Gibraltar Industries’ profits slipped by 2 percent during the second quarter after an expected rebound in its key housing markets never materialized and its industrial sales remained depressed.
And Gibraltar executives warned Thursday that they don’t expect an immediate turnaround, slashing their earnings forecast for the year – a move that sent the Hamburg construction products manufacturer’s shares tumbling by 6 percent, or 87 cents, to $14.53.
Gibraltar’s profits slipped to $7.7 million, or 25 cents per share, down from $7.9 million, or 26 cents per share, a year earlier. Excluding restructuring costs, the company’s adjusted profits dipped by 6 percent to $8.2 million, or 26 cents per share, from $8.7 million, or 28 cents per share, a year earlier. The adjusted earnings were well below the 32 cents per share that analysts were expecting. Shares slid 99 cents, to $14.41 on Thursday.
That prompted the company to lower its earnings forecast for the full year. Gibraltar said it now expects its adjusted profits this year, excluding restructuring costs, to range between 54 cents and 64 cents per share, far below the 83 cents per share that analysts were expecting. Sales growth this year is expected to be modest.
“The fundamentals in the residential and low-rise commercial building markets are moving in a positive direction, but demand was not as strong as we had anticipated in the first half,” said Brian J. Lipke, Gibraltar’s chairman and chief executive officer.
Much of the weakness during the second quarter stemmed from disappointing sales growth, which fell short of what Gibraltar executives had been expecting, in all of its major markets, except for multifamily housing.
Sales grew by 2 percent to $225 million from $220 million a year ago, with all of the increase coming from the three companies that Gibraltar acquired during the fourth quarter of last year. Excluding those acquisitions, sales from Gibraltar’s existing businesses fell by 5 percent and overall revenue growth was far less than the 9 percent increase that company executives had expected.
Gibraltar executives said sales from the company’s industrial products business were “significantly slower,” as weak demand, especially in Europe, forced the company to reduce prices. And instead of the second-half rebound in its industrial markets that Gibraltar executives had forecast earlier this year, they now said they expect the industrial segment, which accounts for about 40 percent of the company’s revenues, to remain weak throughout the rest of 2013.
The company’s housing markets are beginning to improve, but the pace of the recovery has been spotty. While sales growth in the multifamily housing market reached double-digits, other segments of the housing market did not rebound as rapidly as Gibraltar executives had expected.
Henning Kornbrekke, Gibraltar’s president and chief operating officer, pointed to the residential roofing market as a particular disappointment, as bad spring weather delayed roofing work in some parts of the country and consumers remain reluctant to commit to costly home repairs while the economy is sluggish.