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Gibraltar Industries (ROCK) Beats on Q4 Earnings & Revenues

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Premium steel & iron firm, Gibraltar Industries, Inc. (ROCK - Free Report) , reported better-than-expected results for fourth-quarter 2017.

Earnings

Quarterly adjusted earnings came in at 41 cents per share, beating the Zacks Consensus Estimate of 34 cents. Also, the bottom line recorded 37% year-over-year growth.

Quarterly earnings for 2017 came in at $1.71 per share, outpacing the Zacks Consensus Estimate of $1.65. The bottom line came in 2.4% higher than the year-ago tally. Gibraltar Industries noted that profitability in the reported quarter largely stemmed from the Tax Cuts and Jobs Act conversion adjustment as well as the company’s operational efficacy-improvement moves.

Revenues

Net sales in the fourth quarter came in at $258.1 million, beating the Zacks Consensus Estimate of $233 million. The top line also improved 11% year over year, on the back of higher sales of the Energy & Conservation and Residential and Renewable segments.

Segmental Details

Revenues of the Residential Products segment came in at $105.3 million in the reported quarter, up 13% year over year. This upswing was supported by elevated sales of the new housing, repair and remodel construction markets, sturdier electronic package and centralized mail system solutions’ demand, as well as benefits from the Package Concierge buyout (February 2017).

Quarterly sales of the Industrial and Infrastructure Products segment came in at $49.1 million, down 20% year over year. This year-over-year decline stemmed from the impact of  the U.S. bar grating product line’s spin-off in 2016.

Renewable Energy and Conservation segment’s sales were up 34% year over year to $103.7 million in the quarter, driven by a robust domestic business.

Net sales for 2017 came in at $987 million, surpassing the Zacks Consensus Estimate of $961.6 million. However, the top line slipped 2.1% from the prior year.

Gibraltar Industries, Inc. Price, Consensus and EPS Surprise

 

Gibraltar Industries, Inc. Price, Consensus and EPS Surprise | Gibraltar Industries, Inc. Quote

Costs and Margins

Cost of sales in the fourth quarter was $201.4 million, up 13.2% year over year. Gross profit margin in the quarter came in at 22%, contracting 120 basis points (bps) year over year.  

Selling, general and administrative expenses came in at $34.1 million compared to $43.1 million incurred in the year-ago period. Interest expenses were down 4.9% year over year. Adjusted operating margin in the quarter was 9.2%, up 50 bps year over year.

Gross profit margin for 2017 was 24%, down 30 bps year over year. Adjusted operating margin for 2017 shrunk 10 bps year over year to 10.1%.

Balance Sheet and Cash Flow

Exiting fourth-quarter 2017, Gibraltar Industries had cash and cash equivalents worth $222.3 million compared to $170.2 million recorded on Dec 31, 2016. Long-term debt came in at $209.6 million, marginally up 0.2% recorded at the end of 2016.

In 2017, the company generated cash worth $70.1 million from operating activities, as against $124 million generated in the prior-year quarter. Capital expenditures came in at $11.4 million, decreasing 5.8% year over year.

Outlook

Gibraltar Industries intends to boost its organic growth trajectory on the back of new operational enrichment project implementation, product-innovation initiatives and strategic business buyouts in attractive end-markets.  

The company noted that strategic innovation projects and increased demand from all end-markets will continue to drive its revenues in the quarters ahead. Also, the U.S. tax reform will likely benefit margin expansion in the near term.   

The company estimates to report revenues within $213-$220 million and adjusted earnings within 23-28 cents per share for first-quarter 2018.

Moreover, this Zacks Rank #3 (Hold) company anticipates to generate revenues of more than $1 billion in 2018. Adjusted earnings for the year are projected in the range of $1.96-$2.08 per share.

Key Picks

Some better-ranked stocks in the same space are listed below:

Continental Building Products, Inc. sports a Zacks Rank of 1 (Strong Buy). The company pulled off an average positive earnings surprise of 10.25% over the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Patrick Industries, Inc. (PATK - Free Report) flaunts a Zacks Rank of 1. The company generated an average positive earnings surprise of 18.66% in the preceding four quarters.

Quanex Building Products Corporation (NX - Free Report) , another Zacks Rank #1 company, recorded an average positive earnings surprise of 29.94% during the same time frame.

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