Premium steel & iron company Gibraltar Industries, Inc.ROCK reported robust third-quarter results for 2015. The sound performance was supported by the company's current strategy of value-creation as well as successful returns reaped from its recently acquired business, Rough Brothers (''RBI").
Adjusted earnings of 50 cents per share surpassed the Zacks Consensus Estimate of 36 cents and also comfortably exceeded the year-ago tally by 66.7%.
Gibraltar Industries' net sales were $305 million in the quarter, up 30.3% year over year. The increase in revenues was primarily attributable to strong growth in residential market demand, which boosted sales of centralized postal storage products. The company's top-line results also surpassed the Zacks Consensus Estimate of $283 million.
Gross profit margin increased 230 basis points (bps) to 20.1%. Selling, general and administrative (SG&A) expenses were $38 million, up from $23.2 million recorded in the prior-year quarter. Gibraltar Industries reported an adjusted operating margin of 8.8% in the quarter, up 100 bps year over year.
Residential Products segment generated revenues of $127 million, up 4% year over year, supported by increased demand for postal storage products. Adjusted operating margin was 13.1%, up 150 bps year over year. The improvement came on the back of greater operational efficiency as well as favorable volume.
Industrial and Infrastructure Products segment yielded revenues of $96.6 million, down 14% year over year. The decline was triggered by weaker shipment volumes, appreciation of the U.S. dollar with respect to European and Canadian currencies, and lower energy as well as mining activities led by weaker oil prices and persistent uncertainties in the Federal Funding programs. The segment's adjusted operating margin was 8.4%, up 240 bps year over year. The improvement was driven by better management of raw input expenses and superior manufacturing competence.
Other Financial Aspects
Exiting third-quarter 2015, Gibraltar Industries' cash and cash equivalents were $43.3 million, down significantly from $110.6 million recorded at 2014-end. Long-term debt was $220.8 million, up 5.4% from the value recorded on Dec 31, 2014.
In the quarter under review, Gibraltar Industries generated $44.5 million of cash from operating activities compared with $18.1 million utilized in the year-ago period. Capital expenditure was $6.8 million, down from $19.2 million incurred in the year-ago quarter.
Going forward, Gibraltar Industries aims to improve its results with the help of a new four-pillar growth strategy. This program involves operational improvements, product innovation, strategic acquisitions and superior portfolio management. The company also looks forward to realizing three goals in the second half of 2015, namely, improvement in earnings, effective capital deployment and increasing shareholders' utility.
The company has raised its full-year 2015 earnings guidance to a range of 90-95 cents, up from the prior projection of 78-88 cents. Revenues for full-year 2015 are expected within $990 million-$1 billion, up 15% from $862 million earned at 2014-end. Of the aggregate revenue figure, the company's acquired business RBI will likely contribute $155-$160 million by 2015-end. However, the company anticipates weaker industrial segment's sales to weigh on its organic sales in the upcoming quarters.
Other Stocks to Consider
Gibraltar Industries currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the industry include Masco Corporation MAS , Ply Gem Holdings, Inc PGEM and Advanced Drainage Systems, Inc. WMS . While both Masco Corporation and Ply Gem Holdings, Inc hold a Zacks Rank #2 (Buy), Advanced Drainage Systems, Inc. sports a Zacks Rank #1 (Strong Buy).
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