Gibraltar Industries, Inc. (NASDAQ:ROCK) Q4 2022 Earnings Conference Call February 22, 2023 9:00 AM ET Company Participants Carolyn Capaccio - LHA Investor Relations Bill Bosway - Chairman, President, and Chief Executive Officer Tim Murphy - Chief Financial Officer Conference Call Participants Daniel Moore - CJS Securities Julio Romero - Sidoti Operator Greetings, and welcome to the Gibraltar Industries Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is b ...

Financial Performance - The Company reported a liquidity of $322.1 million as of December 31, 2022, including $17.6 million in cash and $304.5 million available under its revolving credit facility[28]. - The Company has a share repurchase program authorized for up to $200 million, with $85.9 million spent to repurchase 1,997,366 shares as of December 31, 2022[31]. - The Company reported a backlog of approximately $299 million as of December 31, 2022, compared to $344 million in the previous year, primarily related to the Renewables, Agtech, and Infrastructure segments[54]. - In 2022, approximately 45% of the Company's revenues were generated from direct sales to end users, a decrease from 56% in 2021[50]. - One home improvement retailer accounted for 14% of the Company's consolidated net sales in 2022, with no other customer exceeding 10%[33]. Acquisitions and Divestitures - The Company acquired Quality Aluminum Products for an aggregate purchase price of $52.1 million, enhancing its Residential segment[30]. - The Company plans to divest its non-core Processing business within the Agtech segment to focus on higher growth opportunities[32]. - The Company classified its Processing business as held for sale as of March 31, 2022, to focus on higher growth areas within the Agtech segment[32]. Operational Strategy - The Company operates 33 facilities, including 25 manufacturing plants, across 15 states, Canada, China, and Japan[20]. - The Company’s portfolio management strategy includes optimizing its business in higher growth markets and divesting non-core segments[16]. - The Company has implemented enterprise resource planning systems to manage inventory and forecast customer orders effectively[46]. - The Company has integrated its Renewables segment under the brand name Terrasmart and Agtech segment under Prospiant to enhance brand strategy[51]. Product Development and Innovation - The Company introduced new products including screw-based racking and foundation solutions, operating software for solar energy investments, and single-axis tracker systems, enhancing installation efficiency and reducing costs[37]. - New products introduced include screw-based racking solutions and operating software for optimizing solar energy investments, enhancing project design capabilities[37]. - The Company has expanded its product offerings in the Infrastructure segment, including engineered pavement sealants for airport runways and corrosion-protection products for cable-suspension bridges, targeting new markets[44]. Employee and Workforce Management - The Company employs 2,137 total employees, with 41% classified as salary and 59% as hourly, reflecting a diverse workforce structure[61]. - The total workforce composition includes 2,137 employees, with 29.1% female and 70.8% male[68]. - Among the employees, 41.0% are salaried and 59.0% are hourly workers[69]. - The ethnic background of employees shows 62.1% White, 13.8% Hispanic or Latino, and 12.6% Black or African American[70]. - The Gibraltar Leadership Program was launched to 194 leaders in 2022, focusing on various leadership skills[73]. - The company emphasizes ongoing education and development, including quarterly ethics training for all employees[73]. Safety and Quality Commitment - The Company maintains a focus on safety, with a disciplined management process and monthly reviews of safety performance by the CEO, aiming for a zero incidents work environment[63]. - The Company’s commitment to quality is reflected in its management systems designed to meet customer and regulatory expectations[27]. Market Presence and Customer Engagement - The Company serves customers primarily in North America, with one home improvement retailer accounting for 14% of consolidated net sales in 2022[33]. - The Company has implemented a Customer Relationship Management (CRM) system to improve sales visibility and enable cross-sell and up-sell opportunities, enhancing market data aggregation[52].

Financial Data and Key Metrics Changes - Adjusted revenue increased by 6% to $389 million, with adjusted operating income up 16%, adjusted EBITDA up 14%, and adjusted EPS up 19% to $1.12 per share [8][22][24] - Backlog decreased by 7% to $356 million, driven by lower backlog in Renewables and Agtech businesses [10][24] Business Line Data and Key Metrics Changes - **Renewables Segment**: Revenue decreased by 14.7%, with backlog down 9%. Adjusted operating margin improved to 12.9%, up 150 basis points year-over-year [26][28] - **Residential Segment**: Revenue increased by 25.7%, with 19% organic growth. Adjusted operating income and EBITDA grew by 22.6% and 21.6%, respectively [30][32] - **Agtech Segment**: Adjusted revenue decreased by 7.3%, but adjusted operating and EBITDA margins improved by 200 and 230 basis points, respectively [35][37] - **Infrastructure Segment**: Revenue increased by 9.1%, with order backlog up 11%. Adjusted operating income increased by 62.5% [38][39] Market Data and Key Metrics Changes - Commodity prices for hot-rolled coil steel and aluminum have corrected, but remain above pre-pandemic levels. Other cost inputs like labor and transportation remain inflated [14] - The UFLPA enforcement continues to impact solar panel supply, with expectations for improvement in the first half of 2023 [11][20] Company Strategy and Development Direction - The company is focused on five key performance initiatives: driving 80/20, managing supply chain disruptions, accelerating digitization, improving organizational health, and conducting business responsibly [48][56] - The company raised the lower end of its GAAP and adjusted EPS outlook for the year, reaffirming its consolidated revenue outlook of $1.38 billion to $1.43 billion [50] Management's Comments on Operating Environment and Future Outlook - Management expects the renewables market to grow, with a slower first half of 2023 due to supply chain issues, but anticipates acceleration in the second half [52][56] - The residential market is returning to normal seasonality, with expectations for solid repair activity despite challenges in new housing construction [53][56] Other Important Information - The company acquired Quality Aluminum Products, contributing $0.02 to adjusted EPS and broadening its geographic and product footprint [9][100] - The company generated $38 million in cash from continuing operations during the quarter, with a net cash investment of $51.6 million for the purchase of QAP [40][43] Q&A Session Summary Question: What was the pricing versus volume during the quarter for the Residential side? - Management indicated that pricing was the main driver, with volume also contributing through participation gains [62] Question: Any inventory reductions from big-box retailers? - Management noted no significant change in volume at the big-box level, with expectations for normal seasonality to return [63][64] Question: What is the expectation for supply ramp-up in Renewables? - Management expects supply to normalize within a quarter once customers feel more comfortable [70] Question: How is inventory impacting free cash flow? - Management acknowledged that supply chain issues forced them to maintain higher inventory levels than anticipated [72][73] Question: What are the key variables for success in Renewables in 2023? - Key variables include panel supply, inflation impacts, and the benefits from the Inflation Reduction Act [95][96] Question: Can you discuss the strategic rationale behind the QAP deal? - The acquisition opens new channel opportunities, geographic expansion, and cross-selling potential [99][101] Question: Will 2023 be a growth year in the Residential segment? - Management believes that despite potential revenue declines from deflationary metal prices, growth can be achieved through volume pickup and participation gains [121][122]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section contains the unaudited consolidated financial statements and accompanying notes for the reporting period [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income (Three Months Ended September 30) | Metric | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net sales | $391,291 | $369,353 | | Gross profit | $94,556 | $83,252 | | Income from operations | $47,396 | $37,978 | | Net income | $34,295 | $27,556 | | Net earnings per share – Diluted | $1.08 | $0.83 | Consolidated Statements of Income (Nine Months Ended September 30) | Metric | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net sales | $1,076,105 | $1,005,334 | | Gross profit | $249,671 | $224,201 | | Income from operations | $108,730 | $82,202 | | Net income | $79,058 | $66,267 | | Net earnings per share – Diluted | $2.43 | $2.01 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income (Three and Nine Months Ended September 30) | Metric | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net income | $34,295 | $27,556 | $79,058 | $66,267 | | Foreign currency translation adjustment | $(3,568) | $(1,057) | $(6,993) | $2,902 | | Total comprehensive income | $30,739 | $26,526 | $72,102 | $69,250 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets (as of September 30, 2022 and December 31, 2021) | Metric | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $21,919 | $12,849 | | Total current assets | $539,201 | $446,967 | | Total assets | $1,326,263 | $1,214,901 | | Total current liabilities | $282,368 | $286,990 | | Long-term debt | $121,840 | $23,781 | | Total stockholders' equity | $843,491 | $825,258 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (Nine Months Ended September 30) | Metric | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $38,561 | $(16,525) | | Net cash (used in) provided by investing activities | $(67,325) | $28,778 | | Net cash provided by (used in) financing activities | $39,675 | $(30,276) | | Net increase (decrease) in cash and cash equivalents | $9,070 | $(18,120) | | Cash and cash equivalents at end of period | $21,919 | $13,934 | [Consolidated Statement of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statement%20of%20Stockholders'%20Equity) Changes in Stockholders' Equity (Nine Months Ended September 30, 2022) | Item | Amount (in thousands) | | :--- | :--- | | Balance at December 31, 2021 | $825,258 | | Net income | $79,058 | | Foreign currency translation adjustment | $(6,993) | | Common stock repurchased | $(55,541) | | Balance at September 30, 2022 | $843,491 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [(1) CONSOLIDATED FINANCIAL STATEMENTS](index=10&type=section&id=%281%29%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) - The accompanying unaudited consolidated financial statements are prepared in accordance with **U.S. GAAP** for interim financial information and Form 10-Q instructions[23](index=23&type=chunk) - The Company's operations are seasonal, meaning **interim financial results are not necessarily indicative of full-year results**[23](index=23&type=chunk) [(2) RECENT ACCOUNTING PRONOUNCEMENTS](index=10&type=section&id=%282%29%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) - ASU No 2020-04 and ASU No 2021-01 provide optional expedients for contracts and hedging relationships affected by **reference rate reform (LIBOR transition)**[25](index=25&type=chunk) - The adoption of these amendments is **not expected to have a material impact** on the Company's financial statements[25](index=25&type=chunk) [(3) ACCOUNTS RECEIVABLE, NET](index=11&type=section&id=%283%29%20ACCOUNTS%20RECEIVABLE%2C%20NET) Accounts Receivable, Net (in thousands) | Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Trade accounts receivable | $222,368 | $185,745 | | Costs in excess of billings | $57,183 | $54,437 | | Total accounts receivables | $279,551 | $240,182 | | Less allowance for doubtful accounts and contract assets | $(3,847) | $(3,738) | | Accounts receivable, net | $275,704 | $236,444 | - Bad debt expense, net of recoveries, for the nine months ended September 30, 2022, was **$960 thousand**[28](index=28&type=chunk) [(4) REVENUE](index=11&type=section&id=%284%29%20REVENUE) - Revenue is generated from a diverse range of products and services, including solar racking systems, residential building products, greenhouses, and infrastructure solutions[29](index=29&type=chunk) - The Company's remaining performance obligations are typically part of contracts with an original expected duration of **one year or less**[30](index=30&type=chunk) Revenue Recognized from Contract Liabilities (in millions) | Period | Revenue Recognized | | :--- | :--- | | Nine months ended Sep 30, 2022 | $41.2 | | Nine months ended Sep 30, 2021 | $52.6 | [(5) INVENTORIES](index=12&type=section&id=%285%29%20INVENTORIES) Inventories (in thousands) | Category | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Raw material | $132,084 | $135,558 | | Work-in-process | $21,642 | $5,858 | | Finished goods | $56,955 | $39,256 | | Gross inventory | $210,681 | $180,672 | | Less reserves | $(6,681) | $(4,465) | | Total inventories, net | $204,000 | $176,207 | [(6) ACQUISITION](index=12&type=section&id=%286%29%20ACQUISITION) - On August 22, 2022, the Company acquired Quality Aluminum Products (QAP), a manufacturer of aluminum and steel products, for a preliminary purchase consideration of **$52.6 million**[33](index=33&type=chunk) - QAP's results have been included in the **Residential segment** since the acquisition date[33](index=33&type=chunk) Preliminary Purchase Price Allocation for QAP (in thousands) | Asset Acquired | Fair Value | | :--- | :--- | | Cash | $1,018 | | Working capital | $24,279 | | Property, plant and equipment | $3,462 | | Acquired intangible assets | $20,000 | | Other assets | $404 | | Goodwill | $3,476 | | **Fair value of purchase consideration** | **$52,639** | - The acquisition was primarily financed through borrowings under the Company's **revolving credit facility**[37](index=37&type=chunk) Acquisition-Related Costs (in thousands) | Category | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Cost of sales | $476 | $476 | | Selling, general and administrative costs | $522 | $529 | | **Total acquisition related costs** | **$998** | **$1,005** | [(7) GOODWILL AND RELATED INTANGIBLE ASSETS](index=13&type=section&id=%287%29%20GOODWILL%20AND%20RELATED%20INTANGIBLE%20ASSETS) Goodwill by Segment (in thousands) | Segment | Balance at Dec 31, 2021 | Acquired Goodwill | Foreign Currency Translation | Balance at Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Renewables | $188,680 | — | $(2,545) | $187,039 | | Residential | $205,452 | $3,476 | — | $208,928 | | Agtech | $85,132 | — | $(1,911) | $83,221 | | Infrastructure | $31,678 | — | — | $31,678 | | **Total** | **$510,942** | **$3,476** | **$(4,456)** | **$510,866** | Acquired Intangible Assets (in thousands) | Category | Gross Carrying Amount (Sep 30, 2022) | Accumulated Amortization (Sep 30, 2022) | | :--- | :--- | :--- | | Indefinite-lived trademarks | $57,700 | — | | Finite-lived trademarks | $5,432 | $4,337 | | Unpatented technology | $34,117 | $21,456 | | Customer relationships | $117,429 | $43,914 | | Non-compete agreements | $2,368 | $1,965 | | Backlog | $6,852 | $6,852 | | **Total acquired intangible assets** | **$223,898** | **$78,524** | Acquired Intangible Asset Amortization Expense (in thousands) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended September 30 | $2,801 | $4,646 | | Nine Months Ended September 30 | $8,718 | $14,125 | [(8) LONG-TERM DEBT](index=14&type=section&id=%288%29%20LONG-TERM%20DEBT) Long-Term Debt (in thousands) | Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Revolving credit facility | $122,300 | $24,500 | | Less unamortized debt issuance costs | $(460) | $(719) | | **Total debt** | **$121,840** | **$23,781** | - The Senior Credit Agreement provides for a revolving credit facility and letters of credit totaling **$400 million**, with an option to increase to **$700 million**[43](index=43&type=chunk) - As of September 30, 2022, the Company was **in compliance with all three financial covenants** of the Senior Credit Agreement[43](index=43&type=chunk) - Availability under the revolving credit facility was **$273.2 million** at September 30, 2022, down from $369.3 million at December 31, 2021[46](index=46&type=chunk) [(9) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=15&type=section&id=%289%29%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20%28LOSS%29) Accumulated Other Comprehensive Income (Loss) (in thousands) | Component | Balance at Dec 31, 2021 | Change (9 months ended Sep 30, 2022) | Balance at Sep 30, 2022 | | :--- | :--- | :--- | :--- | | Foreign Currency Translation Adjustment | $1,640 | $(6,993) | $(5,353) | | Minimum Post Retirement Benefit Plan Adjustments | $(2,247) | $52 | $(2,195) | | **Total Accumulated Other Comprehensive Income (Loss)** | **$187** | **$(6,956)** | **$(6,769)** | [(10) EQUITY-BASED COMPENSATION](index=16&type=section&id=%2810%29%20EQUITY-BASED%20COMPENSATION) - Stockholders approved an increase of **100,000 shares** for issuance under the Non-Employee Directors Plan in May 2022[49](index=49&type=chunk) Equity-Based Awards Granted (Nine Months Ended September 30) | Award Type | 2022 Number of Awards | 2022 Weighted Average Grant Date Fair Value | 2021 Number of Awards | 2021 Weighted Average Grant Date Fair Value | | :--- | :--- | :--- | :--- | :--- | | Performance stock units | 108,464 | $47.00 | 62,778 | $87.84 | | Restricted stock units | 123,351 | $43.42 | 62,873 | $80.43 | | Deferred stock units | 2,460 | $42.69 | 7,536 | $83.58 | | Common shares | 15,652 | $42.49 | 2,512 | $83.58 | - Total Management Stock Purchase Plan (MSPP) liabilities decreased to **$16.2 million** as of September 30, 2022, from $22.6 million as of December 31, 2021[55](index=55&type=chunk) MSPP Restricted Stock Units and Payments (Nine Months Ended September 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Restricted stock units credited | 9,564 | 28,230 | | Share-based liabilities paid (in thousands) | $2,961 | $4,022 | [(11) HELD FOR SALE AND DISCONTINUED OPERATIONS](index=17&type=section&id=%2811%29%20HELD%20FOR%20SALE%20AND%20DISCONTINUED%20OPERATIONS) - The Company committed to a plan to sell its **Processing business** within the Agtech segment during Q1 2022, classifying it as 'held for sale'[57](index=57&type=chunk)[59](index=59&type=chunk) Assets and Liabilities Held for Sale (September 30, 2022, in thousands) | Category | Amount | | :--- | :--- | | **Assets held for sale:** | | | Accounts receivable, net | $89 | | Inventories, net of reserves | $8,498 | | Other current assets | $1,609 | | Property, plant, and equipment, net | $331 | | Operating lease asset | $603 | | Acquired intangibles, net | $6,213 | | **Total assets held for sale** | **$17,343** | | **Liabilities held for sale:** | | | Accounts payable | $803 | | Accrued expenses | $74 | | Non-current operating lease liabilities | $165 | | **Total liabilities held for sale** | **$1,042** | Net Sales and Operating Loss for Held for Sale Operations (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $2,326 | $3,825 | $6,897 | $16,062 | | Operating loss | $(481) | $(1,387) | $(4,115) | $(2,689) | - The Industrial business was sold on February 23, 2021, for net proceeds of **$38 million**, and its results are presented as discontinued operations[62](index=62&type=chunk) [(12) EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS](index=19&type=section&id=%2812%29%20EXIT%20ACTIVITY%20COSTS%20AND%20ASSET%20IMPAIRMENTS) - Exit activity costs and asset impairment charges are incurred due to **80/20 simplification and portfolio management initiatives**[65](index=65&type=chunk) Total Exit Activity Costs & Asset Impairments (in thousands) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended September 30 | $211 | $544 | | Nine Months Ended September 30 | $4,217 | $7,945 | Exit Activity Costs and Asset Impairment Charges by Segment (Nine Months Ended September 30, 2022, in thousands) | Segment | Exit Activity Costs (recoveries), net | Asset Impairment Charges | Total | | :--- | :--- | :--- | :--- | | Renewables | $1,359 | $1,198 | $2,557 | | Residential | $1,298 | $12 | $1,310 | | Agtech | $103 | $217 | $320 | | Infrastructure | $(63) | — | $(63) | | Corporate | $93 | — | $93 | | **Total** | **$2,790** | **$1,427** | **$4,217** | [(13) INCOME TAXES](index=21&type=section&id=%2813%29%20INCOME%20TAXES) Provision for Income Taxes and Effective Tax Rates (Continuing Operations) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Provision for income taxes (in thousands) | $11,690 | $9,561 | $26,686 | $20,578 | | Effective tax rate | 25.4% | 25.6% | 25.2% | 24.1% | - Effective tax rates were greater than the U.S. federal statutory rate of **21%** due to state taxes and nondeductible permanent differences[68](index=68&type=chunk) [(14) EARNINGS PER SHARE](index=21&type=section&id=%2814%29%20EARNINGS%20PER%20SHARE) Earnings Per Share (Three Months Ended September 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Income from continuing operations (in thousands) | $34,295 | $27,854 | | Net income available to common stockholders (in thousands) | $34,295 | $27,556 | | Weighted average shares outstanding – Basic (in thousands) | 31,707 | 32,802 | | Weighted average shares outstanding – Diluted (in thousands) | 31,812 | 33,050 | Earnings Per Share (Nine Months Ended September 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Income from continuing operations (in thousands) | $79,058 | $64,723 | | Net income available to common stockholders (in thousands) | $79,058 | $66,267 | | Weighted average shares outstanding – Basic (in thousands) | 32,396 | 32,791 | | Weighted average shares outstanding – Diluted (in thousands) | 32,503 | 33,055 | [(15) SEGMENT INFORMATION](index=22&type=section&id=%2815%29%20SEGMENT%20INFORMATION) - The Company is organized into four reportable segments: **Renewables, Residential, Agtech, and Infrastructure**[70](index=70&type=chunk)[71](index=71&type=chunk) Net Sales by Reportable Segment (Three Months Ended September 30, in thousands) | Segment | 2022 Net Sales | 2021 Net Sales | YoY Change (%) | | :--- | :--- | :--- | :--- | | Renewables | $111,119 | $130,162 | -14.7% | | Residential | $215,592 | $171,545 | +25.7% | | Agtech | $44,217 | $48,975 | -9.8% | | Infrastructure | $20,363 | $18,671 | +9.1% | | **Total net sales** | **$391,291** | **$369,353** | **+5.9%** | Income from Operations by Reportable Segment (Three Months Ended September 30, in thousands) | Segment | 2022 Income from Operations | 2022 Operating Margin | 2021 Income from Operations | 2021 Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Renewables | $14,216 | 12.8% | $12,206 | 9.4% | | Residential | $35,802 | 16.6% | $29,482 | 17.2% | | Agtech | $3,777 | 8.5% | $2,227 | 4.5% | | Infrastructure | $2,572 | 12.6% | $1,640 | 8.8% | | Unallocated Corporate Expenses | $(8,971) | -2.3% | $(7,577) | -2.1% | | **Total income from operations** | **$47,396** | **12.1%** | **$37,978** | **10.3%** | Net Sales by Reportable Segment (Nine Months Ended September 30, in thousands) | Segment | 2022 Net Sales | 2021 Net Sales | YoY Change (%) | | :--- | :--- | :--- | :--- | | Renewables | $291,451 | $323,425 | -9.9% | | Residential | $595,322 | $475,971 | +25.1% | | Agtech | $130,325 | $149,410 | -12.8% | | Infrastructure | $59,007 | $56,528 | +4.4% | | **Total net sales** | **$1,076,105** | **$1,005,334** | **+7.0%** | Income from Operations by Reportable Segment (Nine Months Ended September 30, in thousands) | Segment | 2022 Income from Operations | 2022 Operating Margin | 2021 Income from Operations | 2021 Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Renewables | $14,061 | 4.8% | $21,195 | 6.6% | | Residential | $104,901 | 17.6% | $79,571 | 16.7% | | Agtech | $5,350 | 4.1% | $4,133 | 2.8% | | Infrastructure | $6,640 | 11.3% | $7,863 | 13.9% | | Unallocated Corporate Expenses | $(22,222) | -2.1% | $(30,560) | -3.0% | | **Total income from operations** | **$108,730** | **10.1%** | **$82,202** | **8.2%** | Total Assets by Reportable Segment (in thousands) | Segment | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Renewables | $419,214 | $445,486 | | Residential | $581,167 | $453,469 | | Agtech | $219,800 | $212,038 | | Infrastructure | $84,626 | $82,662 | | Unallocated corporate assets | $21,456 | $21,246 | | **Total assets** | **$1,326,263** | **$1,214,901** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial condition, operational results, and liquidity [Forward-Looking Statements](index=23&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements that express opinions or projections regarding future events or results[73](index=73&type=chunk) - Forward-looking statements involve risks and uncertainties and are **not guarantees of future performance**; actual results may differ materially[73](index=73&type=chunk) - The Company undertakes **no obligation to update** these statements to reflect future events or developments[73](index=73&type=chunk) [Operating Performance Measures](index=24&type=section&id=Operating%20Performance%20Measures) - Consolidated gross margin is defined as a percentage of total consolidated gross profit to total consolidated net sales[74](index=74&type=chunk) - Operating margin by segment is defined as a percentage of total income from operations by segment to total net sales by segment[74](index=74&type=chunk) - Consolidated operating margin is defined as a percentage of total consolidated income from operations to total consolidated net sales[74](index=74&type=chunk) [Overview](index=24&type=section&id=Overview) - Gibraltar Industries, Inc is a leading manufacturer and provider of products for the **renewable energy, residential, agtech, and infrastructure markets**[75](index=75&type=chunk) - The Company operates in four reportable segments: Renewables, Residential, Agtech, and Infrastructure[76](index=76&type=chunk) - As of September 30, 2022, the Company operated **36 facilities** across 15 states, Canada, China, and Japan[76](index=76&type=chunk) [Recent Trends](index=25&type=section&id=Recent%20Trends) - The Company continues to be impacted by **material cost inflation, labor availability issues, and logistics cost increases**[77](index=77&type=chunk) - U.S. Department of Commerce investigations and the **Uyghur Forced Labor Prevention Act (UFLPA)** are impacting solar panel supply and project timing[78](index=78&type=chunk) - The **Inflation Reduction Act (IRA)** is expected to offer long-term industry certainty for renewable energy through tax credits[79](index=79&type=chunk) [Business Strategy](index=25&type=section&id=Business%20Strategy) - The Company's mission is to create compounding and sustainable value for stockholders by holding strong leadership positions in higher growth markets[80](index=80&type=chunk) - The strategy is built on three core pillars: **Business System, Portfolio Management, and Organization Development**[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - The strategy aims to enable timely responses to market changes, manage input costs, improve margins, and generate cash for growth and returns[82](index=82&type=chunk) [Recent Developments](index=26&type=section&id=Recent%20Developments) - On August 22, 2022, the Company acquired Quality Aluminum Products (QAP) for **$52.6 million**, integrating it into the Residential segment[83](index=83&type=chunk) - In May 2022, the Board authorized a **$200 million share repurchase program**, under which **$55.5 million** of shares were repurchased by September 30, 2022[84](index=84&type=chunk) - The processing equipment business within the Agtech segment was **classified as held for sale** in Q1 2022[85](index=85&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) [Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021](index=26&type=section&id=Three%20Months%20Ended%20September%2030%2C%202022%20Compared%20to%20the%20Three%20Months%20Ended%20September%2030%2C%202021) - Consolidated net sales increased by **5.9% to $391.3 million**, driven by 3.2% organic growth and a 3.1% contribution from the QAP acquisition[88](index=88&type=chunk) - Consolidated gross margin improved to **24.2% from 22.5%**, primarily due to favorable price/cost management and improved operating execution[93](index=93&type=chunk) - Income from operations increased to **$47.4 million (12.1% margin)** from $38.0 million (10.3% margin)[88](index=88&type=chunk)[95](index=95&type=chunk) - Renewables net sales **decreased 14.7%** due to regulatory delays, but operating margin **increased to 12.8%** from 9.4%[89](index=89&type=chunk)[96](index=96&type=chunk) - Residential net sales **increased 25.7%**, with QAP contributing $11.5 million; operating margin slightly decreased to 16.6% from 17.2%[90](index=90&type=chunk)[97](index=97&type=chunk) - Agtech net sales **decreased 9.8%** (excluding held-for-sale business), but operating margin **improved to 8.5%** from 4.5%[91](index=91&type=chunk)[98](index=98&type=chunk) - Infrastructure net sales **increased 9.1%**; operating margin **improved to 12.6%** from 8.8% due to favorable cost alignment[92](index=92&type=chunk)[99](index=99&type=chunk) [Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021](index=30&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202022%20Compared%20to%20the%20Nine%20Months%20Ended%20September%2030%2C%202021) - Consolidated net sales increased by **7.0% to $1.1 billion**, driven by 6.8% organic growth and a 1.1% contribution from the QAP acquisition[105](index=105&type=chunk) - Consolidated gross margin increased to **23.2% from 22.3%**, due to favorable price/cost management and lean initiatives[111](index=111&type=chunk) - Income from operations increased to **$108.7 million (10.1% margin)** from $82.2 million (8.2% margin)[105](index=105&type=chunk)[113](index=113&type=chunk) - Renewables net sales **decreased 9.9%** due to regulatory delays; operating margin **decreased to 4.8%** from 6.6%[106](index=106&type=chunk)[114](index=114&type=chunk) - Residential net sales **increased 25.1%**; operating margin **increased to 17.6%** from 16.7% due to favorable price/cost management[108](index=108&type=chunk)[116](index=116&type=chunk) - Agtech net sales **decreased 12.8%** (excluding held-for-sale business); operating margin **improved to 4.1%** from 2.8%[109](index=109&type=chunk)[117](index=117&type=chunk) - Infrastructure net sales **increased 4.4%**; operating margin **declined to 11.3%** from 13.9% due to steel inflation on fixed-price contracts[110](index=110&type=chunk)[118](index=118&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) [Liquidity Position](index=32&type=section&id=Liquidity%20Position) Liquidity Position (in thousands) | Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $21,919 | $12,849 | | Availability on revolving credit facility | $273,205 | $369,305 | | **Total liquidity** | **$295,124** | **$382,154** | [Sources of Liquidity](index=33&type=section&id=Sources%20of%20Liquidity) - Primary liquidity sources are **cash on hand and available borrowing capacity** under the Senior Credit Agreement[124](index=124&type=chunk) - These sources are believed to be **sufficient to fund future requirements**[124](index=124&type=chunk) - Foreign subsidiaries held **$15.7 million in cash** as of September 30, 2022[125](index=125&type=chunk) [Uses of Cash / Cash Requirements](index=33&type=section&id=Uses%20of%20Cash%20%2F%20Cash%20Requirements) - Short-term cash requirements include payables, benefits, leases, interest, debt, and capital expenditures[127](index=127&type=chunk) - Principal capital requirements are to fund **working capital, capital improvements, acquisitions, and stock repurchases**[127](index=127&type=chunk) - The **$52.6 million acquisition of QAP** was primarily financed through borrowings on the revolving credit facility[130](index=130&type=chunk) - The Company has a **$200 million share repurchase program**, with **$55.5 million** repurchased by September 30, 2022[128](index=128&type=chunk) - The remaining **$2.5 million** of deferred Social Security tax from the CARES Act will be repaid by the end of 2022[129](index=129&type=chunk) [Cash Flows](index=34&type=section&id=Cash%20Flows) Selected Cash Flow Data (Nine Months Ended September 30, in thousands) | Category | 2022 | 2021 | | :--- | :--- | :--- | | Operating activities of continuing operations | $38,561 | $(14,523) | | Investing activities of continuing operations | $(67,325) | $28,954 | | Financing activities of continuing operations | $39,675 | $(30,276) | | Discontinued operations | — | $(2,178) | | Effect of foreign exchange rate changes | $(1,841) | $(97) | | **Net increase (decrease) in cash and cash equivalents** | **$9,070** | **$(18,120)** | - Net cash from operating activities of continuing operations significantly improved to **$38.6 million** in 2022 from $(14.5) million used in 2021[134](index=134&type=chunk)[135](index=135&type=chunk) - Net cash used in investing activities was **$67.3 million** in 2022, primarily due to the **$51.6 million QAP acquisition** and capital expenditures[136](index=136&type=chunk)[137](index=137&type=chunk) - Net cash from financing activities was **$39.7 million** in 2022, driven by debt proceeds offset by debt payments and stock repurchases[138](index=138&type=chunk)[139](index=139&type=chunk) [Critical Accounting Estimates](index=35&type=section&id=Critical%20Accounting%20Estimates) - There have been **no material changes** to the Company's critical accounting estimates from those disclosed in the 2021 Annual Report[140](index=140&type=chunk) [Recent Accounting Pronouncements](index=35&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to **Note 2** to the Company's consolidated financial statements for further information on recent accounting pronouncements[141](index=141&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the Company's exposure to various market risks, with no material changes since year-end 2021 - The Company is exposed to market risk factors such as economic conditions, competition, interest rates, foreign exchange rates, and raw materials pricing[142](index=142&type=chunk) - There have been **no material changes** in the market risk information provided since December 31, 2021[142](index=142&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and reports changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=35&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of September 30, 2022[143](index=143&type=chunk) [Changes in Internal Control over Financial Reporting](index=35&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - A **new ERP system** was implemented for one operating unit in the Renewables segment[144](index=144&type=chunk) - The acquisition of **Quality Aluminum Products (QAP)** will be excluded from management's annual report on internal control for 2022[144](index=144&type=chunk) - Except for the ERP implementation and QAP acquisition, there have been **no other material changes** in internal control over financial reporting[145](index=145&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The Company reports no current material pending litigation or material legal proceedings resolved during the quarter - The Company is subject to litigation in the ordinary course of business, but there is **no current material pending litigation**[146](index=146&type=chunk) - **No material legal proceedings were resolved** during the three months ended September 30, 2022[146](index=146&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new or updated risks related to macroeconomic factors and trade policies impacting the solar industry - **Macroeconomic factors**, including inflation and trade policies, may adversely affect the Company's business and profitability[148](index=148&type=chunk) - **Antidumping duties, the USDOC investigation, and the UFLPA** could impact solar panel supply and demand for the Company's products[149](index=149&type=chunk) - There are **no other material changes** from the risk factors previously disclosed in the 2021 Annual Report and Q1 2022 Form 10-Q[147](index=147&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's share repurchase activity under its authorized $200 million program - The Board of Directors authorized a share repurchase program of up to **$200 million** in May 2022, ending May 2, 2025[150](index=150&type=chunk) Issuer Purchases of Equity Securities (Quarter Ended September 30, 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program | | :--- | :--- | :--- | :--- | :--- | | September 1 - 30, 2022 | 138,528 | $40.00 | 138,528 | $144,459,470 | | **Total** | **138,528** | **$40.00** | **138,528** | | - The Company did not sell any **unregistered equity securities** during the period covered by this report[152](index=152&type=chunk) [Item 3. Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - This item is **not applicable**[154](index=154&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - This item is **not applicable**[154](index=154&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the Company for the reporting period - This item is **not applicable**[153](index=153&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q - Exhibits include corporate organizational documents, certifications, and various **Inline XBRL documents**[155](index=155&type=chunk) [SIGNATURES](index=39&type=section&id=SIGNATURES) This section contains the required signatures of the Company's authorized officers certifying the report - The report is signed by the **Chairman, President and CEO** and the **Senior Vice President and CFO** on November 3, 2022[158](index=158&type=chunk)

SECOND QUARTER 2022 EARNINGS CALL 1 August 3, 2022 SAFE HARBOR STATEMENTS Forward-Looking Statements Certain information set forth in this presentation, other than historical statements, contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are based, in whole or in part, on current expectations, estimates, forecasts, and projections about the Company's business, and management's beliefs about future operations, results, and financial position. ...

Gibraltar Industries, Inc. (NASDAQ:ROCK) Q2 2022 Earnings Conference Call August 3, 2022 9:00 AM ET Company Participants Carolyn Capaccio - LHA, Investor Relations Bill Bosway - Chairman, President & Chief Executive Officer Tim Murphy - Chief Financial Officer Conference Call Participants Stefanos Crist - CJS Securities Ken Zener - KeyBanc Julio Romero - Sidoti and Co. Walter Liptak - Seaport Global Operator Greetings, and welcome to Gibraltar Industries Q2 2022 Earnings Conference Call. At this time, all ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-22462 GIBRALTAR INDUSTRIES, INC. (Exact name of Registrant as specified in its charter) Delaware 16-1445150 (State of inco ...

Gibraltar Industries, Inc. (NASDAQ:ROCK) Q1 2022 Earnings Conference Call May 4, 2022 9:00 AM ET Company Participants Carolyn Capaccio - LHA, Investor Relations Bill Bosway - Chairman, President & Chief Executive Officer Tim Murphy - Chief Financial Officer Conference Call Participants Daniel Moore - CJS Securities Ken Zener - KeyBanc Capital Markets Walt Liptak - Seaport Operator Greetings, and welcome to the Gibraltar Industries Q1 2022 Earnings Conference Call. At this time, all participants are in a lis ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-22462 GIBRALTAR INDUSTRIES, INC. (Exact name of Registrant as specified in its charter) Delaware 16-1445150 (State of inc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-22462 GIBRALTAR INDUSTRIES, INC. Delaware 16-1445150 (State of incorporation ) (I.R.S. Employer Identification No.) 3556 Lake Shore Road P.O. ...