ROCK 10-Q Quarterly Report Sept. 30, 2023

GIBRALTAR INDUSTRIES, INC.

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			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 or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

3556 Lake Shore Road

P.O. Box 2028

Buffalo

New York

14219-0228

(Address of principal executive offices)

(Zip Code)

( 716 ) 826-6500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value per share

ROCK

NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2023, the number of shares of common stock outstanding was: 30,436,438 .

Table of Contents

GIBRALTAR INDUSTRIES, INC.

INDEX


		PAGE NUMBER
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Income for the Three and N ine Months Ended September 30, 2023 and 2022 (unaudited)	3
	Consolidated Statements of Comprehensive Income for the Three and N ine Months Ended September 30, 2023 and 2022 (unaudited)	4
	Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)	6
	Consolidated Statement of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
	SIGNATURES	33

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net sales	$	390,744	$	391,291	$	1,048,925	$	1,076,105
Cost of sales	285,360		296,735		769,873		826,434
Gross profit	105,384		94,556		279,052		249,671
Selling, general, and administrative expense	52,194		47,160		153,415		140,941

Income from operations	53,190		47,396		125,637		108,730
Interest expense	417		1,048		3,216		2,189
Other (income) expense	( 1,040 )		363		( 1,946 )		797
Income before taxes	53,813		45,985		124,367		105,744
Provision for income taxes	14,536		11,690		33,268		26,686





Net income	$	39,277	$	34,295	$	91,099	$	79,058











Net earnings per share:
Basic	$	1.29	$	1.08	$	2.97	$	2.44
Diluted	$	1.28	$	1.08	$	2.96	$	2.43
Weighted average shares outstanding:
Basic	30,485		31,707		30,638		32,396
Diluted	30,715		31,812		30,808		32,503

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income	$	39,277	$	34,295	$	91,099	$	79,058
Other comprehensive (loss) income:
Foreign currency translation adjustment	( 1,376 )		( 3,568 )		( 2,075 )		( 6,993 )

Postretirement benefit plan adjustments, net of tax	8		12		24		37

Other comprehensive loss	( 1,368 )		( 3,556 )		( 2,051 )		( 6,956 )
Total comprehensive income	$	37,909	$	30,739	$	89,048	$	72,102

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)


	September 30, 2023		December 31, 2022
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	85,465	$	17,608
Accounts receivable, net of allowance of $ 4,069 and $ 3,746 , respectively	256,400		217,156
Inventories, net	141,008		170,360
Prepaid expenses and other current assets	24,817		18,813

Total current assets	507,690		423,937
Property, plant, and equipment, net	105,537		109,584
Operating lease assets	23,004		26,502
Goodwill	515,344		512,363
Acquired intangibles	134,047		137,526
Other assets	2,424		701
	$	1,288,046	$	1,210,613
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	160,742	$	106,582
Accrued expenses	100,657		73,721
Billings in excess of cost	51,616		35,017



Total current liabilities	313,015		215,320
Long-term debt	—		88,762
Deferred income taxes	47,007		47,088
Non-current operating lease liabilities	16,901		19,041
Other non-current liabilities	21,274		18,303
Stockholders’ equity:
Preferred stock, $ 0.01 par value; authorized 10,000 shares; none outstanding	—		—
Common stock, $ 0.01 par value; authorized 100,000 shares; 34,212 and 34,060 shares issued and outstanding in 2023 and 2022	342		340
Additional paid-in capital	330,128		322,873
Retained earnings	719,077		627,978
Accumulated other comprehensive loss	( 5,483 )		( 3,432 )
Cost of 3,776 and 3,199 common shares held in treasury in 2023 and 2022	( 154,215 )		( 125,660 )
Total stockholders’ equity	889,849		822,099
	$	1,288,046	$	1,210,613

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash Flows from Operating Activities
Net income	$	91,099	$	79,058


Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization	20,574		19,192
Stock compensation expense	7,257		5,889


Exit activity costs, non-cash	572		1,427


Provision for deferred income taxes	179		181

Other, net	2,945		3,620

Changes in operating assets and liabilities net of effects from acquisitions:
Accounts receivable	( 44,331 )		( 25,538 )
Inventories	30,431		( 19,840 )
Other current assets and other assets	( 1,426 )		393
Accounts payable	53,198		( 24,756 )
Accrued expenses and other non-current liabilities	46,158		( 1,065 )


Net cash provided by operating activities	206,656		38,561
Cash Flows from Investing Activities
Acquisitions, net of cash acquired	( 9,863 )		( 51,621 )
Purchases of property, plant, and equipment, net	( 7,976 )		( 15,704 )





Net cash used in investing activities	( 17,839 )		( 67,325 )
Cash Flows from Financing Activities
Long-term debt payments	( 141,000 )		( 100,000 )
Proceeds from long-term debt	50,000		197,800


Purchase of common stock at market prices	( 29,182 )		( 58,125 )


Net cash (used in) provided by financing activities	( 120,182 )		39,675
Effect of exchange rate changes on cash	( 778 )		( 1,841 )
Net increase in cash and cash equivalents	67,857		9,070
Cash and cash equivalents at beginning of year	17,608		12,849
Cash and cash equivalents at end of period	$	85,465	$	21,919

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount								Shares	Amount
Balance at June 30, 2023	34,194	$	342	$	327,927	$	679,800	$	( 4,115 )	3,770	$	( 153,644 )	$	850,310
Net income	—	—		—		39,277		—		—	—		39,277
Foreign currency translation adjustment	—	—		—		—		( 1,376 )		—	—		( 1,376 )
Postretirement benefit plan adjustments, net of taxes of $ 3	—	—		—		—		8		—	—		8
Stock compensation expense	—	—		2,201		—		—		—	—		2,201

Net settlement of restricted stock units	18	—		—		—		—		6	( 412 )		( 412 )


Excise tax on repurchase of common stock	—	—		—		—		—		—	( 159 )		( 159 )

Balance at September 30, 2023	34,212	$	342	$	330,128	$	719,077	$	( 5,483 )	3,776	$	( 154,215 )	$	889,849




Balance at June 30, 2022	33,989	$	340	$	318,664	$	590,335	$	( 3,213 )	2,374	$	( 88,848 )	$	817,278
Net income	—	—		—		34,295		—		—	—		34,295
Foreign currency translation adjustment	—	—		—		—		( 3,568 )		—	—		( 3,568 )
Postretirement benefit plan adjustments, net of taxes of $ 5	—	—		—		—		12		—	—		12
Stock compensation expense	—	—		1,764		—		—		—	—		1,764

Net settlement of restricted stock units	45	—		—		—		—		18	( 749 )		( 749 )


Common stock repurchased under stock repurchase program	—	—		—		—		—		138	( 5,541 )		( 5,541 )
Balance at September 30, 2022	34,034	$	340	$	320,428	$	624,630	$	( 6,769 )	2,530	$	( 95,138 )	$	843,491

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount								Shares	Amount
Balance at December 31, 2022	34,060	$	340	$	322,873	$	627,978	$	( 3,432 )	3,199	$	( 125,660 )	$	822,099
Net income	—	—		—		91,099		—		—	—		91,099
Foreign currency translation adjustment	—	—		—		—		( 2,075 )		—	—		( 2,075 )
Postretirement benefit plan adjustments, net of taxes of $ 9	—	—		—		—		24		—	—		24
Stock compensation expense	—	—		7,257		—		—		—	—		7,257

Net settlement of restricted stock units	144	2		( 2 )		—		—		56	( 3,215 )		( 3,215 )
Awards of common stock	8	—		—		—		—		—	—		—

Excise tax on repurchase of common stock	—	—		—		—		—		—	( 159 )		( 159 )
Common stock repurchased under stock repurchase program	—	—		—		—		—		521	( 25,181 )		( 25,181 )
Balance at September 30, 2023	34,212	$	342	$	330,128	$	719,077	$	( 5,483 )	3,776	$	( 154,215 )	$	889,849




Balance at December 31, 2021	33,799	$	338	$	314,541	$	545,572	$	187	1,107	$	( 35,380 )	$	825,258
Net income	—	—		—		79,058		—		—	—		79,058
Foreign currency translation adjustment	—	—		—		—		( 6,993 )		—	—		( 6,993 )
Postretirement benefit plan adjustments, net of taxes of $ 15	—	—		—		—		37		—	—		37
Stock compensation expense	—	—		5,889		—		—		—	—		5,889

Net settlement of restricted stock units	219	2		( 2 )		—		—		90	( 4,217 )		( 4,217 )
Awards of common stock	16	—		—		—		—		—	—		—

Common stock repurchased under stock repurchase program	—	—		—		—		—		1,333	( 55,541 )		( 55,541 )
Balance at September 30, 2022	34,034	$	340	$	320,428	$	624,630	$	( 6,769 )	2,530	$	( 95,138 )	$	843,491

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1) CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited consolidated financial statements of Gibraltar Industries, Inc. (the "Company") have been prepared by management in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for the fair presentation of results for the interim period have been included. The Company's operations are seasonal; for this and other reasons financial results for any interim period are not necessarily indicative of the results expected for any subsequent interim period or for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2022.

The consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

(2) RECENT ACCOUNTING PRONOUNCEMENTS

The Company considers the applicability and impact of Accounting Standards Updates ("ASUs"), and ASUs effective in or after 2023, respectively, which were assessed and determined to be either not applicable, or had or are expected to have minimal impact on the Company's consolidated financial statements and related disclosures.

(3) ACCOUNTS RECEIVABLE, NET

Accounts receivable consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Trade accounts receivable	$	216,754	$	179,170
Costs in excess of billings	43,715		41,732
Total accounts receivable	260,469		220,902
Less allowance for doubtful accounts and contract assets	( 4,069 )		( 3,746 )
Accounts receivable, net	$	256,400	$	217,156

Refer to Note 4 "Revenue" concerning the Company's costs in excess of billings.

The following table provides a roll-forward of the allowance for credit losses, for the nine month period ended September 30, 2023, that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected (in thousands):


Beginning balance as of January 1, 2023	$	3,746

Bad debt expense, net of recoveries	1,479
Accounts written off against allowance and other adjustments	( 1,156 )
Ending balance as of September 30, 2023	$	4,069

(4) REVENUE

Sales includes revenue from contracts with customers for designing, engineering, manufacturing and installation of solar racking systems; electrical balance of systems; roof and foundation ventilation products; centralized mail systems and electronic package solutions; retractable awnings; gutter guards; rain dispersion products; trims and flashings and other accessories; designing, engineering, manufacturing and installation of greenhouses; structural bearings; expansion joints; pavement sealant; elastomeric concrete; and bridge cable protection systems.

Refer to Note 14 "Segment Information" for additional information related to revenue recognized by timing of transfer of control by reportable segment.

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As of September 30, 2023, the Company's remaining performance obligations are part of contracts that have an original expected duration of one year or less.

Contract assets consist of costs in excess of billings presented within accounts receivable in the Company's consolidated balance sheets. Contract liabilities consist of billings in excess of cost, classified as current liabilities, and unearned revenue, presented within accrued expenses, in the Company's consolidated balance sheets. Unearned revenue as of September 30, 2023 and December 31, 2022 was $ 7.2 million and $ 4.6 million, respectively. Revenue recognized during the nine months ended September 30, 2023 and 2022 that was in contract liabilities at the beginning of the respective periods was $ 32.2 million and $ 41.2 million, respectively.

(5) INVENTORIES

Inventories consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Raw material	$	91,069	$	111,187
Work-in-process	13,675		17,944
Finished goods	42,497		47,523
Gross inventory	147,241		176,654
Less reserves	( 6,233 )		( 6,294 )
Total inventories, net	$	141,008	$	170,360

(6) ACQUISITION

On July 5, 2023, the Company acquired the assets of a privately held Utah-based company that manufactures and distributes roof flashing and accessory products, and sells direct to roofing wholesalers. The results of this company have been included in the Company's consolidated financial results since the date of acquisition within the Company's Residential segment. The preliminary purchase consideration for this acquisition was $ 10.4 million, which includes a preliminary working capital adjustment and certain other adjustments provided for in the asset purchase agreement.

The purchase price for the acquisition was preliminarily allocated to the assets acquired and liabilities assumed based upon their respective fair values estimated as of the date of acquisition. The Company has commenced the process to confirm the existence, condition, and completeness of the assets acquired and liabilities assumed to establish fair value of such assets and liabilities and to determine the amount of goodwill to be recognized as of the date of acquisition. Due to the timing of the acquisition, the Company continues to gather information supporting the acquired assets and assumed liabilities. Accordingly, all amounts recorded are provisional. These provisional amounts are subject to change if new information is obtained concerning facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. The final determination of the fair value of certain assets and liabilities will be completed within a measurement period of up to one year from the date of acquisition. The final values may also result in changes to depreciation and amortization expense related to certain assets such as property, plant, and equipment and acquired intangible assets. The preliminary excess consideration was recorded as goodwill and approximated $ 4.1 million, all of which is deductible for tax purposes. Goodwill represents future economic benefits arising from other assets acquired that could not be individually identified including workforce additions, growth opportunities, and increased presence in the domestic building products markets. The final purchase price allocation will be completed no later than the third quarter of fiscal year 2024.

The preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed is as follows as of the date of the acquisition (in thousands):



Working capital	$	889
Property, plant and equipment	195
Acquired intangible assets	5,200


Goodwill	4,133
Fair value of purchase consideration	$	10,417

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The intangible assets acquired in this acquisition consisted of the following (in thousands):


	Fair Value		Weighted-Average Amortization Period

Trademarks	$	300	2 years

Customer relationships	4,900		12 years
Total	$	5,200

On August 22, 2022, the Company purchased all the issued and outstanding membership interests of Quality Aluminum Products ("QAP"), a manufacturer of aluminum and steel products including soffit, fascia, trim coil, rain carrying products and aluminum siding. The results of QAP have been included in the Company's consolidated financial results since the date of acquisition within the Company's Residential segment. The purchase consideration for the acquisition of QAP was $ 52.1 million, which includes a working capital adjustment and certain other adjustments provided for in the membership interest purchase agreement.

The purchase price for the acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values estimated as of the date of acquisition. The Company has completed the process to confirm the existence, condition, and completeness of the assets acquired and liabilities assumed to establish fair value of such assets and liabilities and to determine the amount of goodwill to be recognized as of the date of acquisition. The final determination of the fair value of certain assets and liabilities has been completed within a measurement period of up to one year from the date of acquisition. The excess consideration was recorded as goodwill and approximated $ 4.0 million, all of which is deductible for tax purposes. Goodwill represents future economic benefits arising from other assets acquired that could not be individually identified including workforce additions, growth opportunities, and increased presence in the domestic building products markets.

The allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed is as follows as of the date of the acquisition (in thousands):


Cash	$	1,018
Working capital	23,372
Property, plant and equipment	8,486
Acquired intangible assets	14,700
Other assets	1,813
Other liabilities	( 1,295 )
Goodwill	3,991
Fair value of purchase consideration	$	52,085

The intangible assets acquired in this acquisition consisted of the following (in thousands):


	Fair Value		Weighted-Average Amortization Period
Trademarks	$	2,800	Indefinite


Customer relationships	11,900		12 years
Total	$	14,700

In determining the allocation of the purchase price to the assets acquired and liabilities assumed, the Company uses all available information to make fair value determinations using Level 3 unobservable inputs in which little or no market data exists, and therefore, engages independent valuation specialists to assist in the fair value determination of the acquired long-lived assets.

The acquisition of the privately held Utah-based company and the acquisition of QAP were financed primarily through borrowings under the Company's revolving credit facility.

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The Company recognized costs as a component of cost of sales related to the sale of inventory at fair value as a result of allocating the purchase price of recent acquisitions. The Company also incurred certain acquisition-related costs comprised of legal and consulting fees within selling, general, and administrative ("SG&A") expense.

The acquisition-related costs consisted of the following for the three and nine months ended September 30 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of sales	$	12	$	476	$	12	$	476
Selling, general and administrative costs	224		522		245		529
Total acquisition related costs	$	236	$	998	$	257	$	1,005

(7) GOODWILL AND RELATED INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the nine months ended September 30, 2023 are as follows (in thousands):


	Renewables		Residential		Agtech		Infrastructure		Total
Balance at December 31, 2022	$	188,030	$	209,056	$	83,599	$	31,678	$	512,363

Acquired goodwill	—		4,133		—		—		4,133
Adjustments to prior year acquisitions	—		387		—		—		387
Foreign currency translation	( 1,273 )		—		( 266 )		—		( 1,539 )
Balance at September 30, 2023	$	186,757	$	213,576	$	83,333	$	31,678	$	515,344

Goodwill is recognized net of accumulated impairment losses of $ 133.2 million as of September 30, 2023 and December 31, 2022, respectively.

The Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing. The Company determined that no triggering event had occurred as of September 30, 2023 which would require an interim impairment test to be performed.

Acquired Intangible Assets

Acquired intangible assets consisted of the following (in thousands):


	September 30, 2023				December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Indefinite-lived intangible assets:
Trademarks	$	55,500	$	—	$	55,500	$	—
Finite-lived intangible assets:
Trademarks	5,745		4,616		5,448		4,481
Unpatented technology	34,155		23,749		34,163		22,037
Customer relationships	119,078		52,323		115,125		46,557
Non-compete agreements	2,370		2,113		2,371		2,006

	161,348		82,801		157,107		75,081
Total acquired intangible assets	$	216,848	$	82,801	$	212,607	$	75,081

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The following table summarizes the acquired intangible asset amortization expense for the three and nine months ended September 30, (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Amortization expense	$	2,893	$	2,801	$	8,419	$	8,718

Amortization expense related to acquired intangible assets for the remainder of fiscal 2023 and the next five years thereafter is estimated as follows (in thousands):


	2023		2024		2025		2026		2027		2028
Amortization expense	$	2,899	$	11,416	$	11,204	$	9,738	$	8,111	$	7,244

(8) LONG-TERM DEBT

The Company had no outstanding debt as of September 30, 2023 and unamortized debt issuance costs, included in other assets on the consolidated balance sheet, were $ 1.9 million. As of December 31, 2022, the Company's total outstanding debt was $ 88.8 million, which included $ 91.0 million on the Company's revolving credit facility net of $ 2.2 million in unamortized debt issuance costs.

Revolving Credit Facility

On December 8, 2022, the Company entered into a Credit Agreement (the "Credit Agreement"), and concurrently with entering into the Credit Agreement, the Company paid off all amounts owed under the Sixth Amended and Restated Credit Agreement dated as of January 24, 2019. The Credit Agreement provides for a revolving credit facility and letters of credit in an aggregate amount equal to $ 400 million. The Company can request additional financing to increase the revolving credit facility to $ 700 million or enter into a term loan of up to $ 300 million subject to conditions set forth in the Credit Agreement. The Credit Agreement contains two financial covenants. As of September 30, 2023, the Company was in compliance with all financial covenants. The Credit Agreement terminates on December 8, 2027.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at a rate equal to the applicable margin plus (a) a base rate, (b) a daily simple secured overnight financing rate ("SOFR") rate, (c) a term SOFR rate or (d) for certain foreign currencies, a foreign currency rate, in each case subject to a 0 % floor. Through March 31, 2023, the Credit Agreement had an initial applicable margin of 0.125 % for base rate loans and 1.125 % for SOFR and alternative currency loans. Thereafter, the applicable margin ranges from 0.125 % to 1.00 % for base rate loans and from 1.125 % to 2.00 % for SOFR and alternative currency loans based on the Company’s Total Net Leverage Ratio, as defined in the Credit Agreement. In addition, the Credit Agreement is subject to an annual commitment fee, payable quarterly, which was initially 0.20 % of the daily average undrawn balance of the revolving credit facility and, from and after April 1, 2023, ranges between 0.20 % and 0.25 % of the daily average undrawn balance of the revolving credit facility based on the Company’s Total Net Leverage Ratio.

Borrowings under the Credit Agreement are secured by the trade receivables, inventory, personal property, equipment, and general intangibles of the Company’s significant domestic subsidiaries. Capital distributions are subject to certain Total Net Leverage Ratio requirements and capped by an annual aggregate limit under the Credit Agreement.

For the three and nine months ended September 30, 2022, interest rates on the revolving credit facility under the Sixth Amended and Restated Credit Agreement were based on LIBOR plus an additional margin that ranged from 1.125 % to 2.00 %. In addition, the revolving credit facility under the Sixth Amended and Restated Credit Agreement was subject to an undrawn commitment fee ranging between 0.15 % and 0.25 % based on the Total Leverage Ratio and the daily average undrawn balance.

Standby letters of credit of $ 3.9 million have been issued under the Credit Agreement to third parties on behalf of the Company as of September 30, 2023. These letters of credit reduce the amount otherwise available under the revolving credit facility. The Company had $ 396.1 million and $ 304.5 million of availability under the revolving credit facility as of September 30, 2023 and December 31, 2022, respectively.

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(9) ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following tables summarize the cumulative balance of each component of accumulated other comprehensive loss, net of tax, for the three months ended September 30, (in thousands):


	Foreign Currency Translation Adjustment		Postretirement Benefit Plan Adjustments		Total Pre-Tax Amount		Tax (Benefit) Expense		Accumulated Other Comprehensive Loss
Balance at June 30, 2023	$	( 4,081 )	$	( 373 )	$	( 4,454 )	$	( 339 )	$	( 4,115 )

Postretirement health care plan adjustments	—		11		11		3		8
Foreign currency translation adjustment	( 1,376 )		—		( 1,376 )		—		( 1,376 )
Balance at September 30, 2023	$	( 5,457 )	$	( 362 )	$	( 5,819 )	$	( 336 )	$	( 5,483 )


Balance at June 30, 2022	$	( 1,785 )	$	( 2,212 )	$	( 3,997 )	$	( 784 )	$	( 3,213 )

Postretirement health care plan adjustments	—		17		17		5		12
Foreign currency translation adjustment	( 3,568 )		—		( 3,568 )		—		( 3,568 )
Balance at September 30, 2022	$	( 5,353 )	$	( 2,195 )	$	( 7,548 )	$	( 779 )	$	( 6,769 )

The following tables summarize the cumulative balance of each component of accumulated other comprehensive (loss) income, net of tax, for the nine months ended September 30, (in thousands):


	Foreign Currency Translation Adjustment		Postretirement Benefit Plan Adjustments		Total Pre-Tax Amount		Tax (Benefit) Expense		Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2022	$	( 3,382 )	$	( 395 )	$	( 3,777 )	$	( 345 )	$	( 3,432 )

Postretirement health care plan adjustments	—		33		33		9		24
Foreign currency translation adjustment	( 2,075 )		—		( 2,075 )		—		( 2,075 )
Balance at September 30, 2023	$	( 5,457 )	$	( 362 )	$	( 5,819 )	$	( 336 )	$	( 5,483 )


Balance at December 31, 2021	$	1,640	$	( 2,247 )	$	( 607 )	$	( 794 )	$	187

Postretirement health care plan adjustments	—		52		52		15		37
Foreign currency translation adjustment	( 6,993 )		—		( 6,993 )		—		( 6,993 )
Balance at September 30, 2022	$	( 5,353 )	$	( 2,195 )	$	( 7,548 )	$	( 779 )	$	( 6,769 )

The realized adjustments relating to the Company’s postretirement health care costs were reclassified from accumulated other comprehensive loss and included in other expense in the consolidated statements of income.

(10) EQUITY-BASED COMPENSATION

On May 3, 2023, the stockholders of the Company approved the adoption of the Gibraltar Industries, Inc. Amended and Restated 2018 Equity Incentive Plan (the "Amended 2018 Plan") which increases the total number of shares available for issuance by the Company from 1,000,000 shares to 1,550,000 shares. In addition, 81,707 shares that were unissued and available for grant under the Gibraltar Industries, Inc. 2015 Equity Incentive Plan (the "2015 Plan") were consolidated with the Amended 2018 Plan. No further grants will be made under the 2015 Plan. Consistent with the Gibraltar Industries, Inc. 2018 Equity Incentive Plan and the 2015 Plan, the Amended 2018 Plan allows the Company to grant equity-based incentive compensation awards, in the form of non-qualified options, restricted shares, restricted stock units, performance shares, performance stock units, and stock rights to eligible participants.

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On May 4, 2022, the stockholders of the Company approved the adoption of the Gibraltar Industries, Inc. Amended and Restated 2016 Stock Plan for Non-Employee Directors ("Non-Employee Directors Plan") which increases the total number of shares for issuance by the Company thereunder from 100,000 shares to 200,000 shares, allows the Company to grant awards of shares of the Company's common stock to current non-employee Directors of the Company, and permits the Directors to defer receipt of such shares pursuant to the terms of the Non-Employee Directors Plan.

Equity Based Awards - Settled in Stock

The following table sets forth the number of equity-based awards granted during the nine months ended September 30, which will convert to shares upon vesting, along with the weighted average grant date fair values:


	2023			2022
Awards	Number of Awards	Weighted Average Grant Date Fair Value		Number of Awards (2)	Weighted Average Grant Date Fair Value
Performance stock units (1)	85,323	$	53.22	108,464	$	47.00
Restricted stock units	89,713	$	61.21	123,351	$	43.42
Deferred stock units	6,351	$	54.33	2,460	$	42.69
Common shares	8,468	$	54.33	15,652	$	42.49

(1) The Company’s performance stock units (“PSUs”) represent shares granted for which the final number of shares earned depends on financial performance. The number of shares to be issued may vary between 0 % and 200 % of the number of PSUs granted depending on the relative achievement to targeted thresholds. The Company's PSUs with a financial performance condition are based on the Company’s return on invested capital (“ROIC”) over a one-year performance period.

(2) PSUs granted in the first quarter of 2022 includes 5,653 units that were forfeited in the first quarter of 2023 and 62,201 units that will be converted to shares and issued to recipients in the first quarter of 2025 at 60.5 % of the target amount granted, based on the Company's actual ROIC compared to ROIC target for the performance period ended December 31, 2022.

Equity Based Awards - Settled in Cash

The Company's equity-based awards that are settled in cash are the awards under the Management Stock Purchase Plan (the “MSPP”) which is authorized under the Company's equity incentive plans. The MSPP provides participants the ability to defer a portion of their compensation, convertible to unrestricted investments, restricted stock units, or a combination of both, or defer a portion of their directors’ fees, convertible to restricted stock units. Employees eligible to defer a portion of their compensation also receive a company-matching award in restricted stock units equal to a percentage of their compensation.

The deferrals and related company match are credited to an account that represents a share-based liability. The portion of the account deferred to unrestricted investments is measured at fair market value of the unrestricted investments, and the portion of the account deferred to restricted stock units and company-matching restricted stock units is measured at a 200 -day average of the Company’s stock price. The account will be converted to and settled in cash payable to participants upon retirement or a termination of their service to the Company.

Total MSPP liabilities recorded on the consolidated balance sheet as of September 30, 2023 were $ 18.3 million, of which $ 2.0 million was included in current accrued expenses and $ 16.3 million was included in non-current liabilities. Total MSPP liabilities recorded on the consolidated balance sheet as of December 31, 2022 were $ 15.4 million, of which $ 2.3 million was included in current accrued expenses and $ 13.1 million was included in non-current liabilities. The value of the restricted stock units within the MSPP liabilities was $ 15.9 million and $ 13.4 million at September 30, 2023 and December 31, 2022, respectively.

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The following table provides the number of restricted stock units credited to active participant accounts and the payments made with respect to MSPP liabilities during the nine months ended September 30,:


	2023		2022
Restricted stock units credited	46,843		9,564
MSPP liabilities paid (in thousands)	$	2,392	$	2,961

(11) EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS

The Company has incurred exit activity costs and asset impairment charges as a result of its 80/20 simplification and portfolio management initiatives. These initiatives have resulted in the identification of low-volume, low margin, internally-produced products which have been or will be outsourced or discontinued, the simplification of processes, the sale and exiting of less profitable businesses or product lines, and a reduction in the Company's manufacturing footprint.

Exit activity costs (recoveries) were incurred during the nine months ended September 30, 2023 and 2022 which related to moving and closing costs, severance, and contract terminations, along with asset impairment charges (recoveries) related to the write-down of inventory and other charges associated with discontinued product lines, as a result of process simplification initiatives. In conjunction with these initiatives, the Company recorded costs during the nine months ended September 30, 2023 associated with the final closure and sale of a facility closed during the fourth quarter of 2022. During the nine months ended September 30, 2022, the Company exited a facility, relocating to a new one , and separately, closed one other facility as a result of these initiatives.

The following tables set forth the exit activity costs (recoveries) and asset impairment charges (recoveries) incurred by segment during the three and nine months ended September 30, related to the restructuring activities described above (in thousands):


	Three Months Ended September 30,
	2023						2022
	Exit Activity		Asset Impairment		Total		Exit Activity		Asset Impairment		Total
Renewables	$	4,389	$	( 59 )	$	4,330	$	( 44 )	$	—	$	( 44 )
Residential	22		654		676		—		12		12
Agtech	5		—		5		15		217		232
Infrastructure	—		—		—		—		—		—
Corporate	( 33 )		—		( 33 )		11		—		11
Total	$	4,383	$	595	$	4,978	$	( 18 )	$	229	$	211


	Nine Months Ended September 30,
	2023						2022
	Exit Activity		Asset Impairment		Total		Exit Activity		Asset Impairment		Total
Renewables	$	7,298	$	( 82 )	$	7,216	$	1,359	$	1,198	$	2,557
Residential	136		654		790		1,298		12		1,310
Agtech	722		—		722		103		217		320
Infrastructure	—		—		—		( 63 )		—		( 63 )
Corporate	( 33 )		—		( 33 )		93		—		93
Total	$	8,123	$	572	$	8,695	$	2,790	$	1,427	$	4,217

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The following table provides a summary of where the exit activity costs and asset impairment charges were recorded in the consolidated statements of income for the three and nine months ended September 30, (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of sales	$	4,544	$	( 39 )	$	8,155	$	2,249
Selling, general, and administrative expense	434		250		540		1,968
Total exit activity and asset impairment charges	$	4,978	$	211	$	8,695	$	4,217

The following table reconciles the beginning and ending liability for exit activity costs relating to the Company’s facility consolidation efforts (in thousands):


	2023		2022
Balance at January 1	$	2,417	$	272
Exit activity costs recognized	8,123		2,790
Cash payments	( 3,254 )		( 2,782 )
Balance at September 30	$	7,286	$	280

(12) INCOME TAXES

The following table summarizes the provision for income taxes for continuing operations (in thousands) for the three and nine months ended September 30, and the applicable effective tax rates:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Provision for income taxes	$	14,536		$	11,690		$	33,268		$	26,686
Effective tax rate	27.0		%	25.4		%	26.7		%	25.2		%

The effective tax rate for the three and nine months ended September 30, 2023 and 2022, respectively, was greater than the U.S. federal statutory rate of 21 % due to state taxes and nondeductible permanent differences partially offset by favorable discrete item s due to an excess tax benefit on stock-based compensation.

(13) EARNINGS PER SHARE

Earnings per share and the weighted average shares outstanding used in calculating basic and diluted earnings per share are as follows for the three and nine months ended September 30, (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:


Net income available to common stockholders	$	39,277	$	34,295	$	91,099	$	79,058
Denominator for basic earnings per share:
Weighted average shares outstanding	30,485		31,707		30,638		32,396
Denominator for diluted earnings per share:
Weighted average shares outstanding	30,485		31,707		30,638		32,396
Common stock units	230		105		170		107
Weighted average shares and conversions	30,715		31,812		30,808		32,503

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The weighted average number of diluted shares does not include potential anti-dilutive common shares issuable pursuant to equity based incentive compensation awards. The following table provides the potential anti-dilutive common stock units for the three and nine months ended September 30, (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Common stock units	17	51	19	48

(14) SEGMENT INFORMATION

The Company is organized into four reportable segments on the basis of the production processes, products and services provided by each segment, identified as follows:

(i) Renewables, which primarily includes designing, engineering, manufacturing and installation of solar racking and electrical balance of systems;

(ii) Residential, which primarily includes roof and foundation ventilation products, centralized mail systems and electronic package solutions, retractable awnings and gutter guards, rain dispersion products, trims and flashings and other accessories;

(iii) Agtech, which provides growing solutions including the designing, engineering, manufacturing and installation of greenhouses; and

(iv) Infrastructure, which primarily includes structural bearings, expansion joints and pavement sealant for bridges, airport runways and roadways, elastomeric concrete, and bridge cable protection systems.

When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics.

The following table illustrates certain measurements used by management to assess performance of the segments described above for the three and nine months ended September 30, (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net sales:
Renewables	$	106,362	$	111,119	$	243,026	$	291,451
Residential	227,747		215,592		635,476		595,322
Agtech	31,666		44,217		102,546		130,325
Infrastructure	24,969		20,363		67,877		59,007
Total net sales	$	390,744	$	391,291	$	1,048,925	$	1,076,105

Income from operations:
Renewables	$	12,907	$	14,216	$	21,084	$	14,061
Residential	42,158		35,802		115,626		104,901
Agtech	2,136		3,777		3,349		5,350
Infrastructure	6,386		2,572		14,928		6,640
Unallocated Corporate Expenses	( 10,397 )		( 8,971 )		( 29,350 )		( 22,222 )
Total income from operations	$	53,190	$	47,396	$	125,637	$	108,730

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	September 30, 2023		December 31, 2022
Total assets:
Renewables	$	399,969	$	392,368
Residential	539,800		519,567
Agtech	182,988		193,966
Infrastructure	79,877		80,264
Unallocated corporate assets	85,412		24,448

	$	1,288,046	$	1,210,613

The following tables illustrate segment revenue disaggregated by timing of transfer of control to the customer for the three and nine months ended September 30 (in thousands):


	Three Months Ended September 30, 2023
	Renewables		Residential		Agtech		Infrastructure		Total
Net sales:
Point in Time	$	15,903	$	225,985	$	777	$	9,922	$	252,587
Over Time	90,459		1,762		30,889		15,047		138,157
Total net sales	$	106,362	$	227,747	$	31,666	$	24,969	$	390,744


	Three Months Ended September 30, 2022
	Renewables		Residential		Agtech		Infrastructure		Total
Net sales:
Point in Time	$	7,660	$	214,175	$	3,510	$	9,938	$	235,283
Over Time	103,459		1,417		40,707		10,425		156,008
Total net sales	$	111,119	$	215,592	$	44,217	$	20,363	$	391,291


	Nine Months Ended September 30, 2023
	Renewables		Residential		Agtech		Infrastructure		Total
Net sales:
Point in Time	$	35,630	$	630,545	$	5,580	$	24,831	$	696,586
Over Time	207,396		4,931		96,966		43,046		352,339
Total net sales	$	243,026	$	635,476	$	102,546	$	67,877	$	1,048,925


	Nine Months Ended September 30, 2022
	Renewables		Residential		Agtech		Infrastructure		Total
Net sales:
Point in Time	$	18,569	$	591,160	$	9,152	$	25,177	$	644,058
Over Time	272,882		4,162		121,173		33,830		432,047
Total net sales	$	291,451	$	595,322	$	130,325	$	59,007	$	1,076,105

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain information set forth herein includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and, therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “anticipates,” “aspires,” “expects,” “estimates,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, competition, strategies, margins, integration of acquired businesses, the industries in which we operate and the expected impact of evolving laws and regulation. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in the “Risk Factors” disclosures in our most recent Annual Report on Form 10-K. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, liquidity and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained herein. In addition, even if our results of operations, financial condition, liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statements that we make herein speak only as of the date of those statements, and we undertake no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

The Company uses certain operating performance measures, specifically consolidated gross margin, operating margin by segment and consolidated operating margin, to manage the Company's businesses, set operational goals, and establish performance targets for incentive compensation for the Company's employees. The Company defines consolidated gross margin as a percentage of total consolidated gross profit to total consolidated net sales. The Company defines operating margin by segment as a percentage of total income from operations by segment to total net sales by segment and consolidated operating margin as a percentage of total consolidated income from operations to total consolidated net sales. The Company believes consolidated gross margin and operating margin by segment may be useful to investors in evaluating the profitability of the Company's segments and the Company on a consolidated basis.

Overview

Gibraltar Industries, Inc. (the "Company") is a leading manufacturer and provider of products and services for the renewable energy, residential, agtech, and infrastructure markets.

The Company operates and reports its results in the following four reporting segments:

• Renewables;

• Residential;

• Agtech; and

• Infrastructure.

The Company serves customers primarily in North America including renewable energy (solar) developers, home improvement retailers, wholesalers, distributors, institutional and commercial growers of food and plants, and contractors. At September 30, 2023, the Company operated 31 facilities, comprised of 23 manufacturing facilities, one distribution center, and seven offices, which are located in 16 states, Canada, China, and Japan. The Company's operational infrastructure provides the necessary scale to support regional and national customers in each of the Company's markets.

Recent Trends

The uncertainty of the current macro-economic environment, including shifting inflation and higher interest rates, along with trade related disruptions that continue to impact the supply of solar modules used by the Company’s customers, have impacted and may continue to adversely impact our performance and financial results. Although

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the disruption in the supply of solar modules is improving, our customers are being challenged to obtain permits from relevant government entities to build new solar fields and the Company does expect that these aforementioned dynamics will continue in the remainder of 2023.

While the Company does not sell or import solar modules, the goods and services the Company provides for its customers depend upon the supply of solar modules for which such shortages have resulted in project delays over the past two years. The supply has been primarily impacted by two regulatory items: the Uyghur Forced Labor Prevention Act ("UFLPA") which was enacted in June 2022, and the circumvention of anti-dumping and countervailing duties (“AD/CVD”) investigation launched by the U.S. Department of Commerce ("USDOC") in March 2022, against eight solar module manufacturers producing in four countries in Southeast Asia.

The UFLPA requires traceability of components of imported goods to validate components are not sourced from the Xinjiang province in China. This requirement has caused delays in module availability as module manufacturers must follow a stringent importation process with the U.S. Custom and Border Protection Agency. While a few of the larger module manufacturers are experiencing more consistent success with the importation process, other module suppliers need to make further progress with UFLPA and the importation process. The UFLPA continues to create a compliance burden and constrain supply of imported solar modules, but the Company expects continual improvement of supply as more module manufacturers move forward on the learning curve.

As a result of the USDOC’s AD/CVD investigation, and until the final ruling from the USDOC was announced in August 2023, projects were delayed due to the risk of retroactive tariffs being imposed on the import of solar modules produced in four countries in Southeast Asia, where Chinese manufacturers have operations. In addition, of the eight major manufacturers under investigation, five were found to have been circumventing the AD/CVD orders. In parallel to the USDOC investigation, on June 6, 2022, an emergency Presidential Proclamation was issued delaying the imposition of duties on imports from the impacted countries until June 6, 2024. This proclamation provides non-U.S. based module manufacturers time to modify and secure supply chains to ensure compliance with U.S. law.

On August 16, 2022, the Inflation Reduction Act ("IRA") was signed into law. Among other things, the IRA provides for a variety of enhanced Investment Tax Credits ("ITC") and Production Tax Credits for renewable energy subject to specific dates and requirements. Although the Company believes the IRA should assist in driving growth in the renewable energy industry, it is important that the Department of Treasury finalize rules governing the execution of additional investment tax incentives so industry and the Company's customers can move forward with projects currently on hold. Overall, the Company believes the enhanced tax credits under the IRA will provide long-term certainty for the industry and support consistent and accelerating demand for our products. The Company will work with its customers to optimize the various ITCs as the final rules are defined and implemented.

Business Strategy

The Company's mission is to make life better for people and the planet, fueled by advancing the disciplines of engineering, science, and technology. The Company is innovating to reshape critical markets in sustainable power, comfortable and efficient living, and productive growing throughout North America. Furthermore, the Company strives to create compounding and sustainable value for its stockholders and stakeholders with strong and relevant leadership positions in higher growth, profitable end markets focused on addressing some of the world's most challenging opportunities. The foundation of the Company's strategy is built on three core pillars: Business System, Portfolio Management, and Organization Development.

1. Business System reflects the necessary systems, processes, and management tools required to deliver consistent and continuous performance improvement, every day. The Company's business system is a critical enabler to grow, scale, and deliver its plans. The Company's focus is on deploying effective tools to drive growth, improve operating performance, and develop the organization utilizing 80/20 and lean quote-to-cash initiatives along with digital systems for speed, agility and responsiveness. The Business System pillar challenges existing operating paradigms, drives day-to-day performance, forces prioritization of resources, tests the Company's business models, and drives new product and services innovation.

2. Portfolio Management is focused on optimizing the Company’s business portfolio in higher growth markets with leadership positions while ensuring its financial capital and human resources are effectively and efficiently deployed to deliver sustainable, profitable growth while increasing its relevance with customers and shaping its markets. Recent acquisitions to help achieve these objectives include the assets of a small privately held manufacturing and distributing company of roof flashing and accessory products in July 2023

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and Quality Aluminum Products ("QAP") in 2022, both within the Residential segment. To further these objectives, the Company made the decision in 2022 to divest its non-core Processing business and is currently in the final stages of liquidation of this business.

3. Organization Development drives the Company’s continuous focus on ensuring it has the right design and structure to scale the organization in order to execute the Company’s plans and meet commitments. The Company aspires to make its place of work the "Best Place to Work", where focus is on creating an environment for our people to have the best opportunity for success, continue to develop, grow and learn. At core of this pillar is the Company’s development process focused on helping employees reach their potential, improve performance, develop career roadmaps, identify ongoing education requirements, and respective succession plans. The Company believes doing so helps it attract and retain the best people to execute its business plans.

The Company believes the key elements of the Company's strategy enable the Company to respond timely to changes in the end markets the Company serves, including the broader market dynamics experienced over the past two years. The Company continues to examine the need for restructuring of the Company's operations, including consolidation of facilities, reducing overhead costs, curtailing investments in working capital, and managing the Company's business to generate incremental cash. The Company believes its strategy enables the Company to respond to volatility in commodity and other input costs and fluctuations in customer demand, along with striving to maintain and improve margins. The Company has used cash flows generated by these initiatives to minimize debt, improve the Company's liquidity position, invest in growth initiatives and return capital to the Company's shareholders through share repurchases. Overall, the Company continues to strive to achieve stronger financial results, make more efficient use of capital, and deliver higher stockholder returns.

Recent Developments

On July 5, 2023, the Company acquired the assets of a privately held Utah based company that manufactures and distributes roof flashing and accessory products for $10.4 million.

On December 8, 2022, the Company entered into a Credit Agreement (the "Credit Agreement"), and concurrently with entering into the Credit Agreement, the Company paid off all amounts owed under the Sixth Amended and Restated Credit Agreement dated as of January 24, 2019, which was terminated with no prepayment penalties. The Credit Agreement provides for a revolving credit facility and letters of credit in an aggregate amount equal to $400 million. The Company can request additional financing to increase the revolving credit facility to $700 million or enter into a term loan of up to $300 million subject to conditions set forth in the Credit Agreement. The Credit Agreement contains two financial covenants. As of September 30, 2023, the Company was in compliance with both financial covenants. The Credit Agreement terminates on December 8, 2027.

On August 22, 2022, the Company purchased all the issued and outstanding membership interests of QAP, a manufacturer of soffit, fascia, trim coil, rain carrying products and aluminum siding for an aggregate purchase price of $52.1 million. The acquisition of QAP was financed primarily through borrowings under the Company's revolving credit facility. The results of operations of QAP have been included in the Residential segment of the Company's consolidated financial statements from the date of acquisition.

In May 2022, the Company's Board of Directors authorized a share repurchase program of up to $200 million of the Company's issued and outstanding common stock. The program has a duration of three years, ending May 2, 2025. Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations. Any such repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The repurchase program may be suspended or discontinued at any time at the Company's discretion. As of September 30, 2023, the Company has repurchased 2,518,941 shares for an aggregate price of $111.0 million under this repurchase program.

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Results of Operations

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

The following table sets forth selected results of operations data and its percentage of net sales for the three months ended September 30 (in thousands):


	2023				2022
Net sales	$	390,744	100.0	%	$	391,291	100.0	%
Cost of sales	285,360		73.0	%	296,735		75.8	%
Gross profit	105,384		27.0	%	94,556		24.2	%
Selling, general, and administrative expense	52,194		13.4	%	47,160		12.1	%

Income from operations	53,190		13.6	%	47,396		12.1	%
Interest expense	417		0.1	%	1,048		0.2	%
Other (income) expense	(1,040)		(0.3)	%	363		0.1	%
Income before taxes	53,813		13.8	%	45,985		11.8	%
Provision for income taxes	14,536		3.7	%	11,690		3.0	%


Net income	$	39,277	10.1	%	$	34,295	8.8	%

The following table sets forth the Company’s net sales by reportable segment for the three months ended September 30, (in thousands):


							Impact of
	2023		2022		Total Change		Acquisitions		Portfolio Management		Ongoing Operations
Net sales:
Renewables	$	106,362	$	111,119	$	(4,757)	$	—	$	—	$	(4,757)
Residential	227,747		215,592		12,155		18,880		—		(6,725)
Agtech	31,666		44,217		(12,551)		—		(1,546)		(11,005)
Infrastructure	24,969		20,363		4,606		—		—		4,606
Consolidated	$	390,744	$	391,291	$	(547)	$	18,880	$	(1,546)	$	(17,881)

Consolidated net sales were essentially flat at $390.7 million for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. Revenue of $18.9 million generated from recent acquisitions in the Residential segment was essentially offset by a $17.9 million or 5.0% decrease in organic revenue, the result of a 4% volume decline along with a 1% decrease in pricing to customers due to price management initiatives. Consolidated backlog increased 5% to $375 million, as compared to the end of the prior year quarter.

Net sales in the Company's Renewables segment decreased $4.8 million, or 4.2%, to $106.4 million for the three months ended September 30, 2023 compared to $111.1 million for the three months ended September 30, 2022. Revenue declined as module supply, local permitting delays and pending guidance on final IRA tax credit guidelines delayed the timing of contracted and active projects. Module imports have declined as a result of continued, yet improving, importation challenges resulting from the UFLPA implemented in June 2022. New order bookings remained robust as backlog increased 13% from the prior year, as customers and solar module importers gain a better understanding of documentary compliance requirements relative to the UFLPA.

Net sales in the Company's Residential segment increased $12.2 million, or 5.6%, to $227.7 million for the three months ended September 30, 2023 compared to $215.6 million for the three months ended September 30, 2022. Sales of $18.9 million generated from recent acquisitions along with the positive impact of participation gains and expanded market presence offset the year over year impact of market price adjustments in response to lower commodity prices and 80/20 initiatives targeting less attractive product lines.

Net sales in the Company's Agtech segment decreased 28.3%, or $12.6 million, to $31.7 million for the three months ended September 30, 2023 compared to $44.2 million for the three months ended September 30, 2022. The revenue decline was driven by timing of new project construction shifting from the third quarter to the fourth

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quarter, partially offset by new project construction activity commencing at the end of the quarter. Backlog decreased 6% year over year.

Net sales in the Company's Infrastructure segment increased 22.5%, or $4.6 million, to $25.0 million for the three months ended September 30, 2023 compared to $20.4 million for the three months ended September 30, 2022. The increase in revenue was due to strong end market demand and ongoing efforts to increase market participation. Backlog also benefited from these efforts resulting in a 6% increase year over year.

The Company's consolidated gross margin increased to 27.0% for the three months ended September 30, 2023 compared to 24.2% for the three months ended September 30, 2022. The increase was driven by improved price to material cost alignment, solid execution in field operations and continued operational efficiencies, along with 80/20 initiatives and favorable business and product mix.

Selling, general, and administrative ("SG&A") expenses increased by $5.0 million, or 10.7% to $52.2 million for the three months ended September 30, 2023 compared to $47.2 million for the three months ended September 30, 2022. The $5.0 million increase was primarily due to higher performance-based compensation expense as compared to the prior year quarter. SG&A expenses as a percentage of net sales increased to 13.4% for the three months ended September 30, 2023 compared to 12.1% for the three months ended September 30, 2022.

The following table sets forth the Company’s income from operations and income from operations as a percentage of net sales by reportable segment for the three months ended September 30, (in thousands):



	2023				2022				Total Change
Income from operations:
Renewables	$	12,907	12.1	%	$	14,216	12.8	%	$	(1,309)
Residential	42,158		18.5	%	35,802		16.6	%	6,356
Agtech	2,136		6.7	%	3,777		8.5	%	(1,641)
Infrastructure	6,386		25.6	%	2,572		12.6	%	3,814
Unallocated Corporate Expenses	(10,397)		(2.7)	%	(8,971)		(2.3)	%	(1,426)
Consolidated income from operations	$	53,190	13.6	%	$	47,396	12.1	%	$	5,794

The Renewables segment generated an operating margin of 12.1% in the current year quarter compared to 12.8% in the prior year quarter. The decrease in operating margin was a result of restructuring charges incurred in the current year quarter related to addressing customer issues arising from the discontinued legacy solar tracker solution, largely offset by favorable price to cost alignment and field operations efficiencies.

The Residential segment generated an operating margin of 18.5% in the current year quarter compared to 16.6% in the prior year quarter. The expansion in operating margin was the result of increased volume, improved alignment of price/cost, implementation of additional 80/20 initiatives, and favorable product line mix.

The Agtech segment generated an operating margin of 6.7% in the current year quarter compared to 8.5% in the prior year quarter. Operating margin declined year over year due to less favorable price to cost alignment, volume deleverage and product mix, partially offset by 80/20 initiatives.

The Infrastructure segment generated an operating margin of 25.6% during the three months ended September 30, 2023 compared to 12.6% during the three months ended September 30, 2022. The margin improved year over year driven by strong operating execution, strategic pricing, 80/20 productivity, supply chain productivity and favorable product line mix.

Unallocated corporate expenses increased $1.4 million from $9.0 million during the three months ended September 30, 2022 to $10.4 million during the three months ended September 30, 2023. The increase in expense was primarily the result of higher performance-based compensation expense as compared to the prior year quarter.

Interest expense decreased $0.6 million to $0.4 million for the three months ended September 30, 2023 compared to $1.0 million for the three months ended September 30, 2022. Despite higher interest rates in the current year quarter as compared to the prior year quarter, the decrease in interest expense was primarily due to lower average outstanding balances on the Company's revolving credit facility during these respective quarters.

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The Company recorded other income of $1.0 million for the three months ended September 30, 2023, compared to other expense of $0.4 million recorded for the three months ended September 30, 2022. The change year over year is the combined result of foreign currency translation fluctuations and changes in the fair market valuation allowance related to the liquidation of the processing business.

The Company recognized a provision for income taxes of $14.5 million and $11.7 million, with effective tax rates of 27.0% and 25.4% for the three months ended September 30, 2023, and 2022, respectively. The effective tax rate for the three months ended September 30, 2023, and 2022, respectively, was greater than the U.S. federal statutory rate of 21% due to state taxes and nondeductible permanent differences partially offset by favorable discrete items due to an excess tax benefit on stock-based compensation.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

The following table sets forth selected results of operations data and its percentage of net sales for the nine months ended September 30 (in thousands):


	2023				2022
Net sales	$	1,048,925	100.0	%	$	1,076,105	100.0	%
Cost of sales	769,873		73.4	%	826,434		76.8	%
Gross profit	279,052		26.6	%	249,671		23.2	%
Selling, general, and administrative expense	153,415		14.6	%	140,941		13.1	%

Income from operations	125,637		12.0	%	108,730		10.1	%
Interest expense	3,216		0.3	%	2,189		0.2	%
Other (income) expense	(1,946)		(0.2)	%	797		0.1	%
Income before taxes	124,367		11.9	%	105,744		9.8	%
Provision for income taxes	33,268		3.2	%	26,686		2.5	%


Net income	$	91,099	8.7	%	$	79,058	7.3	%

The following table sets forth the Company’s net sales by reportable segment for the nine months ended September 30, (in thousands):


							Impact of
	2023		2022		Total Change		Acquisitions		Portfolio Management		Ongoing Operations
Net sales:
Renewables	$	243,026	$	291,451	$	(48,425)	$	—	$	—	$	(48,425)
Residential	635,476		595,322		40,154		58,709		—		(18,555)
Agtech	102,546		130,325		(27,779)		—		(2,838)		(24,941)
Infrastructure	67,877		59,007		8,870		—		—		8,870
Consolidated	$	1,048,925	$	1,076,105	$	(27,180)	$	58,709	$	(2,838)	$	(83,051)

Consolidated net sales decreased by $27.2 million, or 2.5%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The decrease in revenue was driven by a $83.1 million or 7.7% decrease in organic revenue, largely the result of a 8% volume decline. Partially offsetting the year over year decrease were $58.7 million of revenues generated by recent acquisitions, which are reported as part of the Company's Residential segment, along with participation gains. Consolidated backlog increased 5% to $375 million, as compared to the end of the prior year period.

Net sales in the Company's Renewables segment decreased $48.4 million, or 16.6%, to $243.0 million for the nine months ended September 30, 2023 compared to $291.5 million for the nine months ended September 30, 2022. The decline was the result of decreased demand for solar racking installations, which continues to be impacted by importation challenges resulting from the UFLPA, timing delays incurred due to lengthier permitting processes, and pending guidance on final IRA tax credit guidelines. New order bookings continued to accelerate during the year and backlog increased 13% from the prior year.

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Net sales in the Company's Residential segment increased $40.2 million, or 6.8%, to $635.5 million for the nine months ended September 30, 2023 compared to $595.3 million for the nine months ended September 30, 2022. Sales of $58.7 million generated by recent acquisitions, along with the positive impact of participation gains and expanded market presence more than offset channel inventory corrections and price declines related to commodity cost reductions and 80/20 initiatives targeting less attractive product lines.

Net sales in the Company's Agtech segment decreased 21.3%, or $27.8 million, to $102.5 million for the nine months ended September 30, 2023 compared to $130.3 million for the nine months ended September 30, 2022. Revenue declined as both the segment's commercial business and produce projects experienced delayed new project starts, driven by the timing of project construction. While backlog decreased 6% year over year, the Company expects new project execution that is underway to help drive revenue growth in the fourth quarter of 2023.

Net sales in the Company's Infrastructure segment increased 15.1%, or $8.9 million, to $67.9 million for the nine months ended September 30, 2023 compared to $59.0 million for the nine months ended September 30, 2022. The increase in revenue was due to continued solid market demand and ongoing efforts to increase market participation. Backlog also benefited from these efforts resulting in a 6% increase year over year.

The Company's consolidated gross margin increased to 26.6% for the nine months ended September 30, 2023 compared to 23.2% for the nine months ended September 30, 2022. The increase was driven by improved price to material cost alignment, solid execution in field operations, improvement in supply chain management and continued operational efficiencies, along with 80/20 initiatives and favorable business and product mix.

Selling, general, and administrative ("SG&A") expenses increased by $12.5 million, or 8.9%, to $153.4 million for the nine months ended September 30, 2023 compared to $140.9 million for the nine months ended September 30, 2022. The $12.5 million increase was primarily due to higher performance-based compensation expense as compared to the prior year. Incremental SG&A expenses incurred by recent acquisitions also contributed to the increase. SG&A expenses as a percentage of net sales increased to 14.6% for the nine months ended September 30, 2023 compared to 13.1% for the nine months ended September 30, 2022.

The following table sets forth the Company’s income from operations and income from operations as a percentage of net sales by reportable segment for the nine months ended September 30, (in thousands):



	2023				2022				Total Change
Income from operations:
Renewables	$	21,084	8.7	%	$	14,061	4.8	%	$	7,023
Residential	115,626		18.2	%	104,901		17.6	%	10,725
Agtech	3,349		3.3	%	5,350		4.1	%	(2,001)
Infrastructure	14,928		22.0	%	6,640		11.3	%	8,288
Unallocated Corporate Expenses	(29,350)		(2.8)	%	(22,222)		(2.1)	%	(7,128)
Consolidated income from operations	$	125,637	12.0	%	$	108,730	10.1	%	$	16,907

The Renewables segment generated an operating margin of 8.7% in the current year compared to 4.8% in the prior year. The increase in operating margin was driven by field operations productivity, favorable price to cost alignment and improved supply chain management that offset lower volumes and higher restructuring expenses recorded in the current year.

The Residential segment generated an operating margin of 18.2% in the current year compared to 17.6% in the prior year. The increase in operating margin was the result of continued price/cost rebalancing, 80/20 activities and mix, offset by the anticipated lower margins from the Company's recent acquisitions.

The Agtech segment generated an operating margin of 3.3% in the current year compared to 4.1% in the prior year. Operating margin declined year over year due to volume deleverage and product mix, partially offset by 80/20 initiatives and improvement in project management systems.

The Infrastructure segment generated an operating margin of 22.0% during the nine months ended September 30, 2023 compared to 11.3% during the nine months ended September 30, 2022. The margin improved year over year driven by strong operating execution, 80/20 productivity, supply chain efficiency, and product line mix.

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Unallocated corporate expenses increased $7.1 million from $22.2 million during the nine months ended September 30, 2022 to $29.4 million during the nine months ended September 30, 2023. The increase in expense was primarily due to higher performance-based compensation expense as compared to the prior year.

Interest expense increased year over year with $3.2 million for the nine months ended September 30, 2023 compared to $2.2 million for the nine months ended September 30, 2022. The increase in expense was due to higher interest rates which nearly tripled compared to the prior year, largely offset by higher average outstanding balances in the prior year, $50 million compared to $73 million, for September 30, 2023 and 2022, respectively.

The Company recorded other income of $1.9 million for the nine months ended September 30, 2023, compared to other expense of $0.8 million recorded for the nine months ended September 30, 2022. The change year over year is the combined result of foreign currency translation fluctuations and changes in the fair market valuation allowance related to the liquidation of the processing business.

The Company recognized a provision for income taxes of $33.3 million and $26.7 million, with effective tax rates of 26.7% and 25.2% for the nine months ended September 30, 2023 and 2022, respectively. The effective tax rate for the nine months ended September 30, 2023, and 2022, respectively, was greater than the U.S. federal statutory rate of 21% due to state taxes and nondeductible permanent differences partially offset by favorable discrete items due to an excess tax benefit on stock-based compensation.

Liquidity and Capital Resources

The following table sets forth the Company's liquidity position as of (in thousands):


	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	85,465	$	17,608
Availability on revolving credit facility	396,056		304,505
	$	481,521	$	322,113

Sources of Liquidity

The Company's sources of liquidity are comprised of cash on hand and available borrowing capacity under the Company's Credit Agreement (the "Credit Agreement"), entered into on December 8, 2022. The Credit Agreement replaced and paid off all amounts owed under the Sixth Amended and Restated Credit Agreement dated as of January 24, 2019. The Credit Agreement maintains similar capacity as the prior agreement in which it provides for a revolving credit facility and letters of credit in an aggregate amount equal to $400 million. The Company can request additional financing to increase the revolving credit facility to $700 million or enter into a term loan of up to $300 million subject to conditions set forth in the Credit Agreement. The Company believes that these sources provide the Company with ample liquidity and capital resources to invest in operational excellence, growth initiatives and the development of the organization.

The Company has been able to weather the economic impacts of the broader market dynamics, including the inflationary cost environment, while continuing to make investments that support the Company's strategy. The Company continues to remain focused on managing its working capital, closely monitoring customer credit and collection activities, and working to extend payment terms with its vendors. The Company believes its liquidity, together with the cash expected to be generated from operations, will be sufficient to fund working capital needs and growth initiatives for the foreseeable future.

The Company can and does use the Credit Agreement to provide liquidity and capital resources primarily for the Company's U.S. operations when necessary. Generally, the Company's foreign operations have generated cash flow from operations sufficient to invest in working capital and fund their capital improvements. As of September 30, 2023 and December 31, 2022, the Company's foreign subsidiaries held $22.3 million and $15.2 million of cash, respectively.

Outstanding balances on the Company's revolving credit facility under the Company's Credit Agreement accrue interest at a rate, at the Company's option, equal to the applicable margin plus (a) a base rate, (b) a daily simple secured overnight financing rate ("SOFR"), (c) a term SOFR rate, or (d) for certain foreign currencies, a foreign currency rate. See Note 8 to the Company's consolidated financial statements in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for further information on the Credit Agreement.

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Uses of Cash / Cash Requirements

The Company's material short-term cash requirements primarily include accounts payable, certain employee and retiree benefit-related obligations, operating lease obligations, interest and repayments of borrowing on its revolving credit facility, capital expenditures, and other purchase obligations originating in the normal course of business for inventory purchase orders and contractual service agreements. The Company's principal capital requirements are to fund its operations' working capital and capital improvements, as well as provide capital for acquisitions and to strategically allocate capital through repurchases of Company stock. The Company will continue to invest in growth opportunities as appropriate while focusing on working capital efficiency and profit improvement opportunities to minimize the cash invested to operate its business. The Company intends to fund its cash requirements through cash generated from operations and, as necessary, from the availability on its revolving credit facility.

Over the long-term, the Company expects that future investments, including strategic business opportunities such as acquisitions, may be financed through a number of sources, including internally available cash, availability under the Credit Agreement, new debt financing, the issuance of equity securities, or any combination of the aforementioned. The $10.4 million preliminary purchase price for the acquisition of a privately held Utah-based company was financed primarily through borrowing on our revolving credit facility. All potential acquisitions are evaluated based on the Company's acquisition strategy, which includes the enhancement of the Company's existing products, operations, and/or capabilities, as well as expanding the Company's access to new products, markets, and customers, with the goal of creating compounding and sustainable stockholder value.

These expectations are forward-looking statements based upon currently available information and may change if conditions in the credit and equity markets deteriorate or other circumstances change. To the extent that operating cash flows are lower than current levels, or sources of financing are not available or not available at acceptable terms, the Company's future liquidity may be adversely affected.

Except as disclosed above, there have been no material changes in the Company's cash requirements since December 31, 2022, the end of fiscal year 2022. See Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

Cash Flows

The following table sets forth selected cash flow data for the nine months ended September 30, (in thousands):


	2023		2022
Cash provided by (used in):
Operating activities	$	206,656	$	38,561
Investing activities	(17,839)		(67,325)
Financing activities	(120,182)		39,675

Effect of foreign exchange rate changes	(778)		(1,841)
Net increase in cash and cash equivalents	$	67,857	$	9,070

Operating Activities

Net cash provided by operating activities for the nine months ended September 30, 2023 of $206.7 million consisted of net income of $91.1 million, non-cash net charges totaling $31.5 million, which include depreciation, amortization, stock-based compensation, exit activity recoveries and other non-cash charges, and $84.1 million of cash generated from working capital and other net operating assets. The cash generated from working capital and other net operating assets was largely due to increases in accounts payable, the result of the timing of purchases and

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vendor payments, and billings in excess of costs, the result of increased advance payments from and billings to customers on projects. In addition, cash was generated due to the Company's focus on reducing its investment in inventory to better align with lower sales volumes while still meeting customer demand. These activities were partially offset by an increase in accounts receivable largely the result of seasonal increases in demand.

Net cash provided by operating activities for the nine months ended September 30, 2022 of $38.6 million consisted of income from continuing operations of $79.1 million and non-cash net charges totaling $30.3 million, which include depreciation, amortization, stock-based compensation, exit activity costs and other non-cash charges, offset by a $70.8 million investment in working capital and other net assets. The investment in working capital and other net assets was due to increases in accounts receivable and inventory, largely the result of seasonal increases in demand, holding increased quantities due to general supply chain disruption, along with increased raw material and freight costs impacting inventory. A decrease in accounts payable as a result of the correlation between the timing of inventory receipts and vendor payments also contributed to the increase.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2023 of $17.8 million consisted of cash paid of $10.4 million for the acquisition of a privately held Utah-based company offset by receipt of the $0.6 million final working capital settlement related to the 2022 acquisition of QAP and net capital expenditures of $8.0 million.

Net cash used in investing activities for the nine months ended September 30, 2022 of $67.3 million consisted of net cash paid of $51.6 million for the acquisition of QAP and net capital expenditures of $15.7 million.

Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2023 of $120.2 million consisted of net long-term debt payments of $91.0 million and $29.2 million of common stock repurchases. Net long-term debt payments consisted of $141.0 million in long-term debt payments, offset by $50.0 million in proceeds from borrowing on the Company's long-term debt credit facility. The Company paid $26.0 million during the nine months ended September 30, 2023 related to repurchase of 538,575 shares under the Company's authorized share repurchase program. The remainder of the repurchased common stock of $3.2 million related to the net settlement of tax obligations for participants in the Company's equity incentive plans.

Net cash provided by financing activities for the nine months ended September 30, 2022 of $39.7 million was the result of $197.8 million in proceeds from borrowing on our long-term credit facility, offset by $100.0 million in payments on long-term debt and $58.1 million of common stock repurchases. Share repurchases of 1,333,453 under the Company’s authorized share repurchase program totaled $55.5 million with the balance repurchased for the net settlement of tax obligations for participants in the Company's equity incentive plans.

Critical Accounting Estimates

There have been no material changes to the Company's critical accounting estimates during the nine months ended September 30, 2023 from those disclosed in the consolidated financial statements and accompanying notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

Recent Accounting Pronouncements

See Note 2 to the Company's consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, the Company is exposed to various market risk factors, including changes in general economic conditions, competition, interest rates, foreign exchange rates, and raw materials pricing and availability. In addition, the Company is exposed to other financial market risks, primarily related to its foreign operations. In the current year, there have been no material changes in the information provided under Item 7A in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

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Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

The Company maintains a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Management of the Company, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered in this report. Based upon that evaluation and the definition of disclosure controls and procedures contained in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the end of such period the Company’s disclosure controls and procedures were effective.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined by Rule 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time the Company has been and may in the future become involved in litigation, as well as other legal proceedings in the ordinary course of the Company's business. The Company maintains liability insurance against risks arising out of the normal course of business. While the outcome of these legal proceedings cannot be predicted with certainty, the Company's management, based on currently available facts, does not believe that the ultimate outcome of any pending litigation will have a material effect on the Company's consolidated financial condition, results of operations, or liquidity.

There were no material legal proceedings terminated, settled, or otherwise resolved during the quarter ended September 30, 2023.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risks discussed in “Part I, Item 1A. Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022. These risks and uncertainties have the potential to materially affect the Company's business, financial condition, results of operation, cash flows, and future prospects. Additional risks and uncertainties not currently known to the Company or that the Company currently deems immaterial may materially adversely impact the Company's business, financial condition, or operating results. During the quarter ended September 30, 2023, there have been no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In May 2022, the Company's Board of Directors authorized a share repurchase program of up to $200 million of the Company's issued and outstanding common stock. The program was publicly announced on May 4, 2022 and has a duration of three years, ending May 2, 2025. Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations. Any such repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The repurchase program may be suspended or discontinued at any time at the Company's discretion.

The Company did not purchase shares during the quarter ended September 30, 2023 and the approximate dollar value of shares that may yet be purchased under the program was $88,943,472.

The Company did not sell unregistered equity securities during the period covered by this report.

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Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits


			3.1			Certificate of Incorporation of Gibraltar Industries, Inc., as amended by: (i) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. filed on October 27, 2004, (ii) Certificate of Change of Registered Agent and Registered Office of Gibraltar Industries, Inc. filed on May 11, 2005, (iii) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. filed on May 22, 2012, (iv) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. filed on May 11, 2015, (v) Certificate of Change of Registered Agent and/or Registered Office filed on January 10, 2019, (vi) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. filed on May 6, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed on August 3, 2021), and (vii) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. filed on May 3, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 8, 2023)
			3.2			Second Amended and Restated By-Laws of Gibraltar Industries, Inc., effective as of December 7, 2022 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K/A filed on December 9, 2022)
			10.1 *			Form of Award of Restricted Units (Executive) under the Gibraltar Industries, Inc. Amended and Restated 2018 Equity Incentive Plan
			10.2 *			Form of Award of Restricted Units (Management) under the Gibraltar Industries, Inc. Amended and Restated 2018 Equity Incentive Plan
			10.3 *			Form of Award of Restricted Units (CEO Discretionary) under the Gibraltar Industries, Inc. Amended and Restated 2018 Equity Incentive Plan
			31.1 *			Certification of Chairman of the Board, President and Chief Executive Officer pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.
			31.2 *			Certification of Senior Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.
			32.1 **			Certification of the Chairman of the Board, President and Chief Executive Officer pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.
			32.2 **			Certification of the Senior Vice President and Chief Financial Officer pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.
			101.INS*			Inline XBRL Instance Document
			101.SCH*			Inline XBRL Taxonomy Extension Schema Document
			101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document
			101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document
			101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document
			101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document
			104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*			Submitted electronically with this Quarterly Report on Form 10-Q.
**			Documents are furnished not filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


GIBRALTAR INDUSTRIES, INC.
(Registrant)


/s/ William T. Bosway
William T. Bosway
Chairman of the Board, President and Chief Executive Officer


/s/ Timothy F. Murphy
Timothy F. Murphy
Senior Vice President and Chief Financial Officer

Date: November 2, 2023

TABLE OF CONTENTS

Part I. Financial Information Item 1. Financial Statements Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II. Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibits

Exhibits

ROCK 10-Q Quarter ended Sept. 30, 2023

Exhibits