Yahoo Finance Why Is Gibraltar Industries (ROCK) Up 0.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Gibraltar Industries (ROCK). Shares have added about 0.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Gibraltar Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Gibraltar’s Q1 Earnings & Net Sales Beat, Margins Rise
Gibraltar Industries reported solid earnings in first-quarter 2023. Quarterly earnings surpassed the Zacks Consensus Estimate and increased on a year-over-year basis. Although net sales decreased from the previous year, it beat the consensus mark.
Looking forward, chairman and CEO Bill Bosway, said, “As we head into the second quarter, customer bookings and demand across the business is shaping up as anticipated, and our businesses are on track for a solid second quarter. As committed coming into the year, we remain laser-focused on driving growth, margin expansion, and strong cash performance.”
Inside the Headlines
Gibraltar reported adjusted earnings of 70 cents per share, surpassing the Zacks Consensus Estimate of 62 cents by 12.9% and increasing 16.7% year over year. This was driven by strong contributions from the Renewables, Agtech and Infrastructure segments.
Net sales of $293.3 million outpaced the consensus mark of $289 million by 1.4% but decreased 7.7% from the prior-year level of $317.9 million. The decline was due to the end-market dynamics in the Renewables segment, and customer rescoping and reprioritizing fruit and vegetable growing projects in the Agtech business. On an adjusted basis, the top line declined 8% year over year to $290.8 million.
Segmental Details
Renewable Energy: Net sales in the segment decreased 24.9% from the year-ago quarter to $59.2 million. The U.S. solar industry continued to manage through panel importation challenges resulting from the Uyghur Forced Labor Prevention Act (UFLPA). Adverse weather conditions (the lowest seasonal quarter of the year) affected the top line. The backlog was up 34% sequentially.
The adjusted operating margin of 3.8% expanded a whopping 920 basis points (bps) year over year, driven by field operations productivity and improved supply-chain management that offset lower volumes. The adjusted EBITDA margin increased 1,020 bps from the prior-year quarter to 7.8%.
Residential Products: Net sales in the segment were flat year over year to $179.5 million. The positive impact of participation gains and the acquisition of Quality Aluminum Products or QAP were offset by headwinds of channel inventory correction, the market’s return to normal seasonal demand, and adverse winter weather in key regions of the United States. QAP contributed 8% to sales growth. Organic revenues remained challenged (down 8%), as the market returned to its typical lower seasonal demand patterns. The adjusted operating margin of 16.5% contracted 230 bps in the quarter. The adjusted EBITDA margin fell 190 bps from the prior-year quarter to 18.1%.
Agtech: Sales declined 15.3% year over year to $35.9 million and adjusted sales fell 18% to $33.3 million. The downside was due to the produce customers' rescope, and reprioritize the launch of fruit and vegetable growing facilities. Backlogs were down 31% from the year-ago quarter and 3% sequentially. The adjusted operating margin improved 440 bps year over year to 10.7%. The adjusted EBITDA margin was up 510 bps year over year to 14%.
Infrastructure: Sales in the segment rose 8.7% year over year to $18.7 million. Backlog rose 38% year over year on strong demand. The company expects the infrastructure bill to have a positive impact in 2023. The adjusted operating margin of 14.5% expanded 800 bps year over year. The adjusted EBITDA margin also expanded 760 bps from the prior-year quarter to 18.9%. The upside was driven by strong 80/20 execution, volume, and supply-chain productivity.
Operating Highlights
Adjusted operating profit also grew 14% to $31 million. The adjusted operating margin expanded 210 bps year over year to 10.6%.
Adjusted EBITDA rose 14% to $39 million in the reported period. The adjusted EBITDA margin also increased 260 bps from the prior year to 13.4%.
Balance Sheet & Cash Flow
As of Mar 31, 2023, Gibraltar had liquidity of $351 million, including cash and cash equivalents worth $7.5 million compared with $17.6 million at the 2022-end. Long-term debt was $49.9 million, up from $88.8 million as of Dec 31, 2022.
In the first quarter, net cash provided by operating activities totaled $38 million versus net cash used in operating activities of $7.8 million in the prior year. In the first quarter, the company repurchased 153,537 shares for $7.4 million at an average price of $47.99 per share.
2023 Guidance
Gibraltar expects revenues of $1.36-$1.41 billion, whereas it reported $1.39 billion in 2022. Adjusted earnings are expected to be $3.46-$3.66 per share, suggesting a rise from the $3.40 reported in 2022.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Gibraltar Industries has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Gibraltar Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Gibraltar Industries is part of the Zacks Building Products - Miscellaneous industry. Over the past month, United Rentals (URI), a stock from the same industry, has gained 3.3%. The company reported its results for the quarter ended March 2023 more than a month ago.
United Rentals reported revenues of $3.29 billion in the last reported quarter, representing a year-over-year change of +30.2%. EPS of $7.95 for the same period compares with $5.73 a year ago.
United Rentals is expected to post earnings of $9.20 per share for the current quarter, representing a year-over-year change of +17.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for United Rentals. Also, the stock has a VGM Score of A.
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