35.7 million, or $1.12 per share. EPS growth of 28.6% and 19.1% in the quarter on a GAAP and adjusted basis, respectively, was driven by participation gains, price management, business mix, and 80/20 initiatives and the share repurchase program.

Adjusted measures exclude charges for restructuring initiatives, acquisition-related items, senior leadership transition costs, and the results of the Processing business, which was classified as held for sale in the first quarter of 2022, as further described in the appended reconciliation of adjusted financial measures.

Third Quarter Segment Results

Renewables

For the third quarter, the Renewables segment reported:

		Three Months Ended September 30, 2022
$Millions		GAAP						Adjusted
		2022		2021		% Change		2022		2021		% Change
Net Sales		$111.1		$130.2		(14.7)%		$111.1		$130.2		(14.7)%
Operating Income		$14.2		$12.2		16.4%		$14.3		$14.8		(3.4)%
Operating Margin		12.8%		9.4%		340 bps		12.9%		11.4%		150 bps

Segment revenue was down 14.7% and backlog decreased 9%. The timing and progress of solar projects depend upon the supply of solar panels, and solar installations continue to be impacted by supply constraints due to the Uyghur Forced Labor Prevention Act (UFLPA), which was enacted in June, and a three-month delay by the U.S. Department of Commerce for its preliminary ruling on its solar panel anti-dumping / countervailing duties (AD/CVD) anticircumvention investigation.

Despite the effects of this trade environment, adjusted operating margin improved as expected, increasing 150 basis points year-over-year and 590 basis points sequentially, driven by improved project management, price / cost alignment, and field operations efficiencies.

Residential

For the third quarter, the Residential segment reported:

		Three Months Ended September 30, 2022
$Millions		GAAP						Adjusted
		2022		2021		% Change		2022		2021		% Change
Net Sales		$215.6		$171.5		25.7%		$215.6		$171.5		25.7%
Operating Income		$35.8		$29.5		21.4%		$36.3		$29.6		22.6%
Operating Margin		16.6%		17.2%		(60) bps		16.8%		17.2%		(40) bps

Revenue increased 25.7%, the segment’s ninth consecutive quarter of double-digit growth, with organic revenue up 19.0% and the acquisition of Quality Aluminum Products contributing 6.7% of the growth. Organic revenue growth was driven by pricing, participation gains and market demand.

Adjusted operating income grew 22.6% and adjusted operating margin was flat on an organic basis. The recent acquisition of Quality Aluminum Products drove the 40 basis point decrease to 16.8%. We expect QAP margins to improve as 80/20 is implemented.

Agtech

For the third quarter, the Agtech segment reported:

		Three Months Ended September 30, 2022
$Millions		GAAP						Adjusted
		2022		2021		% Change		2022		2021		% Change
Net Sales		$44.2		$49.0		(9.8)%		$41.9		$45.2		(7.3)%
Operating Income		$3.8		$2.2		72.7%		$4.5		$3.9		15.4%
Operating Margin		8.5%		4.5%		400 bps		10.7%		8.7%		200 bps

GAAP revenue decreased 9.8%, with adjusted revenue down 7.3% due to Produce project movement partially offset by strong Commercial business. While quote activity remains robust, backlog decreased 7% on a challenging year-over-year comparison.

GAAP operating margin improved 400 basis points and adjusted operating margin 200 basis points. On a sequential basis, adjusted operating margin improved 400 basis points. Margin performance was driven by good business mix, improving price / cost management, supply chain improvement, and 80/20 initiatives.

Infrastructure

For the third quarter, the Infrastructure segment reported:

		Three Months Ended September 30, 2022
$Millions		GAAP						Adjusted
		2022		2021		% Change		2022		2021		% Change
Net Sales		$20.4		$18.7		9.1%		$20.4		$18.7		9.1%
Operating Income		$2.6		$1.6		62.5%		$2.6		$1.6		62.5%
Operating Margin		12.6%		8.8%		380 bps		12.6%		8.8%		380 bps

Revenue increased 9.1% as bidding activity remained very strong and backlog increased 11%. Management expects continued positive impact from increased infrastructure spending related to the Infrastructure Investment and Jobs Act through the end of this year and into 2023.

Operating income increased 62.5% and operating margins improved 380 basis points driven by price material cost alignment, volume leverage, positive mix and improved operating execution.

Business Outlook

Gibraltar is raising the lower end and narrowing the range of its EPS outlook for the full year 2022, with consolidated revenue still expected to range between $1.38 billion and $1.43 billion. GAAP EPS is expected to be between $2.90 and $3.00, and adjusted EPS expected to be between $3.30 and $3.40. Previous GAAP and Adjusted EPS guidance ranges were $2.80 to $3.00 and $3.20 to $3.40, respectively.

“Given our performance to date and our demand profile entering the fourth quarter, we remain confident in delivering our full-year EPS outlook. We remain very focused on simplifying our operations, executing for our customers and controlling the things we can control,” said Mr. Bosway.

Third Quarter 2022 Conference Call Details

Gibraltar will host a conference call today starting at 9:00 a.m. ET to review its results for the third quarter of 2022. Interested parties may access the webcast through the Investors section of the Company’s website at www.gibraltar1.com, where related presentation materials will also be posted prior to the conference call. The call may also be accessed by dialing 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 is a leading manufacturer and provider of products and services for the renewable energy, residential, agtech, and infrastructure markets. Gibraltar’s mission, to make life better for people and the planet, is fueled by advancing the disciplines of engineering, science, and technology. Gibraltar is innovating to reshape critical markets in comfortable living, sustainable power, and productive growing throughout North America. For more please visit 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 availability and pricing of our principal raw materials and component parts, supply chain challenges causing project delays and field operations inefficiencies and disruptions, availability of labor at our manufacturing and distribution facilities or on our project sites, further impacts of COVID-19 on our customers, suppliers, employees, operations, business, liquidity and cash flows, the loss of any key customers, adverse effects of inflation, 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, disruptions to our IT systems, the impact of regulation (including the Department of Commerce’s solar panel anti-circumvention investigation and the Uyghur Forced Labor Prevention Act (UFLPA)), rebates, credits and incentives and variations in government spending 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 and Quarterly Report on Form 10-Q 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, including adjusted revenues, adjusted operating income and margin, adjusted net income, adjusted earnings per share (EPS) and adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) each a non-GAAP financial measure. Adjusted revenue reflects the removal of revenue associated with our Processing business, which has been classified as held-for-sale. Adjusted net income, operating income and margin excludes special charges consisting of restructuring costs primarily associated with 80/20 simplification or lean initiatives, senior leadership transition costs, acquisition related costs and the operating losses generated by our processing business that has been classified as held-for-sale. These special charges are excluded since they may not be considered directly related to the Company’s ongoing business operations. The adjusted measures now exclude the results of the Processing business since it was classified as held for sale as of March 31, 2022. Our adjusted financial measures as of and for the three-month and nine-month periods ending September 30, 2021 have been recast to reflect this additional adjustment as detailed in the appended reconciliation of adjusted financial measures. The results of the Processing business are considered non-recurring due to the Company’s commitment during the first quarter of 2022 to a plan to sell the Processing business. The aforementioned exclusions along with other adjustments to other income below operating profit are excluded from adjusted EPS. Adjusted EBITDA further excludes depreciation, amortization and stock compensation. In evaluating its business, the Company considers and uses these non-GAAP financial measures as supplemental measures of its operating performance. The Company believes that the presentation of results excluding these items provides meaningful supplemental data to investors 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. Adjusted EBITDA is also a useful measure of the Company’s ability to service debt and is one of the measures used for determining the Company’s debt covenant compliance.

Adjustments to the most directly comparable financial measures presented on a GAAP basis are quantified in the reconciliation of adjusted financial measures excluding special charges provided in the supplemental financial schedules that accompany this news release. 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 and our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Reconciliations of non-GAAP measures related to full-year 2022 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations due to the high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations.

GIBRALTAR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited)
		Three Months Ended September 30,							Nine Months Ended September 30,
			2022			2021				2022			2021
Net sales		$	391,291		$	369,353			$	1,076,105		$	1,005,334
Cost of sales			296,735			286,101				826,434			781,133
Gross profit			94,556			83,252				249,671			224,201
Selling, general, and administrative expense			47,160			45,274				140,941			141,999
Income from operations			47,396			37,978				108,730			82,202
Interest expense			1,048			491				2,189			1,180
Other expense (income)			363			72				797			(4,279	)
Income before taxes			45,985			37,415				105,744			85,301
Provision for income taxes			11,690			9,561				26,686			20,578
Income from continuing operations			34,295			27,854				79,058			64,723
Discontinued operations:
(Loss) income before taxes			—			(201	)			—			1,867
Provision for income taxes			—			97				—			323
(Loss) income from discontinued operations			—			(298	)			—			1,544
Net income		$	34,295		$	27,556			$	79,058		$	66,267
Net earnings per share – Basic:
Income from continuing operations		$	1.08		$	0.85			$	2.44		$	1.97
(Loss) income from discontinued operations			—			(0.01	)			—			0.05
Net income		$	1.08		$	0.84			$	2.44		$	2.02
Weighted average shares outstanding – Basic			31,707			32,802				32,396			32,791
Net earnings per share – Diluted:
Income from continuing operations		$	1.08		$	0.84			$	2.43		$	1.96
(Loss) income from discontinued operations			—			(0.01	)			—			0.05
Net income		$	1.08		$	0.83			$	2.43		$	2.01
Weighted average shares outstanding – Diluted			31,812			33,050				32,503			33,055

GIBRALTAR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)
		September 30, 2022				December 31, 2021
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	21,919			$	12,849
Accounts receivable, net of allowance of $3,847 and $3,738, respectively			275,704				236,444
Inventories, net			204,000				176,207
Prepaid expenses and other current assets			37,578				21,467
Total current assets			539,201				446,967
Property, plant, and equipment, net			105,097				96,885
Operating lease assets			24,850				18,120
Goodwill			510,866				510,942
Acquired intangibles			145,374				141,504
Other assets			875				483
		$	1,326,263			$	1,214,901
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	157,167			$	172,286
Accrued expenses and other current liabilities			82,789				67,993
Billings in excess of cost			42,412				46,711
Total current liabilities			282,368				286,990
Long-term debt			121,840				23,781
Deferred income taxes			40,257				40,278
Non-current operating lease liabilities			17,956				11,390
Other non-current liabilities			20,351				27,204
Stockholders’ equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding			—				—
Common stock, $0.01 par value; authorized 100,000 shares in 2022 and 2021; 34,034 shares and 33,799 shares issued and outstanding in 2022 and 2021			340				338
Additional paid-in capital			320,428				314,541
Retained earnings			624,630				545,572
Accumulated other comprehensive (loss) income			(6,769	)			187
Treasury stock, at cost, 2,530 and 1,107 shares in 2022 and 2021			(95,138	)			(35,380	)
Total stockholders’ equity			843,491				825,258
		$	1,326,263			$	1,214,901

GIBRALTAR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
		Nine Months Ended September 30,
			2022				2021
Cash Flows from Operating Activities
Net income		$	79,058			$	66,267
Income from discontinued operations			—				1,544
Income from continuing operations			79,058				64,723
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			19,192				23,958
Stock compensation expense			5,889				6,769
Exit activity costs, non-cash			1,427				1,193
Provision for (benefit of) deferred income taxes			181				(689	)
Other, net			3,620				1,274
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable			(25,538	)			(65,297	)
Inventories			(19,840	)			(65,906	)
Other current assets and other assets			393				(316	)
Accounts payable			(24,756	)			32,029
Accrued expenses and other non-current liabilities			(1,065	)			(12,261	)
Net cash provided by (used in) operating activities of continuing operations			38,561				(14,523	)
Net cash used in operating activities of discontinued operations			—				(2,002	)
Net cash provided by (used in) operating activities			38,561				(16,525	)
Cash Flows from Investing Activities
Acquisitions, net of cash acquired			(51,621	)			4,143
Purchases of property, plant, and equipment			(15,704	)			(13,251	)
Net proceeds from sale of business			—				38,062
Net cash (used in) provided by investing activities of continuing operations			(67,325	)			28,954
Net cash used in investing activities of discontinued operations			—				(176	)
Net cash (used in) provided by investing activities			(67,325	)			28,778
Cash Flows from Financing Activities
Proceeds from long-term debt			197,800				58,500
Long-term debt payments			(100,000	)			(83,636	)
Purchase of common stock at market prices			(58,125	)			(6,161	)
Net proceeds from issuance of common stock			—				1,021
Net cash provided by (used in) financing activities			39,675				(30,276	)
Effect of exchange rate changes on cash			(1,841	)			(97	)
Net increase (decrease) in cash and cash equivalents			9,070				(18,120	)
Cash and cash equivalents at beginning of year			12,849				32,054
Cash and cash equivalents at end of period		$	21,919			$	13,934

GIBRALTAR INDUSTRIES, INC. Reconciliation of Adjusted Financial Measures (in thousands, except per share data) (unaudited)
		Three Months Ended September 30,2022
		As Reported In GAAP Statements				Restructuring & Senior Leadership Transition Costs				Acquisition Related Items				Portfolio Management				Adjusted Financial Measures
Net Sales
Renewables		$	111,119			$	—			$	—			$	—			$	111,119
Residential			215,592				—				—				—				215,592
Agtech			44,217				—				—				(2,326	)			41,891
Infrastructure			20,363				—				—				—				20,363
Consolidated sales			391,291				—				—				(2,326	)			388,965
Income from operations
Renewables			14,216				(42	)			126				—				14,300
Residential			35,802				12				476				—				36,290
Agtech			3,777				232				—				481				4,490
Infrastructure			2,572				—				—				—				2,572
Segments Income			56,367				202				602				481				57,652
Unallocated corporate expense			(8,971	)			82				522				—				(8,367	)
Consolidated income from operations			47,396				284				1,124				481				49,285
Interest expense			1,048				—				—				—				1,048
Other expense			363				—				—				—				363
Income before income taxes			45,985				284				1,124				481				47,874
Provision for income taxes			11,690				74				285				124				12,173
Income from continuing operations		$	34,295			$	210			$	839			$	357			$	35,701
Income from continuing operations per share – diluted		$	1.08			$	0.01			$	0.02			$	0.01			$	1.12
Operating margin
Renewables			12.8	%			—	%			0.1	%			—	%			12.9	%
Residential			16.6	%			—	%			0.2	%			—	%			16.8	%
Agtech			8.5	%			0.5	%			—	%			1.1	%			10.7	%
Infrastructure			12.6	%			—	%			—	%			—	%			12.6	%
Segments Margin			14.4	%			0.1	%			0.1	%			0.1	%			14.8	%
Consolidated			12.1	%			0.1	%			0.3	%			0.1	%			12.7	%

GIBRALTAR INDUSTRIES, INC. Reconciliation of Adjusted Financial Measures (in thousands, except per share data) (unaudited)
		Three Months Ended September 30, 2021
		As Reported In GAAP Statements				Restructuring & Senior Leadership Transition Costs				Acquisition Related Items				Adjusted Financial Measures				Portfolio Management*				Adjusted Financial Measures *
Net Sales
Renewables		$	130,162			$	—			$	—			$	130,162			$	—			$	130,162
Residential			171,545				—				—				171,545				—				171,545
Agtech			48,975				—				—				48,975				(3,825	)			45,150
Infrastructure			18,671				—				—				18,671				—				18,671
Consolidated sales			369,353				—				—				369,353				(3,825	)			365,528
Income from operations
Renewables			12,206				523				2,064				14,793				—				14,793
Residential			29,482				83				—				29,565				—				29,565
Agtech			2,227				293				—				2,520				1,387				3,907
Infrastructure			1,640				—				—				1,640				—				1,640
Segments Income			45,555				899				2,064				48,518				1,387				49,905
Unallocated corporate expense			(7,577	)			41				53				(7,483	)			—				(7,483	)
Consolidated income from operations			37,978				940				2,117				41,035				1,387				42,422
Interest expense			491				—				—				491				—				491
Other expense			72				—				—				72				—				72
Income before income taxes			37,415				940				2,117				40,472				1,387				41,859
Provision for income taxes			9,561				198				515				10,274				355				10,629
Income from continuing operations		$	27,854			$	742			$	1,602			$	30,198			$	1,032			$	31,230
Income from continuing operations per share – diluted		$	0.84			$	0.02			$	0.05			$	0.91			$	0.03			$	0.94
Operating margin
Renewables			9.4	%			0.4	%			1.6	%			11.4	%			—	%			11.4	%
Residential			17.2	%			—	%			—	%			17.2	%			—	%			17.2	%
Agtech			4.5	%			0.6	%			—	%			5.1	%			3.6	%			8.7	%
Infrastructure			8.8	%			—	%			—	%			8.8	%			—	%			8.8	%
Segments Margin			12.3	%			0.2	%			0.5	%			13.1	%			0.6	%			13.7	%
Consolidated			10.3	%			0.2	%			0.5	%			11.1	%			0.5	%			11.6	%
*Recast to exclude processing equipment business which was reclassified as held for sale as of March 31, 2022.

Contacts

LHA Investor Relations

Jody Burfening/Carolyn Capaccio

(212) 838-3777

rock@lhai.com

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