Gibraltar Industries said second-quarter profits fell 16.9 percent despite an uptick in sales, as the residential markets for its roofing and other building products failed to rebound from a harsh winter as officials had expected.
The Buffalo-based building products manufacturer reported net income of $6.4 million, or 21 cents per share, down from $7.7 million, or 25 cents per share, in the same quarter a year ago.
Those results included after-tax special items related to business restructuring during both quarters, of $400,000 and $500,000, respectively. Not including those one-time items, adjusted profits fell 25.6 percent to $6.1 million, or 19 cents per share, from $8.2 million, or 26 cents per share.
Net sales rose 5 percent to $235 million, with gains in both the residential and the industrial and infrastructure businesses. But while sales demand was strong for mailboxes and other postal storage products in the housing segment, demand for “roofing-related products remained unexpectedly weak throughout the second quarter and well below demand anticipated by many industry observers,” said Brian Lipke, chairman and CEO.
“After a long cold winter that drove lower-than-anticipated first-quarter results, end-market demand in the second quarter did not rebound as expected,” Lipke said in a press release. “This contributed to lower-than anticipated revenue growth in our residential products segment, as the improvement in customer orders experienced at the end of March and April did not carry into the remainder of the quarter.”
Residential products sales rose 6 percent to $117.4 million, but the operating profit margin fell because of higher raw material costs, price cuts for certain products and slower benefits from “profit improvement initiatives.” In industrial and transportation infrastructure products, sales rose 3 percent to $117.9 million on stronger industrial sales, but the margin also fell because of a higher material costs and lower infrastructure shipments, which meant the mix of sales was less profitable than a year ago.
“The other parts of our business performed as expected during the quarter,” Lipke said. “On the bottom-line, our results reflected unfavorable product mix, increased commodity costs and reduced pricing.”
The company said it expects continued growth in sales of postal products, but little change in conditions otherwise for the next six months. So sales in the second half of the year will likely be comparable to the first half, and 6 percent higher than last year, with total revenues for the year of $853 million to $860 million, up from $828 million last year. But efforts to boost the profit margin, including through more efficient production, should help the bottom-line more in the second half compared to the first, the company said.