Net Sales: GAAP -3.3%, Adjusted -2.0%; EPS: GAAP +5.0%, Adjusted +2.6%

Strong Operating Cash Flow Generation, $36 Million

2024 Outlook: Moderating Revenue Growth, EPS Unchanged

Gibraltar Industries, Inc. (NASDAQ:ROCK), a leading manufacturer and provider of products and services for the residential, renewable energy, agtech and infrastructure markets, today reported its financial results for the three- and six-month period ended June 30, 2024.

"We delivered solid execution and strong operating cash flow performance across Gibraltar, generating $36 million, while overcoming two market headwinds that impacted growth in our Residential and Renewables businesses in the quarter. The residential market experienced unexpected channel destocking which started in late May / early June. We offset some of this impact through participation gains, which will support our residential growth plan in the second half. Although net sales for Renewables were up versus prior year, it was less than expected as some customers continued to have project delays related to ongoing trade and regulatory issues. Agtech bookings surpassed $90 million in the quarter, a record for the business, and support strong revenue growth in the second half. We continue to work toward achieving growth in all four segments in 2024 while expanding margin and driving cash flow, and we feel positive about our full year outlook," stated Chairman and CEO Bill Bosway.

Second Quarter 2024 Consolidated Results

($Millions, except EPS)
Three Months Ended June 30,
	2024	2023	Change		2024	2023	Change
Net Sales	$353.0	$364.9	(3.3)%	Adjusted Net Sales	$353.0	$360.1	(2.0)%
Net Income	$32.2	$30.7	4.9%	Adjusted Net Income	$36.4	$35.4	2.8%
Diluted EPS	$1.05	$1.00	5.0%	Adjusted Diluted EPS	$1.18	$1.15	2.6%

GAAP net sales were down 3.3% while adjusted net sales were down 2.0% driven by a slowing market in Residential. Agtech bookings are up significantly and support strong revenue growth in the second half, and Infrastructure performance is expected to remain positive going forward.

GAAP net income increased 4.9% to $32.2 million, or $1.05 per share, and adjusted net income increased 2.8% to $36.4 million, or $1.18 per share.

Adjusted measures exclude charges for restructuring initiatives, acquisition-related items, senior leadership transition costs, and portfolio management actions, as further described in the appended reconciliation of adjusted financial measures.

Second Quarter Segment Results

Residential

($Millions)
Three Months Ended June 30,
	2024	2023	Change		2024	2023	Change
Net Sales	$214.3	$228.2	(6.1)%	Adjusted Net Sales	$214.3	$228.2	(6.1)%
Operating Income	$43.3	$44.0	(1.6)%	Adjusted Operating Income	$43.5	$44.0	(1.1)%
Operating Margin	20.2%	19.3%	90 bps	Adjusted Operating Margin	20.3%	19.3%	100 bps

Net sales decreased 6.1% driven by 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.

Operating margins expanded through solid execution, 80/20 initiatives, and effective price/cost management.

Renewables

($Millions)
Three Months Ended June 30,
	2024	2023	Change		2024	2023	Change
Net Sales	$79.4	$77.5	2.5%	Adjusted Net Sales	$79.4	$73.4	8.2%
Operating Income	$1.6	$5.9	(72.9)%	Adjusted Operating Income	$6.2	$7.7	(19.5)%
Operating Margin	2.1%	7.6%	(550) bps	Adjusted Operating Margin	7.8%	10.5%	(270) bps

GAAP net sales increased 2.5% and adjusted net sales increased 8.2%, which excludes the Japan renewables business divested in 2023. Net sales were 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 decreased 10% during the quarter as some customers paused signing new contracts as they work through trade and/or regulatory items specific to their projects.

Both GAAP and adjusted operating margins were impacted by product mix as the 1P tracker product moves through its launch process learning curve to permanently tooled production for suppliers and an efficient field installation process. GAAP margins were further impacted by restructuring activities and prior year portfolio management actions.

Agtech

($Millions)
Three Months Ended June 30,
	2024	2023	Change		2024	2023	Change
Net Sales	$34.5	$35.0	(1.4)%	Adjusted Net Sales	$34.5	$34.3	0.6%
Operating Income	$2.3	$(1.1)	309.1%	Adjusted Operating Income	$2.3	$3.3	(30.3)%
Operating Margin	6.6%	(3.2)%	980 bps	Adjusted Operating Margin	6.6%	9.5%	(290) bps

GAAP net sales decreased 1.4% and adjusted net sales increased 0.6%, which excludes the Processing business liquidated in 2023. Revenue was impacted by new projects starting later in the quarter, with June revenue up significantly over May. New bookings reached $90 million in the quarter increasing nearly 400% over Q1 resulting in backlog up 32% over prior year.

Both GAAP and adjusted operating margins were impacted by project timing and mix, while GAAP was more than offset by the liquidation of the processing business in 2023.

Infrastructure

($Millions)
Three Months Ended June 30,
	2024	2023	Change		2024	2023	Change
Net Sales	$24.8	$24.2	2.5%	Adjusted Net Sales	$24.8	$24.2	2.5%
Operating Income	$6.2	$5.8	6.9%	Adjusted Operating Income	$6.2	$5.8	6.9%
Operating Margin	25.1%	24.1%	100 bps	Adjusted Operating Margin	25.1%	24.1%	100 bps

Net sales increased 2.5%, driven by continued strong execution and market participation gains. Backlog decreased 12% as expected due to a large project booked in 2023 reaching its final stages; bookings increased 3% on a sequential basis reflecting consistent customer activity. Demand and quoting remain strong, and management expects order flow to increase in the second half of the year.

Operating margins increased 100 basis points driven by price / cost alignment, ongoing strong execution, 80/20 productivity, and improving product mix.

Business Outlook

Mr. Bosway continued, "We are making a slight adjustment to our net sales outlook for the year to reflect recent slower market conditions in both Residential and Renewables end markets offset by strength in both Agtech and Infrastructure. We remain focused on driving participation gains as we work toward achieving growth in all four segments, with operational improvements to support solid second half and full year margin expansion and cash flow growth."

Consolidated net sales are now expected to range between $1.38 billion and $1.42 billion, compared to $1.38 billion in 2023, or $1.36 billion on an adjusted basis. The outlook for both GAAP and adjusted EPS is unchanged, with GAAP EPS continuing to range between $4.04 and $4.29, compared to $3.59 in 2023, and adjusted EPS continuing to range between $4.57 and $4.82, compared to $4.09 in 2023.

Second Quarter 2024 Conference Call Details

Gibraltar will host a conference call today starting at 9:00 a.m. ET to review its results for the second quarter of 2024. Interested parties may access the webcast through the Investors section of the Company's website at www.gibraltar1.com, where related presentation materials will also be posted prior to the conference call. The call also may be accessed by dialing (877) 407-3088 or (201) 389-0927. For interested individuals unable to join the live conference call, a webcast replay will be available on the Company's website for one year.

About Gibraltar

Gibraltar is a leading manufacturer and provider of products and services for the residential, renewable energy, agtech, and infrastructure markets. Gibraltar's mission, to make life better for people and the planet, is fueled by advancing the disciplines of engineering, science, and technology. Gibraltar is innovating to reshape critical markets in comfortable living, sustainable power, and productive growing throughout North America. For more please visit www.gibraltar1.com.

Forward-Looking Statements

Certain information set forth in this news release, 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. These statements are not guarantees of future performance and are subject to a number of risk factors, uncertainties, and assumptions. Actual events, performance, or results could differ materially from the anticipated events, performance, or results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from current expectations include, among other things, the availability and pricing of our principal raw materials and component parts, supply chain challenges causing project delays and field operations inefficiencies and disruptions, the loss of any key customers, adverse effects of inflation, our ability to continue to improve operating margins, our ability to generate order flow and sales and increase backlog; our ability to translate our backlog into net sales, other general economic conditions and conditions in the particular markets in which we operate, changes in spending due to laws and government incentives, such as the Infrastructure Investment and Jobs Act, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, our ability to realize synergies from newly acquired businesses, disruptions to IT systems, the impact of trade and regulation (including the latest Department of Commerce's solar panel anti-circumvention investigation, the bifacial exemption revocation, the Auxin Solar challenge to the Presidential waiver of tariffs, deadline to install certain modules under the waiver, and the Uyghur Forced Labor Prevention Act (UFLPA)), rebates, credits and incentives and variations in government spending and our ability to derive expected benefits from restructuring, productivity initiatives, liquidity enhancing actions, and other cost reduction actions. Before making any investment decisions regarding our company, we strongly advise you to read the section entitled "Risk Factors" in our most recent annual report on Form 10-K which can be accessed under the "SEC Filings" link of the "Investor Info" page of our website at www.Gibraltar1.com. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law or regulation.

Adjusted Financial Measures

To supplement Gibraltar's consolidated financial statements presented on a GAAP basis, Gibraltar also presented certain adjusted financial measures in this news release and its quarterly conference call, including adjusted net sales, adjusted operating income and margin, adjusted net income, adjusted earnings per share (EPS), free cash flow and adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), each a non-GAAP financial measure. Adjusted net sales reflects the removal of net sales associated with our Processing business, which has been liquidated and our Japan renewables business which was sold on December 1, 2023. Adjusted net income, operating income and margin exclude special charges consisting of restructuring costs (primarily comprised of exit activities costs and impairment of both tangible and intangible assets associated with 80/20 simplification, lean initiatives and / or discontinued products), senior leadership transition costs (associated with new and / or terminated senior executive roles), acquisition related costs (legal and consulting fees for recent business acquisitions), and portfolio management (which represents the operating results generated by our processing business which was liquidated in 2023 and our Japan renewables business which was sold in 2023). These special charges are excluded since they may not be considered directly related to the Company's ongoing business operations. The aforementioned exclusions along with other adjustments to other income below operating profit are excluded from adjusted EPS. Adjusted EBITDA further excludes interest, taxes, depreciation, amortization and stock compensation expense. In evaluating its business, the Company considers and uses these non-GAAP financial measures as supplemental measures of its operating performance. Free cash flow is operating cash flow less capital expenditures and the related margin is free cash flow divided by net sales. The Company believes that the presentation of adjusted measures and free cash flow provides meaningful supplemental data to investors that are indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods as well as comparison with other companies. Adjusted EBITDA and free cash flow are also useful measures of the Company's ability to service debt and adjusted EBITDA is one of the measures used for determining the Company's debt covenant compliance.

Adjustments to the most directly comparable financial measures presented on a GAAP basis are quantified in the reconciliation of adjusted financial measures provided in the supplemental financial schedules that accompany this news release. These adjusted measures should not be viewed as a substitute for the Company's GAAP results and may be different than adjusted measures used by other companies and the Company's presentation of non-GAAP financial measures should not be construed as an inference that the Company's future results will be unaffected by unusual or non-recurring items.

Reconciliations of non-GAAP measures related to full-year 2024 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations due to the high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations.


GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
		2024			2023			2024			2023
Net sales	$	353,005		$	364,914		$	645,511		$	658,181
Cost of sales		257,132			268,175			465,250			484,513
Gross profit		95,873			96,739			180,261			173,668
Selling, general, and administrative expense		53,404			53,662			106,056			101,221
Income from operations		42,469			43,077			74,205			72,447
Interest (income) expense		(1,495	)		1,308			(2,245	)		2,799
Other expense (income)		347			(509	)		(674	)		(906	)
Income before taxes		43,617			42,278			77,124			70,554
Provision for income taxes		11,419			11,555			19,980			18,732
Net income	$	32,198		$	30,723		$	57,144		$	51,822

Net earnings per share:
Basic	$	1.05		$	1.01		$	1.87		$	1.69
Diluted	$	1.05		$	1.00		$	1.86		$	1.68
Weighted average shares outstanding:
Basic		30,588			30,554			30,580			30,725
Diluted		30,791			30,684			30,801			30,846


GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

	June 30, 2024			December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	179,102		$	99,426
Accounts receivable, net of allowance of $5,563 and $5,572, respectively		259,358			224,550
Inventories, net		134,493			120,503
Prepaid expenses and other current assets		18,912			17,772
Total current assets		591,865			462,251
Property, plant, and equipment, net		108,314			107,603
Operating lease assets		41,134			44,918
Goodwill		511,590			513,383
Acquired intangibles		121,567			125,980
Other assets		2,471			2,316
	$	1,376,941		$	1,256,451
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	140,888		$	92,124
Accrued expenses		85,099			88,719
Billings in excess of cost		59,498			44,735
Total current liabilities		285,485			225,578
Deferred income taxes		57,110			57,103
Non-current operating lease liabilities		32,601			35,989
Other non-current liabilities		26,074			22,783
Stockholders' equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding		—			—
Common stock, $0.01 par value; authorized 100,000 shares; 34,274 and 34,219 shares issued and outstanding in 2024 and 2023		343			342
Additional paid-in capital		338,978			332,621
Retained earnings		795,655			738,511
Accumulated other comprehensive loss		(3,496	)		(2,114	)
Cost of 3,797 and 3,778 common shares held in treasury in 2024 and 2023		(155,809	)		(154,362	)
Total stockholders' equity		975,671			914,998
	$	1,376,941		$	1,256,451


GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	Six Months Ended June 30,
		2024			2023
Cash Flows from Operating Activities
Net income	$	57,144		$	51,822
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,416			13,665
Stock compensation expense		6,358			5,056
Exit activity costs (recoveries), non-cash		163			(23	)
Provision for deferred income taxes		—			179
Other, net		2,347			2,680
Changes in operating assets and liabilities net of effects from acquisitions:
Accounts receivable		(33,828	)		(54,979	)
Inventories		(13,794	)		12,130
Other current assets and other assets		(3,791	)		4,069
Accounts payable		48,518			48,327
Accrued expenses and other non-current liabilities		13,120			31,168
Net cash provided by operating activities		89,653			114,094
Cash Flows from Investing Activities
Acquisitions, net of cash acquired		—			554
Purchases of property, plant, and equipment, net		(8,707	)		(5,284	)
Net proceeds from sale of business		350			—
Net cash used in investing activities		(8,357	)		(4,730	)
Cash Flows from Financing Activities
Proceeds from long-term debt		—			40,800
Long-term debt payments		—			(120,000	)
Purchase of common stock at market prices		(1,447	)		(28,770	)
Net cash used in financing activities		(1,447	)		(107,970	)
Effect of exchange rate changes on cash		(173	)		(381	)
Net increase in cash and cash equivalents		79,676			1,013
Cash and cash equivalents at beginning of year		99,426			17,608
Cash and cash equivalents at end of period	$	179,102		$	18,621


GIBRALTAR INDUSTRIES, INC.
Reconciliation of Adjusted Financial Measures
(in thousands, except per share data)
(unaudited)

Three Months Ended June 30, 2024

	As Reported In GAAP Statements			Restructuring Charges			Acquisition & Senior Leadership Transition Costs			Portfolio Management			Adjusted Financial Measures
Net Sales
Residential	$	214,316		$	—		$	—		$	—		$	214,316
Renewables		79,381			—			—			—			79,381
Agtech		34,508			—			—			—			34,508
Infrastructure		24,800			—			—			—			24,800
Consolidated sales		353,005			—			—			—			353,005

Income from operations
Residential		43,313			145			—			—			43,458
Renewables		1,647			4,449			113			—			6,209
Agtech		2,282			11			—			—			2,293
Infrastructure		6,215			—			—			—			6,215
Segments Income		53,457			4,605			113			—			58,175
Unallocated corporate expense		(10,988	)		4			96			—			(10,888	)
Consolidated income from operations		42,469			4,609			209			—			47,287

Interest income		(1,495	)		—			—			—			(1,495	)
Other expense		347			—			—			(324	)		23
Income before income taxes		43,617			4,609			209			324			48,759
Provision for income taxes		11,419			1,170			(274	)		72			12,387
Net income	$	32,198		$	3,439		$	483		$	252		$	36,372
Net income per share - diluted	$	1.05		$	0.11		$	0.01		$	0.01		$	1.18

Operating margin
Residential		20.2	%		0.1	%		—	%		—	%		20.3	%
Renewables		2.1	%		5.6	%		0.1	%		—	%		7.8	%
Agtech		6.6	%		—	%		—	%		—	%		6.6	%
Infrastructure		25.1	%		—	%		—	%		—	%		25.1	%
Segments Margin		15.1	%		1.3	%		—	%		—	%		16.5	%
Consolidated		12.0	%		1.3	%		—	%		—	%		13.4	%


GIBRALTAR INDUSTRIES, INC.
Reconciliation of Adjusted Financial Measures
(in thousands, except per share data)
(unaudited)

Three Months Ended June 30, 2023

	As Reported In GAAP Statements			Restructuring & Senior Leadership Transition			Portfolio Management & Acquisition Costs			Adjusted Financial Measures			Portfolio Management *			Adjusted Financial Measures *
Net Sales
Residential	$	228,234		$	—		$	—		$	228,234		$	—		$	228,234
Renewables		77,459			—			—			77,459			(4,081	)		73,378
Agtech		35,028			—			(765	)		34,263			—			34,263
Infrastructure		24,193			—			—			24,193			—			24,193
Consolidated sales		364,914			—			(765	)		364,149			(4,081	)		360,068

Income from operations
Residential		43,959			—			—			43,959			—			43,959
Renewables		5,908			2,997			148			9,053			(1,358	)		7,695
Agtech		(1,117	)		156			4,233			3,272			—			3,272
Infrastructure		5,828			—			—			5,828			—			5,828
Segments Income		54,578			3,153			4,381			62,112			(1,358	)		60,754
Unallocated corporate expense		(11,501	)		—			66			(11,435	)		—			(11,435	)
Consolidated income from operations		43,077			3,153			4,447			50,677			(1,358	)		49,319

Interest expense		1,308			—			—			1,308			—			1,308
Other income		(509	)		—			559			50			(57	)		(7	)
Income before income taxes		42,278			3,153			3,888			49,319			(1,301	)		48,018
Provision for income taxes		11,555			857			622			13,034			(420	)		12,614
Net income	$	30,723		$	2,296		$	3,266		$	36,285		$	(881	)	$	35,404
Net income per share - diluted	$	1.00		$	0.08		$	0.10		$	1.18		$	(0.03	)	$	1.15

Operating margin
Residential		19.3	%		—	%		—	%		19.3	%		—	%		19.3	%
Renewables		7.6	%		3.9	%		0.2	%		11.7	%		(1.2	)%		10.5	%
Agtech		(3.2	)%		0.4	%		12.1	%		9.5	%		—	%		9.5	%
Infrastructure		24.1	%		—	%		—	%		24.1	%		—	%		24.1	%
Segments Margin		15.0	%		0.9	%		1.2	%		17.1	%		(0.2	)%		16.9	%
Consolidated		11.8	%		0.9	%		1.3	%		13.9	%		(0.2	)%		13.7	%

* Recast to exclude sale of Japan-based solar racking business within the Renewables segment.


GIBRALTAR INDUSTRIES, INC.
Reconciliation of Adjusted Financial Measures
(in thousands, except per share data)
(unaudited)

Six Months Ended June 30, 2024

	As Reported In GAAP Statements			Restructuring Charges			Acquisition & Senior Leadership Transition Costs			Portfolio Management			Adjusted Financial Measures
Net Sales
Residential	$	399,427		$	—		$	—		$	—		$	399,427
Renewables		130,877			—			—			—			130,877
Agtech		68,535			—			—			—			68,535
Infrastructure		46,672			—			—			—			46,672
Consolidated sales		645,511			—			—			—			645,511

Income from operations
Residential		77,659			73			—			—			77,732
Renewables		3,291			4,718			233			—			8,242
Agtech		4,890			149			—			—			5,039
Infrastructure		11,111			—			—			—			11,111
Segments Income		96,951			4,940			233			—			102,124
Unallocated corporate expense		(22,746	)		4			219			8			(22,515	)
Consolidated income from operations		74,205			4,944			452			8			79,609

Interest income		(2,245	)		—			—			—			(2,245	)
Other (income) expense		(674	)		—			—			829			155
Income before income taxes		77,124			4,944			452			(821	)		81,699
Provision for income taxes		19,980			1,228			(460	)		51			20,799
Net income	$	57,144		$	3,716		$	912		$	(872	)	$	60,900
Net income per share - diluted	$	1.86		$	0.12		$	0.03		$	(0.03	)	$	1.98

Operating margin
Residential		19.4	%		—	%		—	%		—	%		19.5	%
Renewables		2.5	%		3.6	%		0.2	%		—	%		6.3	%
Agtech		7.1	%		0.2	%		—	%		—	%		7.4	%
Infrastructure		23.8	%		—	%		—	%		—	%		23.8	%
Segments Margin		15.0	%		0.8	%		—	%		—	%		15.8	%
Consolidated		11.5	%		0.8	%		—	%		—	%		12.3	%


GIBRALTAR INDUSTRIES, INC.
Reconciliation of Adjusted Financial Measures
(in thousands, except per share data)
(unaudited)

Six Months Ended June 30, 2023

	As Reported In GAAP Statements			Restructuring & Senior Leadership Transition			Portfolio Management & Acquisition Costs			Adjusted Financial Measures			Portfolio Management *			Adjusted Financial Measures *
Net Sales
Residential	$	407,729		$	—		$	—		$	407,729		$	—		$	407,729
Renewables		136,664			—			—			136,664			(6,031	)		130,633
Agtech		70,880			—			(3,279	)		67,601			—			67,601
Infrastructure		42,908			—			—			42,908			—			42,908
Consolidated sales		658,181			—			(3,279	)		654,902			(6,031	)		648,871

Income from operations
Residential		73,468			114			—			73,582			—			73,582
Renewables		8,177			2,934			180			11,291			(908	)		10,383
Agtech		1,213			717			4,894			6,824			—			6,824
Infrastructure		8,542			—			—			8,542			—			8,542
Segments Income		91,400			3,765			5,074			100,239			(908	)		99,331
Unallocated corporate expense		(18,953	)		(19	)		87			(18,885	)		—			(18,885	)
Consolidated income from operations		72,447			3,746			5,161			81,354			(908	)		80,446

Interest expense		2,799			—			—			2,799			—			2,799
Other (income) expense		(906	)		—			1,027			121			(99	)		22
Income before income taxes		70,554			3,746			4,134			78,434			(809	)		77,625
Provision for income taxes		18,732			997			663			20,392			(160	)		20,232
Net income	$	51,822		$	2,749		$	3,471		$	58,042		$	(649	)	$	57,393
Net income per share - diluted	$	1.68		$	0.09		$	0.11		$	1.88		$	(0.02	)	$	1.86

Operating margin
Residential		18.0	%		—	%		—	%		18.0	%		—	%		18.0	%
Renewables		6.0	%		2.1	%		0.1	%		8.3	%		(0.4	)%		7.9	%
Agtech		1.7	%		1.0	%		7.0	%		10.1	%		—	%		10.1	%
Infrastructure		19.9	%		—	%

Gibraltar Announces Second Quarter 2024 Financial Results