It has been about a month since the last earnings report for Gibraltar Industries (
ROCK Quick Quote ROCK - Free Report) . Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Gibraltar Industries due for a breakout? 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 drivers.
Gibraltar Earnings Lag Estimates in Q4
Gibraltar Industries, Inc. reported lackluster earnings for fourth-quarter 2021. Earnings missed the Zacks Consensus Estimate and declined on a year-over-year basis due to low margins in the Renewables segment. Margins were affected by increased field costs owing to supply-chain disruptions and intense inflation on structural steel in solar canopy racking projects.
Nevertheless, net sales surpassed the consensus mark and increased from the year-ago quarter’s levels. President and CEO of Gibraltar, Bill Bosway, stated, “As we enter 2022, our demand is solid across the business and the robust long-term fundamentals supporting our end markets remain intact. We expect the market environment to be dynamic for at least the first half of the year as inflation, labor, transportation, and pandemic challenges persist. I am confident, given the successes we achieved and the investments we made over the last 12 months in our organization, systems, and processes, we will enhance our 2022 performance and deliver full year growth and margin expansion as we continue to execute toward our 2025 objectives.” Inside the Headlines
For the fourth quarter, Gibraltar reported adjusted earnings of 54 cents per share, missing the Zacks Consensus Estimate of 78 cents by 30.8% and declining 8.5% year over year.
Quarterly net sales of $334.4 million lagged the consensus mark of $329.3 million by 1.6%. The top line increased 26.1% year over year owing to 8.6% organic growth, driven by pricing, volume and participation gains. Acquisitions contributed 17.5% to the top line. The order backlog in 2021 was $344 million, up 16% year over year. The upside can be attributed to robust end-market demand and new order activity across the business. Segmental Details
Renewable Energy: Net sales in the segment increased 68.3% from the year-ago quarter’s levels to $108.7 million, primarily driven by solid contributions from the TerraSmart business. However, organic revenue declined 2.3% due to solar project delays related to supply chain and field operation disruptions. Owing to strength in ground mount and canopy solutions, backlog increased to $167 million, up 27% year over year.
Adjusted operating margins contracted 1,150 basis points (bps) year over year to just 1.3%, owing to inefficient field project management associated with market supply disruptions and cost inflation on structural steel used in solar canopy projects. Adjusted EBITDA margin contracted a whopping 1,070 bps from the prior-year quarter’s levels to just 3.5%. Residential Products: Net sales in the segment increased 24.4% year over year to $159.5 million. The uptick can be attributed to price, volume and participation gains. Adjusted operating margins of 16.6% improved 70 bps in the quarter. Adjusted EBITDA margin improved 30 bps from the prior-year quarter’s levels to 18.1%. Agtech: Sales in the segment declined 16.9% year over year to $49.8 million thanks to persistent project delays related to slowness in the production and process licensing in the cannabis businesses. Backlogs were up 1% from the year-ago quarter’s levels, backed by strength in produce and commercial businesses. Adjusted operating margins contracted 10 bps year over year to 6.3%. Adjusted EBITDA margins were essentially flat year over year at 9.1%. Infrastructure: Sales in the segment rose 33.1% year over year to $16.5 million. The upside was driven by growth in fabricated and non-fabricated products. The order backlog increased 12% year over year to $47 million on solid demand. Adjusted operating margins rose 10 bps to 6.5%, owing to the benefits of 80/20 initiatives and a favorable mix. These factors were partially offset by structural steel inflation and labor availability challenges. Adjusted EBITDA margin contracted 130 bps from the prior-year quarter’s tally to 11.5%. Costs & Margins
In the reported quarter, selling, general and administrative expenses increased 7.6% year over year to $42.7 million. As a percentage of sales, the metric improved 220 bps year over year to 12.8%.
Adjusted operating margin contracted 190 bps year over year to 7.7%. Adjusted EBITDA margin also contracted 210 bps from the prior year to 10.1%. Balance Sheet & Cash Flow
As of Dec 31, 2021, Gibraltar had cash and cash equivalents worth $12.8 million compared with $32.1 million at 2020-end. Long-term debt was $23.8 million, down from $85.6 million a year ago.
In 2021, net cash provided by operating activities totaled $23.1 million compared with $89.1 million in 2020. 2021 Highlights
Net sales for the year came in at $1.34 billion, up 29.8% from $1.03 billion in 2020. Adjusted earnings totaled $2.78, up 1.8% from $2.73 in the previous year. Adjusted operating and EBITDA margins declined 200 and 220 bps year over year, respectively.
Based on the ongoing business dynamics, Gibraltar expects revenues to be $1.38-$1.43 billion, suggesting year-over-year growth of 3-6.7%. The consensus estimate for 2022 revenues is currently pegged at $1.43 billion. Adjusted earnings are likely to be in the range of $3.20-$3.40 per share, indicating a 15.1-22.3% year-over-year rise. The consensus mark for the same is pegged at $3.68 per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -35.51% due to these changes.
At this time, Gibraltar Industries has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Gibraltar Industries has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.