Gibraltar Announces Third Quarter 2024 Financial Results

Net Sales: $361 Million; EPS: GAAP $1.11, Adjusted $1.27

Strong Operating Cash Flow Generation of $65 Million

Confirms Updated 2024 Outlook for Revenue: $1.31-$1.33B, GAAP, Adjusted EPS: $3.57-$3.71, $4.11-$4.25, Respectively

Gibraltar Industries, Inc. (NASDAQ:ROCK), a leading manufacturer and provider of products and services for the residential, renewable energy, agtech and infrastructure markets, today reported its financial results for the three- and nine-month period ended September 30, 2024.

"Third quarter results were within our previously announced range, with the Renewables and Residential businesses coming in as we anticipated, Agtech sales growing over 30%, and three of our four segments delivering margin growth translating to $65 million in cash flow generation on solid execution and working capital management. We are managing well in a challenging sales environment and are well positioned to weather current market disruptions," stated Chairman and CEO Bill Bosway.

Third Quarter 2024 Consolidated Results

GAAP and adjusted net sales were down 7.6% and 6.2%, respectively, driven by solar industry headwinds impacting the Renewables business and a slowdown in the Residential market, partially offset by growth in Agtech.

GAAP net income decreased to $34.0 million, or $1.11 per share, and adjusted net income decreased to $38.9 million, or $1.27 per share.

Adjusted measures exclude charges for restructuring initiatives, acquisition-related items, senior leadership transition costs, and portfolio management actions, as further described in the appended reconciliation of adjusted financial measures.

Third Quarter Segment Results

Residential

Net sales decreased 6.7% driven by a slower residential market, including the repair and remodel sector, which is impeding the timing and benefit of participation gains as customers take longer to flush inventory from incumbent suppliers.

Operating margins expanded through solid execution, effective price/cost management and 80/20 initiatives.

Renewables

Net sales and new project bookings were impacted by trade and regulatory headwinds associated with the two independent AD/CVD investigations, which are forcing the industry to put major focus on completing panel installations and the administrative reporting requirements ahead of the December 3, 2024 expiration of the tariff moratorium for panels granted through the Presidential Proclamation associated with the first investigation. Correspondingly, backlog decreased 24%.

GAAP and adjusted operating margins were impacted by lower volume and product mix associated with the launch and learning curve of the 1P tracker while dealing with the abovementioned industry challenges. GAAP margins were additionally impacted by planned operational improvements, restructuring activities and prior-year portfolio management actions.

Agtech

GAAP net sales increased 30.9% and adjusted net sales increased 34.3% driven mainly by projects starting to accelerate in the Produce division including facilities to grow strawberries, lettuce, melons, and vine crops. Additional new projects in both the Produce and Commercial divisions are anticipated to be booked as design work is completed and projects are finalized for launch, the timing of which decreased backlog 3%.

GAAP and adjusted operating margin expansion was driven by volume, product mix, 80/20 initiatives, and solid field execution.

Infrastructure

Net sales decreased by 7.2%, impacted by the timing on a large project in the prior year. Backlog increased 3%. Demand and quoting remain strong, supported by ongoing investment at the federal and state levels.

Operating margins increased 230 basis points, driven by product line mix, new products, 80/20 initiatives, and strong execution.

Business Outlook

Mr. Bosway continued, "Our outlook is unchanged from our recent update, and although we are dealing with some challenging end markets, we expect to deliver earnings growth this year through operational improvement. Our operating teams continue to proactively work through their end market dynamics, and we are focused on supporting our customers while simultaneously growing our participation with them."

Consolidated net sales are expected to range between $1.31 billion and $1.33 billion, compared to $1.38 billion in 2023, or $1.36 billion on an adjusted basis. GAAP and adjusted EPS are expected to range, respectively, between $3.57 and $3.71, compared to $3.59 in 2023, and between $4.11 and $4.25, compared to $4.09 in 2023.

Third Quarter 2024 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 2024. 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 also may be accessed by dialing (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 residential, renewable energy, 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, the loss of any key customers, adverse effects of inflation, our ability to continue to improve operating margins, our ability to generate order flow and sales and increase backlog; our ability to translate our backlog into net sales, other general economic conditions and conditions in the particular markets in which we operate, changes in spending due to laws and government incentives, such as the Infrastructure Investment and Jobs Act, 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 IT systems, the impact of East and Gulf coast port strikes, the impact of trade and regulation (including the latest Department of Commerce's solar panel anti-circumvention investigation, the bifacial exemption revocation, the Auxin Solar challenge to the Presidential waiver of tariffs, deadline to install certain modules under the waiver, 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 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 and its quarterly conference call, including adjusted net sales, adjusted operating income and margin, adjusted net income, adjusted earnings per share (EPS), free cash flow and adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), each a non-GAAP financial measure. Adjusted net sales reflects the removal of net sales associated with our Processing business, which has been liquidated and our Japan renewables business which was sold on December 1, 2023. Adjusted net income, operating income and margin exclude special charges consisting of restructuring costs (primarily comprised of exit activities costs and impairment of both tangible and intangible assets associated with 80/20 simplification, lean initiatives and / or discontinued products), senior leadership transition costs (associated with new and / or terminated senior executive roles), acquisition related costs (legal and consulting fees for recent business acquisitions), and portfolio management (which represents the operating results generated by our processing business which was liquidated in 2023 and our Japan renewables business which was sold in 2023). These special charges are excluded since they may not be considered directly related to the Company's ongoing business operations. The aforementioned exclusions along with other adjustments to other income below operating profit are excluded from adjusted EPS. Adjusted EBITDA further excludes interest, taxes, depreciation, amortization and stock compensation expense. In evaluating its business, the Company considers and uses these non-GAAP financial measures as supplemental measures of its operating performance. Free cash flow is operating cash flow less capital expenditures and the related margin is free cash flow divided by net sales. The Company believes that the presentation of adjusted measures and free cash flow 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. Adjusted EBITDA and free cash flow are also useful measures of the Company's ability to service debt and adjusted EBITDA 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 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 the Company's presentation of non-GAAP financial measures should not be construed as an inference that the Company's future results will be unaffected by unusual or non-recurring items.

Reconciliations of non-GAAP measures related to full-year 2024 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.