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Why Is Gibraltar Industries (ROCK) Up 4.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Gibraltar Industries (ROCK - Free Report) . Shares have added about 4.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Gibraltar Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Gibraltar Q2 Earnings & Net Sales Beat Estimate
Gibraltar Industries, Inc. reported solid earnings in second-quarter 2023. Quarterly earnings surpassed the Zacks Consensus Estimate and increased on a year-over-year basis. Although net sales decreased from the previous year, it beat the consensus mark.
The company’s quarterly results reflect organic growth, improving solar module supply, increased volume, accretive 80/20 initiatives, better price and cost alignment, along with supply-chain optimization initiatives, and improvement in project management systems. Gibraltar is optimistic about its upcoming growth prospects with its solid end market fundamentals backed by increased backlog levels sequentially, as well as, year over year. Backed by the aforementioned tailwinds, ROCK increased its 2023 adjusted earnings per share (EPS) outlook.
Inside the Headlines
Gibraltar reported adjusted earnings of $1.18 per share, surpassing the Zacks Consensus Estimate of adjusted earnings of 97 cents per share by 21.7% and increasing 22.9% year over year. This was driven by solid execution in all its operating segments.
Net sales of $364.9 million outpaced the consensus mark of $351 million by 3.8% but decreased 0.5% from the prior-year level of $366.9 million. The decline was due to the market price adjustments in the Residential segment, project delays in the Renewables and Agtech segments concerning solar module availability, project permitting, and project rescoping as well as continuous channel inventory right-sizing. These headwinds were partially offset by organic growth in the Residential and Infrastructure segments and the acquisition of Quality Aluminum Products. On an adjusted basis, the top line remained flat year over year at $364.1 million.
Segmental Details
Renewable Energy: Net sales in the segment decreased 23.6% from the year-ago quarter to $77.5 million wherein our model expected the segmental net sales to decline 10.1% to $91.3 million year over year. The solar module supply and delay in local permits affected project timing of contracted as well as active projects. Nonetheless, there are continuous improvements in module supply as additional module importers are coming up with the importation of the Uyghur Forced Labor Prevention Act learning curve. The order backlog was up 16.7% sequentially and 6.3% year over year.
The adjusted operating margin of 11.7% expanded 470 basis points (bps) year over year, driven by efficient execution across the business. The adjusted EBITDA margin increased 550 bps from the prior-year quarter to 14.8%.
Residential Products: Net sales in the segment were up 14% year over year to $228.2 million. This segment’s reported figure is up from our prediction of $196.6 million, which suggested a 1.8% decline from the prior year. Organic sales growth and the acquisition of Quality Aluminum Products or QAP backed the uptrend, offsetting the year-over-year impact of market price adjustments made in prior quarters. QAP contributed 12.7% and organic sales contributed 1.3% to net sales growth.
The adjusted operating margin of 19.3% expanded 80 bps in the quarter. The adjusted EBITDA margin increased 90 bps from the prior-year quarter to 20.5%.
Agtech: Sales declined 19.9% year over year to $35 million and adjusted sales fell 16.1% to $34.3 million. For this segment, we expected net sales as well as the adjusted sales to decline year over year by 3.9% to $42 million and by 2.7% to $39.8 million, respectively. The model’s value suggested higher sales value compared to the reported value. The downside was due to customer delays in project starts in the commercial business. Backlogs were up 16.2% sequentially.
The adjusted operating margin improved 280 bps year over year to 9.5%. The adjusted EBITDA margin was up 350 bps year over year to 12.9%.
Infrastructure: Sales in the segment rose 12.6% year over year to $24.2 million compared to the model’s prediction of $22.2 million, which indicated a 3.3% year-over-year increase. Backlog rose 46.1% year over year on strong end markets demand.
The adjusted operating margin of 24.1% expanded by a whopping 1,070 bps year over year. The adjusted EBITDA margin also expanded 1,030 bps from the prior-year quarter to 27.6%.
Operating Highlights
Adjusted operating profit also grew 18% to $51 million. The adjusted operating margin expanded 210 bps year over year to 13.9%.
Adjusted EBITDA rose 18% to $61 million in the reported period. The adjusted EBITDA margin also increased 250 bps from the prior year to 16.7%.
Balance Sheet & Cash Flow
As of Jun 30, 2023, Gibraltar had liquidity of $403 million, including cash and cash equivalents worth $18.6 million, up from $17.6 million at 2022 end. Long-term debt was $9.8 million, down from $88.8 million as of Dec 31, 2022.
As of the first six months of 2023, net cash provided by operating activities totaled $114.1 million, compared with $0.5 million in the prior year. In the second quarter of 2023, the company repurchased 368,038 shares for $17.8 million at an average price of $48.40 per share.
Raised EPS & Retained Net Sales 2023 Guidance
Gibraltar expects revenues of $1.36-$1.41 billion, whereas it reported revenues of $1.38 billion in 2022.
Adjusted earnings are now expected to be $3.90-$4.10 per share (previously expected $3.46-$3.66 per share), suggesting a rise from adjusted earnings of $3.40 per share reported in 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Gibraltar Industries has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. It comes with little surprise Gibraltar Industries has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Gibraltar Industries is part of the Zacks Building Products - Miscellaneous industry. Over the past month, United Rentals (URI - Free Report) , a stock from the same industry, has gained 2.5%. The company reported its results for the quarter ended June 2023 more than a month ago.
United Rentals reported revenues of $3.55 billion in the last reported quarter, representing a year-over-year change of +28.3%. EPS of $9.88 for the same period compares with $7.86 a year ago.
United Rentals is expected to post earnings of $11.32 per share for the current quarter, representing a year-over-year change of +22.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for United Rentals. Also, the stock has a VGM Score of A.
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Why Is Gibraltar Industries (ROCK) Up 4.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Gibraltar Industries (ROCK - Free Report) . Shares have added about 4.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Gibraltar Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Gibraltar Q2 Earnings & Net Sales Beat Estimate
Gibraltar Industries, Inc. reported solid earnings in second-quarter 2023. Quarterly earnings surpassed the Zacks Consensus Estimate and increased on a year-over-year basis. Although net sales decreased from the previous year, it beat the consensus mark.
The company’s quarterly results reflect organic growth, improving solar module supply, increased volume, accretive 80/20 initiatives, better price and cost alignment, along with supply-chain optimization initiatives, and improvement in project management systems. Gibraltar is optimistic about its upcoming growth prospects with its solid end market fundamentals backed by increased backlog levels sequentially, as well as, year over year. Backed by the aforementioned tailwinds, ROCK increased its 2023 adjusted earnings per share (EPS) outlook.
Inside the Headlines
Gibraltar reported adjusted earnings of $1.18 per share, surpassing the Zacks Consensus Estimate of adjusted earnings of 97 cents per share by 21.7% and increasing 22.9% year over year. This was driven by solid execution in all its operating segments.
Net sales of $364.9 million outpaced the consensus mark of $351 million by 3.8% but decreased 0.5% from the prior-year level of $366.9 million. The decline was due to the market price adjustments in the Residential segment, project delays in the Renewables and Agtech segments concerning solar module availability, project permitting, and project rescoping as well as continuous channel inventory right-sizing. These headwinds were partially offset by organic growth in the Residential and Infrastructure segments and the acquisition of Quality Aluminum Products. On an adjusted basis, the top line remained flat year over year at $364.1 million.
Segmental Details
Renewable Energy: Net sales in the segment decreased 23.6% from the year-ago quarter to $77.5 million wherein our model expected the segmental net sales to decline 10.1% to $91.3 million year over year. The solar module supply and delay in local permits affected project timing of contracted as well as active projects. Nonetheless, there are continuous improvements in module supply as additional module importers are coming up with the importation of the Uyghur Forced Labor Prevention Act learning curve. The order backlog was up 16.7% sequentially and 6.3% year over year.
The adjusted operating margin of 11.7% expanded 470 basis points (bps) year over year, driven by efficient execution across the business. The adjusted EBITDA margin increased 550 bps from the prior-year quarter to 14.8%.
Residential Products: Net sales in the segment were up 14% year over year to $228.2 million. This segment’s reported figure is up from our prediction of $196.6 million, which suggested a 1.8% decline from the prior year. Organic sales growth and the acquisition of Quality Aluminum Products or QAP backed the uptrend, offsetting the year-over-year impact of market price adjustments made in prior quarters. QAP contributed 12.7% and organic sales contributed 1.3% to net sales growth.
The adjusted operating margin of 19.3% expanded 80 bps in the quarter. The adjusted EBITDA margin increased 90 bps from the prior-year quarter to 20.5%.
Agtech: Sales declined 19.9% year over year to $35 million and adjusted sales fell 16.1% to $34.3 million. For this segment, we expected net sales as well as the adjusted sales to decline year over year by 3.9% to $42 million and by 2.7% to $39.8 million, respectively. The model’s value suggested higher sales value compared to the reported value. The downside was due to customer delays in project starts in the commercial business. Backlogs were up 16.2% sequentially.
The adjusted operating margin improved 280 bps year over year to 9.5%. The adjusted EBITDA margin was up 350 bps year over year to 12.9%.
Infrastructure: Sales in the segment rose 12.6% year over year to $24.2 million compared to the model’s prediction of $22.2 million, which indicated a 3.3% year-over-year increase. Backlog rose 46.1% year over year on strong end markets demand.
The adjusted operating margin of 24.1% expanded by a whopping 1,070 bps year over year. The adjusted EBITDA margin also expanded 1,030 bps from the prior-year quarter to 27.6%.
Operating Highlights
Adjusted operating profit also grew 18% to $51 million. The adjusted operating margin expanded 210 bps year over year to 13.9%.
Adjusted EBITDA rose 18% to $61 million in the reported period. The adjusted EBITDA margin also increased 250 bps from the prior year to 16.7%.
Balance Sheet & Cash Flow
As of Jun 30, 2023, Gibraltar had liquidity of $403 million, including cash and cash equivalents worth $18.6 million, up from $17.6 million at 2022 end. Long-term debt was $9.8 million, down from $88.8 million as of Dec 31, 2022.
As of the first six months of 2023, net cash provided by operating activities totaled $114.1 million, compared with $0.5 million in the prior year. In the second quarter of 2023, the company repurchased 368,038 shares for $17.8 million at an average price of $48.40 per share.
Raised EPS & Retained Net Sales 2023 Guidance
Gibraltar expects revenues of $1.36-$1.41 billion, whereas it reported revenues of $1.38 billion in 2022.
Adjusted earnings are now expected to be $3.90-$4.10 per share (previously expected $3.46-$3.66 per share), suggesting a rise from adjusted earnings of $3.40 per share reported in 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Gibraltar Industries has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. It comes with little surprise Gibraltar Industries has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Gibraltar Industries is part of the Zacks Building Products - Miscellaneous industry. Over the past month, United Rentals (URI - Free Report) , a stock from the same industry, has gained 2.5%. The company reported its results for the quarter ended June 2023 more than a month ago.
United Rentals reported revenues of $3.55 billion in the last reported quarter, representing a year-over-year change of +28.3%. EPS of $9.88 for the same period compares with $7.86 a year ago.
United Rentals is expected to post earnings of $11.32 per share for the current quarter, representing a year-over-year change of +22.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for United Rentals. Also, the stock has a VGM Score of A.