Premium steel & iron firm, Gibraltar Industries, Inc. ROCK reported in-line earnings in first-quarter 2017. However, the top line displayed weaker-than-expected performance in the reported quarter.
Over the last one year, shares of this Zacks Rank #3 (Hold) stock yielded 28.31%, outperforming 26.76% growth recorded by the Zacks categorized Building & Construction Products Miscellaneous industry.
The company noted that revenues and profitability of the quarter were hurt due to the portfolio management programs and dismal input prices. However, the company anticipates to boost near-term results on the back of its unique four-pillar growth strategy over the long term.
Quarter in Details
Earnings
Quarterly adjusted earnings of 20 cents came in line with the Zacks Consensus Estimate. However, the bottom line fell short of the year-ago tally of 32 cents per share. The company stated that unfavorable raw material pricing adversely affected its bottom-line results in the quarter.
Revenues
Net sales in the quarter came in at $206.6 million, missing the Zacks Consensus Estimate of $213 million. The top line also came lower than the year-ago tally of $237.7 million. The company believes that this tepid top-line performance in the quarter was witnessed due to the ongoing proactive portfolio management activities.
Segmental Details
Revenues of Residential Products segment were $105 million during the quarter, up 5% year over year. This upside was stemmed by gradual improvement of the residential housing market, as well as increased sales of the company’s centralized mail and Express Locker solutions.
Quarterly sales of Industrial and Infrastructure Products segment came in at $50 million, down 37% year over year. The downside was witnessed due to the divestiture of the company’s U.S. bar grating product line and European industrial operations. Notably, lower volume of infrastructure business also weighed over the segment’s revenues.
Renewable Energy and Conservation segment’s sales dipped 10% year over year to $52 million in the quarter due to poor backlog.
Costs
Cost of sales in the first quarter was $157.4 million, down 14.3% year over year. Selling, general and administrative expenses came in at $39.6 million compared to $36.4 million recorded in the year-ago period. Interest expenses were down 3.1% year over year.
Margins
Gross profit margin in the reported quarter was 23.8%, up 100 basis points (bps) year over year. However, adjusted operating margin in the reported quarter came in at 6.4%, down 180 bps year over year.
Balance Sheet
Exiting first-quarter 2017, Gibraltar Industries had cash and cash equivalents worth $160.9 million compared to $170.2 million recorded on Dec 31, 2016. Long-term debt came in at $209.4 million, as against $209.2 million recorded at the end of 2016.
Cash Flow
In the first quarter, the company generated cash worth $2.3 million from operating activities, as against $15.5 million generated in the prior-year quarter. Capital expenditures came in at $1.5 million, down 3.2% year over year.
Outlook
Gibraltar Industries believes that the dreary industrial and infrastructure market conditions and input prices would likely recover in the second half of 2017. The company noted that markets are rebounding, though not in the anticipated pace. On account of this, Gibraltar Industries trimmed its full-year 2017 guidance. Adjusted earnings for 2017 are now anticipated to lie within the $1.57–$1.70 per share range, lower than the previous guidance of $1.75–$1.85 per share. For full-year 2017, the company anticipates to generate revenues in the band of $970–$980 million, down 2–3% year over year.
Second-quarter 2017 revenues and earnings are projected to lie in the band of $249–$254 million and 37–42 cents per share, respectively.
Stocks to Consider
Some better-ranked stocks in the industry are listed below:
Boise Cascade Company BCC generated an impressive average positive earnings surprise of 114.74% over the trailing four quarters and currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Armstrong World Industries, Inc. AWI currently carries a Zacks Rank #2 (Buy) and has an average positive earnings surprise of 1.73% for the last four quarters.
TopBuild Corp. BLD also carries a Zacks Rank #2 and generated an average positive earnings surprise of 27.38% over the past four quarters.
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