Gibraltar Announces Fourth Quarter and 2021 Financial Results

2021 Revenue of $1.34B, GAAP EPS of $2.25, Adjusted EPS of $2.78

Q4 Revenue of $334.4M, Q4 GAAP EPS of $0.30; Adjusted EPS of $0.54

Order Backlog Increased 16%, Led by Renewables, with Strength Across the Board

2022 Outlook: Revenue $1.38B-$1.43B, EPS: GAAP $2.80-$3.00, Adjusted $3.20-$3.40

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 December 31, 2021.

“Fourth quarter results were within our previously-announced range, capping off a year of top-line growth as we increased our leadership positions in sustainable, high-demand markets, while grappling with increasing complexity in a challenging inflation and supply chain environment,” Chairman and CEO Bill Bosway stated. “Renewables’ results, as previously disclosed, were impacted by increased cost absorption from supply disruptions causing increased field costs and unanticipated levels of structural steel inflation. We delivered solid results in our Residential, Agtech, and Infrastructure segments, all of which expanded margins on achieving greater balance in price/cost and improving supply chain management and execution. We are proud of all of our teams and appreciate their focus and agility in confronting each obstacle as we progressed through 2021.”

Fourth Quarter 2021 Consolidated Results from Continuing Operations

Below are fourth quarter 2021 consolidated results from continuing operations:

Net sales from continuing operations increased 26.1% to $334.4 million, with organic growth contributing 8.6% and recent acquisitions contributing 17.5% despite continued supply chain challenges in the quarter, driven by price, volume, and participation gains.

GAAP earnings decreased 44.3% to $9.8 million, or $0.30 per share, and adjusted earnings decreased 7.7% to $18.0 million, or $0.54 per share. As previously announced, the quarter was impacted by margin compression in the Renewables segment from two issues – supply disruptions causing increased field costs, and an unanticipated level of inflation on structural steel in solar canopy racking projects. Positive contributors to the quarter included: Residential segment margins recovered through pricing actions, volume, participation gains, and continued 80/20 initiatives; Infrastructure segment margins benefited from lean productivity initiatives and favorable product line mix; Agtech segment margin improved sequentially on continued execution from lean enterprise initiatives and supply chain improvements. Adjusted measures remove charges for restructuring initiatives, acquisition-related items, and senior leadership transition costs, as further described in the appended reconciliation of adjusted financial measures.

Fourth Quarter Segment Results

Renewables

For the fourth quarter, the Renewables segment reported:

Revenue increased 68.3% including the TerraSmart acquisition, with organic revenue decreasing 2.3% driven by solar project delays related to supply chain and field operations disruptions. Backlog increased 27%, driven by strength in both ground mount and canopy solutions.

Adjusted operating income decreased to $1.4 million and operating margins contracted to 1.3% as field project management inefficiencies associated with market supply disruptions and an unanticipated level of cost inflation on structural steel used in solar canopy projects. The integration of TerraSmart remains on track with organization, process development, information systems, supply chain, and in-sourcing activities gaining momentum per plan.

Residential

For the fourth quarter, the Residential segment reported:

Revenue increased 24.4%, marking the sixth consecutive quarter of double-digit growth, nearly all of which was organic. Revenue was driven by price, volume and participation gains.

Adjusted operating income grew 29.9% and adjusted operating margin of 16.6% improved 70 basis points as price management and key operating actions began to drive year-over-year margin recovery. Gibraltar continues to work with supply chain partners to support customer needs while continuing its focus on price/cost management, simplification, in-lining, and automation.

Agtech

For the fourth quarter, the Agtech segment reported:

Revenue decreased 16.9% as state and local agencies continued to work through construction permit backlogs for facilities designed to grow fruits and vegetables. For the states which legalized cannabis in 2020, the process of issuing production and processing licenses to operators remains slower than expected resulting in additional customer project delays during the quarter. The commercial greenhouse business continued solid growth across its core product lines serving the retail, institutional and car wash markets. Order backlog increased modestly in the quarter, with continued strength in produce and commercial businesses.

Adjusted operating margin improved 120 basis points compared to the third quarter on continued execution from lean enterprise initiatives, ongoing integration activities, and efforts to optimize supply chain, particularly in sourcing roofing systems and glass; margin was essentially flat year-over-year.

Infrastructure

For the fourth quarter, the Infrastructure segment reported:

Revenue increased 33.1%, driven by growth in both fabricated and in non-fabricated products. Management expects to see the impact of incremental government spending on infrastructure toward the end of 2022. Order backlog increased 12%.

Adjusted operating margin was up slightly as the benefits of 80/20 initiatives and favorable mix offset unanticipated structural steel inflation as well as labor availability challenges.

Business Outlook

“2021 was a challenging year in which we gained valuable learning from an environment that pressure-tested our systems, processes, tools, and organization and operating paradigms. These challenges - unprecedented inflation, supply chain inefficiencies, and labor availability issues along with acquisition integrations and additional pandemic variants - helped us identify additional opportunities to improve our business, portfolio, business systems, and organization,” stated Mr. Bosway.

“As we enter 2022, our demand is solid across the business and the robust long-term fundamentals supporting our end markets remain intact. We expect the market environment to be dynamic for at least the first half of the year as inflation, labor, transportation, and pandemic challenges persist,” Mr. Bosway concluded. “I am confident, given the successes we achieved and the investments we made over the last 12 months in our organization, systems, and processes, we will enhance our 2022 performance and deliver full year growth and margin expansion as we continue to execute toward our 2025 objectives.”

Gibraltar is providing guidance for revenue and earnings for the full year 2022. Consolidated revenue is expected to range between $1.38 billion and $1.43 billion, compared to $1.34 billion in 2021. GAAP EPS is expected to range between $2.80 and $3.00, compared to $2.25 in 2021, and adjusted EPS is expected to range between $3.20 and $3.40, compared to $2.78 in 2021.

Fourth Quarter 2021 Conference Call Details

Gibraltar will host a conference call today starting at 9:00 a.m. ET to review its results for the fourth quarter of 2021. 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, the impacts of COVID-19 on the global economy and 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, 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 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 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 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, and acquisition related costs. 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. Special charges are excluded since they may not be considered directly related to the Company’s ongoing business operations.

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.