Gibraltar Industries(US:ROCK)2024-10-30 12:00PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements for Q3 and 9M 2024 and 2023, including income, balance sheet, cash flow, and equity statements Consolidated Statements of Income (Unaudited, $ thousands) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $361,196 | $390,744 | $1,006,707 | $1,048,925 | | Gross profit | $93,526 | $105,384 | $273,787 | $279,052 | | Income from operations | $43,998 | $53,190 | $118,203 | $125,637 | | Net income | $34,039 | $39,277 | $91,183 | $91,099 | | Diluted EPS | $1.11 | $1.28 | $2.96 | $2.96 | Consolidated Balance Sheet Highlights ($ thousands) | Asset/Liability | Sep 30, 2024 (unaudited) | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $228,879 | $99,426 | | Total current assets | $642,291 | $462,251 | | Total assets | $1,424,590 | $1,256,451 | | Total current liabilities | $306,593 | $225,578 | | Total stockholders' equity | $1,003,233 | $914,998 | Consolidated Statements of Cash Flows (Unaudited, $ thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $154,335 | $206,656 | | Net cash used in investing activities | ($13,976) | ($17,839) | | Net cash used in financing activities | ($10,940) | ($120,182) | | Net increase in cash and cash equivalents | $129,453 | $67,857 | - A $10.4 million acquisition of a Utah-based roof flashing manufacturer occurred on July 5, 2023, integrated into the Residential segment32 Exit Activity and Asset Impairment Charges ($ thousands) | Period | 2024 | 2023 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | $5,106 | $4,978 | | Nine Months Ended Sep 30 | $10,050 | $8,695 | Segment Net Sales ($ thousands) | Segment | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | | :--- | :--- | :--- | :--- | :--- | | Residential | $212,363 | $227,747 | $611,790 | $635,476 | | Renewables | $84,064 | $106,362 | $214,941 | $243,026 | | Agtech | $41,527 | $31,666 | $110,062 | $102,546 | | Infrastructure | $23,242 | $24,969 | $69,914 | $67,877 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a consolidated net sales decrease of 7.6% for Q3 and 4.0% for 9M, driven by volume declines in Residential and Renewables, alongside margin, liquidity, and cash flow analysis Overview and Business Strategy The company operates in Residential, Renewables, Agtech, and Infrastructure segments, guided by a three-pillar strategy, with Renewables facing regulatory and trade policy uncertainties - The company's strategy is built on three core pillars: Business System, Portfolio Management, and Organization Development828384 - The Renewables business faces ongoing uncertainty from AD/CVD investigations, the 2024 tariff moratorium expiration, and lack of Inflation Reduction Act guidance81 Results of Operations Q3 net sales decreased 7.6% YoY, primarily due to declines in Renewables and Residential, while 9M net sales fell 4.0%, with Renewables' operating margins significantly declining Q3 2024 vs Q3 2023 Net Sales Change by Segment ($ thousands) | Segment | 2024 Net Sales | 2023 Net Sales | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Residential | $212,363 | $227,747 | ($15,384) | -6.7% | | Renewables | $84,064 | $106,362 | ($22,298) | -21.0% | | Agtech | $41,527 | $31,666 | $9,861 | +31.1% | | Infrastructure | $23,242 | $24,969 | ($1,727) | -6.9% | | Consolidated | $361,196 | $390,744 | ($29,548) | -7.6% | Q3 2024 vs Q3 2023 Operating Margin by Segment (Percentage) | Segment | 2024 Operating Margin | 2023 Operating Margin | | :--- | :--- | :--- | | Residential | 19.8% | 18.5% | | Renewables | 1.0% | 12.1% | | Agtech | 9.3% | 6.7% | | Infrastructure | 27.9% | 25.6% | 9M 2024 vs 9M 2023 Net Sales Change by Segment ($ thousands) | Segment | 2024 Net Sales | 2023 Net Sales | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Residential | $611,790 | $635,476 | ($23,686) | -3.7% | | Renewables | $214,941 | $243,026 | ($28,085) | -11.6% | | Agtech | $110,062 | $102,546 | $7,516 | +7.3% | | Infrastructure | $69,914 | $67,877 | $2,037 | +3.0% | | Consolidated | $1,006,707 | $1,048,925 | ($42,218) | -4.0% | 9M 2024 vs 9M 2023 Operating Margin by Segment (Percentage) | Segment | 2024 Operating Margin | 2023 Operating Margin | | :--- | :--- | :--- | | Residential | 19.6% | 18.2% | | Renewables | 1.9% | 8.7% | | Agtech | 7.9% | 3.3% | | Infrastructure | 25.2% | 22.0% | Liquidity and Capital Resources The company maintains strong liquidity of $623.9 million as of September 30, 2024, primarily from cash and a revolving credit facility, allocating capital to working capital, improvements, acquisitions, and share repurchases Liquidity Position ($ thousands) | Component | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $228,879 | $99,426 | | Availability on revolving credit facility | $395,055 | $396,056 | | Total Liquidity | $623,934 | $495,482 | - Primary liquidity sources include cash on hand and a $400 million revolving credit facility expiring December 2027123 Cash Flows Net cash from operating activities for 9M 2024 was $154.3 million, a decrease from the prior year, primarily due to working capital changes, with investing and financing activities using $14.0 million and $10.9 million respectively Cash Flow Summary for Nine Months Ended Sep 30 ($ thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Operating Activities | $154,335 | $206,656 | | Investing Activities | ($13,976) | ($17,839) | | Financing Activities | ($10,940) | ($120,182) | - The decrease in operating cash flow in 2024 was largely due to less favorable changes in working capital, specifically accounts payable and inventory131132 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk exposure, including interest rates, foreign exchange, and raw material pricing, have occurred since the December 31, 2023, 10-K filing - No material changes in the company's market risk factors were reported during the current year140 Item 4. Controls and Procedures Disclosure controls and procedures were effective as of September 30, 2024, with a new ERP system implemented in the Residential segment representing a change in internal control - The CEO and CFO concluded that disclosure controls and procedures were effective at the end of the reporting period141 - A new ERP system was implemented for a Residential segment operating unit in Q3 2024, aiming to enhance security and automate accounting143 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ordinary course litigation, but management does not anticipate any material impact on its financial condition, results, or liquidity - Management does not believe any pending litigation will materially affect the company's consolidated financial condition144 Item 1A. Risk Factors No material changes to risk factors have been reported since the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - No material changes to risk factors were reported for the quarter ended September 30, 2024146 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q3 2024, the company repurchased 139,427 shares at an average price of $64.45, with approximately $80.0 million remaining under the share repurchase program Share Repurchases for the Quarter Ended September 30, 2024 | Month | Total Shares Purchased (Shares) | Average Price Paid per Share (US dollars per share) | | :--- | :--- | :--- | | July 2024 | — | — | | August 2024 | 122,534 | $64.39 | | September 2024 | 16,893 | $64.89 | | Total | 139,427 | $64.45 | - The company's $200 million share repurchase program is authorized for three years, concluding May 2, 2025148 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL documents SIGNATURES Signatures The report is signed on October 30, 2024, by William T. Bosway, Chairman, President, and CEO, and Joseph A. Lovechio, VP and CFO