Gibraltar Industries, Inc. ROCK reported fourth-quarter 2023 results, wherein quarterly earnings and net sales missed the Zacks Consensus Estimate.
On a year-over-year basis, the top and the bottom lines increased.
The company's quarterly results reflect organic growth, increased volume, improving customer and product mix, accretive 80/20 initiatives, better price and cost alignment, along with supply-chain optimization initiatives and improvements in project management systems. Gibraltar is optimistic about its upcoming growth prospects with its robust end-market fundamentals, backed by increased backlog levels.
Backed by solid end market fundamentals, improving business conditions in Renewables and Agtech markets, and an efficient operating engine, ROCK is well-poised to deliver strong results in 2024.
Shares of the company plunged 13.1% on Feb 21 during the trading hours after the earnings release.
Inside the Headlines
Gibraltar's adjusted earnings of 85 cents per share missed the Zacks Consensus Estimate of 86 cents by 1.2%. On the other hand, the metric grew 18.1% year over year.
Gibraltar Industries, Inc. Price, Consensus and EPS Surprise
Gibraltar Industries, Inc. Price, Consensus and EPS Surprise
Gibraltar Industries, Inc. price-consensus-eps-surprise-chart | Gibraltar Industries, Inc. Quote
Net sales of $328.8 million also lagged the consensus mark of $335.5 million by 2% but increased 4.7% from the prior-year level of $313.9 million. Benefits received from solid execution in Residential and Infrastructure segments, and increasing order backlog levels were partially offset by lingering industry headwinds faced by Renewables and Agtech segments. On an adjusted basis, the top line grew 5.1% year over year compared with the prior-year adjusted net sales of $312.9 million.
Segmental Details
Renewables: Net sales in the segment increased 1.9% from the year-ago quarter to $87.7 million. This was driven by backlog converting to sales as customers continued to work through challenges related to permitting delays and awaited final tax credit guidance from the Inflation Reduction Act. The backlog was up 20.9% year over year.
The adjusted operating margin of 13.1% contracted 210 basis points (bps) year over year. The adjusted EBITDA margin decreased 210 bps from the year-ago quarter to 15.8%.
Residential: Net sales in the segment were up 4.3% year over year to $179.3 million. This was backed by a 3.1% increase in organic sales driven by participation gains and volume, partially offset by pricing adjustments related to commodity deflation. Also, improved price/cost alignment, volume and 80/20 initiatives aided the uptrend.
The adjusted operating margin of 17.5% expanded a whopping 410 bps in the quarter. The adjusted EBITDA margin gained 410 bps from the year-ago quarter to 19.2%.
Agtech: Net sales increased 10.1% and adjusted net sales gained 12.8% year over year to $42.4 million.
The adjusted operating margin fell 790 bps year over year to 3.3%. The adjusted EBITDA margin was negative 1% compared with7.6% reported a year ago.
Infrastructure: Sales in the segment rose 12.1% year over year to $19.4 million, driven by solid end-market demand and market participation gains. Backlog rose 3% year over year on strong demand.
The adjusted operating margin of 18.6% expanded 490 bps year over year. The adjusted EBITDA margin also expanded 460 bps from the year-ago quarter to 23.1%.
Operating Highlights
Adjusted operating profit grew to $34.4 million from $31.3 million reported in the prior year. The adjusted operating margin expanded 50 bps year over year to 10.5%.
Adjusted EBITDA rose 8.7% to $43.6 million in the reported period. The adjusted EBITDA margin also increased 50 bps from the prior year to 13.3%.
2023 at a Glance
In the full year, Gibraltar reported net sales of $1.38 billion, down from $1.39 billion reported in 2022. Adjusted earnings during the year were $4.11 per share, up from $3.40 reported in 2022.
Adjusted operating margin increased 180 bps to 12.7%, year over year. The adjusted EBITDA margin of 15.4% was up 210 bps from the prior year.
Balance Sheet & Cash Flow
As of Dec 31, 2023, Gibraltar had liquidity of $495 million, including cash and cash equivalents worth $99.4 million compared with $17.6 million at 2022 end.
There was no long-term debt at the end of fourth-quarter 2023 against $88.8 million as of Dec 31, 2022.
In 2023, net cash provided by operating activities totaled $218.5 million compared with $102.7 million in the prior year.
Free cash flow was up 15% to $205 million in the reported year.
2024 Guidance
Gibraltar expects net sales of $1.43-$1.48 billion for 2024. Adjusted earnings are expected to be $4.57-$4.82 per share.
Zacks Rank & Recent Construction Releases
Gibraltar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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