Gibraltar Announces First Quarter 2021 Financial Results

Gibraltar Industries, Inc., a leading manufacturer and provider of products and services for the renewable energy, residential, agtech, and infrastructure markets, reported its financial results for the three-month period ended March 31, 2021. Reported results include TerraSmart, acquired at the end of December 2020.

–Q1 Revenue Increases 34%, including 10% Organic and 24% Growth from Acquisitions

–GAAP EPS Up 7% to $0.32, Adjusted EPS Expands 33% to $0.53

–Strong Demand in Each Segment with Order Backlog at Record $355 Million

–Separating Renewable Energy and Conservation Segment into Two Segments

“Our first quarter results reflect solid execution and participation gains across our markets while continuing to operate through the pandemic as well as challenging weather across the country and supply chain and labor availability dynamics,” President and Chief Executive Officer Bill Bosway stated. “Revenue increased 34%, adjusted EPS grew 33% and our order backlog strengthened to $355 million. The integrations of TerraSmart and Sunfig in our Renewables business are on plan, and we have made significant progress with the integration of Thermo Energy Solutions in our Agtech business. Overall, we are off to a solid start in 2021.”

Segment Reporting Change

Beginning with the first quarter of 2021, Gibraltar will report business results across four segments: Renewables, Residential, Agtech, and Infrastructure, with Renewables and Agtech separated out of the former Renewable Energy and Conservation Segment. Commenting on this change, Mr. Bosway stated, “As we continue our transformation, it is important we offer greater transparency to our investors and stakeholders about our strategy and performance of our core businesses and the markets we participate in. The Renewables and Agtech businesses are creating significant opportunities for us, and unique and focused investments are required to accelerate growth in each business going forward.”

First Quarter 2021 Consolidated Results from Continuing Operations

Net sales from continuing operations increased 33.5% to $287.6 million, driven by the Renewables and Residential segments, with organic growth contributing 10.0% and recent acquisitions 23.5%.

GAAP earnings increased 6.1% to $10.5 million, or $0.32 per share, and adjusted earnings increased 30.8% to $17.4 million, or $0.53 per share, the result of organic growth and continued margin expansion in the Renewables, Residential, and Infrastructure segments, the TerraSmart acquisition, product and services mix, good price/cost management, and 80/20 productivity initiatives. Adjusted measures remove charges for restructuring initiatives, acquisition-related items, senior leadership transition costs, and other reclassifications, as further described in the appended reconciliation of adjusted financial measures.

Below are first quarter 2021 consolidated results from continuing operations:

First Quarter Segment Results

Renewables

The Renewables segment reflects Gibraltar’s business in the solar energy market, and includes the design, engineering, manufacturing and installation of solar racking and electrical balance of systems. The results of the Renewables segment include the acquisitions of TerraSmart and Sunfig, which were completed in December 2020.

Revenue increased 80.8%, driven by the acquisitions of TerraSmart and Sunfig, along with 2.1% organic growth across the legacy business. As experienced during the fourth quarter of 2020, project schedule movement and timing remained dynamic in the quarter given record infection rates, some unique weather events, and ongoing supply chain challenges. As well, given the extension of the investment tax credit benefit, demand related to safe harbor activity was significantly reduced in this quarter versus the previous year. Despite this dynamic, both the legacy business and TerraSmart we able to offset the safe harbor impact in the current quarter. Overall, demand continued to build in both the legacy and TerraSmart businesses with each making significant contributions to increasing customer order backlog to $164 million, up 51% from prior year, a record level for the combined business.

Adjusted operating margin performance in the legacy business improved 50 basis points to 9.8% on continued 80/20 productivity in manufacturing facilities, good execution across field operations, and diligent price/cost management initiatives. TerraSmart delivered performance as per the acquisition plan, integration is on schedule, and it enters the second quarter with the necessary momentum to deliver its full year margin plan, which is expected to be accretive in 2021. GAAP margins reflect planned restructuring and integration costs associated with the onboarding of TerraSmart.

For the first quarter, the Renewables segment reported:

Residential

Revenue increased 35.6% with strong organic growth and participation gains across all four Residential businesses despite impact from challenging weather in February and supply chain dynamics related to material availability and logistics. The acquisition of Architectural Mailboxes in 2020 generated 9% of the total growth in the quarter and integration remains on track.

Adjusted operating margin increased with solid execution of 80/20 productivity initiatives, price/cost management, and higher volume which offset ongoing pandemic concerns, higher input costs, labor availability, and logistics management challenges.

For the first quarter, the Residential segment reported:

Agtech

The Agtech segment provides commercial greenhouse growing and plant processing solutions including design, engineering, manufacturing and installation of commercial greenhouses and botanical oil extraction systems.

Revenue was down 5.1% driven by higher infection rates, challenging weather, supply chain dynamics, and the timing of regulatory approvals for cannabis production in a number recently- legalized states. Collectively, customer project planning for new production sites and the competition of existing sites were impacted accordingly. Offsetting these headwinds was positive activity in the produce market which continued to gain momentum and in turn offset slower but improving market conditions in the cannabis and hemp markets. Order activity and backlog continues to support Gibraltar’s outlook for these markets’ recovery in the second half of 2021. Segment backlog increased 5% sequentially to $96 million, driven by an active produce market, and this trend is expected to continue and drive positive results in 2021.

Adjusted operating margin was impacted by the overall mix and timing of projects along with lower volumes in the processing equipment business. The integration of Thermo Energy Solutions (TES), Agtech’s core produce market business, is progressing well despite the continued closure of the US-Canadian border. The majority of the lower margin projects brought in at the time of TES’ acquisition were completed in the quarter, and margins are expected to expand in 2021 through execution of newer, higher-margin projects in backlog and benefits from the implementation of 80/20 operating systems. The consolidation of two processing manufacturing facilities was also completed during the quarter, providing the business with a better cost structure going forward.

For the first quarter, the Agtech segment reported:

Infrastructure

Revenue decreased $400,000 as the pandemic continued to impact existing and new project schedules driven by state and federal DOT funding. Order backlog grew 15% to $52 million in the first quarter, reflecting positive momentum as the economy continues to recover.

Improvement in adjusted operating margin was driven by ongoing investment in operating systems and technology, 80/20 productivity initiatives, and strong execution in fabricated products. This momentum has helped the business offset the slow but recovering market for higher-margin non-fabricated products and solutions.

For the first quarter, the Infrastructure segment reported:

Business Outlook

“While we have solid end market demand and strong order backlog, general market challenges remain – the pandemic, general inflation, labor availability, and supply chain dynamics – and arguably, the current environment is more challenging than what we experienced in 2020. We will remain focused on execution and controlling what we can control, continuing to work on the business, and using our healthy balance sheet to invest in both organic and inorganic initiatives,” commented Mr. Bosway.

“Our guidance for revenue and earnings for the full year 2021 remains unchanged. Consolidated revenue is expected to range between $1.3 billion and $1.35 billion.

“GAAP EPS is expected to range between $2.78 and $2.95 compared to $2.53 in 2020, and adjusted EPS is expected to range between $3.30 and $3.47 compared to $2.73 in 2020.”

For the complete press release, click here.

About Gibraltar

Gibraltar Industries is a leading manufacturer and provider of products and services for the renewable energy, conservation, residential, and infrastructure markets. With a three-pillar strategy focused on business systems, portfolio management, and organization and talent development, Gibraltar’s mission is to create compounding and sustainable value with strong leadership positions in higher growth, profitable end markets. Gibraltar serves customers primarily throughout North America. Comprehensive information about Gibraltar can be found on its website at www.gibraltar1.com.

Contact:

Jody Burfening – LHA Investor Relations – rock@lhai.com – (212) 838-3777

Source: Gibraltar Industries, Inc.