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Gibraltar Buys Thermo Energy, Fortifies Commercial Greenhouse

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Gibraltar Industries, Inc. ROCK announces the acquisition of Canada-based Thermo Energy Systems, which will enable it to penetrate into the biologically-grown organic food market.

Benefits of the Buyout

Thermo Energy — now part of Gibraltar’s Renewable Energy and Conservation segment — is a commercial greenhouse service provider located in Kingsville.

Thermo Energy supplies and installs greenhouse heating and cooling systems, irrigation systems, CO2 systems, hot water storage tanks, boiler install and service, greenhouse carts, custom stainless-steel kitchens in bunkhouses as well as fabrication of greenhouse structures.

Courtesy of its best-in-class execution, experience and domain knowledge, Thermo Energy is expected to contribute annual revenues of approximately $75 million.  The acquisition is expected to be accretive for 2020.

Focus on Commercial Greenhouse Solutions

Biologically-grown organic food market, with more than $1-billion prospects, has been growing at a mid- to high- single digit rate on the back of rising consumer demand.

“Thermo’s experience and domain knowledge in commercial growing further expands our leadership position in the design, manufacture, installation and systems integration for our customers in the biologically-grown organic food market,” stated Gibraltar Chief Executive Officer, William Bosway.

Strong demand for its commercial greenhouse growing solutions has been driving Gibraltar’s performance. During the third quarter of 2019, the Renewable Energy and Conservation segment delivered robust revenue performance. Revenues in the segment increased 18.6% year over year to $116.8 million, with organic growth of 11.3%.

The uptick can be attributed to strong demand for its commercial greenhouse growing solutions as well as contributions from the acquisitions of SolarBos (completed in the year-ago quarter) and Apeks Supercritical (in third-quarter 2019).

Meanwhile, segment backlog increased 72% year over year on strong end-market activity and enhanced new business bidding activities.

Price Performance

Shares of Gibraltar have surged 47.3% in the past year compared with the industry's 35.3% rise. Apart from increased profitability in Renewable Energy & Conservation as well as Industrial and Infrastructure Product, the performance was backed by a solid earnings surprise history. The company’s earnings have surpassed the Zacks Consensus Estimate in nine of the trailing 13 quarters. Moreover, earnings estimates for 2020 have remained unchanged in the past 30 days.


Zacks Rank and Key Picks

Gibraltar Industries currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space are Arcosa, Inc. ACA, CRH plc (CRH - Free Report) and Installed Building Products, Inc. IBP, each sporting a Zack Rank #1.

Arcosa has three-five year expected EPS growth rate of 12.6%.

CRH plc’s 2020 earnings are expected to rise 15.3%.

Installed Building Products has three-five year expected EPS growth rate of 16%.

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