Gibraltar Industries(ROCK) - 2024 Q2 - Quarterly Results

Financial Performance Overview This section provides an overview of the company's consolidated financial performance for the second quarter of 2024 Second Quarter 2024 Consolidated Results In Q2 2024, Gibraltar reported a slight decrease in net sales, with GAAP sales down 3.3% and adjusted sales down 2.0% year-over-year. However, the company achieved growth in profitability, with GAAP net income increasing by 4.9% and diluted EPS growing by 5.0%. The company also generated strong operating cash flow of $36 million Second Quarter 2024 Consolidated Results Summary (in millions, except per share amounts) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | GAAP Net Sales | $353.0M | $364.9M | (3.3)% | | Adjusted Net Sales | $353.0M | $360.1M | (2.0)% | | GAAP Net Income | $32.2M | $30.7M | 4.9% | | Adjusted Net Income | $36.4M | $35.4M | 2.8% | | GAAP Diluted EPS | $1.05 | $1.00 | 5.0% | | Adjusted Diluted EPS | $1.18 | $1.15 | 2.6% | - Generated strong operating cash flow of $36 million during the quarter[3] - The company faced market headwinds from unexpected channel destocking in the Residential segment and customer project delays in the Renewables business[3] Second Quarter Segment Results This section details the financial performance of Gibraltar's Residential, Renewables, Agtech, and Infrastructure segments Residential The Residential segment's net sales decreased by 6.1% to $214.3 million due to a slowing market and channel destocking. Despite the sales decline, operating margin expanded by 100 basis points on an adjusted basis, driven by solid execution and effective price/cost management Residential Segment Performance (in millions, except percentages) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $214.3M | $228.2M | (6.1)% | | Adjusted Operating Income | $43.5M | $44.0M | (1.1)% | | Adjusted Operating Margin | 20.3% | 19.3% | +100 bps | - The sales decrease was driven by a slowing market and unexpected channel destocking, partially offset by participation gains and growth in ventilation product lines[75] Renewables The Renewables segment saw an 8.2% increase in adjusted net sales to $79.4 million, driven by strong demand for its new 1P tracker product. However, both GAAP and adjusted operating margins declined significantly due to product mix and learning curve inefficiencies associated with the new product launch. Order backlog decreased by 10% as some customers paused new contracts due to trade and regulatory issues Renewables Segment Performance (in millions, except percentages) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Adjusted Net Sales | $79.4M | $73.4M | 8.2% | | Adjusted Operating Income | $6.2M | $7.7M | (19.5)% | | Adjusted Operating Margin | 7.8% | 10.5% | (270) bps | - Net sales were driven by strong demand for the new 1P tracker product[7] - Operating margins were negatively impacted by product mix and the learning curve of the new 1P tracker product launch[8][9] Agtech The Agtech segment's adjusted net sales were flat, increasing by 0.6% to $34.5 million. The segment achieved a record-breaking $90 million in new bookings, a nearly 400% increase over Q1, leading to a 32% year-over-year rise in backlog. This strong order flow supports expectations for significant revenue growth in the second half of the year Agtech Segment Performance (in millions, except percentages) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Adjusted Net Sales | $34.5M | $34.3M | 0.6% | | Adjusted Operating Income | $2.3M | $3.3M | (30.3)% | | Adjusted Operating Margin | 6.6% | 9.5% | (290) bps | - Achieved a record $90 million in new bookings during the quarter, an increase of nearly 400% from Q1[31] - The strong bookings resulted in a 32% increase in backlog compared to the prior year, supporting strong revenue growth expectations for the second half[3][31] Infrastructure The Infrastructure segment reported a 2.5% increase in net sales to $24.8 million. Operating income grew by 6.9%, and operating margin expanded by 100 basis points to 25.1%, attributed to effective price/cost alignment, strong execution, and favorable product mix Infrastructure Segment Performance (in millions, except percentages) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $24.8M | $24.2M | 2.5% | | Operating Income | $6.2M | $5.8M | 6.9% | | Operating Margin | 25.1% | 24.1% | +100 bps | - Margin expansion was driven by price/cost alignment, strong execution, 80/20 productivity initiatives, and improving product mix[32] Business Outlook This section outlines the company's financial projections and strategic expectations for the full year 2024 Full Year 2024 Guidance Gibraltar has slightly adjusted its full-year 2024 net sales forecast to a range of $1.38 billion to $1.42 billion, reflecting slower conditions in Residential and Renewables markets, offset by strength in Agtech and Infrastructure. The company reaffirmed its EPS guidance, with GAAP EPS expected to be between $4.04 and $4.29, and adjusted EPS between $4.57 and $4.82 Full Year 2024 Guidance (in billions, except per share amounts) | Metric | 2024 Outlook | 2023 Actual | | :--- | :--- | :--- | | Consolidated Net Sales | $1.38B - $1.42B | $1.38B | | GAAP EPS | $4.04 - $4.29 | $3.59 | | Adjusted EPS | $4.57 - $4.82 | $4.09 | - The net sales outlook was adjusted to reflect slower market conditions in Residential and Renewables, offset by strength in Agtech and Infrastructure[33] - The outlook for both GAAP and adjusted EPS remains unchanged[12] Financial Statements This section presents the company's core financial statements, including consolidated statements of income, balance sheets, and cash flows Consolidated Statements of Income For the second quarter ended June 30, 2024, net sales were $353.0 million, a decrease from $364.9 million in the prior year. Despite lower sales, net income increased to $32.2 million from $30.7 million, driven by a lower provision for income taxes and a shift from interest expense to interest income Consolidated Statements of Income (in thousands, except per share amounts) | (In thousands) | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net sales | $353,005 | $364,914 | | Gross profit | $95,873 | $96,739 | | Income from operations | $42,469 | $43,077 | | Net income | $32,198 | $30,723 | | Diluted EPS | $1.05 | $1.00 | Consolidated Balance Sheets As of June 30, 2024, Gibraltar's total assets increased to $1.38 billion from $1.26 billion at the end of 2023. The increase was primarily driven by higher cash and cash equivalents and accounts receivable. Total stockholders' equity also grew to $975.7 million from $915.0 million over the same period Consolidated Balance Sheets (in thousands) | (In thousands) | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $179,102 | $99,426 | | Total current assets | $591,865 | $462,251 | | Total assets | $1,376,941 | $1,256,451 | | Total current liabilities | $285,485 | $225,578 | | Total stockholders' equity | $975,671 | $914,998 | Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash provided by operating activities was $89.7 million, compared to $114.1 million in the prior-year period. The decrease was mainly due to changes in working capital, particularly a larger increase in accounts receivable. The company's cash and cash equivalents increased by $79.7 million during the period, ending at $179.1 million Consolidated Statements of Cash Flows (in thousands) | (In thousands) | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $89,653 | $114,094 | | Net cash used in investing activities | ($8,357) | ($4,730) | | Net cash used in financing activities | ($1,447) | ($107,970) | | Net increase in cash | $79,676 | $1,013 | | Cash at end of period | $179,102 | $18,621 | Non-GAAP Financial Measures This section explains and reconciles the company's non-GAAP financial measures to their most directly comparable GAAP counterparts Explanation of Adjusted Measures The company uses non-GAAP financial measures such as adjusted net sales, adjusted operating income, and adjusted EPS to supplement its GAAP results. These measures exclude special charges like restructuring costs, acquisition-related items, senior leadership transition costs, and the results of divested or liquidated businesses. Management believes these adjusted figures provide a clearer view of core operating performance and facilitate comparisons across periods - Adjusted financial measures exclude special charges not considered directly related to ongoing business operations[35] - Specific exclusions include: restructuring costs, senior leadership transition costs, acquisition-related costs, and portfolio management actions (e.g., liquidated Processing business and sold Japan renewables business)[35] Reconciliation of GAAP to Non-GAAP Measures This section provides detailed tables reconciling GAAP financial results to the company's non-GAAP adjusted measures for various periods, including the second quarter, first six months, and full year. The reconciliations cover key metrics such as net sales, operating income, net income, EPS, and EBITDA, broken down by business segment where applicable Q2 2024 Income from Operations Reconciliation (in thousands) | Q2 2024 Income from Operations (In thousands) | GAAP | Adjustments | Adjusted | | :--- | :--- | :--- | :--- | | Residential | $43,313 | $145 | $43,458 | | Renewables | $1,647 | $4,562 | $6,209 | | Agtech | $2,282 | $11 | $2,293 | | Infrastructure | $6,215 | $0 | $6,215 | | Unallocated corporate | ($10,988) | $100 | ($10,888) | | Consolidated | $42,469 | $4,818 | $47,287 | - The report includes detailed reconciliation tables for Q2 2024, Q2 2023, the six months ended June 30 for both years, and the full year 2023[23][25][62]