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8-K - FORM 8-K - GIBRALTAR INDUSTRIES, INC.l41972e8vk.htm
     Exhibit 99.1
Contact:
Kenneth Smith
Chief Financial Officer
716.826.6500 ext. 3217
kwsmith@gibraltar1.com.
Gibraltar Announces Fourth-Quarter and Year-End 2010 Results
Nonresidential Product Demand Drives 7% Net Sales Growth
Strong Free Cash Flow and Lower Working Capital Fuel 37% Reduction in Net Debt
Buffalo, New York, February 24, 2011 — Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading manufacturer and distributor of products for building markets, today reported its financial results for the three and 12 months ended December 31, 2010.
Management Comments on Financial Results
“Our fourth-quarter and 2010 results were in alignment with our forecast and our strategy to continually reduce expenses and improve efficiencies,” said Gibraltar Chairman and Chief Executive Officer Brian Lipke. “Streamlining our operations allowed us to generate strong free cash flow while reducing working capital during the year. These gains strengthened both our business and our balance sheet, enabling us to continue capitalizing on Gibraltar’s competitive strengths despite weak demand in the majority of our key markets.”
“Gibraltar’s net sales for the fourth quarter of 2010 grew 7% year-over-year, reflecting our sustained focus on marketing, customer service and product innovation,” said Gibraltar President and Chief Operating Officer Henning Kornbrekke. “These top-line results were stronger than we expected, primarily due to a shift in our business mix toward sales of products for the nonresidential market. For full-year 2010, net sales decreased slightly from 2009 as single-digit growth in the nonresidential market was offset by lower residential sales. For the fourth quarter and full-year 2010, sales to wholesale distributors, service centers and dealers increased from the comparable periods in 2009, while sales to home centers decreased.”
“We completed the restructuring of three business units and consolidated five more facilities in the fourth quarter,” said Kornbrekke. “In addition to continuing to improve our performance in manufacturing and customer delivery, we have invested in systems that are enhancing our supply chain planning and procurement processes and inventory management capabilities. Although increases in steel and other raw material prices affected our fourth-quarter 2010 results, these business improvements moderated the impact on our full-year results, and we expect them to enable us to better manage the continuing commodity volatility we anticipate for the year ahead.”
For the fourth quarter of 2010, net sales increased 7% to $153.7 million from $144.1 million for the fourth quarter of 2009. The company’s GAAP loss from continuing operations for the fourth quarter of 2010 was $76.2 million, or $2.51 per diluted share, compared with $29.8 million, or $0.99 per diluted share, for the fourth quarter 2009. The GAAP loss from continuing operations for the fourth quarter of 2010 included after-tax special charges of $62.7

 


 

million of intangible asset impairment, $4.7 million for exit activity costs related to business restructuring, and $2.4 million of deferred tax valuation allowances. After-tax special charges for the fourth quarter of 2009 included $25.4 million of intangible asset impairment and $0.2 million for exit activity costs related to business restructuring and a write down of deferred financing costs as a result of early payment of the company’s term loan.
The company’s fourth-quarter 2010 non-GAAP loss from continuing operations before special charges was $6.4 million, or $0.21 per share, compared with a loss of $4.2 million, or $0.14 per share, in the fourth quarter of 2009.
Gross margin before special charges decreased to 16% in the fourth quarter of 2010 from 20% in the fourth quarter of 2009. The decrease was primarily due to less favorable alignment between costs and selling prices, partially offset by higher unit sales volume and operating efficiency.
Selling, general and administrative expense before special charges decreased 7% to $28.7 million for the fourth quarter of 2010 from $30.7 million in the fourth quarter of 2009. The decrease was primarily the result of lower compensation and benefits expenses on reduced staffing levels.
For the 12 months ended December 31, 2010, net sales decreased 1% to $685.1 million from $691.8 million in 2009. The company’s GAAP loss from continuing operations for full-year 2010 was $73.4 million, or $2.42 per diluted share, compared with $41.1 million, or $1.36 per diluted share, in 2009. The GAAP loss from continuing operations for 2010 included after-tax special charges of $62.6 million for intangible asset impairment, $5.5 million for exit activity costs related to business restructuring, $2.4 million of deferred tax valuation allowances, and $0.9 million for an ineffective interest rate swap. The 2009 after-tax special charges included $40.4 million of intangible asset impairment, $1.5 million for exit activity costs related to business restructuring, and $1.2 million for a write down of deferred financing costs as a result of amending the senior credit agreement and early payment of the company’s term loan.
The company’s full-year 2010 non-GAAP loss from continuing operations before special charges was $2.0 million, or $0.07 per share, compared with income from continuing operations before special charges of $2.1 million, or $0.07 per share, in 2009.
Gross margin before special charges for 2010 decreased to 18% from 19% in 2009 on a 1% decline in sales. The decrease in gross margin was primarily due to the net effect of increased raw material costs, partially offset by improved operating efficiencies.
Selling, general and administrative expenses before special charges increased 2% to $108.7 million in 2010 from $106.7 million in 2009, primarily due to higher variable compensation.
Liquidity and Capital Resources
  Gibraltar’s liquidity was $146.7 million as of December 31, 2010, including cash on hand of $60.9 million.
  The company generated free cash flow of $60.7 million, or 9% of sales, for the year ended December 31, 2010, consisting of cash generated by operations of $69.2 million less capital expenditures of $8.5 million.

 


 

  As a result, Gibraltar reduced net debt outstanding by $87.4 million, or 37%, to $146.3 million as of December 31, 2010 from $233.7 million as of December 31, 2009.
Outlook
“The early indicators in 2011 support our forecast for improved performance as we fully leverage Gibraltar’s more efficient operations and strong market positions in the year ahead,” Lipke said. “The firming of demand in the nonresidential sector that we experienced in the fourth quarter is especially encouraging because it occurred in the energy, manufacturing and transportation markets where Gibraltar is well-established. We also are seeing early signs of improvement in the residential and nonresidential repair and remodeling markets, and we expect this activity to accelerate through the coming year.”
“We advanced Gibraltar’s restructuring efforts in 2010, further reducing our operating expenses while providing us with highly efficient, centralized manufacturing and distribution facilities, and enhanced customer service capabilities,” said Lipke. “At the same time, we grew sales, gained market share, optimized our balance sheet and significantly improved Gibraltar’s liquidity. As a result, we begin 2011 positioned to couple further organic growth with an invigorated focus on accretive acquisitions aimed at enhancing our product leadership as well as the profitability of our operations.”
Fourth-Quarter Conference Call Details
Gibraltar has scheduled a conference call to review its results for the fourth quarter of 2010 tomorrow, February 25, 2011, starting at 9:00 a.m. ET. Interested parties may access the call by dialing (866) 730-5768 or (857) 350-1592. The presentation slides that will be discussed in the conference call are expected to be available on Thursday, February 24, 2011, by 6:00 pm ET. The slides may be downloaded from the Conference Calls page of the Investor Info section of the Gibraltar website: http://www.gibraltar1.com/investors/index.cfm?page=48. A replay of the conference call and a copy of the transcript will be available on the Gibraltar website following the call.
About Gibraltar
Gibraltar Industries is North America’s leading ventilation products, mail storage (single and cluster), rain dispersion, bar grating, expanded metal, and metal lath manufacturer. The company serves customers in a variety of industries in all 50 states and throughout the world from 42 facilities in 20 states, Canada, England, and Germany. Gibraltar is also the second-largest manufacturer of structural connectors in North America and it holds leadership positions in other product categories. More than 80% of its sales come from products having the #1 or #2 market share. Comprehensive information about Gibraltar can be found on its website, at http://www.gibraltar1.com.
Safe Harbor Statement
Information contained in this news 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 and 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.
Non-GAAP Financial Data
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, restructuring primarily associated with the closing and consolidation of our facilities, deferred tax valuation allowances, interest expense recognized as a result of our interest rate swap becoming ineffective and the write off of deferred financing costs. 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 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 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.
Next Earnings Announcement
Gibraltar expects to release its financial results for the three months ending March 31, 2011, on Wednesday, May 4, 2011, and hold its earnings conference call on Thursday, May 5, 2011, starting at 9:00 a.m. ET.

 


 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2010     2009     2010     2009  
Net sales
  $ 153,708     $ 144,110     $ 685,068     $ 691,771  
Cost of sales
    135,097       115,010       566,673       561,402  
 
                       
Gross profit
    18,611       29,100       118,395       130,369  
Selling, general, and administrative expense
    29,311       30,863       109,537       107,964  
Intangible asset impairment
    77,141       34,597       76,964       60,098  
 
                       
Loss from operations
    (87,841 )     (36,360 )     (68,106 )     (37,693 )
Interest expense
    (4,677 )     (5,673 )     (21,160 )     (23,108 )
Equity in partnership’s (loss) income and other income
    (83 )     153       81       316  
 
                       
Loss before taxes
    (92,601 )     (41,880 )     (89,185 )     (60,485 )
Benefit of income taxes
    (16,391 )     (12,118 )     (15,789 )     (19,416 )
 
                       
Loss from continuing operations
    (76,210 )     (29,762 )     (73,396 )     (41,069 )
 
                               
Discontinued operations:
                               
Income (loss) from discontinued operations before taxes
    478       532       (30,219 )     (17,879 )
(Benefit of) provision for income taxes
    (1,217 )     163       (12,547 )     (6,923 )
 
                       
Income (loss) from discontinued operations
    1,695       369       (17,672 )     (10,956 )
 
                               
Net loss
  $ (74,515 )   $ (29,393 )   $ (91,068 )   $ (52,025 )
 
                       
 
                               
Net (loss) income per share — Basic and Diluted
                               
Loss from continuing operations
  $ (2.51 )   $ (0.99 )   $ (2.42 )   $ (1.36 )
Income (loss) from discontinued operations
    0.05       0.02       (0.59 )     (0.37 )
 
                       
Net loss
  $ (2.46 )   $ (0.97 )   $ (3.01 )   $ (1.73 )
 
                       
Weighted average shares outstanding — Basic and Diluted
    30,327       30,163       30,303       30,135  
 
                       

 


 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
                 
    December 31,  
    2010     2009  
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 60,866     $ 23,596  
Accounts receivable, net
    74,544       71,782  
Inventories
    83,344       86,296  
Other current assets
    21,084       25,513  
Assets of discontinued operations
    2,539       44,938  
 
           
Total current assets
    242,377       252,125  
 
               
Property, plant, and equipment, net
    158,352       174,704  
Goodwill
    325,655       392,704  
Acquired intangibles
    66,395       82,182  
Investment in partnership
    1,345       2,474  
Other assets
    16,766       17,811  
Assets of discontinued operations
          52,942  
 
           
 
  $ 810,890     $ 974,942  
 
           
 
               
Liabilities and Shareholders’ Equity
               
Current liabilities:
               
Accounts payable
  $ 59,277     $ 47,383  
Accrued expenses
    40,377       38,757  
Current maturities of long-term debt
    408       408  
Liabilities of discontinued operations
    56       22,468  
 
           
Total current liabilities
    100,118       109,016  
 
               
Long-term debt
    206,789       256,874  
Deferred income taxes
    39,863       51,818  
Other non-current liabilities
    23,267       16,791  
Liabilities of discontinued operations
          12,217  
Shareholders’ equity:
               
Preferred stock $.01 par value; authorized 10,000,000 shares; none outstanding
           
Common stock, $.01 par value; authorized 50,000,000 shares; 30,516,197 and 30,295,084 shares issued at December 31, 2010 and 2009, respectively
    305       303  
Additional paid-in capital
    231,999       227,362  
Retained earnings
    212,914       303,982  
Accumulated other comprehensive loss
    (2,060 )     (2,230 )
Cost of 218,894 and 150,903 common shares held in treasury at December 31, 2010 and 2009, respectively
    (2,305 )     (1,191 )
 
           
Total shareholders’ equity
    440,853       528,226  
 
           
 
  $ 810,890     $ 974,942  
 
           

 


 

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                 
    Year Ended December 31,  
    2010     2009  
Cash Flows from Operating Activities
               
Net (loss) income
  $ (91,068 )   $ (52,025 )
Loss from discontinued operations
    (17,672 )     (10,956 )
 
           
(Loss) income from continuing operations
    (73,396 )     (41,069 )
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
               
Intangible asset impairment
    76,964       60,098  
Depreciation and amortization
    26,395       26,244  
Non-cash charges to interest expense
    4,324       3,382  
Stock compensation expense
    4,315       4,407  
Equity in partnerships’ loss (income)
    111       (153 )
Distributions from partnerships’ income
          156  
Provision for deferred income taxes
    (10,629 )     (17,671 )
Other non-cash adjustments
    7,143       3,633  
Increase (decrease) in cash from changes in:
               
Accounts receivable
    (4,115 )     29,934  
Inventories
    1,938       51,060  
Other current assets and other assets
    1,380       (8,772 )
Accounts payable
    12,831       (14,263 )
Accrued expenses and other non-current liabilities
    8,400       2,852  
 
           
Net cash provided by operating activities of continuing operations
    55,661       99,838  
Net cash provided by operating activities of discontinued operations
    13,582       31,761  
 
           
Net cash provided by operating activities
    69,243       131,599  
 
           
Cash Flows from Investing Activities
               
Net proceeds from sale of business
    29,164        
Net proceeds from sale of property, plant, and equipment
    313       298  
Additional considerations for acquisitions
          (4,949 )
Purchase of investment in partnership
    (1,250 )      
Purchases of property, plant, and equipment
    (8,470 )     (9,774 )
 
           
Net cash provided by (used in) investing activities of continuing operations
    19,757       (14,425 )
Net cash used in investing activities of discontinued operations
    (368 )     (1,038 )
 
           
Net cash provided by (used in) investing activities
    19,389       (15,463 )
 
           
Cash Flows from Financing Activities
               
Long-term debt payments
    (58,967 )     (182,401 )
Proceeds from long-term debt
    8,559       83,022  
Purchase of treasury stock at market prices
    (1,114 )     (634 )
Payment of deferred financing costs
    (164 )     (2,383 )
Payment of dividends
          (1,499 )
Tax benefit from stock compensation
    54        
Net proceeds from issuance of common stock
    270       47  
 
           
Net cash used in financing activities
    (51,362 )     (103,848 )
 
           
Net increase (decrease) in cash and cash equivalents
    37,270       12,288  
Cash and cash equivalents at beginning of year
    23,596       11,308  
 
           
Cash and cash equivalents at end of year
  $ 60,866     $ 23,596  
 
           


 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
(unaudited)
(in thousands, except per share data)
                                         
    Three Months Ended December 31, 2010  
    As             Impairment     Deferred     Results  
    Reported     Intangible     And Exit     Tax     Excluding  
    In GAAP Statements     Asset Impairment     Activity Costs     Valuation Allowance     Special Charges  
Net sales
  $ 153,708     $     $     $     $ 153,708  
Cost of sales
    135,097             (5,459 )           129,638  
 
                             
Gross profit
    18,611             5,459             24,070  
Selling, general, and administrative expense
    29,311             (647 )           28,664  
Intangible asset impairment
    77,141       (77,141 )                  
 
                             
Loss from operations
    (87,841 )     77,141       6,106             (4,594 )
Operating margin
    (57.1 )%     50.2 %     3.9 %     0.0 %     (3.0 )%
 
                                       
Interest expense
    (4,677 )                       (4,677 )
Equity in partnership’s (loss) and other income
    (83 )                       (83 )
 
                             
Loss before income taxes
    (92,601 )     77,141       6,106             (9,354 )
Benefit of income taxes
    (16,391 )     14,485       1,374       (2,400 )     (2,932 )
 
                             
Loss from continuing operations
  $ (76,210 )   $ 62,656     $ 4,732     $ 2,400     $ (6,422 )
 
                             
Loss from continuing operations per share — diluted
  $ (2.51 )   $ 2.07     $ 0.15     $ 0.08     $ (0.21 )
 
                             
                                         
    Three Months Ended December 31, 2009  
    As             Impairment             Results  
    Reported     Intangible     And Exit     Deferred     Excluding  
    In GAAP Statements     Asset Impairment     Activity Costs     Financing Costs     Special Charges  
Net sales
  $ 144,110     $     $     $     $ 144,110  
Cost of sales
    115,010                         115,010  
 
                             
Gross profit
    29,100                         29,100  
Selling, general, and administrative expense
    30,863             (117 )           30,746  
Intangible asset impairment
    34,597       (34,597 )                  
 
                             
Loss from operations
    (36,360 )     34,597       117             (1,646 )
Operating margin
    (25.2 )%     24.0 %     0.1 %     0.0 %     (1.1 )%
 
                                       
Interest expense
    (5,673 )                 270       (5,403 )
Equity in partnership’s income and other income
    153                         153  
 
                             
Loss before income taxes
    (41,880 )     34,597       117       270       (6,896 )
Benefit of income taxes
    (12,118 )     9,245       46       106       (2,721 )
 
                             
Loss from continuing operations
  $ (29,762 )   $ 25,352     $ 71     $ 164     $ (4,175 )
 
                             
Loss from continuing operations per share — diluted
  $ (0.99 )   $ 0.84     $ 0.00     $ 0.01     $ (0.14 )
 
                             

 


 

GIBRALTAR INDUSTRIES, INC.
Non-GAAP Reconciliation of Results Excluding Special Charges
(unaudited)
(in thousands, except per share data)
                                                 
    Year Ended December 31, 2010  
    As             Impairment             Deferred     Results  
    Reported     Intangible     And Exit     Ineffective     Tax     Excluding  
    In GAAP Statements     Asset Impairment     Activity Costs     Interest Rate Swap     Valuation Allowance     Special Charges  
Net sales
  $ 685,068     $     $     $     $     $ 685,068  
Cost of sales
    566,673             (6,364 )                 560,309  
 
                                   
Gross profit
    118,395             6,364                   124,759  
Selling, general, and administrative expense
    109,537               (806 )                     108,731  
Intangible asset impairment
    76,964       (76,964 )                        
 
                                   
(Loss) income from operations
    (68,106 )     76,964       7,170                   16,028  
Operating margin
    (9.9 )%     11.2 %     1.0 %     0.0 %     0.0 %     2.3 %
 
                                               
Interest expense
    (21,160 )                 1,424             (19,736 )
Equity in partnership’s income and other income
    81                               81  
 
                                   
Loss before income taxes
    (89,185 )     76,964       7,170       1,424             (3,627 )
Benefit of income taxes
    (15,789 )     14,412       1,671       520       (2,400 )     (1,586 )
 
                                   
Loss from continuing operations
  $ (73,396 )   $ 62,552     $ 5,499     $ 904     $ 2,400     $ (2,041 )
 
                                   
Loss from continuing operations per share — diluted
  $ (2.42 )   $ 2.06     $ 0.18     $ 0.03     $ 0.08     $ (0.07 )
 
                                   
 
                                               
                                                 
    Year Ended December 31, 2009  
    As             Impairment             Deferred     Results  
    Reported     Intangible     And Exit     Deferred     Tax     Excluding  
    In GAAP Statements     Asset Impairment     Activity Costs     Financing Costs     Valuation Allowance     Special Charges  
Net sales
  $ 691,771     $     $     $     $     $ 691,771  
Cost of sales
    561,402             (1,705 )                 559,697  
 
                                   
Gross profit
    130,369             1,705                   132,074  
Selling, general, and administrative expense
    107,964             (880 )     (379 )           106,705  
Intangible asset impairment
    60,098       (60,098 )                        
 
                                   
(Loss) income from operations
    (37,693 )     60,098       2,585       379             25,369  
Operating margin
    (5.4 )%     8.7 %     0.3 %     0.1 %     0.0 %     3.7 %
 
                                               
Interest expense
    (23,108 )                 1,424             (21,684 )
Equity in partnership’s income and other income
    316                               316  
 
                                   
(Loss) income before income taxes
    (60,485 )     60,098       2,585       1,803             4,001  
(Benefit of) provision for income taxes
    (19,416 )     19,661       1,049       604             1,898  
 
                                   
(Loss) income from continuing operations
  $ (41,069 )   $ 40,437     $ 1,536     $ 1,199     $     $ 2,103  
 
                                   
(Loss) income from continuing operations per share — diluted
  $ (1.36 )   $ 1.34     $ 0.05     $ 0.04     $ 0.00     $ 0.07