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Gibraltar (ROCK) Tops Q2 Earnings, Maintains 2017 Guidance

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Premium steel & iron firm, Gibraltar Industries, Inc. (ROCK - Free Report) reported mixed second-quarter 2017 results.

Quarter in Details

Earnings and Revenues

Quarterly adjusted earnings of 43 cents handily surpassed the Zacks Consensus Estimate of 40 cents. However, the bottom line came in lower than the year-ago tally of 46 cents per share. Quarterly earnings in the reported quarter exceeded the previously estimated guidance range of 37–42 cents per share.

Net sales in the quarter came in at $248 million, marginally missing the Zacks Consensus Estimate of $251 million. In addition, the top line came in lower than the year-ago figure of $265.7 million. The company noted that quarterly revenues were affected by input cost inflation, and lower backlog of Industrial and Infrastructure Products segment.

Gibraltar Industries, Inc. Price, Consensus and EPS Surprise

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

Segmental Details

Revenues of Residential Products segment were $127 million during the quarter, up 6% year over year. This upside was stemmed by steady recovery of the new housing, repair and remodel construction markets, sturdy sales of commercial package solutions, as well as the Package Concierge buyout (closed in Feb 2017) benefits.

Quarterly sales of Industrial and Infrastructure Products segment came in at $58 million, plunging 29% year over year. The downside was stemmed by the divestiture of the company’s U.S. bar grating product line and European industrial operations. Notably, the lingering tepid conditions in the infrastructure end markets also thwarted the segment’s revenues.

Renewable Energy and Conservation segment’s sales dipped 3% year over year to $63 million in the quarter due to the challenging scenario prevailing in overseas energy markets and divestiture of the company’s European raking solar business (Dec 2016).

Costs and Margins

Cost of sales in the second quarter was $185.8 million, down 5.6% year over year. Gross profit margin in the reported quarter came in at 25%, contracting 100 basis points (bps) year over year.  

Selling, general and administrative expenses came in at $36.9 million compared to $40.3 million incurred in the year-ago period. Interest expenses were down 3.2% year over year. Adjusted operating margin in the reported quarter was 10.3%, down 90 bps year over year.

Balance Sheet and Cash Flow

Exiting second-quarter 2017, Gibraltar Industries had cash and cash equivalents worth $182.4 million compared to $170.2 million recorded on Dec 31, 2016. Long-term debt came in at $209.2 million, in line with the figure witnessed at the end of 2016.

In the first half of 2017, the company generated cash worth $21.7 million from operating activities, as against $49.4 million generated in the prior-year quarter. Capital expenditures were $3.3 million, down 18.9% year over year.

Outlook

This Zacks Rank #3 (Hold) company is poised to grow on the back of its four-pillar value generating strategy and acquisition benefits. The company expects the dreary industrial and infrastructure market conditions, and input prices to recover in the second half of 2017.

On grounds of such optimistic view, Gibraltar Industries maintained its full-year 2017 earnings and revenue guidance. Adjusted earnings for 2017 are anticipated to lie within the $1.57–$1.70 per share range. The company estimates to report revenues within the range of $970–$980 million for 2017.

Third-quarter 2017 revenues and earnings are projected to lie in the range of $275–$280 million and 58–65 cents per share, respectively.

Stocks to Consider

A few better-ranked stocks in the industry are listed below:

KB Home (KBH - Free Report) , which sports a Zacks Rank #1 (Strong Buy) at present, pulled off an average positive earnings surprise of 12.47% over the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Masco Corporation (MAS - Free Report) currently holds a Zacks Rank #2 (Buy) and has an average positive earnings surprise of 3.53% for the past four quarters.

M.D.C. Holdings, Inc. (MDC - Free Report) also carries a Zacks Rank #2 and generated an average positive earnings surprise of 7.45% over the trailing four quarters.

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