Gibraltar Industries Inc. (ROCK, Financial) filed Quarterly Report for the period ended 2010-09-30.
Gibraltar Industries Inc. has a market cap of $285.1 million; its shares were traded at around $9.41 with a P/E ratio of 36.1 and P/S ratio of 0.3. ROCK is in the portfolios of James Barrow of Barrow, Hanley, Mewhinney & Strauss, Chuck Royce of Royce& Associates, NWQ Managers of NWQ Investment Management Co, Jim Simons of Renaissance Technologies LLC.
Despite the decrease in net sales during the first nine months of 2010 from the comparable period in the prior year, gross margin increased to 18.8% for the nine months ended September 30, 2010 from 18.5% for the nine months ended September 30, 2009. The increase in gross margin was a direct result of cost reduction initiatives we put in place during 2009 and 2010. The commodity markets for our raw materials, which principally include steel, aluminum, and resins, experienced a precipitous decline in costs during the first half of 2009 and then have generally risen during the second half of 2009 and throughout the first six months of 2010. As a result, our prices have been consistently aligned to our costs during the nine months ended September 30, 2010 which contributed to similar gross margins throughout the year. During 2009, the significant decline in commodity prices led to lower gross margins in the first six months of the year and a significant improvement during the third quarter of 2009.
The provision for income taxes for the nine months ended September 30, 2010 was $0.6 million, an effective tax rate of 17.6%, compared with a benefit from income taxes of $7.3 million, an effective rate of 39.2% for the same period in 2009. A change in forecasted earnings caused a significant change in the forecasted annual effective tax rate during the three months ended September 30, 2010. The provision for income taxes for the nine months ended September 30, 2010 reflects the most recent estimate of the income tax provision forecasted for the full year. Small changes in our forecasted earnings could have a significant impact on our effective tax rate for the full year as a result of our pre-tax earnings approximating break-even, non-deductible permanent items, and certain state taxes. The effective tax rate for the nine months ended September 30, 2009 was higher than the U.S. federal statutory tax rate due to state taxes and the tax benefit of adjustments made to the Companys reserve for uncertain tax positions partially offset by the impact of non-deductible permanent differences.
Borrowings under the Senior Credit Agreement are secured by the trade receivables, inventory, personal property and equipment, and certain real property of the Companys significant domestic subsidiaries. The Senior Credit Agreement provides for a revolving credit facility and letters of credit in an aggregate amount that does not exceed the lesser of (i) $200 million or (ii) a borrowing base determined by reference to the trade receivables, inventories, and property, plant, and equipment of the Companys significant domestic subsidiaries. The Senior Credit Agreement also provided a term loan originally aggregating $58.7 million which was subsequently repaid in full during 2009. The revolving credit facility is committed through August 30, 2012. Borrowings on the revolving credit facility bear interest at a variable interest rate based upon the London Interbank Offered Rate (LIBOR), with a LIBOR floor of 1.50% plus 3.25%, or at the Companys option, an alternate base rate. The revolving credit facility also carries an annual facility fee of 0.50% on the entire facility, whether drawn or undrawn, and fees on outstanding letters of credit which are payable quarterly. As of September 30, 2010, we had $104.3 million of availability under the revolving credit facility.
The Companys $204.0 million of Senior Subordinated 8% Notes (8% Notes) were issued in December 2005 at a discount to yield 8.25%. Provisions of the 8% Notes include, without limitation, restrictions on indebtedness, liens, and distributions from restricted subsidiaries, asset sales, affiliate transactions, dividends, and other restricted payments. Dividend payments are subject to annual limits of $0.25 per share and $10 million. After December 1, 2010, the 8% Notes are redeemable at the option of the Company, in whole or in part, at the redemption price (as defined in the Senior Subordinated 8% Notes Indenture), which declines annually from 104% to 100% on and after December 1, 2013. In the event of a Change in Control (as defined in the Senior Subordinated 8% Notes Indenture), each holder of the 8% Notes may require the Company to repurchase all or a portion of such holders 8% Notes at a purchase price equal to 101% of the principal amount thereof. As of September 30, 2010, we had $201.9 million, net of discount, of our 8% Notes outstanding.
Each of our significant domestic subsidiaries has guaranteed the obligations under the Senior Credit Agreement. Debt outstanding under the Senior Credit Agreement and the related guarantees are secured by a first priority security interest (subject to permitted liens as defined in the Senior Credit Agreement) in substantially all the tangible and intangible assets of our Company and our material domestic subsidiaries, subject to certain exceptions, and a pledge of 100% of the stock of our significant domestic subsidiaries and a pledge of 65% of the voting stock of our foreign subsidiaries. The 8% Notes are guaranteed by each of our significant domestic subsidiaries.
Read the The complete Report
Gibraltar Industries Inc. has a market cap of $285.1 million; its shares were traded at around $9.41 with a P/E ratio of 36.1 and P/S ratio of 0.3. ROCK is in the portfolios of James Barrow of Barrow, Hanley, Mewhinney & Strauss, Chuck Royce of Royce& Associates, NWQ Managers of NWQ Investment Management Co, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Our gross margin also decreased to 17.2% for the three months ended September 30, 2010 from 23.5% for the three months ended September 30, 2009. The decrease in gross margin from the prior year was attributable to a less-favorable alignment of material costs to customer selling prices during the current year compared to the previous year. During the third quarter of 2010, raw material costs declined from earlier in the year and we experienced increased competitive pressures on pricing. These factors led to a decline in gross margins as we sold inventory purchased at higher costs during the previous quarter. In contrast, reduced raw material costs experienced in the first half of 2009 allowed us to significantly improve gross margins during the three months ended September 30, 2009. The impact of material cost fluctuations experienced during the third quarter of 2010 compared to the prior year offset the cost reduction initiatives we implemented over the past two years to align our cost structure to a lower level of sales volume. We continue to implement lean manufacturing initiatives to further reduce our costs and improve efficiencies. We believe these cost cutting measures will lead to much improved gross margins in future periods when the economy recovers and our sales volume increases.Despite the decrease in net sales during the first nine months of 2010 from the comparable period in the prior year, gross margin increased to 18.8% for the nine months ended September 30, 2010 from 18.5% for the nine months ended September 30, 2009. The increase in gross margin was a direct result of cost reduction initiatives we put in place during 2009 and 2010. The commodity markets for our raw materials, which principally include steel, aluminum, and resins, experienced a precipitous decline in costs during the first half of 2009 and then have generally risen during the second half of 2009 and throughout the first six months of 2010. As a result, our prices have been consistently aligned to our costs during the nine months ended September 30, 2010 which contributed to similar gross margins throughout the year. During 2009, the significant decline in commodity prices led to lower gross margins in the first six months of the year and a significant improvement during the third quarter of 2009.
The provision for income taxes for the nine months ended September 30, 2010 was $0.6 million, an effective tax rate of 17.6%, compared with a benefit from income taxes of $7.3 million, an effective rate of 39.2% for the same period in 2009. A change in forecasted earnings caused a significant change in the forecasted annual effective tax rate during the three months ended September 30, 2010. The provision for income taxes for the nine months ended September 30, 2010 reflects the most recent estimate of the income tax provision forecasted for the full year. Small changes in our forecasted earnings could have a significant impact on our effective tax rate for the full year as a result of our pre-tax earnings approximating break-even, non-deductible permanent items, and certain state taxes. The effective tax rate for the nine months ended September 30, 2009 was higher than the U.S. federal statutory tax rate due to state taxes and the tax benefit of adjustments made to the Companys reserve for uncertain tax positions partially offset by the impact of non-deductible permanent differences.
Borrowings under the Senior Credit Agreement are secured by the trade receivables, inventory, personal property and equipment, and certain real property of the Companys significant domestic subsidiaries. The Senior Credit Agreement provides for a revolving credit facility and letters of credit in an aggregate amount that does not exceed the lesser of (i) $200 million or (ii) a borrowing base determined by reference to the trade receivables, inventories, and property, plant, and equipment of the Companys significant domestic subsidiaries. The Senior Credit Agreement also provided a term loan originally aggregating $58.7 million which was subsequently repaid in full during 2009. The revolving credit facility is committed through August 30, 2012. Borrowings on the revolving credit facility bear interest at a variable interest rate based upon the London Interbank Offered Rate (LIBOR), with a LIBOR floor of 1.50% plus 3.25%, or at the Companys option, an alternate base rate. The revolving credit facility also carries an annual facility fee of 0.50% on the entire facility, whether drawn or undrawn, and fees on outstanding letters of credit which are payable quarterly. As of September 30, 2010, we had $104.3 million of availability under the revolving credit facility.
The Companys $204.0 million of Senior Subordinated 8% Notes (8% Notes) were issued in December 2005 at a discount to yield 8.25%. Provisions of the 8% Notes include, without limitation, restrictions on indebtedness, liens, and distributions from restricted subsidiaries, asset sales, affiliate transactions, dividends, and other restricted payments. Dividend payments are subject to annual limits of $0.25 per share and $10 million. After December 1, 2010, the 8% Notes are redeemable at the option of the Company, in whole or in part, at the redemption price (as defined in the Senior Subordinated 8% Notes Indenture), which declines annually from 104% to 100% on and after December 1, 2013. In the event of a Change in Control (as defined in the Senior Subordinated 8% Notes Indenture), each holder of the 8% Notes may require the Company to repurchase all or a portion of such holders 8% Notes at a purchase price equal to 101% of the principal amount thereof. As of September 30, 2010, we had $201.9 million, net of discount, of our 8% Notes outstanding.
Each of our significant domestic subsidiaries has guaranteed the obligations under the Senior Credit Agreement. Debt outstanding under the Senior Credit Agreement and the related guarantees are secured by a first priority security interest (subject to permitted liens as defined in the Senior Credit Agreement) in substantially all the tangible and intangible assets of our Company and our material domestic subsidiaries, subject to certain exceptions, and a pledge of 100% of the stock of our significant domestic subsidiaries and a pledge of 65% of the voting stock of our foreign subsidiaries. The 8% Notes are guaranteed by each of our significant domestic subsidiaries.
Read the The complete Report
