Gibraltar Industries, Inc. — Q1 2021 Form 10-Q
Period: Three months ended March 31, 2021; comparisons are to Q1 2020 unless noted. Gibraltar supplies products and services in Renewables, Residential, Agtech, and Infrastructure. The Industrial business was sold in February 2021 and is presented as discontinued operations.
Financial performance
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Net sales | $287.6 million | $215.4 million |
| Gross profit / margin | $60.0 million / 20.9% | $49.9 million / 23.1% |
| Operating income / margin | $12.8 million / 4.5% | $12.8 million / 5.9% |
| Continuing-operations income | $10.5 million | $9.9 million |
| Net income | $12.8 million | $12.1 million |
| Diluted EPS | $0.39 | $0.37 |
| Operating cash flow, continuing operations | $(1.2) million | $(43.8) million |
Sales rose 33.5%, comprising $50.6 million from acquisitions and $21.6 million of organic growth. Residential and Renewables drove growth; Agtech and Infrastructure sales declined. Gross margin contracted 2.2 percentage points, in part from costs to discontinue the company’s organic solar-tracker solution and lower margins at recent acquisitions. SG&A rose 27.3% to $47.2 million, but declined as a share of sales to 16.4% from 17.2%.
Segments
| Segment | Sales | Operating income (loss) | Notable comparison |
|---|---|---|---|
| Renewables | $85.5 million | $(0.5) million | Sales grew 80.8%, primarily from TerraSmart; margin fell to (0.6)% from 9.2%. |
| Residential | $140.2 million | $22.9 million | Sales grew 35.6%; margin improved to 16.4% from 13.3%. |
| Agtech | $46.7 million | $0.9 million | Sales declined 5.1%; margin was 2.0% versus 2.7%. |
| Infrastructure | $15.1 million | $2.0 million | Sales declined 2.6%; margin improved to 13.5% from 10.2%. |
Cash, debt, and liquidity
Cash was $20.7 million at March 31, 2021, down from $32.1 million at year-end. Long-term debt was $58.0 million, versus $85.6 million at year-end. The company had $334.8 million available under its revolving facility and reported compliance with all three credit covenants. Total stated liquidity—cash plus facility availability—was $355.5 million.
Continuing-operations investing cash flow was $22.6 million, including $27.0 million of net proceeds from the Industrial sale; capital expenditures were $4.4 million. Continuing-operations financing cash flow was $(30.4) million, reflecting $46.6 million of debt payments and $20.0 million of new borrowings. Continuing operations used $1.2 million of operating cash, including a $23.1 million investment in working capital and other net assets, largely related to inventory growth and incentive-program payments.
Outlook, commentary, and notable items
- Management maintained full-year 2021 guidance: revenue of $1.30–$1.35 billion and GAAP EPS of $2.78–$2.95.
- Management cited solid end-market demand and strong order backlog, while noting pandemic-related uncertainty, inflation, labor availability, supply-chain challenges, transportation constraints, and material costs. It said Q1 results were not materially adversely affected by COVID-19.
- Renewables backlog increased 138% year over year (23% organically); Infrastructure backlog rose 15%. Agtech backlog declined 12% year over year but increased 5% sequentially.
- The Industrial sale generated $38 million of proceeds, including a $13 million seller note, and an estimated pretax loss of $30 million, largely recorded in Q4 2020. Q1 discontinued operations included $20.4 million of sales and $2.3 million of income; the filing also reports a $0.3 million adjustment to the disposal loss.
- Q1 exit-activity and impairment charges were $5.2 million, primarily related to portfolio and process simplification; two facilities were closed. The TerraSmart purchase-price allocation remained provisional, with finalization expected by December 31, 2021.
- The company said risk factors had not materially changed from its 2020 Form 10-K. It reported effective disclosure controls and no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether the maintained revenue and EPS guidance is achievable amid inflation, supply-chain constraints, labor availability, and pandemic uncertainty.
- Whether Renewables and Agtech margins recover as management expects during 2021, and whether acquired-business integration and backlog convert into profitable sales.
- Whether working-capital needs—particularly inventory—continue to pressure operating cash flow despite reported earnings and ample borrowing availability.
- The final Industrial-sale working-capital adjustments and TerraSmart purchase-price allocation, including any resulting earnings or balance-sheet effects.
- How much reported growth reflects organic performance versus acquisitions; Q1 sales growth included substantial acquisition contribution.