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GIBRALTAR INDUSTRIES As promised. Gibraltar’s Investor Mission Statement Gibraltar is committed to achieving $2 billion in annual sales, with net income of $100 million, by 2009, or sooner. To reach this goal, we seek to generate top- and bottom-line growth 015 $1, that averages 20% per year. These goals can be reached by staying true to our vision of: 58 $7 78 5 $6 22 ■ Becoming a true leader in all of our businesses, with 16 $64 $6 $6 significant market share in each of our operations. We’ll focus $558 50 on businesses with accretive financial characteristics which $4 differentiate us from our competition; $343 83 $2 ■ Serving a diverse group of customers and markets to reduce $200 $168 our exposure to any single industry or customer, while focusing 93 94 95 96 97 98 99 00 01 02 03 04 our activities on high-growth markets; and Annual Sales ■ Creating the best team in each of our businesses, by fostering IN MILLIONS an environment where every member of the Gibraltar Team can do his or her best work – and be recognized and rewarded 18% Compound Annual Growth Rate for his or her contributions. In spite of four recessions, Gibraltar has increased its sales in 27 of the last 33 years, with growth ANNUAL REPORT accelerating after its 1993 Initial Public Offering. Gibraltar Industries, Inc. 2004 3556 Lake Shore Road | PO Box 2028 | Buffalo, NY 14219-0228 716 826 6500 | www.gibraltar1.com Annual Report 2004 GIBRALTAR INDUSTRIES As promised. Gibraltar’s Investor Mission Statement Gibraltar is committed to achieving $2 billion in annual sales, with net income of $100 million, by 2009, or sooner. To reach this goal, we seek to generate top- and bottom-line growth 015 $1, that averages 20% per year. These goals can be reached by staying true to our vision of: 58 $7 78 5 $6 22 ■ Becoming a true leader in all of our businesses, with 16 $64 $6 $6 significant market share in each of our operations. We’ll focus $558 50 on businesses with accretive financial characteristics which $4 differentiate us from our competition; $343 83 $2 ■ Serving a diverse group of customers and markets to reduce $200 $168 our exposure to any single industry or customer, while focusing 93 94 95 96 97 98 99 00 01 02 03 04 our activities on high-growth markets; and Annual Sales ■ Creating the best team in each of our businesses, by fostering IN MILLIONS an environment where every member of the Gibraltar Team can do his or her best work – and be recognized and rewarded 18% Compound Annual Growth Rate for his or her contributions. In spite of four recessions, Gibraltar has increased its sales in 27 of the last 33 years, with growth ANNUAL REPORT accelerating after its 1993 Initial Public Offering. Gibraltar Industries, Inc. 2004 3556 Lake Shore Road | PO Box 2028 | Buffalo, NY 14219-0228 716 826 6500 | www.gibraltar1.com Annual Report 2004 Financial Highlights Eleven-year Selected Financial Highlights (In thousands, except percent (In thousands, except percent and per share data) DECEMBER 31, 2004 DECEMBER 31, 2003 CHANGE and per share data) 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 Net sales $ 1,014,664 $ 758,261 33.8 % Net sales $1,014,664 $758,261 $645,114 $616,028 $677,540 $621,918 $557,944 $449,700 $342,974 $282,833 $200,142 Gross profit 209,734 147,429 42.3 % Income from operations 92,646 58,117 49,601 37,482 59,135 54,316 43,679 31,603 29,924 19,727 15,307 Income from operations 92,646 58,117 59.4 % Interest expense 14,243 14,252 10,403 16,446 18,942 13,439 11,389 5,115 3,827 3,984 1,374 Net Income 50,782 26,953 88.4 % Net income per share, diluted $ 1.72 $ 1.11 55.0 % Income before income taxes 83,249 44,550 39,757 21,063 40,950 42,030 33,066 27,488 26,790 16,384 14,805 Weighted average shares outstanding, diluted 29,596 24,387 21.4 % Income taxes 32,467 17,597 15,903 8,530 16,585 17,022 13,226 11,072 10,815 6,662 5,996 Net income Long-term debt $ 295,347 $ 222,402 32.8 % 50,782 26,953 23,854 12,533 24,365 25,008 19,840 16,416 15,975 9,722 8,809 $50.8 Shareholders’ equity 453,743 394,181 15.1 % Net income per share – Capital expenditures 25,196 22,571 11.6 % Basic $ 1.73 $ 1.12 $ 1.04 $ 0.67 $ 1.29 $ 1.33 $ 1.06 $ 0.89 $ 0.95 $ 0.64 $ 0.58 Depreciation and amortization $ 25,029 $ 22,448 11.5 % Weighted average shares outstanding – Basic 29,362 24,143 22,921 18,886 18,865 18,810 18,684 18,536 16,892 15,246 15,245 Return on average equity 12.0 % 7.8 % 53.8 % Net income per share – Return on sales 5.0 % 3.6 % 38.9 % Diluted $ 1.72 $ 1.11 $ 1.02 $ 0.65 $ 1.28 $ 1.30 $ 1.05 $ 0.87 $ 0.93 $ 0.63 $ 0.57 Weighted average shares All share and per share amounts have been adjusted for the 3-for-2 stock split which occurred in 2004. 0 outstanding – Diluted 29,596 24,387 23,279 19,159 19,028 19,209 18,977 18,887 17,196 15,320 15,300 7. 0 4 9 $2 5. Cash dividends 4. 3. per common share $2 $ 0.146 $ 0.117 $ 0.103 $ 0. 090 $ 0.077 $ 0.083 – – – – – $2 $2 .8 Book value per share $ 15.33 $ 13.65 $ 12.23 $ 11.55 $ 11.05 $ 9.83 $ 8.56 $ 7.53 $ 6.59 $ 4.61 $ 3.96 4 $19 2004 Performance Highlights 0 Table of Contents Working capital $242,255 $150,694 $138,246 $105,064 $132,407 $112,923 $124,236 $ 87,645 $ 68,673 $ 57,515 $ 48,524 $16. $16. Record annual sales of $1.0 billion, up 34% Inside Front Total assets 957,701 777,743 576,568 535,040 556,046 522,080 438,435 281,336 222,507 167,423 126,380 .7 $12.5 Shareholders Letter $9 Best-ever net income of $50.8 million, up 88% .3 Total debt 310,039 242,250 166,932 212,275 255,853 236,621 200,746 83,024 49,841 59,054 38,658 $8.8 $7 2 Best-ever gross (20.7%), operating (9.1%), and net income Shareholders’ equity 453,743 394,181 293,117 218,347 208,348 185,459 160,308 140,044 121,744 70,244 60,396 (5.0%) margins Financial and Performance Highlights 93 94 95 96 97 98 99 00 01 02 03 04 Capital expenditures 25,196 22,571 15,995 14,344 19,619 21,999 22,062 21,784 15,477 14,504 16,171 Made four acquisitions 3 Depreciation 11-year Financial Highlights / Profile and amortization $ 25,029 $ 22,448 $ 20,481 $ 23,486 $ 21,188 $ 17,452 $ 13,333 $ 8,478 $ 6,246 $ 4,538 $ 3,445 Annual Net Income Strengthened and deepened both our Executive Management IN MILLIONS Team and Board of Directors 4 Return on sales (%) 5.0 3.6 3.7 2.0 3.6 4.0 3.6 3.7 4.7 3.4 4.4 Gibraltar at a Glance Return on average equity (%) Completed a 3-for-2 stock split, increasing shares outstanding 12.0 7.8 9.3 5.9 12.4 14.5 13.2 12.5 16.6 14.9 15.7 to 29.6 million, which improved the stock’s float and liquidity 6 All share and per share amounts have been adjusted for the 3-for-2 stock split which occurred in 2004. Review of Operations 19% Compound Annual Growth Rate Increased our annual dividend payment by 67% 19 Compared to the 3,366 companies that have Stock reached its highest-ever share price of $26.91 (split-adjusted) Board of Directors on October 6 and finished the year up 41%, on top of a gain of Company Profile more than 30% in 2003 been public during the last ten years, Gibraltar 20 Executive Management Team ranks in the top 25% for sales growth and the Changed the company’s name to Gibraltar Industries, Inc., Gibraltar Industries is a leading manufacturer, processor, and distributor of metals and other engineered materials for the building to better align it in the marketplace and to clarify our position in key products, vehicular, and other industrial markets. We classify our operations into three segments: Building Products, Processed Metal growth markets 21 top 21% for net income growth. Form 10-K Products, and Thermal Processing (Heat Treating). In the 11 years since our Initial Public Offering, we have strategically repositioned Gibraltar, dramatically changing its size, scope, product offering, customer mix, and geographic coverage, all of which positions the Inside Back Company for even stronger performance in the future. Gibraltar serves approximately 10,000 customers in a variety of industries in all Shareholder Information 50 states, Canada, Mexico, Europe, Asia, and Central and South America. It has approximately 3,900 employees and operates 75 facilities in 26 states, Canada, and Mexico. 2 3 Fellow shareholders, December 29, 2004 is a day we will remember for a long time. The good news is that we possess tremendous potential for both growth and cost savings in all of our three Fellow Shareholders: business segments.