Gibraltar Industries' key housing markets remain depressed, but CEO Brian J. Lipke thinks the Hamburg building products manufacturer already is on the rebound.
Over the last four years, Gibraltar has aggressively cut costs, closed facilities and reduced its workforce as the nation's housing bubble burst and the economy fell into a deep recession.
That stopped cold Gibraltar's long growth spurt and led to a plunge in sales and painful losses in 2009 and 2010. Gibraltar's restructuring began to yield dividends last year as the economy slowly improved and the company's sales rebounded, making the firm profitable again.
This year, Lipke expects Gibraltar to be even more profitable than it was last year.
"Today, we stand here with a repositioned company that is well-positioned to take advantage of some of the strongest growing parts of the building products market," Lipke told shareholders during Gibraltar's annual meeting Thursday.
During the downturn, Gibraltar shifted its sales focus to depend less on the devastated new housing market, which now is tied to about a quarter of Gibraltar's residential revenues, and more on other markets with greater profit potential, such as the repair and remodeling housing segment and road and bridge work.
"We're much better positioned in higher margin areas and areas that have much better growth potential," he said.
The company also has been persistently pushing to reduce its costs, cutting its facilities from 76 to 40 since late 2007 and reducing Gibraltar's annual operating expenses by $60 million.
Those changes also mean that Gibraltar doesn't have to wait for the economy to rebound. "We've put the company in a position where we can take matters into our own hands," Lipke said.
The company's facilities currently are running at about 60 percent of their capacity, which leaves plenty of room to build sales without having to add more factories or distribution centers.
"We've got a lot of available capacity that we're not using but that we're paying for," Lipke said.
Gibraltar's rebound hit a bit of a bump during the first quarter, with the company reporting an 83 percent plunge in its profits, which fell well short of analyst forecasts despite a 17 percent jump in sales.
Gibraltar's profits slid to $1.4 million, or 4 cents per share, from $8.4 million, or 28 cents per share, a year ago.
Excluding $1.2 million in acquisition and restructuring related costs during the first quarter of this year and other one-time expenses last year, Gibraltar's adjusted profits fell by 19 percent to $2.6 million, or 9 cents per share, from $3.2 million, or 11 cents per share, a year ago. The earnings were well below the 17 cents per share that analysts were expecting.
The company's sales rose to $192 million from $164 million, buoyed by a 4 percent increase in revenues from its existing businesses and the impact of its acquisitions during the past year. But the sales were less than the $202 million that analysts were expecting.
Lipke said Gibraltar, which built its business over the last two decades through a steady stream of acquisitions, remains on the hunt for deals that will add profitable businesses that will either expand an existing market niche or push the company into a related one.
"There are ample acquisition opportunities," Lipke said, noting that he expects the company's existing businesses to grow at a 3 percent to 5 percent annual pace. "We have a very full pipeline."