Gibraltar Industries, Inc.’s ROCK shares jumped more than 13% on Aug 5, after it reported better-than-expected results for second-quarter 2020. The company’s earnings and sales not only topped analysts’ expectations but also improved year over year on persistent strength across the business, particularly in the Renewable Energy & Conservation and Residential Products units.
Inside the Headlines
Gibraltar reported adjusted earnings of 84 cents per share, which handily topped the Zacks Consensus Estimate of 40 cents by 110%. The bottom line increased 15.1% year over year, supported by growth in Renewable Energy & Conservation, as well as Residential Products segments.
Net sales surpassed the consensus mark by 25.7% and increased 8.8% year over year to $285.8 million, owing to 1.6% organic growth driven by its Renewable Energy & Conservation segment. Acquisitions contributed 7.2% to top-line growth.
The company’s backlog was $277 million (at quarter-end), up 14% year over year owing to increased participation in Renewable Energy and Conservation, as well as Residential Products.
Gibraltar Industries, Inc. Price, Consensus and EPS Surprise
Gibraltar Industries, Inc. price-consensus-eps-surprise-chart | Gibraltar Industries, Inc. Quote
Residential Products: Net sales in the segment grew 7% from the year-ago period to $139.5 million for the quarter. The upside was mainly due to solid repair and remodel activity.
Adjusted operating margins improved 400 basis points (bps) to 20.2%. Strong execution, product mix, improved material cost alignment and 80/20 simplification initiatives aided the margins.
Industrial and Infrastructure Products: Sales in the segment decreased 14.4% year over year to $48.1 million owing to lower demand for core industrial products during the pandemic.
Nonetheless, adjusted operating margins expanded 490 bps to 14.5%, backed by a more favorable mix of higher-margin products and solid execution of 80/20 profit improvement efforts.
Renewable Energy and Conservation: Quarterly net sales in the segment rose 29.3% year over year (4.2% on an organic basis) to $98.3 million. Apeks Supercritical, Thermo Energy Solutions and Delta Separations acquisitions contributed 25.1% to top-line growth. The uptick can be attributed to core business strength, driven by participation gains, volume leverage, productivity improvements and favorable price/material cost alignment. Segment backlog grew 18% year over year owing to healthy market dynamics, participation gains and the recent acquisitions.
However, adjusted operating margins of 170% in the segment were down 170 bps.
Costs & Margins
Selling, general and administrative expenses increased 1.9% year over year to $37.7 million. As a percentage of sales, the metric decreased 90 bps year over year to 13.2%. Adjusted operating margin of 12.9% expanded 130 bps year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2020, Gibraltar had cash and cash equivalents worth $120.9 million compared with $191.4 million at 2019-end.
The company used $7.3 million cash in operations for the first six months of 2020 versus $6.5 million cash provided by operating activities a year ago.
Zacks Rank & Key Picks
Currently, Gibraltar 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 include Masco Corporation MAS, Owens Corning Inc. OC and TopBuild Corp. BLD, each sporting a Zacks Rank #1.
Masco has three-five year expected earnings rate of 14.9%.
Owens Corning and TopBuild topped the consensus mark in all the last four quarters, with the average surprise being 63.8% and 16%, respectively.
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