Gibraltar Announces First Quarter 2022 Financial Results

Revenue: GAAP up 11%, Adjusted up 12%; EPS: GAAP up 47%, Adjusted up 11%

Reaffirms 2022 Revenue and EPS Growth Outlook

Order Backlog Remains Robust, up 23%

Commits to Sale of Agtech’s Processing Business

Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading manufacturer and provider of products and services for the renewable energy, residential, agtech and infrastructure markets, today reported its financial results for the three-month period ended March 31, 2022.

“Gibraltar generated solid revenue and EPS growth in the quarter despite the continuation of supply issues impacting our solar customers, the solar industry, and our Renewables business, particularly early in the quarter,” Chairman and CEO Bill Bosway stated. “Our Residential business generated strong revenue and margin performance, our Agtech business continued to expand adjusted operating margin, and our Infrastructure business delivered strong revenue growth. Demand across the company remains very solid with our backlog up 23% during the quarter."

First Quarter 2022 Consolidated Results from Continuing Operations

Below are first quarter 2022 consolidated results from continuing operations:

Net sales from continuing operations increased 10.5% to $317.9 million. Gibraltar made the decision during the first quarter of 2022 to sell its Agtech processing equipment business and, as adjusted to exclude this business’s revenue, adjusted revenue increased 11.8% to $316.0 million. This organic increase was driven by participation gains and price management in the Residential segment, partially offset by continued supply chain challenges in the Renewables segment.

GAAP earnings increased 47.6% to $15.5 million, or $0.47 per share, and adjusted earnings increased 9.4% to $19.7 million, or $0.60 per share. Profitability in the quarter was driven by Residential through participation gains, price management and 80/20 initiatives. While Agtech GAAP margin decreased year-over-year, adjusted segment margin improved through 80/20 and lean enterprise initiatives, supply chain optimization activities, and favorable business mix. As anticipated, the Renewables segment experienced a carryover of the supply challenges plaguing the industry in 2021 during the first quarter, and was also impacted by project inefficiencies due to severe winter weather. Infrastructure margin was impacted by steel inflation, labor availability, and 2^nd shift start-up inefficiencies to support demand in the fabrication business.

Adjusted measures exclude charges for restructuring initiatives, acquisition-related items, senior leadership transition costs, and the results of our Processing business, which has been classified as held for sale as further described in adjusted financial measures below.

First Quarter Segment Results

Renewables

For the first quarter, the Renewables segment reported:

As expected, the industry-wide supply chain challenges experienced in 2021 continued to delay and disrupt solar project schedules in the first quarter, and severe weather in the Northeast, particularly in January and February, also contributed to project delays and disruptions. While revenue decreased 7.8% for the quarter, end market demand remained robust with new bookings driving backlog up 41% during the quarter.

Adjusted operating loss was $4.3 million and operating margin contracted to (5.4)% on lower volume and field management inefficiencies related to project delays and disruptions. These factors began to abate in March and Gibraltar expects significant sequential margin improvement in the second quarter.

Residential

For the first quarter, the Residential segment reported:

Revenue increased 28.0%, marking the seventh consecutive quarter of double-digit growth. Revenue was driven by market, price and participation gains both in the building products and mail and package businesses.

Adjusted operating income grew 46.5% and adjusted operating margin improved 240 basis points to 18.8% as price/cost management, segment mix, and 80/20 initiatives continue to drive year-over-year margin improvement.

Agtech

Gibraltar has classified the processing equipment business, which accounted for 10% of the Agtech segment’s 2021 revenue, as held-for-sale with first quarter 2022 results and has removed the related revenues and expenses of this business from its adjusted results. This market has been significantly impacted by industry conditions and the pandemic over the last two years, and its recovery projection no longer fits Gibraltar’s timetable for growth and return generation. This decision will enable the Agtech team to focus on accelerating in its more profitable greenhouse structures markets - Produce, Commercial, and Cannabis.

For the first quarter, the Agtech segment reported:

GAAP revenue decreased 9.2% and adjusted revenue decreased 2.9% as projects were delayed as states and local agencies continue to work through respective construction permit backlogs and scheduled timing of projects. Despite these delays, market demand in Produce, Commercial, and Cannabis continues to grow with order backlog increasing 18% in the quarter.

Adjusted operating margin improved 160 basis points versus last year on continued execution 80/20 and lean enterprise initiatives, integration activities, improved business mix, and supply chain optimization projects.

Infrastructure

For the first quarter, the Infrastructure segment reported:

Revenue increased 13.9%, driven by growth in fabricated products. While order backlog declined 7% on timing of orders and revenues, pipeline and bidding activity remain strong. Management continues to expect a positive impact of incremental government spending on infrastructure toward the end of 2022.

Adjusted operating margin decreased year-over-year but remained flat sequentially as steel inflation impacted fixed price projects booked in 2020 and early 2021. The fabrication business also experienced challenges with labor availability and inefficiencies related to adding second shift capacity to support increased demand. Margins are expected to improve through 2022 as incremental capacity becomes more efficient and orders for higher margin, non-fabricated product continue to improve.

Business Outlook

Gibraltar is reaffirming guidance for revenue and earnings for the full year 2022, with consolidated revenue expected to range between $1.38 billion and $1.43 billion. GAAP EPS is expected to be between $2.80 and $3.00, and adjusted EPS expected to be between $3.20 and $3.40.

“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,” said Mr. Bosway.

Recast of 2021 Financial Information

Gibraltar has provided a recast of Consolidated and Agtech segment results reflecting the removal of the processing equipment business for the four quarters and full year of 2021 on the Quarterly Results page of its website, which can be accessed through the Investor section by clicking on Reports & Presentations.

First Quarter 2022 Conference Call Details

Gibraltar will host a conference call today starting at 9:00 a.m. ET to review its results for the first quarter of 2022. Interested parties may access the webcast through the Investors section of the Company’s website at www.gibraltar1.com, where related presentation materials will also be posted prior to the conference call. The call may also be accessed by dialing into the call at (877) 407-3088 or (201) 389-0927. For interested individuals unable to join the live conference call, a webcast replay will be available on the Company’s website for one year.

About Gibraltar

Gibraltar is a leading manufacturer and provider of products and services for the renewable energy, residential, agtech, and infrastructure markets. Gibraltar’s mission, to make life better for people and the planet, is fueled by advancing the disciplines of engineering, science, and technology. Gibraltar is innovating to reshape critical markets in comfortable living, sustainable power, and productive growing throughout North America. For more please visit www.gibraltar1.com.

Forward-Looking Statements

Certain information set forth in this news release, other than historical statements, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are based, in whole or in part, on current expectations, estimates, forecasts, and projections about the Company’s business, and management’s beliefs about future operations, results, and financial position. These statements are not guarantees of future performance and are subject to a number of risk factors, uncertainties, and assumptions. Actual events, performance, or results could differ materially from the anticipated events, performance, or results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from current expectations include, among other things, the availability and pricing of our principal raw materials and component parts, supply chain challenges causing project delays and field operations inefficiencies and disruptions, availability of labor at our manufacturing and distribution facilities or on our project sites, further impacts of COVID-19 on our customers, suppliers, employees, operations, business, liquidity and cash flows, the loss of any key customers, other general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, our ability to realize synergies from newly acquired businesses, disruptions to our IT systems, the impact of regulation (including the Department of Commerce’s solar panel anti-circumvention investigation), rebates, credits and incentives and variations in government spending and our ability to derive expected benefits from restructuring, productivity initiatives, liquidity enhancing actions, and other cost reduction actions. Before making any investment decisions regarding our company, we strongly advise you to read the section entitled “Risk Factors” in our most recent annual report on Form 10-K and Quarterly Report on Form 10-Q which can be accessed under the “SEC Filings” link of the “Investor Info” page of our website at www.Gibraltar1.com. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law or regulation.

Adjusted Financial Measures

To supplement Gibraltar’s consolidated financial statements presented on a GAAP basis, Gibraltar also presented certain adjusted financial measures in this news release, including adjusted revenues, adjusted operating income and margin, adjusted net income, adjusted earnings per share (EPS) and adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) each a non-GAAP financial measure. Adjusted revenue reflects the removal of revenue associated with our Processing business, which has been classified as held-for-sale. Adjusted net income, operating income and margin excludes special charges consisting of restructuring costs primarily associated with 80/20 simplification or lean initiatives, senior leadership transition costs, acquisition related costs and the operating losses generated by our processing business that has been classified as held-for-sale. These special charges are excluded since they may not be considered directly related to the Company’s ongoing business operations. The adjusted measures now exclude the results of the Processing business since it was classified as held for sale as of March 31, 2022. Our adjusted financial measures as of and for the three-month period ending March 31, 2021 have been recast to reflect this additional adjustment as detailed in the appended reconciliation of adjusted financial measures. The results of the Processing business are considered non-recurring due to the Company’s commitment during the first quarter of 2022 to a plan to sell the Processing business. The aforementioned exclusions along with other adjustments to other income below operating profit are excluded from adjusted EPS. Adjusted EBITDA further excludes depreciation, amortization and stock compensation. In evaluating its business, the Company considers and uses these non-GAAP financial measures as supplemental measures of its operating performance. The Company believes that the presentation of results excluding these items provides meaningful supplemental data to investors that are indicative of the Company’s core operating results and facilitates comparison of operating results across reporting periods as well as comparison with other companies. Adjusted EBITDA is also a useful measure of the Company’s ability to service debt and is one of the measures used for determining the Company’s debt covenant compliance.

Adjustments to the most directly comparable financial measures presented on a GAAP basis are quantified in the reconciliation of adjusted financial measures excluding special charges provided in the supplemental financial schedules that accompany this news release. These adjusted measures should not be viewed as a substitute for the Company’s GAAP results and may be different than adjusted measures used by other companies and our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Reconciliations of non-GAAP measures related to full-year 2022 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations due to the high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations.