Gibraltar Industries executives, stung by a 47 percent plunge in first-quarter profits, think the worst is over for the Hamburg-based construction and processed metal products manufacturer.
With Gibraltar reporting profits that were in line with its twice-reduced forecasts and company executives predicting that business will pick up as the year progresses, investors reacted favorably, pushing the company's stock up by 5 percent, or $1.15, to $22.81.
"We believe improvements are on the horizon," said Henning N. Kornbrekke, Gibraltar's president and chief operating officer.
While the slump in Gibraltar's key housing markets, along with inventory cutbacks by its big retail customers, contributed to a 2 percent drop in sales to $318 million, Kornbrekke said the company noticed revenues picking up in late March and the trend has continued into April.
"We expect our business will strengthen considerably as we move into the seasonally strongest periods for our business -- the second and third quarters," as home repair and remodeling activity picks up, he said Thursday during a conference call.
As a result, Gibraltar said it expects its second-quarter profits to range between 43 cents to 48 cents per share, which is in line with the average estimate of 44 cents per share that the five analysts surveyed by Thomson Financial/First Call were expecting.
Gibraltar's first-quarter profits, which fell to $6.2 million, or 21 cents per share, from $11.7 million, or 39 cents per share, a year ago, also were hurt by a $700,000 pre-tax charge stemming from the company's closing of its processed metals plant on Military Road in Kenmore. That move, which eliminated about 90 local jobs, is expected to help increase the profitability of that part of Gibraltar's business by about 3 percentage points, Kornbrekke said.
"We're aggressively taking steps to control and cut costs," said Brian J. Lipke, Gibraltar's chairman and chief executive officer.
All of the decline in sales came from Gibraltar's building products business, where revenues fell by 4 percent to $207 million. Sales at its processed metal products business grew by 2 percent to $110 million.
But operating profits were down at both businesses. Operating profits at the building products business dropped by 40 percent to $18.7 million, while earnings fell by 24 percent to $4.4 million at the processed metal products segment.