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Gibraltar (ROCK) Q3 Earnings & Net Sales Beat, Backlog Fall
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Gibraltar Industries, Inc. (ROCK - Free Report) reported impressive results in third-quarter 2022. Earnings and net sales surpassed the Zacks Consensus Estimate and increased on a year-over-year basis, backed by strong Residential and Infrastructure businesses.
However, the order backlog of $356 million was down 7% year over year as softness in the Renewables and Agtech businesses persists.
Chairman and CEO of ROCK, Bill Bosway, stated, “2022 is unfolding in line with our expectations as our focus on simplifying operations and margin recovery pays off. Our operating performance across our businesses was strong in the third quarter, with our Renewables and Agtech businesses showing continuing margin improvement as we anticipated, and the Residential and Infrastructure businesses both generating solid revenue and margin results.”
Inside the Headlines
Gibraltar reported adjusted earnings of $1.12 per share, which topped the Zacks Consensus Estimate of $1.03 by 8.7% and increased 19.1% year over year from 94 cents. The uptrend was backed by strong sales growth as well as business mix, 80/20 initiatives and the share repurchase program.
Gibraltar Industries, Inc. Price, Consensus and EPS Surprise
Quarterly net sales of $391.3 million marginally topped the consensus mark of $390.79 million and increased 5.9% from the prior year’s levels. On an adjusted basis, the top line increased 6.4% year over year to $389 million. The upside was driven by participation gains and price management and the acquisition of Quality Aluminum Products in the Residential segment, partially offset by continued supply chain woes and project delays in the Agtech and Renewables segments.
Segmental Details
Renewable Energy: Net sales in the segment decreased 14.7% from the year-ago quarter’s levels to $111.1 million. The backlog was down 9% year over year. The decline was due to dynamic solar project schedules.
Adjusted operating margins expanded 150 basis points (bps) year over year to 12.9% and improved 590 bps sequentially, driven by improved project management, price/cost alignment and field operations efficiencies. Adjusted EBITDA margin increased 190 bps from the prior-year quarter’s levels to 15%.
Residential Products: Net sales in the segment increased 25.7% year over year to $215.6 million, marking the ninth consecutive quarter of double-digit growth with organic revenue growth 19% and the acquisition of Quality Aluminum Products contributing 6.7% to segment’s sale growth. Organic revenue growth was driven by pricing, participation gains and market demand.
Adjusted operating margins of 16.8% contracted 40 bps in the quarter, thanks to headwinds associated with the acquisition of Quality Aluminum Products. Adjusted EBITDA margin contracted 60 bps from the prior-year quarter’s levels to 18%.
Agtech: Sales declined 9.8% year over year to $44.2 million and adjusted sales fell 7.3% to $41.9 million. The downside was due to the shift of the Produce project. Backlogs were down 7% from the year-ago quarter’s levels due to challenging year-over-year comparison.
Adjusted operating margins improved 200 bps year over year to 10.7%. Also, the metric improved 400 bps sequentially. Strong margin was driven by a good business mix, improving price/cost management, supply chain improvement and 80/20 initiatives. Adjusted EBITDA margin was up 230 bps year over year to 13.5%.
Infrastructure: Sales in the segment rose 9.1% year over year to $20.4 million. Backlog rose 11% year over year as bidding activity continued to be very strong. The company expects the infrastructure bill to have a positive impact in the fourth quarter of 2022 and 2023.
Adjusted operating margins of 12.6% expanded 380 bps year over year, driven by price material cost alignment, volume leverage, positive mix and improved operating execution. Adjusted EBITDA margin expanded 370 bps from the prior-year quarter’s tally to 16.8%.
Costs & Margins
In the reported quarter, gross profit increased 13.6% year over year to $94.6 million. As a percentage of sales, selling, general and administrative expenses increased 180 bps year over year to 12.1%.
Adjusted operating margin expanded 110 bps year over year to 12.7%. Adjusted EBITDA margin also increased 100 bps from the prior year to 14.7%.
Balance Sheet & Cash Flow
As of Sep 30, 2022, Gibraltar had liquidity of $295 million, including cash and cash equivalents worth $21.9 million, up from $12.8 million at the 2021-end. Long-term debt was $121.8 million, significantly up from $23.8 million as of Dec 31, 2021.
In the first nine months of 2022, net cash provided by operating activities totaled $38.6 million against net cash used in operations $16.5 million in the previous year.
2022 Guidance Narrowed
Gibraltar still expects revenues to be $1.38-$1.43 billion, reflecting year-over-year growth of 3-6.7%. Adjusted earnings are now expected to be in the range of $3.30-$3.40 per share, indicating a 15.1-22.3% year-over-year rise. Earlier it anticipated $3.20-$3.40 per share earnings for the year.
Adjusted operating income narrowed to $150-$155 million from $146-$155 million anticipated earlier, and adjusted operating margin will now be in 10.7-10.9% range. In 2021, Adjusted operating income was $127.9 million and the adjusted operating margin was 9.7%.
ROCK anticipates adjusted EBITDA of $184–$189 million, raised lower end by $4 million, reflecting improvement from the year-ago figure of $159.7 million. Adjusted EBITDA margin will now be 13.1-13.3% versus 12.1% in 2021.
The company expects free cash flow to be nearly 6% of revenue, down from the prior projection of 10%, due to delayed inventory by continued supply chain disruption. FCF was 0.4% of 2021 revenue.
United Rentals, Inc. (URI - Free Report) reported third-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company has been gaining from the sustained demand in its end markets and the strength of its core rental business.
URI also lifted its full-year guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in third-quarter 2022. Its earnings surpassed the Zacks Consensus Estimate and rose on a year-over-year basis. However, sales declined from the year-ago quarter’s figure and lagged the consensus mark.
For 2022, OTIS expects adjusted net sales to be within $13.4-$13.5 billion, lower than the $13.6-$13.8 billion projected earlier. Adjusted earnings per share are anticipated to be $3.11-$3.15, suggesting 5-7% year-over-year growth. This is down from the prior projection of $3.17-$3.21 per share.
TopBuild Corp. (BLD - Free Report) reported stellar results for third-quarter 2022. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and improved significantly on a year-over-year basis. Solid contributions from all three end markets that BLD serves (residential, commercial and industrial), along with operational efficiency, drove the results.
For 2022, TopBuild expects sales between $4.95 billion and $5 billion versus $4.8-$4.9 billion expected earlier. The estimated figure indicates an increase from $3.49 billion. Adjusted EBITDA is projected within $915-$935 million compared with $860-$900 million projected earlier. This suggests growth from $605.9 million reported in 2021.
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Gibraltar (ROCK) Q3 Earnings & Net Sales Beat, Backlog Fall
Gibraltar Industries, Inc. (ROCK - Free Report) reported impressive results in third-quarter 2022. Earnings and net sales surpassed the Zacks Consensus Estimate and increased on a year-over-year basis, backed by strong Residential and Infrastructure businesses.
However, the order backlog of $356 million was down 7% year over year as softness in the Renewables and Agtech businesses persists.
Chairman and CEO of ROCK, Bill Bosway, stated, “2022 is unfolding in line with our expectations as our focus on simplifying operations and margin recovery pays off. Our operating performance across our businesses was strong in the third quarter, with our Renewables and Agtech businesses showing continuing margin improvement as we anticipated, and the Residential and Infrastructure businesses both generating solid revenue and margin results.”
Inside the Headlines
Gibraltar reported adjusted earnings of $1.12 per share, which topped the Zacks Consensus Estimate of $1.03 by 8.7% and increased 19.1% year over year from 94 cents. The uptrend was backed by strong sales growth as well as business mix, 80/20 initiatives and the share repurchase program.
Gibraltar Industries, Inc. Price, Consensus and EPS Surprise
Gibraltar Industries, Inc. price-consensus-eps-surprise-chart | Gibraltar Industries, Inc. Quote
Quarterly net sales of $391.3 million marginally topped the consensus mark of $390.79 million and increased 5.9% from the prior year’s levels. On an adjusted basis, the top line increased 6.4% year over year to $389 million. The upside was driven by participation gains and price management and the acquisition of Quality Aluminum Products in the Residential segment, partially offset by continued supply chain woes and project delays in the Agtech and Renewables segments.
Segmental Details
Renewable Energy: Net sales in the segment decreased 14.7% from the year-ago quarter’s levels to $111.1 million. The backlog was down 9% year over year. The decline was due to dynamic solar project schedules.
Adjusted operating margins expanded 150 basis points (bps) year over year to 12.9% and improved 590 bps sequentially, driven by improved project management, price/cost alignment and field operations efficiencies. Adjusted EBITDA margin increased 190 bps from the prior-year quarter’s levels to 15%.
Residential Products: Net sales in the segment increased 25.7% year over year to $215.6 million, marking the ninth consecutive quarter of double-digit growth with organic revenue growth 19% and the acquisition of Quality Aluminum Products contributing 6.7% to segment’s sale growth. Organic revenue growth was driven by pricing, participation gains and market demand.
Adjusted operating margins of 16.8% contracted 40 bps in the quarter, thanks to headwinds associated with the acquisition of Quality Aluminum Products. Adjusted EBITDA margin contracted 60 bps from the prior-year quarter’s levels to 18%.
Agtech: Sales declined 9.8% year over year to $44.2 million and adjusted sales fell 7.3% to $41.9 million. The downside was due to the shift of the Produce project. Backlogs were down 7% from the year-ago quarter’s levels due to challenging year-over-year comparison.
Adjusted operating margins improved 200 bps year over year to 10.7%. Also, the metric improved 400 bps sequentially. Strong margin was driven by a good business mix, improving price/cost management, supply chain improvement and 80/20 initiatives. Adjusted EBITDA margin was up 230 bps year over year to 13.5%.
Infrastructure: Sales in the segment rose 9.1% year over year to $20.4 million. Backlog rose 11% year over year as bidding activity continued to be very strong. The company expects the infrastructure bill to have a positive impact in the fourth quarter of 2022 and 2023.
Adjusted operating margins of 12.6% expanded 380 bps year over year, driven by price material cost alignment, volume leverage, positive mix and improved operating execution. Adjusted EBITDA margin expanded 370 bps from the prior-year quarter’s tally to 16.8%.
Costs & Margins
In the reported quarter, gross profit increased 13.6% year over year to $94.6 million. As a percentage of sales, selling, general and administrative expenses increased 180 bps year over year to 12.1%.
Adjusted operating margin expanded 110 bps year over year to 12.7%. Adjusted EBITDA margin also increased 100 bps from the prior year to 14.7%.
Balance Sheet & Cash Flow
As of Sep 30, 2022, Gibraltar had liquidity of $295 million, including cash and cash equivalents worth $21.9 million, up from $12.8 million at the 2021-end. Long-term debt was $121.8 million, significantly up from $23.8 million as of Dec 31, 2021.
In the first nine months of 2022, net cash provided by operating activities totaled $38.6 million against net cash used in operations $16.5 million in the previous year.
2022 Guidance Narrowed
Gibraltar still expects revenues to be $1.38-$1.43 billion, reflecting year-over-year growth of 3-6.7%. Adjusted earnings are now expected to be in the range of $3.30-$3.40 per share, indicating a 15.1-22.3% year-over-year rise. Earlier it anticipated $3.20-$3.40 per share earnings for the year.
Adjusted operating income narrowed to $150-$155 million from $146-$155 million anticipated earlier, and adjusted operating margin will now be in 10.7-10.9% range. In 2021, Adjusted operating income was $127.9 million and the adjusted operating margin was 9.7%.
ROCK anticipates adjusted EBITDA of $184–$189 million, raised lower end by $4 million, reflecting improvement from the year-ago figure of $159.7 million. Adjusted EBITDA margin will now be 13.1-13.3% versus 12.1% in 2021.
The company expects free cash flow to be nearly 6% of revenue, down from the prior projection of 10%, due to delayed inventory by continued supply chain disruption. FCF was 0.4% of 2021 revenue.
Zacks Rank & Peer Releases
Gibraltar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
United Rentals, Inc. (URI - Free Report) reported third-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company has been gaining from the sustained demand in its end markets and the strength of its core rental business.
URI also lifted its full-year guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in third-quarter 2022. Its earnings surpassed the Zacks Consensus Estimate and rose on a year-over-year basis. However, sales declined from the year-ago quarter’s figure and lagged the consensus mark.
For 2022, OTIS expects adjusted net sales to be within $13.4-$13.5 billion, lower than the $13.6-$13.8 billion projected earlier. Adjusted earnings per share are anticipated to be $3.11-$3.15, suggesting 5-7% year-over-year growth. This is down from the prior projection of $3.17-$3.21 per share.
TopBuild Corp. (BLD - Free Report) reported stellar results for third-quarter 2022. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and improved significantly on a year-over-year basis. Solid contributions from all three end markets that BLD serves (residential, commercial and industrial), along with operational efficiency, drove the results.
For 2022, TopBuild expects sales between $4.95 billion and $5 billion versus $4.8-$4.9 billion expected earlier. The estimated figure indicates an increase from $3.49 billion. Adjusted EBITDA is projected within $915-$935 million compared with $860-$900 million projected earlier. This suggests growth from $605.9 million reported in 2021.