Gibraltar (ROCK) Stock Takes a Hit Despite Q3 Earnings Beat


Gibraltar Industries, Inc.

ROCK

reported third-quarter 2020 results, wherein earnings beat the Zacks Consensus Estimate, while revenues met the same. Moreover, the top and the bottom line increased on a year-over-year basis.

Despite reporting solid results, the company emphasized on the level of uncertainty due to the coronavirus pandemic and the upcoming election. To this end, president and chief executive officer, Bill Bosway, stated, “While our momentum and end market trends continue to be positive, we are closely monitoring the everchanging pandemic landscape and potential impact on the U.S. and global economy.”

Following the results, shares of the company fell 7.1% during trading hours on Oct 29.

Inside the Headlines

For the third quarter, Gibraltar reported adjusted earnings of $1.06 per share, beating the Zacks Consensus Estimate of $1 by 6%. The bottom line increased 11.6% year over year, supported by growth in Renewable Energy & Conservation as well as Residential Products segments.

Quarterly net sales during the third quarter of 2020 were almost in line with the consensus mark of $330 million. Nonetheless, the top line grew 10.2% year over year owing to 2.1% organic growth driven by its Residential Products and Renewable Energy & Conservation segments. Acquisitions contributed 8.1% to top-line growth.

The company’s backlog was $304 million (at quarter-end), up 26% year over year owing to solid demand in the Renewable Energy and Conservation segment.

Segmental Details


Residential Products:

Net sales in the segment grew 20.1% from the year-ago period to $151.7 million for the quarter. The upside was primarily due to solid activity in the home improvement market.

Adjusted operating margins improved 530 basis points (bps) to 21.5%. Strong execution, product mix, improved material cost alignment and 80/20 simplification initiatives aided margins.


Industrial and Infrastructure Products:

Sales in the segment decreased 11.6% year over year to $49.7 million owing to lower demand for core industrial products.

Nonetheless, adjusted operating margins expanded 80 bps to 11%, backed by solid execution and effective price and material cost management.


Renewable Energy and Conservation:

Quarterly net sales in the segment rose 9.8% year over year to $128.3 million. Notably, the upside can be primarily attributed to growth in Renewable Energy and previous acquisitions in the Conservation business, offset by a slowdown in the cannabis and hemp markets. Segment backlog grew 28% year over year owing to strong end market demand in renewable energy along with strength in the fruit and vegetable market and increasing activity in the cannabis market. However, adjusted operating margins of 11.6% in the segment showed a decline of 620 bps during the third quarter of 2020.

Costs & Margins

Selling, general and administrative expenses decreased 7.9% year over year to $41.6 million. As a percentage of sales, the metric decreased 250 bps year over year to 12.6%. Adjusted operating margin of 13.7% expanded 40 bps year over year.

Balance Sheet & Cash Flow

As of Sep 30, 2020, Gibraltar had cash and cash equivalents worth $179.8 million compared with $191.4 million at 2019-end.

For the nine months ended Sep 30, 2020, net cash provided by operating activities came in at $56.2 million, compared with $72.5 million a year ago.

Zacks Rank

Gibraltar, which shares space with

Installed Building Products, Inc.

IBP

in the same industry, currently carries a Zacks Rank #3 (Hold). You can see


the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases


Armstrong World Industries, Inc

.

AWI

recently reported

third-quarter

2020 results, wherein earnings and revenues beat the Zacks Consensus Estimate. The company reported adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate of 95 cents by 12.6%. However, the bottom line declined 22.5% from $1.38 reported in the year-ago quarter. Net sales of $246.3 million beat the consensus mark of $231 million by 6.6%. However, the top line fell 11.1% year over year.


Owens Corning

OC

reported

third-quarter

2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. The company reported adjusted earnings of $1.70 per share, surpassing the Zacks Consensus Estimate of $1.32 by 28.8%. Moreover, the bottom line improved 6.3% year over year. Meanwhile, net sales of $1.9 billion outpaced the consensus mark of $1.8 billion by 6% and also increased 1.1% year over year.

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