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Why Is Gibraltar Industries (ROCK) Down 3.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Gibraltar Industries (ROCK - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Gibraltar Industries due for a breakout? 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 catalysts.
Gibraltar Q2 Earnings Miss, Up Y/Y, Sales View Lowered
Gibraltar Industries, Inc. reported strong second-quarter 2024 earnings despite top-line woes. Although both the earnings and net sales missed the Zacks Consensus Estimate, the bottom line strengthened on a year-over-year basis.
ROCK has slightly reduced its net sales outlook for 2024 to reflect recent slower market conditions in both Residential and Renewables end markets, partially offset by strength in both Agtech and Infrastructure. Nonetheless, it remains focused on driving participation gains across the segments, with operational improvements to support solid second-half and full-year margin expansion and cash flow growth.
Inside the Headlines
Gibraltar’s adjusted EPS of $1.18 missed the Zacks Consensus Estimate of $1.26 by 6.4% but increased year over year by 2.6%. Net sales of $353 million lagged the consensus mark of $370 million by 4.7% and decreased 3.3% from the prior-year level of $364.9 million due to a slowdown in the Residential market. On an adjusted basis, the top line fell 2% year over year.
Segmental Details
Renewable Energy: Net sales in the segment increased 2.5% from the year-ago quarter to $79.4 million (up 8.2% on an adjusted basis), driven by strong demand from new and existing customers for the new 1P tracker product. Despite a growing pipeline of new projects across all product lines, order backlog fell 10% as some customers paused signing new contracts as they worked through trade and/or regulatory items specific to their projects.
The adjusted operating margin of 7.8% contracted 270 basis points (bps) year over year due to an unfavorable product mix owing to the 1P tracker product moving through its launch process learning curve to permanently tooled production for suppliers and an efficient field installation process. The adjusted EBITDA margin decreased 290 bps from the prior-year quarter to 10.7%.
Residential Products: Net sales in the segment were down 6.1% year over year to $214.3 million. This was due to a slowing market and unexpected channel destocking in the second half of the quarter, partially offset by participation gains with new and existing customers, growth in ventilation product lines, and expansion initiatives in the Rocky Mountain region.
However, an adjusted operating margin of 20.3% expanded 100 bps in the quarter on the back of solid execution, 80/20 initiatives, and effective price/cost management. The adjusted EBITDA margin grew 120 bps from the prior-year quarter to 21.7%.
Agtech: Sales declined 1.4% year over year, but adjusted sales inched up 0.6% to $34.5 million. The downside was due to delayed new project construction. Backlogs increased an impressive 32% year over year on the back of solid new bookings, which reached $90 million in the quarter, representing nearly 400% growth sequentially. The adjusted operating margin fell 290 bps year over year to 6.6%, mainly due to unfavorable project timing and mix. The adjusted EBITDA margin contracted 360 bps year over year to 9.3%.
Infrastructure: Sales in the segment rose 2.5% year over year to $24.8 million, driven by continued strong execution and market participation gains. Backlog, however, declined 12% due to a large project booked in 2023, which is reaching its final stages. On an impressive note, bookings increased 3% on a sequential basis, reflecting consistent customer activity. The adjusted operating margin of 25.1% expanded 100 bps year over year, driven by price/cost alignment, ongoing strong execution, 80/20 productivity, and improving product mix. The adjusted EBITDA margin also expanded 70 bps from the prior-year quarter to 28.3%.
Operating Highlights
Adjusted operating income declined 4% to $47 million. The adjusted operating margin contracted 30 bps year over year to 13.4%. Adjusted EBITDA fell 3% to $58 million in the reported period. The adjusted EBITDA margin also declined 10 bps from the prior year to 16.4%.
Balance Sheet & Cash Flow
As of Jun 30, 2024, Gibraltar had liquidity of $574 million, including cash and cash equivalents worth $179 million compared with $99.4 million at 2023-end. There was no long-term debt at the end of the second quarter. In the first half of 2024, net cash provided by operating activities totaled $89.7 million compared with $114.1 million in the prior-year period.
2024 Guidance Updated
Gibraltar now expects net sales of $1.38-$1.42 billion versus the previous expectations of $1.43-$1.48 billion for 2024. The company reported $1.38 billion of net sales ($1.36 billion on an adjusted basis) in 2023. GAAP EPS is still expected in the range of $4.04-$4.29 compared with $3.59 in 2023. Adjusted EPS is expected to be $4.57-$4.82 compared with $4.09 in 2023. The company notified that Agtech bookings are up significantly and support strong revenue growth in the second half, and Infrastructure performance is expected to remain positive going forward. Also, demand and quoting remain strong within Infrastructure, and it expects order flow to increase in the second half of the year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -10.9% due to these changes.
VGM Scores
At this time, Gibraltar Industries has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Gibraltar Industries has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Gibraltar Industries belongs to the Zacks Building Products - Miscellaneous industry. Another stock from the same industry, United Rentals (URI - Free Report) , has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
United Rentals reported revenues of $3.77 billion in the last reported quarter, representing a year-over-year change of +6.2%. EPS of $10.70 for the same period compares with $9.88 a year ago.
For the current quarter, United Rentals is expected to post earnings of $12.53 per share, indicating a change of +6.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
United Rentals has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Why Is Gibraltar Industries (ROCK) Down 3.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Gibraltar Industries (ROCK - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Gibraltar Industries due for a breakout? 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 catalysts.
Gibraltar Q2 Earnings Miss, Up Y/Y, Sales View Lowered
Gibraltar Industries, Inc. reported strong second-quarter 2024 earnings despite top-line woes. Although both the earnings and net sales missed the Zacks Consensus Estimate, the bottom line strengthened on a year-over-year basis.
ROCK has slightly reduced its net sales outlook for 2024 to reflect recent slower market conditions in both Residential and Renewables end markets, partially offset by strength in both Agtech and Infrastructure. Nonetheless, it remains focused on driving participation gains across the segments, with operational improvements to support solid second-half and full-year margin expansion and cash flow growth.
Inside the Headlines
Gibraltar’s adjusted EPS of $1.18 missed the Zacks Consensus Estimate of $1.26 by 6.4% but increased year over year by 2.6%. Net sales of $353 million lagged the consensus mark of $370 million by 4.7% and decreased 3.3% from the prior-year level of $364.9 million due to a slowdown in the Residential market. On an adjusted basis, the top line fell 2% year over year.
Segmental Details
Renewable Energy: Net sales in the segment increased 2.5% from the year-ago quarter to $79.4 million (up 8.2% on an adjusted basis), driven by strong demand from new and existing customers for the new 1P tracker product. Despite a growing pipeline of new projects across all product lines, order backlog fell 10% as some customers paused signing new contracts as they worked through trade and/or regulatory items specific to their projects.
The adjusted operating margin of 7.8% contracted 270 basis points (bps) year over year due to an unfavorable product mix owing to the 1P tracker product moving through its launch process learning curve to permanently tooled production for suppliers and an efficient field installation process. The adjusted EBITDA margin decreased 290 bps from the prior-year quarter to 10.7%.
Residential Products: Net sales in the segment were down 6.1% year over year to $214.3 million. This was due to a slowing market and unexpected channel destocking in the second half of the quarter, partially offset by participation gains with new and existing customers, growth in ventilation product lines, and expansion initiatives in the Rocky Mountain region.
However, an adjusted operating margin of 20.3% expanded 100 bps in the quarter on the back of solid execution, 80/20 initiatives, and effective price/cost management. The adjusted EBITDA margin grew 120 bps from the prior-year quarter to 21.7%.
Agtech: Sales declined 1.4% year over year, but adjusted sales inched up 0.6% to $34.5 million. The downside was due to delayed new project construction. Backlogs increased an impressive 32% year over year on the back of solid new bookings, which reached $90 million in the quarter, representing nearly 400% growth sequentially. The adjusted operating margin fell 290 bps year over year to 6.6%, mainly due to unfavorable project timing and mix. The adjusted EBITDA margin contracted 360 bps year over year to 9.3%.
Infrastructure: Sales in the segment rose 2.5% year over year to $24.8 million, driven by continued strong execution and market participation gains. Backlog, however, declined 12% due to a large project booked in 2023, which is reaching its final stages. On an impressive note, bookings increased 3% on a sequential basis, reflecting consistent customer activity. The adjusted operating margin of 25.1% expanded 100 bps year over year, driven by price/cost alignment, ongoing strong execution, 80/20 productivity, and improving product mix. The adjusted EBITDA margin also expanded 70 bps from the prior-year quarter to 28.3%.
Operating Highlights
Adjusted operating income declined 4% to $47 million. The adjusted operating margin contracted 30 bps year over year to 13.4%. Adjusted EBITDA fell 3% to $58 million in the reported period. The adjusted EBITDA margin also declined 10 bps from the prior year to 16.4%.
Balance Sheet & Cash Flow
As of Jun 30, 2024, Gibraltar had liquidity of $574 million, including cash and cash equivalents worth $179 million compared with $99.4 million at 2023-end. There was no long-term debt at the end of the second quarter. In the first half of 2024, net cash provided by operating activities totaled $89.7 million compared with $114.1 million in the prior-year period.
2024 Guidance Updated
Gibraltar now expects net sales of $1.38-$1.42 billion versus the previous expectations of $1.43-$1.48 billion for 2024. The company reported $1.38 billion of net sales ($1.36 billion on an adjusted basis) in 2023. GAAP EPS is still expected in the range of $4.04-$4.29 compared with $3.59 in 2023. Adjusted EPS is expected to be $4.57-$4.82 compared with $4.09 in 2023. The company notified that Agtech bookings are up significantly and support strong revenue growth in the second half, and Infrastructure performance is expected to remain positive going forward. Also, demand and quoting remain strong within Infrastructure, and it expects order flow to increase in the second half of the year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -10.9% due to these changes.
VGM Scores
At this time, Gibraltar Industries has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Gibraltar Industries has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Gibraltar Industries belongs to the Zacks Building Products - Miscellaneous industry. Another stock from the same industry, United Rentals (URI - Free Report) , has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
United Rentals reported revenues of $3.77 billion in the last reported quarter, representing a year-over-year change of +6.2%. EPS of $10.70 for the same period compares with $9.88 a year ago.
For the current quarter, United Rentals is expected to post earnings of $12.53 per share, indicating a change of +6.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
United Rentals has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.