Gibraltar Industries (NasdaqGS:ROCK) Q4 2025 Earnings call February 26, 2026 09:00 AM ET Company ParticipantsCarolyn Capaccio - Senior Vice PresidentDaniel Moore - Partner and Director of ResearchJoseph Lovechio - Chief Financial OfficerWilliam Bosway - Chairman, President, and Chief Executive OfficerConference Call ParticipantsJustin Mechetti - Equity Research AnalystOperatorGreetings, welcome to the Gibraltar Industries Fourth Quarter 2025 Financial Results Conference Call. At this time, all participants ...

Financial Data and Key Metrics Changes - Consolidated revenue in Q4 2025 decreased by 28%, with HDMC revenue down 10% and HDFS revenue down 59% [24] - Consolidated operating income for Q4 was a loss of $361 million, compared to a loss of $193 million in Q4 2024 [25] - Full year 2025 consolidated revenue was $4.5 billion, a 14% decrease compared to the previous year, with operating income of $387 million, down from $417 million in 2024 [26] Business Line Data and Key Metrics Changes - HDMC retail sales in Q4 increased by 5% in North America but decreased by 10% internationally, leading to a global retail sales decline of 1% [26] - For the full year 2025, HDMC revenue decreased by 13% to $3.6 billion, driven by a 16% drop in wholesale volumes [31] - HDFS revenue for Q4 was $106 million, down from $257 million in the prior year, primarily due to lower retail and wholesale finance receivables [37] Market Data and Key Metrics Changes - North American retail sales were up 5% in Q4, while EMEA retail sales declined by 24% due to adverse macroeconomic conditions [27][28] - Asia-Pacific retail sales decreased by 1% in Q4, with significant weakness in China, while Latin America saw a 10% increase in Q4 [29] - Global retail sales of new motorcycles were down 12% for the full year 2025 [29] Company Strategy and Development Direction - The company is focused on stabilizing the business by restoring dealer confidence and aligning wholesale activity with retail demand [5] - Immediate priorities include improving dealer profitability, reigniting brand momentum, and reducing costs [6] - A strategic plan announcement is expected in May 2026, with a focus on sustainable growth and optimizing inventory management [4][12] Management's Comments on Operating Environment and Future Outlook - Management views 2026 as a transition year to reset the business and expects margins to be under pressure due to production running below wholesale [12] - The company anticipates a cost of $75 million to $105 million in new or increased tariffs for 2026, which will impact operating margins [46] - Management is optimistic about returning to long-term earnings and free cash flow levels, emphasizing the importance of dealer health and inventory management [12][23] Other Important Information - The HDFS transaction is expected to transform the business into a capital-light, de-risked model, with a significant reduction in HDFS debt [24][36] - The company plans to conduct a rigorous review of its cost base and operating expenses to align with current demand levels [19] - A total of $150 million in annual run rate savings is anticipated starting in 2027, excluding LiveWire [70] Q&A Session Summary Question: HDFS operating income expectations - Management indicated that HDFS operating income for 2026 is expected to be between $45 million and $60 million, with a long-term view of potentially tripling that figure [50][52] Question: Wholesale guidance and inventory levels - Management expects Q1 2026 wholesale shipments to be slightly down compared to the previous year, with an increase anticipated in Q2 [56][58] Question: Global retail expectations - Management is optimistic about U.S. retail sales, particularly with new model introductions, and expects some upside in 2026 compared to 2025 [63][66] Question: Annual run rate savings distribution - The $150 million in annual run rate savings will not include LiveWire and is expected to be realized starting in the back half of 2026 [70][71] Question: Bridging wholesale growth to operating income - Management acknowledged the challenges in achieving operating income amidst tariff impacts and production versus wholesale dynamics [74]

Financial Data and Key Metrics Changes - Total sales volume reached 350,000 units, representing a 37% year-over-year increase [7] - Revenue reached RMB 1,260 million, a year-over-year growth of 3534% [8] - Gross margin stood at 20.1%, up 3.1 percentage points year-over-year [8][38] - Net profit was RMB 5.9 million, compared to a net loss of RMB 25 million for the same period last year [40] Business Line Data and Key Metrics Changes - In the China market, sales volume surged by 54% to 318,000 units, with revenue growth from scooters at 45% year-over-year [8][10] - Overseas market sales volume declined by 35% to 31,000 units, primarily due to US tariffs and competition in Europe [8][24] - ASP in China increased by 11% compared to Q1, returning close to 2024 annual levels [11] Market Data and Key Metrics Changes - The US market saw a 17% decline in sales, while the Asian market delivered a 21% year-over-year increase [27][28] - The European market faced significant headwinds due to intensified price competition [28] Company Strategy and Development Direction - The company is focusing on product portfolio optimization and cost reduction through product platformization [9] - New product lines are being developed to comply with upcoming regulations for electric bicycles [14][15] - The company plans to expand its retail footprint, adding over 1,000 stores in 2025 [30][62] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about performance in both China and overseas markets in the second half of the year [29] - Anticipation of a demand surge in Q4 due to new regulations affecting electric bicycles [30] - The company expects to maintain a healthy gross margin and stable ASP throughout the second half of the year [31] Other Important Information - The company achieved significant sales during promotional events, including RMB 1,060 million in GMV during the six eighteen shopping campaign [20] - The company has expanded its online presence significantly, contributing to 77% of total sales volume [23] Q&A Session Summary Question: Reasons for the increase in unit price and gross profit margin in Q2 - The increase in ASP was due to product mix improvement, particularly with the introduction of upgraded models [45][46] Question: Outlook for sales volume next year for domestic electric two-wheeled vehicles - Management is cautious but preparing for potential demand shifts due to regulatory changes [50][52] Question: Expectations for the overseas market recovery - Management confirmed a positive outlook for growth in the overseas market, particularly in electric two-wheelers [58][60] Question: Plans for expanding the dealer network in China - The company plans to continue expanding its dealer network, targeting around 4,700 stores by the end of the year [62][63] Question: Will revenue growth outpace volume growth in the next quarter? - Management indicated that revenue growth is expected to be in line with volume growth, but ASP may be lower due to seasonal trends [71][72]