Gibraltar stock soars despite loss
Gibraltar Industries’ third-quarter profits plunged by 74 percent but still zoomed past analyst forecasts, sending the Hamburg-based building products manufacturer’s stock soaring Thursday.
Gibraltar’s shares soared by 23 percent, or $2.67, to $14.06 after the company reported earnings that topped analyst expectations by 10 cents per share, and executives said they see signs that their key automotive and construction markets have stabilized and are beginning what could be the early stages of a recovery.
While Gibraltar executives said they remain cautious about how strong their markets will be because of the uncertainty in the economy, they noted that their two-year effort to restructure the business has put the company in a position to be solidly profitable at a much lower level of sales.
“We’ve taken an awful lot of cost out of the business,” said Henning Kornbrekke, Gibraltar’s president and chief operating officer, during a conference call. “We can operate profitably at a lower level of volume.”
Even so, Gibraltar’s profits still plummeted from a year ago as weakness in the housing and automotive markets led to a 34 percent drop in sales.
Gibraltar’s profits tumbled to $4.9 million, or 16 cents per share, from $19.2 million, or 64 cents per share, a year earlier. Excluding $4.8 million in special charges, Gibraltar’s earnings from continuing operations of 28 cents per share were much better than the 18 cents per share that analysts were expecting. Gibraltar executives said the company’s prolonged efforts to cut costs are enhancing its profitability, even as sales declined, sliding by 34 percent to $225 million during the third quarter, down from $342 million a year earlier.
Gibraltar closed three additional facilities in the third quarter, bringing the total number of plants, warehouses and distribution facilities eliminated by the company to 35 since the beginning of 2007. During that time, Gibraltar has closed 40 percent of its facilities, leaving the company with the production capacity to handle $1.5 billion in annual sales. The company is on pace for about $1 billion in sales this year.
Kornbrekke said the company expects a seasonal slowdown in its business during the fourth quarter, despite signs that many of its markets have stabilized and some, such as automotive and residential building, are showing modest gains.
Operating profits at the company’s building products business tumbled by 31 percent to $23 million on a similar decline in revenues to $191 million. The company’s processed metals business posted a $3.4 million operating loss as revenues plunged by 46 percent to $35 million amid the struggles of the auto industry. Kornbrekke said the processed metals business returned to profitability in September.
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