A month has gone by since the last earnings report for Gibraltar Industries (ROCK). Shares have added about 6.5% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Gibraltar's Q3 Earnings Beat, Sales Miss Estimates
Gibraltar Industries, Inc. reported mixed third-quarter 2024 results. Earnings beat the Zacks Consensus Estimate, but revenues missed the same.
Gibraltar’s third-quarter performance was aligned with forecasts, with Renewables and Residential segments meeting expectations and Agtech sales rising more than 30%. Improved margins across three of four segments generated $65 million in cash flow, supported by strong execution and effective working capital management.
CEO Bill Bosway emphasized that despite challenging market conditions, Gibraltar remains positioned for earnings growth this year. The company continues to focus on operational improvements and expanding customer relationships to navigate current market dynamics.
Inside ROCK’s Headlines
Gibraltar’s adjusted earnings per share (EPS) of $1.27 beat the Zacks Consensus Estimate of $1.26 but decreased by 7.3% year over year.
Net sales of $361.2 million lagged the consensus mark of $362 million and decreased 7.6% from the prior-year level of $390.7 million due to challenges in the solar industry affecting the Renewables segment and a slowdown in the Residential market, with some offset from growth in Agtech. On an adjusted basis, the top line fell 6.2% year over year.
Segmental Details
Renewable Energy: Net sales in the segment dropped 21% from the year-ago quarter to $84.1 million (down 17.2% on an adjusted basis). Net sales and new project bookings were affected by trade and regulatory challenges from two AD/CVD investigations, as the industry focuses on panel installations and reporting requirements before the Dec. 3, 2024, tariff moratorium expiration. The backlog declined by 24%.
The adjusted operating margin of 6.5% contracted 1,040 basis points (bps) year over year due to an unfavorable product mix. The adjusted EBITDA margin decreased from 19% in the prior-year quarter to 9.3%.
Residential Products: Net sales in the segment were down 6.7% year over year to $212.4 million due to a sluggish residential market, particularly in the repair and remodel sector.
However, an adjusted operating margin of 19.9% expanded 110 bps in the quarter due to solid execution, 80/20 initiatives and effective price/cost management. The adjusted EBITDA margin expanded from 20.2% from the prior-year quarter to 21.4%.
Agtech: Sales grew 30.9% year over year, and adjusted sales rose 34.3% to $41.5 million. The upside was driven by accelerating projects in the Produce division, including facilities for growing strawberries, lettuce, melons and vine crops.
The adjusted operating margin expanded 450 bps year over year to 10.1% due to volume, product mix, 80/20 initiatives and solid field execution. The adjusted EBITDA margin expanded from 8.1% a year ago to 12.2%.
Infrastructure: Sales in the segment dropped 7.2% year over year to $23.2 million, impacted by the timing of a large project in the prior year. However, the backlog grew 3%, with strong demand and quoting activity driven by continued federal and state investment.
The adjusted operating margin of 27.9% expanded 230 bps year over year, fueled by a favorable product mix, the launch of new products, the impact of 80/20 initiatives and effective execution. The adjusted EBITDA margin expanded from 29.1% in the prior-year quarter to 31.4%.
Operating Highlights
Adjusted operating income declined 13.6% to $50.1 million. The adjusted operating margin contracted 120 bps year over year to 13.9%. Adjusted EBITDA fell 11.7% to $66.8 million in the reported period. The adjusted EBITDA margin was 16.3%, down from 17.3% a year ago.
Balance Sheet & Cash Flow
As of Sept. 30, 2024, Gibraltar had cash and cash equivalents of $228.9 million compared with $99.4 million at 2023-end. There was no long-term debt at the end of the third quarter.
In the first nine months of 2024, net cash provided by operating activities totaled $154.3 million compared with $206.7 million in the prior-year period.
2024 Guidance
Gibraltar expects net sales in the band of $1.31-$1.33 billion. The company reported $1.38 billion of net sales ($1.36 billion on an adjusted basis) in 2023. GAAP EPS is expected in the range of $3.57-$3.71 compared with $3.59 in 2023. Adjusted EPS is expected in the band of $4.11-$4.25 compared with $4.09 in 2023.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
VGM Scores
Currently, Gibraltar Industries has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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
Gibraltar Industries has a Zacks Rank #4 (Sell). We expect a below average 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, Masco (MAS), a stock from the same industry, has gained 0.6%. The company reported its results for the quarter ended September 2024 more than a month ago.
Masco reported revenues of $1.98 billion in the last reported quarter, representing a year-over-year change of +0.2%. EPS of $1.08 for the same period compares with $1 a year ago.
Masco is expected to post earnings of $0.88 per share for the current quarter, representing a year-over-year change of +6%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.6%.
Masco has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
