A month has gone by since the last earnings report for Gibraltar Industries (ROCK). Shares have lost about 3.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Gibraltar Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Gibraltar Q2 Earnings Miss, Up Y/Y, Sales View Lowered

Gibraltar Industries, Inc. reported strong second-quarter 2024 earnings despite top-line woes. Although both the earnings and net sales missed the Zacks Consensus Estimate, the bottom line strengthened on a year-over-year basis.

ROCK has slightly reduced its net sales outlook for 2024 to reflect recent slower market conditions in both Residential and Renewables end markets, partially offset by strength in both Agtech and Infrastructure. Nonetheless, it remains focused on driving participation gains across the segments, with operational improvements to support solid second-half and full-year margin expansion and cash flow growth.

Inside the Headlines

Gibraltar’s adjusted EPS of $1.18 missed the Zacks Consensus Estimate of $1.26 by 6.4% but increased year over year by 2.6%. Net sales of $353 million lagged the consensus mark of $370 million by 4.7% and decreased 3.3% from the prior-year level of $364.9 million due to a slowdown in the Residential market. On an adjusted basis, the top line fell 2% year over year.

Segmental Details

Renewable Energy: Net sales in the segment increased 2.5% from the year-ago quarter to $79.4 million (up 8.2% on an adjusted basis), driven by strong demand from new and existing customers for the new 1P tracker product. Despite a growing pipeline of new projects across all product lines, order backlog fell 10% as some customers paused signing new contracts as they worked through trade and/or regulatory items specific to their projects.

The adjusted operating margin of 7.8% contracted 270 basis points (bps) year over year due to an unfavorable product mix owing to the 1P tracker product moving through its launch process learning curve to permanently tooled production for suppliers and an efficient field installation process. The adjusted EBITDA margin decreased 290 bps from the prior-year quarter to 10.7%.

Residential Products: Net sales in the segment were down 6.1% year over year to $214.3 million. This was due to a slowing market and unexpected channel destocking in the second half of the quarter, partially offset by participation gains with new and existing customers, growth in ventilation product lines, and expansion initiatives in the Rocky Mountain region.

However, an adjusted operating margin of 20.3% expanded 100 bps in the quarter on the back of solid execution, 80/20 initiatives, and effective price/cost management. The adjusted EBITDA margin grew 120 bps from the prior-year quarter to 21.7%.

Agtech: Sales declined 1.4% year over year, but adjusted sales inched up 0.6% to $34.5 million. The downside was due to delayed new project construction. Backlogs increased an impressive 32% year over year on the back of solid new bookings, which reached $90 million in the quarter, representing nearly 400% growth sequentially. The adjusted operating margin fell 290 bps year over year to 6.6%, mainly due to unfavorable project timing and mix. The adjusted EBITDA margin contracted 360 bps year over year to 9.3%.

Infrastructure: Sales in the segment rose 2.5% year over year to $24.8 million, driven by continued strong execution and market participation gains. Backlog, however, declined 12% due to a large project booked in 2023, which is reaching its final stages. On an impressive note, bookings increased 3% on a sequential basis, reflecting consistent customer activity. The adjusted operating margin of 25.1% expanded 100 bps year over year, driven by price/cost alignment, ongoing strong execution, 80/20 productivity, and improving product mix. The adjusted EBITDA margin also expanded 70 bps from the prior-year quarter to 28.3%.