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Gibraltar Industries (ROCK) Up 1.1% Since Last Earnings Report: Can It Continue?

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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 1.1% 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 its most recent earnings report in order to get a better handle on the important drivers.

Gibraltar Q1 Earnings & Revenue Beat

Gibraltar Industries, Inc. reported better-than-expected first-quarter 2022 results despite the continuation of supply-chain issues impacting solar customers, the solar industry, and the Renewables business.

President and CEO of Gibraltar, Bill Bosway, stated, “Given our solid start to the year and current demand across the business, our outlook for the year remains unchanged. We expect our Renewables segment to improve in the second quarter and are working closely with customers to assess potential exposure to the Department of Commerce’s solar panel anti-circumvention investigation. We expect solid performance in our Residential segment as we continue to execute on demand, manage price/cost, and gain additional participation. We look for the Agtech segment’s performance to continue to improve as it executes on higher margin backlog and benefits from 80/20 and lean initiatives. We expect Infrastructure to have a solid year with favorable business mix, good volume, and improved efficiency in its operations.”

Notably, Gibraltar has classified the processing equipment business (which accounted for 10% of the Agtech segment’s 2021 revenues) as held-for-sale with first-quarter 2022 results. It has removed the related revenues and expenses of this business from its adjusted results.

Inside the Headlines

For the first quarter, Gibraltar reported adjusted earnings of 60 cents per share, beating the Zacks Consensus Estimate of 45 cents by 33.3% and increasing 11.1% year over year. Quarterly net sales of $317.9 million surpassed the consensus mark of $301 million by 5.7%. The top line increased 10.5% year over year. Adjusted revenues (excluding Agtech revenue) grew 11.8%, driven by participation gains and price management in the Residential segment, partially offset by continued supply chain challenges in the Renewables segment. Notably, during the first quarter, Gibraltar decided to sell its Agtech processing equipment business.

The order backlog in first quarter was $433 million, up 23% 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 decreased 7.8% from the year-ago quarter’s levels to $78.8 million, as the industry-wide supply chain challenges continued to delay and disrupt the solar project. Also, severe weather in the Northeast, particularly in January and February, contributed to project delays and disruptions. Nonetheless, robust end-market demand led to new bookings, thereby driving backlog up 41% during the quarter. Adjusted operating margins contracted 1,280 basis points (bps) year over year to a negative 5.4%, owing to inefficient field project management associated with market supply disruptions and cost inflation on structural steel used in solar canopy projects.

Residential Products: Net sales in the segment increased 28% year over year to $179.5 million. This marked the seventh consecutive quarter of double-digit growth. The uptick can be attributed to price, volume and participation gains. Adjusted operating margins of 18.8% improved 240 bps in the quarter.

Agtech: Sales in the segment declined 9.2% year over year to $42.4 million thanks to persistent project delays related to sluggish production and process licensing in the cannabis businesses. Nonetheless, backlogs were up 18% from the year-ago levels, backed by market demand in Produce, Commercial, and Cannabis. Adjusted operating margins expanded 160 bps year over year to 6.3%.

Infrastructure: Sales in the segment rose 13.9% year over year to $17.2 million. The upside was driven by growth in fabricated products. However, order backlog dropped 7% year over year. Adjusted operating margins contracted 660 bps to 6.9%, as steel inflation impacted fixed-price projects, booked in 2020 and early 2021.

Costs & Margins

In the reported quarter, selling, general and administrative expenses decreased 7.5% year over year to $43.6 million. As a percentage of sales, the metric improved 270 bps year over year to 13.7%. Adjusted operating margin improved 40 bps year over year to 8.5%. Adjusted EBITDA margin also contracted 740 bps from the prior year to 11.3%.

Balance Sheet & Cash Flow

As of Mar 31, 2022, Gibraltar had cash and cash equivalents worth $15.6 million compared with $12.8 million at 2021-end. Long-term debt was $42.4 million, up from $23.8 million a year ago. In the quarter, net cash used in operating activities totaled $7.8 million compared with $3.2 million in the year-ago quarter.

2022 Guidance

Based on the ongoing business dynamics, Gibraltar still expects revenues of $1.38-$1.43 billion, suggesting year-over-year growth of 3-6.7%. Adjusted earnings are likely in the range of $3.20-$3.40 per share, indicating a 15.1-22.3% year-over-year rise.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, Gibraltar Industries has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Gibraltar Industries has a Zacks Rank #3 (Hold). We expect an in-line 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, Masco (MAS - Free Report) , a stock from the same industry, has gained 5.2%. The company reported its results for the quarter ended March 2022 more than a month ago.

Masco reported revenues of $2.2 billion in the last reported quarter, representing a year-over-year change of +11.7%. EPS of $0.95 for the same period compares with $0.89 a year ago.

Masco is expected to post earnings of $1.19 per share for the current quarter, representing a year-over-year change of +4.4%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

Masco has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.


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