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Gibraltar profits down in fourth quarter; Sales up 22 percent; compensation took toll

Gibraltar Industries' return to profitability went off track in the fourth quarter.

The Hamburg construction products manufacturer lost money for the first time in four quarters despite a 21 percent jump in its sales.

Gibraltar lost $6.6 million, or 22 cents per share, during the fourth quarter, which still was a major improvement from its loss of $74.5 million, or $2.46 per share, a year ago, when the company had $68 million in asset impairment charges.

Excluding those one-time items, the company's adjusted operating loss narrowed to $5.1 million, or 17 cents per share, from a loss of $6.6 million, or 22 cents per share, a year earlier.

Analysts has been expecting a profit of 3 cents per share.

The company's sales improved to $174.1 million from $144.1 million, with revenues from Gibraltar's existing business growing by 7 percent, while the two companies it acquired during 2011 accounting for two-thirds of the overall sales growth.

Part of the loss stemmed from $6.4 million in additional costs stemming from stock-based compensation for its executives. The increase resulted from the spike in Gibraltar's stock, which has more than doubled over the last five months.

While Gibraltar lost money for the first time since the fourth quarter of 2010, company executives said Friday they believe the firm remains on the right track with its focus on construction and infrastructure markets and its sharply lower operating expenses.

The company has closed more than 50 facilities, leaving Gibraltar with 41 operating plants, down from a peak of 92. Gibraltar plans to close two more sites this year, said Henning Kornbrekke, the company's president and chief operating officer.

That and other cost-cutting steps have eliminated about $60 million in costs and have significantly reduced the company's break-even point, which should allow Gibraltar to sharply increase its earnings with even a modest improvement in revenues, said Brian J. Lipke, chairman and chief executive officer.

"As our end markets rebound, we expect our performance to improve by an even greater extent," Lipke said during a conference call.

"The company has made significant progress," Lipke said. "We've taken control of our business by refocusing it" on the construction and infrastructure markets, while also lowering its operating costs.

Gibraltar's key housing and remodeling markets remain weak, leaving the company's factories operating at about 60 percent of capacity, Lipke said. Still, Lipke said he has been seeing some signs of improvement since November.

"We're feeling more optimistic about the outlook for our end markets," he said.

Gibraltar's revenues are split evenly between its residential and nonresidential markets. About a quarter of its residential sales come from new construction, with three-quarters coming from remodeling work.

The company said it expects its sales this year to increase from $767 million in 2011. Gibraltar, which earned $16.5 million, or 54 cents per share, during all of last year, did not make any earnings forecasts, although analysts are predicting that profits will jump by 86 percent to 93 cents per share.

email: drobinson@buffnews.com