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Gibraltar Reports 3rd Quarter Sales and Earnings

11/02/2007 - Excluding one-time charges related to the sale of Hubbell Steel and Solar Michigan, Gibraltar Industries reports $12.8 million income from continuing operations on $343 million in sales from continuing operations for the third quarter, and $35.8 million income from continuing operations on $1 billion in sales from continuing operations for the first nine months.

Gibraltar Industries, Inc. reported income from continuing operations (before one-time charges) of $12.8 million on sales from continuing operations of $343 million for the third quarter. For the first nine months, income from continuing operations (before one-time charges) was $35.8 million on sales from continuing operations of $1 billion.

Discontinued Operations
 
Gibraltar incurred a pre-tax charge of $13.9 million for its planned sale of the Hubbell Steel assets.
 
The company also incurred pre-tax costs of $2.9 million associated with the sale of its Solar Michigan operation.
 
These charges, which were recorded in the third quarter, have been reflected in the results from discontinued operations.
 
Results from Hubbell’s and Solar Michigan’s business operations have been reflected in the results for discontinued operations for all periods presented.  

Third Quarter Results— Reported income from continuing operations of $11.4 million ($.38 per share) was negatively impacted by two nonrecurring items including a $0.4-million ($.01 per share) net of tax, restructuring charge related to consolidation of the company’s strip steel facilities, and $1.8 million ($.04 per share) in acquisition-related purchase accounting adjustments resulting from the write-up of inventories acquired in the Noll/NorWesCo and Florence transactions from their historic cost basis to fair market value. The expensing of these inventory adjustments will be completed in October and will impact fourth-quarter results by $.01 per share.
 
Income from continuing operations before one-time charges was $12.8 million ($.43 per share), compared to $18.2 million ($.61 per share) in the third quarter of 2006. The decline in income from continuing operations was in line with the lower unit volume and mix changes and was partly offset by programs to streamline operations.
 
Sales from continuing operations were $343 million, an increase of approximately 8% compared to $318 million in the third quarter of 2006. Net sales, excluding acquisitions, were down 8%, driven by the soft residential building market. Acquisitions added approximately 15% to net sales in the quarter.
 
The cost of the planned sale of Hubbell Steel assets amounted to a pre-tax charge of $13.9 million. The company also incurred $2.9 million in pre-tax costs associated with the sale of its Solar Michigan operation. These charges were recorded in the third quarter and have been reflected in the results from discontinued operations. The results from Hubbell’s and Solar Michigan’s business operations have been reflected in the results for discontinued operations for all periods presented.
 
Nine-Month Results— Reported income from continuing operations for the first nine months of 2007 is $31.4 million ($1.04 per share). Income from continuing operations before one-time charges was $35.8 million ($1.19 per share), compared to $50.0 million ($1.67 per share) in the first nine months of 2006. The decline in income from continuing operations was in line with the lower unit volume and mix changes and was partly offset by Gibraltar’s aggressive programs to streamline its operations.
 
Sales from continuing operations were up by approximately five percent to $1 billion, compared to $956 million in the first nine months of 2006. Net sales, excluding acquisitions, were down 7% for the year-to-date, driven by the soft residential building market.
 
Management Comments—“We generated third-quarter sales and earnings that were within our expectations—even though conditions in our two largest markets, residential housing and automotive, remained challenging during the quarter,” said Brian J. Lipke, Gibraltar’s Chairman and CEO. “More importantly, we continue to strategically transform Gibraltar through acquisitions, divestitures, and the streamlining of our existing businesses, all of which positions us for significantly improved results as the markets we serve improve and volumes return to more normalized levels.”
 
“During the third quarter, we completed the acquisition of Florence Corp., a leader in the storage and postal products market,” said Henning N. Kornbrekke, Gibraltar’s President and Chief Operating Officer. “Earlier this month, we announced the sale of the assets of Hubbell Steel, a business that was not meeting our performance targets. We also made more progress with the consolidation of our facilities, with eight locations closed or consolidated thus far in 2007 and we are looking to close or consolidate additional locations. All of these actions will improve our operating characteristics, enhancing our ability to deliver stronger and more consistent results.
 
“Our participation in the commercial building and industrial markets, our operations in Europe and Asia, and our recent acquisitions are helping to offset the slowdown in the residential building and automotive markets,” continued Kornbrekke. “Even in the new-build housing market, which is down 27 percent compared to first nine months of 2006, our core building products sales have decreased by approximately ten percent, which indicates that we are expanding our market share in an extremely difficult operating environment. We are also continuing to focus on operational excellence, cost reductions, and the further streamlining of our operations,” said Kornbrekke.
 
Outlook—In light of the operating environment discussed above, Kornbrekke said that, barring a significant change in business conditions, Gibraltar expects its fourth-quarter earnings per share from continuing operations before any one-time items will be in the range of $0.12 to $0.16, compared to $0.20 in the fourth quarter of 2006.
 
Gibraltar Industries is a leading manufacturer, processor, and distributor of products for the building, industrial, and vehicular markets. The company serves customers in a variety of industries in all 50 states and throughout the world. It has approximately 4100 employees and operates 84 facilities in 27 states, Canada, China, England, Germany, and Poland. Gibraltar’s common stock is a component of the S&P SmallCap 600 and the Russell 2000® Index.