Q4 2020 Gibraltar Industries Inc Earnings Call
Ladies and gentlemen, thank you for standing by your conference will begin in approximately one to two minutes again. Please continue to hold your conference will begin shortly.
[music].
Industrial business, which was divested on February 23rd 2021, as a discontinued operation with Fourthquarter Twenty-twenty results [noise].
Excuse me. Additionally, Gibraltar as earnings release and remarks contain non-GAAP financial measures tables of reconciliation, including GAAP, two adjusted financial measures as well as continuing and discontinued operation can be found on the earnings press release that was issued today further results of Terror Smart, which was acquired at 11 59 P.
<unk> on December 31, 2020 had no impact on operations in 2020 reported results.
I have noted on slide present to the presentation.
Their earnings press release, and slide presentation contains forward looking statements with respect to future financial results. These statements are not guarantee that future performance and the companies actual results may differ materially from the anticipated events performance or results expressed or implied by these forward looking statements Gibraltar advise you to read the risk factors detailed and it's S.
SEC filings, which can also be access or the company's web site.
Now I will turn the call over to build Logway Bill.
Thanks curled on good morning, everybody and thanks for joining the call. This morning, I hope everyone is remaining safe and healthy and.
Navigating through some of the recent winter weather, but we've all experienced let's start with an overview of our 2024 year in fourth quarter results men. Tim is gonna provide more detailed regarding your Q for financials, and then I'll circle back with you on review our strategic priorities.
Priorities and for your guidance for 2021, and then we'll open the call.
Your questions. So, let's turn to slide three 2020 results.
Oh excuse me overall, we delivered record results in 2020.
While remaining very focused on health and wellbeing of our of our people of our operations, our customers and and obviously the communities we operate in.
For the full year revenue increased 15 per cent GAAP EPS increased 38% of adjusted EPS increased 18%.
<unk> gap operating margin improved 100, and 840 basis points and adjusted operating margin crude 40 basis points to 11.3 per cent.
Return on invested capital improved $17 six per cent.
Up over 180 basis points versus 2019, so despite a challenging and I'd say relatively dynamic environment in 2021.
We actually do well on her key initiatives, we generate strong cash flow.
And we continue to improve operations, we also invested organization, adding a talent and accelerated on education initiative.
We deployed additional digital on it systems and tools and we made five acquisitions to strengthen our leadership position and relevance anarchy markets Ricard reacquired thermal energy solutions, a leader in the commercial growing infrastructure.
Market Delta separations, the leader and process an extraction equipment.
Well mailboxes, a leader in kind mailboxes, and Tara smart SUNFISH respective leaders on the solar energy space.
And as mentioned that is starting to call. We also announced the sale of our industrial business earlier this week.
Fight the business as a discontinued operation.
With our fourth quarter results. So a lot of important initiatives completed during the year really focused on supporting our objective of increasing participation higher growth.
Higher margin markets.
Now, let's talk about the fourth quarter, we delivered solid results, while operating what I would say it was probably the most dynamic period of the year for us the pandemic of.
That was starting to peak with a record level of infection rates across the country key commodity prices began to inflate.
Start to see some solar panels supply challenges.
Surfacing and and a few customers experiencing some permitting delays.
And then all of this was wrapped up around them pretty abnormal and anxious holiday season for many folks now that all being said as we emphasize with the team throughout the year. You know we stayed focused on what we can control and do the best we can and for the quarter revenue increased 17 43 per cent.
Really driven by good growth on a residential products and also from acquisitions maiden, both male and package and the growing and processing business.
Ah residential products business really continue to X execution momentum delivering solid margin results from assistant with the performance we have seen throughout the year.
GAAP EPS increased 15, two per cent adjusted EPS three five per cent, but our GAAP operating margin declined 40 basis points on our adjusted operating margin, calling 100 basis points to 9.6 per cent. So let's talk about our margin performance and a quarter, which it was really driving are impacted by a couple of market dynamics.
<unk>, one of our solar energy business and.
The other on her growing and processing business. So let me start with the solar business for some context in 2020, we shipped and deployed approximately one and a half gigawatts of solar infrastructure over a thousand different projects across the U S.
Mainly supporting the community on commercial and industrial segments, the smaller midsize projects during.
During the fourth quarter, we had a portion of our then active 325 projects representing between 50 megawatt 70 megawatt.
Delay due to some solar panel availability in a few local permitting issues as a result, we had some projects and therefore revenue margin moving to 2021 on the panel supply issue, which has been driven by some shortages of key components, particularly polysilicon, but also glass and some silver paced.
As well as really robust growth in demand across the global solar energy market. You know should improve should continue to improve I would say in the first half of 2021 as some of this capacity comes back on line.
The second factor, which we have been dealing with over the last three quarters is related to our hands on cannabis markets, where as you know we provide green.
Greenhouse growing structures and processing equipment for oil extraction day.
Demand was less than expected on the fourth quarter, but we we saw an uptick in customer activity in early December the similar pace to actually pre pandemic lab levels.
As we enter 2021 and as I mentioned in our Q3 earnings call. We expect this margaret to recover throughout 2021 in our business to resume growth and deliver better results as well.
Despite these two challenges on the quarter, we do have strong momentum entering 2021 or demand profile is very positive.
With our overall backlog approximately $200 million up 50 per cent versus Q4 2019.
Which includes the acquisition of terrorist smart, but also a 26 per cent without including terrorist smart.
And there are two important things I want to make sure that I note regarding our backlog first our backlog has always been highly correlated with actual demand across our business and second to actually be included in our backlog <unk>, we have to have an executed valid commercial contract.
That's been rude internally approved and signed by both on customer and have and your browser.
And a down payment of up to 50 per cent of the contract value on it must be received or be in hand.
Any other customer activity indoor potential projects that are in our funnel, our scope and their tracks, but they're not permitted to be included in your backlog.
Meeting the above criteria.
So let me finish aside with a couple of comments regarding a recent acquisitions a tear smart son pig. We are obviously very excited about adding these businesses in our integration process with both teams is in full swing as a discuss dirt on January call announcing the deals a tear smart and son pig.
These businesses really help us accelerated porchia initiatives and or solar business. You know first the bus Frank and help us scalar position.
A relatively large market for 7 billion dollar domestic schiller market, which we see going on at 10 to 15 per cent per year really bronze and create some best portfolio. We believe Iraq with the system and foundation technology infrastructure, but also electrical balance of systems and design software solutions.
That supports our vision.
Initial to accelerate you know, making solar energy readily available everywhere and it enhances our revenue growth emergent profiles, we build our leadership in faster growing more profit markets.
So before I turn it over to Tim I I do want to.
So a big thank you to everyone across the router for what the team does each and every day and and it's support dedication for each other their families and their communities we operate in and for the journey. We're on the 20th 20 was the challenge near on so many fronts in our team responded in a way that.
Honestly makes me incredibly proud to be part of the other organization you know I'm I'm.
Fairly confident all our stakeholders feel the same way.
So now, let's let's turn on the side for and can take it away.
Thanks, Bill on good morning, everyone.
I'll take you through our consolidated segment results. My discussion covers results from continuing options, we classify the industrial business, which was divested on Tuesday is discontinued operation from 2020.
I'll also provide more color on this divestiture shortly.
And as a reminder, Tara smart had no impact on on income statement in 2020 cause we acquired the business at the end of the day on December 31st.
The acquisition on Terra Smart is reflected in our year end balance sheet and cash flows.
So go on to consolidated consolidated revenue increased 17.3 per cent driven by growth on the residential products and where the hold on a dream conservation segments withdraw set of revenue decline in the infrastructure sentiment.
<unk> revenue growth of 3.6 per cent was driven by continued execution on very strong demand and participation games and the residential product segment, which was partially offset by organic revenue decrease willful energy conservation and infrastructure cycles.
January $13 seven per cent growth from our first quarter of 2020 opposition to thermal energy and Delta separations on our fourth quarter 2020 acquisition of architectural mailboxes.
Total backward backlog at quarter on including Paris marches approaching 300 million.
50 per cent from the prior year from them by continued and market demand in a renewable energy conservation segment and to a lesser extent demand in our infrastructure segments.
And savvy to GAAP operating income was at 12, 44%.
And adjusted operating income increased five eight per cent in the fourth quarter.
From Saudi the gap and adjusted EPS crew $15, two and three five per cent prospectively. The increase was the results of organic growth continued margin expansion on the residential product segment.
Products and services mix effective price material cost management, and I'm getting benefits from operational excellence initiatives.
As a result of the industrial business divestiture included in the fourth quarter of 2020 loss from just continue operations of 26.1 million, there's a 29 $6 million non-cash loss related to the disclosure of this business.
Now, let's from you each of the three reporting segment, starting with slide five to renewable energy and conservation second.
Segment revenue increased 11 eight per cent driven by a recent acquisitions organic revenue slowed 11 per cent during the quarter by a few market factors.
Solar energy customers experienced unanticipated delays for their existing projects related to solar panels supply challenges in building from Anthony's pushing project scheduled for the fourth quarter 24th quarter into 2021.
And the growing and processing business the slow market for greenhouse structures in process from extraction equipment, serving cannabis on half markets, but we've seen over the past two quarters persistent for these markets are improving.
Renewable energy businesses margin performance was impacted in the quarter by the reduction of solar volume.
Cause he existing projects moved into 2020 again, we accept the solar panels supply challenges to some side in the first half.
On the conservation side margins were impacted by COVID-19 related Toledo or integration plan on thermal energy due to mandated visitation and travel restrictions between the U S. In Canada on the survey was located.
Current market conditions for greenhouse structures and processing equipment per kind of us and have also negatively impact emergence in the corner.
Total segment backlog continue to grow increase from 55 per cent, concluding Tara smart for the core growth of 22 per cent pretty we split between the solar on growing and processing.
By continued strength on both on markets.
Tara Smart accounting for the remaining 33 per cent.
In early December 2020, the existing industries federal investment tax credit, which was slated stepped down from 26% to 22 per cent was extended through the end of 2022, which is positive for the business.
Pipeline projects and these are projects in the sales funnel, but not yet signed with the contract strange for both the solar and growing in process and businesses heading into 2000 twenties range trough.
Ultimately dislike six to review on most recent acquisition.
As expected Tara Smart generated 2020 revenues of 157 million and adjusted EBITDA $26 million again tourists merch results did not in past R Q4 reported results.
The inclusion of tourists Mart brings to renewable energy and conservation segment to approximately 51% of Gibraltar is totally consolidated twenty-twenty revenues on a pro forma basis.
And as we discussed on January on the left side of this chart, we share the historical pro forma and anticipated progression of our solar energy business.
It's in the renewable energy Conservation segment.
On a pro forma basis for 2020, our solar energy business had revenue run range of roughly $400 million with adjusted operating income margins in excess of 12%.
Over the next five years, we expect this business to continue to grow to significant pace and expand its profitability from.
By the backdrop expected annual market growth in the range of 10% to 15%.
Walters, increasing participation in community and utility solo through the broadest industry offering available.
And commercial and operational integration to provide scalability and maximize growth synergies.
From a consolidated perspective, we ended 2020 with just over 1 billion in revenue and adjusted operating margin of 11.3%.
On on a pro forma basis, we exit 2020 with a revenue rumley, just under 1.2 billion and adjusted operating margins in excess of 11.5 per cent.
Let's move to slide seven review, our residential products signals.
Submit revenue increased 26, seven from last year with the residential market strength driven by ongoing housing fundamentals on strong demand and participation games across all channels.
Organic revenue grew 21, 4% and the acquired architectural mailboxes business contributed five three per cent to the growth.
Captain adjusted operating margins increased 280 basis points with consistent execution volume average price cost management and continued benefits remain 20th issues.
The organizational changes we made in 2019 continue to benefit from businesses and we continue to improve processes and develop the organization.
Let's move to slide eight two of your infrastructure product segment.
As mentioned earlier in my comments covering the results from continuing operations.
On the results of the industrial business or a coolness discontinued operations.
Second revenue decreased seven 5% because the pandemic continue to impact existing and new product project schedules, especially with our airport from the maintenance customers for customers have delayed spending.
Infrastructure backlog improve modestly and bidding activity is approaching record levels and 2021.
Adjusted operating margin was up 60 basis points through strong execution on our fabricated product lines, which offset a decline in our higher margin nonfat defeated product lines.
Let's move to slide nine to discuss the industrial business divestiture.
First I would like to thank the team of these businesses for all their efforts over the past 15 years of our ownership and to wish them continued success. This team did a great job embracing 80, 20, optimizing their operations and focusing their efforts on higher margin opportunities.
This divestiture as a direct result of the portfolio matters from pillar of our strategy committed to a plan to sell these businesses during the fourth quarter and reported report that is discontinued operations on our 2020 results.
And completed the sale on Tuesday, receiving net proceeds from approximately 38 million approximately 25 million in cash and a $13 million note that secured by real estate.
Recorded a non-cash loss of 29.6 million on December 31 to reduce the book value of the net assets to estimated realizable value.
And the industrial business for a full year on fourth quarter prior to recording the non-cash loss generated revenues from $129 $9 million and 38 million and adjusted operating profit $13 94.1 million respectively.
Let's move to slide tend to discuss our liquidity position.
Our free cash flow of $76 billion of 2020 years negatively impacted by our planned investment thermal energy working capital of $42 for a million dollars.
On the M&A front as previously reported in October we paid $27 million per architectural mailboxes and in December we paid $3 75 million for some fatigue and $228 2 million for Tara Smart.
Tara Smart consideration included in 85 million dollar draw on a revolver on the assumption of point $6 million of debt with the remainder finance through cash on hand.
At December 31st we had 309 million available on a revolver cash on hand, a 32 million on our leverage was approximately half a turn.
We continue to expect to repair revolver within a year using cash flow generated from operations and the proceeds of the industrial sale.
And with respect to the industrial divestiture will use net cash received approximately 25 moving to reduce outstanding debt $13 million note secured by real estate matures in five years.
Given on a strong operating cash flow and relatively modest capital expenditures, we continue to have ample liquidity to invest in on operational excellence growth initiatives and development of our organization on repayment of debt.
We remain active in M&A discussions and continue to remain focused on managing on working capital.
Now turn the call back over to book.
Thanks, Tim Let's turn to slide 11, and I'll give you an update on the recent actions supporting or a three seater strategic pillars first let's discuss our business system, our focus on executing our pandemic playbook continues and will remain throughout 2021.
Obviously must maintain the best and safest work environment for our team. So we can execute consistently and can choose for our customers from 2020, we invested more in digital I T systems include.
Including ERP project, CRM implementations remote management capability and cyber security to protect how we do business and we will we will continue to invest.
2021 the.
The raw material inflation on availability environment will continue to be dynamic throughout 2021, our businesses have been implementing actions to minimize on offset this headwind through supply chain planning price management productivity initiatives on 80 20 projects.
Our second portfolio, our second pillar portfolio management and 2020, we built stronger positions in our solar energy growing and processing and residential products businesses with five acquisitions, we made significant progress integrating our new companies, even with pandemic related restrictions and our progress will continue in 2021, we also day divested as mentioned or.
Industrial business enable us to allocate more time town energy to our faster go into more profitable businesses.
And third organization development in 2020, we had a significant talent to the team [noise].
Upgrading filling gaps in sales marketing human resources engineering, and digital ITN cyber security.
We execute our digital education initiatives, covering ethics compliance and diversity.
Ah quality of inclusion in cyber security with approximately 20000 hours of employee training and we expect to complete another 25000 hours of training in 2021.
They're really building a diversity of thought.
<unk> organization, feeling a team and create an environment.
For our people to growth has success and then 2000 2050 per cent of our management new hires were classified as diverse [noise].
That's not a walk through of 2021 priority. So I want to start with a quick summary per each business and we'll start with a renewables and conservation segment. So let's turn to slide 12, and talk about our solar energy priorities use solar market is expected remain robust and has several positive driver supporting it's longterm growth.
Since 2015, our solar business has grown 17, 18% per year.
With the acquisition of Terror Smart son Pig is 10 presented earlier.
We really expect to drive snick and performance improvement in this business over the next two to three years.
See it starts in 2021 was successfully integrating tear smart and son pig and scaling our processes and systems and the organization to support increasing demand. We're also excited to have a strong portfolio with electrical property, including track on canopy solutions and I expect us to Maine very active in further broadening our plan.
Form with additional investments in technology software and services.
I was trying to slide 13, and review, our growing and processing like key priorities in the market for growing food cannabis and flowers and environmentally friendly way without the use of pesticides 12 months a year in any region of the country continues to gain momentum.
Yeah, I'd say demand for commercial growing structure square footage is increasing six to seven per cent per year, and we see additional investment supporting this market moving forward as well.
Consumer demand for healthy food cannabis based and kind of his face products to drive health and wellbeing, both physical and mental is growing at an impressive right.
You know like our solar business are key priorities are to complete integration of our recent acquisitions thermal energy guilt separations at APEC supercritical.
And scale the business and deliver growth margin expansion in 2020, we had a strong leadership to the team implemented a scalable organization structure and started implementation of ERP in CRM systems.
21 will continue these efforts in further build out our project field management capability.
To deliver the best customer experience in industry.
Let's move to slide 14.
Discuss our parties for the residential business yeah.
We expect the residential market to remain relatively strong in 2021, both of new construction and repair the model segments, and we participate well on both the fundamental market drivers supply demand interest rates. Other incentives continue to be favorable that are expected to offset I believe potential price inflation headwinds during the year are key priorities reflect continuation.
Of our focus that we heard in 2020, we're going to expand our participation gains in different channels and geography's deploy digital systems for better customer experience connectivity in reducing channel costs.
And closely managing pricing material cost inflation and driving additional 80 20 productivity initiatives.
Let's move to slide 15 would discuss parties for the infrastructure business.
We do expect infrastructure market to benefit from a federals infrastructure spending bill anticipated from the biting administration.
As it should provide more clarity around funding and support per state department of transportation groups on existing and new projects as well as Hunter Bill will accelerate private public partnership initiatives as it has in the past.
Our priorities with or without a spending bill or to support.
Existing a new high speed rail projects with our new IP bearing technology continue operations and supply chain improvement efforts should arrive growth and margin.
And expand our high margin sealant coding business at airport runways parking garages and other infrastructure markets.
As they start to recover the second half of 2021.
So, let's turn to sigh 16th just for a quick recap of 2021 were priorities first scanlon improving Ah renewables on conservation business, it's about integrating acquisitions per a plan executing a record level backlog flawlessly, continuing to build organization capabilities at tools and processes and systems and strength in the.
Folio further with technology IP software and services secondly, just improving overall execution across the Baltar around health and safety 80, 20 productivity quality of new product development.
Third really Ah proactively managing.
And optimize on our supply chain around today's material inflation environment and supply challenges then for that continue to conduct business in the right and responsible way by driving are environmentally sound solutions invested in our communities where people live and work.
And obviously trying to create the best environment for people that have success.
So with that let's move to slide 17, and discuss our outlook for 2021. So although we are dealing with some short term market challenges, we enter 2021 with good momentum across our businesses you have confidence on our end markets.
And a strong backlog that supports a correlates with real demand.
We will continue to execute operating playbook, we're going to maintain a safe environment for people.
Obviously work closely with our suppliers and support our customers as a result, I am confident we will deliver a full year growth margin expansion.
In 2021, and our <unk> pull your guidance is summarized as follows.
Consolidated revenue is expected to range between $1.3 billion on the 0.3 5 billion GAAP EPS is expected range between 278, and 295 compared to 253 and 2020 and.
And adjusted EPS is expected to range between 330, and 347 compared to 273 in in 2020.
So while we are returning to providing full year guidance. At this time, we are not provided an outlook for the first quarter as we've done in the past as I discussed we expect the overall environment.
And some some of our specific spy challenges to remain somewhat on unpredictable in the first half of the year.
But clarity increasing as we move through the year, regardless of the quarter to quarter cadence. We have conference an overall 2021 outlook and we will remain focus on X funeral plans and living on a full year plan.
So with that.
Let's open the call for questions.
Thank you we will now be conducting a question and answer session if.
If you would like to ask a question. Please press star one on your telephone keypad, a confirmation toma indicate your line isn't the question queue you.
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For participants moving speaker equipment, it may be necessary to pick up your handset before pressing this darkies one moment, please while we poll for questions.
Thank you. Our first question comes from the line of Daniel more with T. J S. Securities. Please proceed with your question.
Bill Tim Good morning, Thanks for taking my questions.
Or any day.
I want to start with renewables on the solar side.
Is it possible to estimate the revenue in margin impact on the customer supply chain shortages in queue for.
How much lingering impact is likely in Q1.
Yeah, it's what I will say that is significant.
Yeah, that's why I wanted to call it out today and talk through it it's over a few projects. We don't have complete clarity on the exact amount outside of it would be insignificant and the reason I say that as each of the price for a different stages in terms of when they flow into 2021.
That's we're monitoring that it may be chew on it may be queue to it just it.
At various project by project and it's case by case each projects a little different scenario in some cases, where customers had a panel availability issue. They may switch to a different panel module when they do that it causes redesign with racking systems, all the things that we do in that.
Causes certain type of delay in other cases.
If a customer just says hey, I don't have my panel and I'm gonna delay they'll work their supply chains to try to get those panels in and that'll be a different type of delays. So in terms of when it actually flows through those projects are existing they're out there they're in process, but it's going to be a combination of flowing into Q1 and some into Q2.
<unk>.
That's helpful and and maybe if you could just elaborate on the permitting challenges that you mentioned in.
Where are those and what it's the likelihood those challenges linger beyond the quarter or two.
Yeah, I think those are more.
I think that the supply of solar panels as a temporary situation, but it's driven by some some specific things that are being rectified and and we just we didn't really see much of that when you see you know we have a thousand different projects and flight and 350 going on at one time what we're.
Really do with his 300 different 350 different supply changed managed by individual developers on customers right. So same with permitting.
We deal with per main issues all the time.
And so it wasn't I wouldn't say it was a big surprise that we would experience. It I think it's where it happened and what projects as happened on that was impactful to us in the quarter.
And they came late.
And they happen to be on some relatively larger projects and then you know from our history. We've always been a net more of a community solar space.
Which is kind of five megabit water three megawatt smaller our strategy last couple of years as to move up into some of the bigger projects and so are the makeup of our 350 projects on the quarter still very heavily weighted towards smaller size, but we do have more larger projects and some of those were part of that 50 to 70 megawatt.
Group that got moved and when you move you know two or three of those it's pretty impactful so.
We've got a list of each project that moved and it's a different story for each other delays there'll be those permits will come through and they'll get back on track. It's just.
Story for each one is way it actually works.
Helpful with more from a there'd be longer term question on the longer term outlook for renewables I think you've stated pro forma margins in 2020 above 12%.
And would improve his volume growth what adjusted operating margin range is associated with the 700 million revenue target for 25, and do we think of that is sort of straight line improvements step function just any thoughts there.
Yeah, well I only heard in general.
10 come are too, but I would say, there's there's a combination of things that will drive our margin enhancement, obviously volume helps but.
When you think about how we integrate scale the business there'll be some step function improvement based on.
Processes and systems, both in our facilities with our supply chain and in the field.
So it's gonna be a combination of.
Things are going to drive our margin enhancement.
Go ahead.
Yeah again.
2025, we said we'd be 15 per cent plus.
Our expectation.
Got it that is still the case, okay. Thank you on Downcycled any follow ups.
Our next question comes from the line of Kenzie on Air with Keybanc Capital markets. Please proceed with your question.
Good morning, gentlemen.
They can't on Oreo.
I'm well if haik you what a year 20 was for your company.
I guess, let me start with the legacy piece cause that's gonna be the easiest here residential.
Doing quite well I don't know, Tim if you Wanna Kinda, just talked about and market demand there and perhaps a first verse second half.
You know.
Sense of where the market is you know home depot earlier. This week, just said no guidance. So I mean, I I guess I get it it's it's a tough tough and market to figure, but if you could shed some color in terms of you know.
Revenue mix margin trajectory anything like that.
[noise] I would say generally we think you know housing is remains pretty strong.
The repair remodel which is gonna.
Could it be the dry who the bulk of our business.
No indication that that's gonna change.
So we expect we got participation games last year, and we didn't have them all year. So we expect revenue growth from that.
Catalog it's.
It's not going to expand like it did.
19 to 20, I wouldn't expect us to repeat 20 to 21.
Right.
<unk> or margin expansion on.
Our goal is to grow our businesses and make more money on a year or so.
You'd think that back half I mean, not to not to put you guys on the spot, but you know a large supplier like they only works talked about high growth on the front half of 21, but actually being negative in the back half of 2021 is that a possibility given the 20 per cent because I know we talked about your real share games that you had because you got.
Didn't shut down on operations like other people. So you gain share could you may be qualified how much of that you know.
12 per cent game, you know growth you had this your body come from share gains are just some way to think about how you improved your position because your operations are better first peers as opposed to just a macro tailwind.
Oh, Yeah, I needed to combination of all three right. We started working on the businesses back in 19 and started going after some additional customer of opportunities.
Once we sort of took some of the things in the background. So.
It's hard to say how much is specifically.
Incremental stores persons Same-store volumes Yep, it's a mix of that in on the operations are better structured.
For higher returns song.
Kennedy said.
Without giving guidance over them for the full year not by segment I'll go on.
On the go too far but.
So that's a good market without seeing.
You know, we don't we don't we're not predicting a slowdown.
What's there today.
Yeah.
No I think I can.
Yes. He can just the one thing that we here and you may hear those from other folks as well.
Second half of the year kind of May correlate a little bit with how the pandemic started to subside over the next.
Arguably six months or whatever timeframe infection it happened but.
Access to having labor to drive the residential construction market last year was plentiful because you had so many people coming out of the.
Service.
Industry when it was really hampered by the pandemic and moving into the residential construction industry, where you can there's a ton of lower less skilled jobs available on the residential construction Marr.
Market and so there was a huge labor supply going into that which I think is what also helped keep the pace of.
Residential going and I think that's true going into the first half because of where we are on a global are you know on a.
Economic brought economy basis in the U S.
As those restaurants and some of the service industries start to pick back up.
Do we have heard and people are concerned about what we still have labor availability to continue support the growth.
It's expected and the inherent demand for residential so yeah. There are some nuances like that to consider in the second half that may be what people are plenty a little bit too are concerned with but.
But from our perspective.
You know, we see decent momentum starting out the year and we're going to continue to do the things we talked about so.
We'll see we'll see how that evolves the second half.
Now.
Focusing on.
[laughter] renewable I mean, it's.
Just amazing how far that business has come from.
Yeah, where are B I was originally.
And I'm I'm, just thinking about communications I think you guys are doing a very good job trying to illuminate you're in markets that might not be so obvious to people.
Do you think so I understand F Y 21 guidance I understand uncertainty around one Q clearly solar.
The vegetable you know.
Canada has all the all these markets seemed to be you know and secular growth book.
Is there a way do you think the inability to or to give guidance is there something structural about those businesses that we should really just think about.
You know your ability to offer quarterly guidance is not so much a.
Function of concern or businesses certainty as it is.
The nature of those businesses cause I think investors going to have to grapple with the talk like we always went to quarterly guidance are you know we want you to know what's happening.
To the Penny is that is that something we should just except because those markets move on such different.
You know cadences, you know from backlog to I I don't know I'm just interested in your thoughts because I think that's gonna be one of the things that I certainly would struggle with relative you're older businesses is clarity lumpiness not the growth rates right structure, but just how we think about that day I appreciate it sorry about that broad question.
No. It's a it's a it's a really good question and I appreciate your ass net.
You know clearly the make up of the businesses evolving to where we've got half our business now focused in these these markets and their project based businesses and there's potential movement from one quarter to the next and we see that every now and then and it's a little less predictable.
Think overtime as you grow in this space and you become more mature you get a pattern.
And so you know the the the one time events or she was disruptions here and there eventually start to wash themselves out they do during the course of the year, but did you get a little bit bigger.
<unk> and I was from tend to do I think you'll see less and less concerned about that quarter to quarter, but you know on the next couple of years, Yeah. I think there's there's gonna be some of that challenge the reason.
But that's not the reason, we're not guiding right now by quarter, we're actually.
Continue to deal with just like everybody else you know an infection rates still pretty high there are still a lot of supply chain.
Challenges out there and not related to those two markets.
This you know huge weather system, not just disrupted the the U S. As you know it's been a challenge for a lot of different companies, where you know people were mandated to be shut down for eight or 10 days, if you're operating anywhere near Texas, or Kansas and all that good stuff. So.
You know, we just have a number of things that I think are kind of unique.
You know things are still out there that's more of our guidance concern by quarter right. Now is just from needs from that stuff to settle but inherently we think it will and if you think about it this way.
You know last year, we in at this time last year, we started to see and hear a lot more about the pandemic going into you know at the beginning of the year, you're going into the air you're thinking Oh, My gosh, what's gonna happen.
We feel like we're coming in the opposite direction now, where we're coming out of that and things are getting a little better they're still challenging but you have to you know we have to believe and we do believe that things are gonna get more.
A little more clearer as we go forward economy should get stronger.
Vaccinations are coming rolling out the extra rates come down and that's going to have I think a a big impact on just cadence and consistency around.
Able to predict some things that for the last 12 months, it's been a bit of a challenge so.
So it's a combination of things that I I do appreciate the question I think as we build out or.
Solar and growing and processing business, Yeah, we'll have a little less predictability quarter to quarter.
And eventually that will have a cadence that's more consistent but we will experience at an interim I'm sure.
Thank you.
Oh.
As a reminder, if you would like to ask a question press star one on your telephone keypad.
Our next question comes from the line of Walter lip taxes Seaport Global. Please proceed with your question.
Uh huh. Thanks, good morning, guys.
Well well.
And I wanted to ask an industrial question.
And make sure that I'm understanding the numbers that of the business that you sold.
So it looks like it it was a profitable business day you sold.
Is that right.
Yes.
What was the EBITDA liberal on it.
[noise] well.
So we gave you adjusted operating profit, probably a million and a half to $2 million depreciation in there on <unk>.
Cancel that.
So we have to actually a million and then the the sale price want to make sure I understand this it was 38 billion with.
Some types, who are a real estate transaction.
Yes.
Okay.
Okay. So the multiple looks fairly low I was this doesn't under auction or how how did you.
Was that a decision made your defense it.
Yeah, so what what what's not reflected in those numbers that he just looked at was the way we've been really managing that business for the last few years, which was.
Using it to generate cash and not necessarily reinvesting so it's.
It's capital intensive.
And there is.
Some different capital expenditures that need to be made so would you look at the EBITDA.
On a regenerated.
You have to share to recognize that there's deferred capex. So it wasn't auction.
Mm wide.
And we went through that can really pick the best.
Okay, and which which businesses are you keeping.
What's left is the infrastructure.
Infrastructure business it does expansion joints bearings and she'll just for the.
Highway in the airport parking room.
Market.
Okay, so that his room.
The day is brown well, yeah, that's that's what's left.
Okay.
Okay. So this was the perimeter fencing.
In the architectural metals that was so perfect.
Okay.
Okay, alright, thanks for that and I'm Gonna go back from an earlier question about the renewables and.
Wasn't sure I heard the answer about the.
The project delays.
What day you know.
<unk> I think you said it was significantly I don't know if you give a dollar amount or a ballpark of how much revenue and profit shifted.
From fourthquarter into next year.
Yeah, I didn't give a dollar amount it was significant.
For US 50 to 70 megawatts is.
He was a pretty significant number but.
But I didn't get a dollar amount because I'm not sure exactly where it's going to land, it's gonna be the cute one Q too and but it was I would say significant relative to the results on queue for for the solar business.
And.
It really comes down to four or five projects that were of decent sized projects bigger than what we traditionally have done.
Or would have been able to support which has been you know on part of our strategy to get into some of those mid sized projects and a couple of those.
Were delayed because the panels just didn't show up and then we had two of them that were delayed just on a on a permitting issue.
So you know that that I'll be worked out it's not a demand you definitely don't have a demand issue no can I assist the time element.
We're quite quite busy right now.
Okay great.
And then as you do ship these whatever in the first or second quarter. It sounds like there might be the delays may cause some costs related issues. Some reengineering I wonder what you're thinking about with these.
Four to five Big project getting pushed out is there an impact on the margins.
No not really actually oftentimes, it's it it it can help us.
We hope our customers.
Won't have to go through that incur extra cost, but it's not a burden on us if it's a redesign it's almost like a new project and that's just a decision they make.
And they look at that relative to the the returns Ain't get on taking that path either I redesign around on different panel on.
Or I wait from my panel that I currently have designed and.
Yeah, that's a big decision for them to make and I think it's been this developer Douglas by developers size of project, that's where you are in their set of economics, they put into their investment pieces in the first place so for us it's not.
Not a cost burden or incremental costs, it's like getting another project.
Okay, Okay, great alright, thank you very much.
Yeah.
Our next question comes from the line of Julio Romero at Cydonia. Please proceed with your question.
Hey, good morning, everyone.
Hi, Julio who are you.
Okay. So apologies as I joined the call a little bit late here, but just wanted to ask about your exposure to Texas would you see any short term negative effects or or on the other hand, you know has that kind of superstorm increase the appetite for increased capital investment in in solar and kind of grid reliability more broadly.
Well first of all we have some operations in Texas really support in a residential business and so we we experienced some some delays over the last week and a half like a lot of others and you know any suppliers I heard of that area. We were mandated to be shut down we could use natch.
From gas to run the didn't have electricity, so we're up and running now but [noise]. So we've got some catch up work to do but there's a bit of a I think there's going to be a bit of a lag and some of them to supply change the catch back up as it relates to.
The at least the first three months of the year, but again the demand is [laughter].
Robust so I won't be working at as it relates to solar Etsy.
Et cetera, I don't see any impact there are there we haven't seen immediate impact there one way or the other.
We'll see what happens as.
Texas comes out of this and you know, maybe reassesses power infrastructure and things of that nature and what they may Wanna do but you know, it's probably too early to.
Say on that front, but from an existing.
Workload perspective, it was not hugely impactful for solar business at least if that's what you're asking.
Okay.
Just turning to your residential side.
Can you maybe speak to the the integration of your recent mailbox acquisition.
Yeah, I would say you know, it's going pretty well we've got a.
Fulltime team on it and making progress as we had expected.
You know.
It's it's it's on a huge business and it's not a large organization and if you recall [noise].
Most of what they do is is outsourced so there's not a lot of manufacturing back him that there are some supply chain things that we've been working pretty hard there's some in sourcing opportunities.
Lot of 80, 20 initiatives around Pls, and CLS and and we're in the midst of all that and I think that's resonating pretty well internally, but also.
It a lot simpler for some of our key customers cause we had on a bit of a product product overlap in some areas. So yeah I would say overall, it's it's it's on schedule an going as planned.
Got it and then just lost on for me is.
I guess.
With a tax rate in line with what you did in 2020, you kind of appropriate for.
21 and beyond.
Who you are if you look at our at our guys on the crush release, we've got about 20% on our gas in about 27 per cent.
An hour adjusted on the variance year to year his room discrete items that are pretty hard to.
Estimate is more at the beginning of the year.
A lot of variables that impact us.
Okay. Thanks for taking the questions and best of luck and 21.
Oh thanks.
Mr Balls way, we have no further questions at this time I would now like to turn on the floor back over to you for closing comments.
Great well listen to we want to thank everybody again for joining us today looking forward to.
Connecting back with everybody to talk about the first quarter in early May I think who may 5th may 6th time frame and and one of the point I think we are going to try to have an investor day later on your you know.
If it really safe and and we have the ability to do that would like to do that in person. So we will circle back with everybody on when that.
On that get scheduled.
And.
I hope, everyone stays safe and healthy and have a good day.
Good rest of the week. Thank you.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.