Q4 2023 Gibraltar Industries Inc Earnings Call

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Operator: Greetings, and welcome to Gibraltar. Anyone should require anything, my pleasure. Carolyn?

Greetings and welcome to Gibraltar Industries fourth quarter 2023 financial results Conference call.

At this time all participants are in a listen only mode.

A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

A reminder, this conference is being recorded.

Carolyn M. Capaccio: LHA. Thanks, Operator. Good morning, everyone, and thank you for joining us today. With me on the call is Bill Bosway, Gibraltar Industries Chairman, President, and Chief Executive Officer, and Tim Murphy, Gibraltar's Chief Financial Officer. The earnings press release that was issued this morning, as well as a slide presentation that management will use during the call, are both available in the investor's section of the company's website, GibraltarOne.com. Gibraltar's earnings press release and remarks contain non-GAAP financial measures.

It is now my pleasure to introduce Carolyn capacity O L. H, a investor relations. Thank you you may begin.

Thanks, operator, good morning, everyone and thank you for joining us today with me on the call is still baas wage a browser industries, Chairman, President and Chief Executive Officer, and Tim Murphy, Gibraltar, Chief Financial Officer.

Earnings Press release that was issued this morning as well as a slide presentation that management will use during the call are both available in the investors section of the company's website Gibraltar one dot com.

<unk> earnings press release, and remarks contain non-GAAP financial measures tables, and reconciliation of GAAP to adjusted financial measures can be found in the earnings press release that was issued today.

Carolyn M. Capaccio: Tables of reconciliation of GAAP-to-adjusted financial measures can be found in the earnings press release that was issued today. Also, as noted on slide 2 of the presentation, the earnings press release and slide presentation contain forward-looking statements with respect to future financial results. These statements are not guarantees of future performance, and the company's actual results may differ materially from the anticipated events, performance, or results expressed or implied by these forward-looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can be accessed through the company's website. Now I'll turn the call over to Bill Bosway. Bill.

Also as noted on slide two of the presentation. The earnings press release and slide presentation contain forward looking statements with respect to future financial results. These statements are not guarantees of future performance and the company's actual results may differ materially from the anticipated events performance or results expressed or implied by these forward looking.

Statements Gibraltar advises you to read the risk factors detailed in its SEC filings, which can be accessed through the Companys website now I'll turn the call over to Bill Dunaway Bill.

William T. Bosway: Thanks, Carolyn. Good morning, everyone, and thank you for joining today's call. We'll start with an overview of the fourth quarter and full year 2023 results. Tim will take you through our financial performance, and I'll walk you through our 2024 outlook, and then we'll open the call for your questions. So let's turn to slide 3, titled 2023 Year in Review. We delivered a strong finish to a very good year for Gib

It's Carolyn good morning, everyone.

Everyone and thank you for joining today's call will start with an overview of fourth quarter and full year 2023 results.

Tim will take you through our financial performance and I'll walk you through our 2020 for outlook and then well open the call for your questions. So, let's turn to slide three titled 2023 year in review.

And we delivered a strong finish to a very good year for Gibraltar.

William T. Bosway: And I like our momentum as we move forward. In 2023, we expanded our market leadership positions, we continue to improve our quality of earnings, and we generated strong cash flow. Our residential and infrastructure businesses delivered solid growth and strong margin expansion, and renewables delivered excellent margin expansion despite ongoing industry headwinds impacting revenue. For the year, adjusted operating income grew 16%, adjusted EBITDA grew 15%, and adjusted EPS grew 21% on essentially flat

Our momentum as we move forward in 2023, we expanded our market leadership positions, we continue to improve our quality of earnings and generate strong cash flow, so residential and infrastructure businesses delivered solid growth and strong margin expansion.

[noise] renewables delivered excellent margin expansion, despite ongoing industry headwinds impacting revenue for.

For the year adjusted operating income grew 16% adjusted EBITDA grew 15% and adjusted EPS grew 21% on essentially flat sales.

William T. Bosway: Through solid margin expansion and improvement of working capital, we generated $218 million of operating cash flow and a free cash flow rate to sales of 15%. In the fourth quarter, all four segments contributed net sales growth, demonstrating solid momentum going forward, and booking strength resulted in the backlog being up 10% as we closed out the year. As well, our recent acquisitions in residential executed a plan, and during the fourth quarter, we further optimized our portfolio by divesting our small non-strategic solar business located in Japan. In all, we had a very productive year, and I'm incredibly proud of our entire organization for staying focused on what matters most, doing things the right way, and building a stronger foundation for the future. We enter the new year with solid market fundamentals, improving market conditions for renewable energy and ag tech and markets, and a more scalable and efficient operating engine. And we look forward to another strong year in 2024.

Solid margin expansion and improvement in working capital, we generated $218 million of operating cash flow and our free cash flow rate to sales of 15%.

In the fourth quarter, all four segments contributed.

Net sales growth demonstrating solid momentum going forward and bookings strength resulted in our backlog being up 10% as we closed out the year as.

As well, our recent acquisitions and residential executed to plan and during the fourth quarter. We further optimized our portfolio by divesting our small nonstrategic solar business located in Japan.

In all we had a very productive year and I'm incredibly proud of our entire organization for staying focused on what matters most doing.

Doing things the right way and building a stronger foundation for the future.

We entered the new year with solid end market fundamentals, improving marketing conditions in renewables and AD Tech end markets and a more scalable and efficient operating engine.

And we look forward to another strong year in 2024.

William T. Bosway: Let's turn to slide four for an update on the solar market. Although the overall industry has improved, there remain some short-term headwinds the industry is navigating through. First, the industry is waiting for the Department of Treasury to issue final guidelines on IRA tax credits, specifically the 10% domestic content bonus. The delay in these guidelines, particularly in this high interest rate environment, has caused some customers to pause finalizing and executing projects as they try to pin down project economics and returns, and therefore project finance. The most recent consensus is that the guidelines will be expected in the first or second quarter of 2024.

Let's turn to slide four for an update on the solar market.

Although the overall industry has improved there remains some short term headwinds the industry is navigating through first the industry is waiting on the department of Treasury to issue final guidelines on IRA I or a tax credit specifically at 10% domestic content.

The delay of these guidelines, particularly in the in this high interest rate environment has caused some customers to pause finalizing executing projects as they try to pin down project economics and returns and therefore project financing and most recent consensus is that the guidelines are expected in the first or second quarter of 2024.

William T. Bosway: Secondly, permitting delays at the local level are impacting some customer project start dates, so the situation is improving as local government offices add capacity to support normalized demand levels for our customers. However, each permit situation is unique to a location and local government office, and ultimately, project schedule changes create a timing impact for revenue.

Secondly, permitting delays at the local level are impacting some customer project start dates so the situation is improving.

As local government offices add capacity to support normalized demand levels.

For our customers each permit situation is unique to location and local government office and ultimately project schedule changes create a timing impact for revenue for.

William T. Bosway: For context, historically, we experienced about 10% of our planned revenue shift from one quarter to the next or to our future quarter. Toward the end of 2022 and for the first three quarters of 2023, we experienced a revenue shift of approximately 25%, which is a significant change from historical norms. We started to see the situation improve during the fourth quarter, which is reflected in our business generating positive growth in the quarter. Module supply continues to improve and be less of a headwind for our customers. For the UFL-PA, importers continue to move up the enforcement learning curve, and there seems to be much more consistency and flow in the availability of modules. In regard to the Department of Commerce anti-dumping and countervailing duty case, as of now, three of the eight module suppliers investigated by the DOC are expected to export modules to the U.S. are able to export modules to the U.S. without duty.

For context, historically, we experienced about 10% of our planned revenue shift from one quarter to the next door to our future quarter to date of 2022 and for the first three quarters of 2023, we experienced a revenue shift of approximately 25%, which is a significant change to historical norms, we starting to see the situation improve during the fourth quarter, which is reflected in <unk>.

Business generating positive growth in the quarter.

With respect to module supply continues to improve and be less of a headwind for our customers for the U F. L. P. A importers continue to move up the unfortunate learning curve and there seems to be much more consistency in flow and availability of modules.

In regards to the department of Commerce, anti dumping anti dumping and countervailing countervailing duty case as of now three of the eight module suppliers investigate by the DSA are expected to export modules to the U S are able to export modules to the U S without duty an executive order from administration to waive tariffs for two years has remained enforcing.

William T. Bosway: An executive order from the administration to waive tariffs for two years has remained in force and will so until June 2024. In December, the plaintiff in the original case sued the Department of Commerce and the U.S. Customs and Border Protection Agency for not collecting duties on Southeast Asian imports, claiming the Department of Commerce was not required to follow Obama's executive orders.

So until June 2024.

In December the plaintiffs in the original case to the department of Commerce, and the U S customs and border protection agency for not collecting duties on South East Asian imports, claiming the department of Commerce was not required to follow administrations executive order.

Timothy F. Murphy: The plaintiff has asked the U.S. Court of International Trade to end the tariff waiver and open up the opportunity for retroactive duties on modules imported from Southeast Asia. It is challenging to predict the timing and outcome of the current legal situation, but regardless of where it lands, customers have been preparing for the executive order to end in June, and they have worked hard to develop and implement more flexible and reliable solutions for monitoring. With that, I'll turn it over to Tim to review our results. Thanks, Bill, and good morning, everyone.

Plaintiff has asked the U S court of international trade and the tariff waiver and open up the opportunity for retroactive duties on modules imported from southeast Asia.

It is challenging to predict the timing and outcome of the current legal situation, but regardless of where it lands customers had been preparing for the executive order to end in June and they have worked hard to develop and implement more flexible reliable solutions for modules.

With that I'll turn it over to Tim to review our results.

Thanks, Bill and good morning, everyone I'll take you through our consolidated and segment results starting on slide five.

Timothy F. Murphy: I'll take you through our consolidated and second results, starting on slide five. Adjusted fourth quarter sales increased 5% to $329 million. All segments contributed to the growth in the quarter as renewables in the ag tech businesses converted backlog to sales at higher rates than in previous quarters, and we grew market participation. These drivers were partially offset by pricing adjustments related to prior year commodity deflation in the residential space; backlog at quarter end was 330 million, up approximately 10% versus the fourth quarter of 2022. Demand and order flow remains strong heading into the first quarter of 2024. Adjusted Operating Income and Adjusted EBITDA dollars increased 10% and 9%, respectively, in the fourth quarter, with Adjusted EPS up 18%.

Adjusted fourth quarter sales increased 5% to $329 million.

All segments contributed to the growth in the corner as renewables in the AG Tech businesses converted backlog the sales at higher rates than in previous quarters, we grew market participation.

These drivers were partially offset by pricing adjustments related to prior year commodity deflation and the residential business.

Backlog at quarter end was $330 million up approximately 10% versus the fourth quarter of 2022.

Demand in order flow remains strong heading into the first quarter of 2024.

Adjusted operating income and adjusted EBITDA dollars increased 10% and 9% respectively in the fourth quarter with adjusted EPS up 18%.

Timothy F. Murphy: A recent acquisition in the residential segment added about a penny to adjusted EPI. Margin improvement in the quarter was driven by solid execution, price-cost management, higher volumes, operational improvements, and additional 80-20 benefits. However, weighted average shares outstanding decreased 1.7% for the fourth quarter of 2022 to 30.7 million shares in the fourth quarter of 2023, and there were no share repurchases in the quarter.

Our recent acquisition in the residential segment added about a penny to adjusted EPS.

Margin improvement in the quarter was driven by solid execution price cost management higher volumes operational improvements and additional 820 benefits.

Weighted average shares outstanding decreased one 7% for the fourth quarter of 2022 to 37 million shares in the fourth quarter of 2023.

And there were no share repurchases in the quarter.

Timothy F. Murphy: Now let's review each segment starting with slide six, the renewable energy segment. Segment net sales increased 1.9% with backlog converting to sales at higher rates than in the previous quarters as customers continue to work through scheduling challenges related to programming delays and await final tax credit guidance for the inflation reduction. Module availability continues to improve as module importers advance up the UFLPA enforcement learning curve, and permitting delays are gradually improving at the local level. Bookings of new orders were robust, with year-over-year growth again accelerating to 20.9% versus last year. And as Bill mentioned, while some customers are waiting to sign contracts until the Department of Treasury issues the Inflation Reduction Act tax credit guidelines, the pipeline remains very strong. And as a reminder, our backlog consists only of signed contracts with depositors, does not include purchase orders without a signed contract and deposit, MSAs without specific work orders, or verbal agreements with customers and our new book user backers. Just operating the margins decreased 210 basis The strong execution across the business was offset by warranty costs that occurred during the quarter for a project completed in 2022. The cost relates to a project where we were delayed in installing after materials were delivered to the job site according to our agreement.

Now, let's review each segment, starting with slide six the renewable segment.

Segment net sales increased one 9% with backlog converting to sales at higher rates than in the previous quarters as customers continue to work through scheduling challenges related to permitting delays.

And await final tax credit guidance shouldn't inflation reduction Act module availability continues to improve.

Absolutely important advance up the U F L P. A unfortunate learning curve.

Permitting delays are gradually improving at the local level.

Bookings of new orders were robust with year over year growth again accelerated to 29% versus last year and as Bill mentioned, while some customers are waiting to sign contracts until the department of Treasury issues inflation reduction Act tax credit guidance, our pipeline remains very strong.

And as a reminder, our backlog consist only of signed contracts with deposits.

Do you not include purchase orders without a signed contract and deposit Msas without specific work orders, a verbal agreements with customers in our new bookings or backlog.

Adjusted operating and EBITDA margins decreased 210 basis points versus the prior year with strong execution across the business was offset by warranty costs incurred during the quarter for a project completed in 2022.

The costs relates to a project where were delayed and installing after materials were delivered to the job site. According to our agreement.

Timothy F. Murphy: As we've discussed, we changed our contract terms and conditions and our internal processes to ensure our customers are ready for us when we arrive on site according to the agreed upon schedule. Before this charge, segment profitability improved in the fourth quarter of 2020. We expect full year 2024 growth and continued margin expansion in the renewables business assuming industry constraints continue to ease with continued improvement in module importation, IRE Guidance Issues, and Additional Recovery and Local Permits.

As we've discussed we've changed our contract terms and conditions and our internal processes to ensure our customers are ready for us when we arrive on site. According to the agreed upon schedule.

Before this charge segment profitability improved in the fourth quarter of 2023.

We expect full year 2020 for growth and continued margin expansion in the renewables business assuming industry constraints continue to ease with continued improvement module importation.

I already guidance issuance and the additional recovery in local permitting.

Timothy F. Murphy: We do expect a slower first quarter, as more of our backlog is for our new 1P tracker, and this product has a longer lead time than some of our other offers. Let's move to slide seven and review our residential segment sales increased 4.3% from last year, organic growth was 3.1%, and the recent acquisitions added 1.2%. Organic growth was driven by participation and gains in volume, partially offset by pricing adjustments related to prior year commodity deflation.

We do expect a slower first quarter as more of our backlog is for our new one P tracker and this product has longer lead time than some of our other offerings.

Let's move to slide seven to review our residential segment.

Segment sales increased four 3% from last year.

<unk> growth was three 1% and our recent acquisitions added one 2%.

Organic growth was driven by participation games with volume.

Partially offset by pricing adjustments related to prior year commodity deflation.

Timothy F. Murphy: We continue to benefit from increased participation with new and existing customers and from having expanded into new regions. We've seen our customer demand continue to follow historical seasonal demand patterns, and our most recent acquisition is performing to our expectations, with an adjusted operating and EBITDA margin of 17.5% and 19.2%, respectively. Both expanded 410 basis points through higher volume, improved price-cost alignment versus the prior year's quarter, and 80-20 initial. Additionally, this year, we plan to move additional locations to our common ERP systems and expect to begin to leverage the IT investments made to date in the residential. In 2024, we expect modest revenue growth with continued improvement in margins as your increased market participation gains, and Contributional Acquisitions support the top line and continue to 80-20 in the operational efficiencies sidebar. Let's move to slide 8 to review our act text.

We continue to benefit from increased participation with new and existing customers from having expanded to new regions.

She and her customer demand continue to follow historical seasonal demand patterns and our most recent acquisition is performing to our expectations.

Adjusted operating and EBITDA margin of 17, 5% and 19, 2%, respectively. Both expanded 410 basis points to higher volume improved price cost alignment versus prior year's quarter and 80 20 initiatives.

And this year, we plan to move additional locations to our common ERP systems and expect to begin to leverage the I T investments made to date and the residential business.

In 2024, we expect modest revenue growth with continued improvement in margins as your increased market participation games.

And contribution from acquisition to support the top line, we continue to 80, 20 and operational efficiencies to drive margins.

Yeah.

Let's move to slide eight to review our AG Tech segment.

Timothy F. Murphy: Adjusted net sales increased 12.8% as our team executed well, converting new orders, including a large project, into sales. Backlog to quarter end is now 4.2% as some customers continue to undergo project redesign, and our pipeline project remains very strong. The segment adjusted operating EBITDA margins decreased to negative levels because of the inclusion in our operating results of a $3.5 million charge related to a receivable associated with distressed cannabis. We determined during the fourth quarter that the likelihood of recovery was sufficiently low and wrote it down. Before the charge, adjusted operating margin was approximately 5%, an increase of 40 basis points from last year, driven by higher volume, a strong customer and product mix, and benefits from the A20 initiative.

Adjusted net sales increased 12, 8% as our team executed well converting new orders, including a large project and the sales.

Backlog at quarter end was down four 2% as some customers continue to undergo project redesigns.

And our pipeline of project remains very strong.

Yeah.

Segment, adjusted operating and EBITDA margins decreased to negative levels because of the inclusion of our operating results of $3 $5 million charge related to receivable associated with distressed cannabis customer.

We determined during the fourth quarter that the likelihood of a couple of years, a sufficiently low and wrote it down before.

Before the charge adjusted operating margin was approximately 5% increase of 40 basis points from last year, driven by higher volume strong customer and product mix and benefits from 80 20 initiatives.

Timothy F. Murphy: We expect sales growth and margin expansion in 2024 as the headwinds affecting our customers shift to tailwinds and expected upcoming orders from our strong pipeline reflect improving industry demand. Let's move to slide 9 to review our infrastructure. Segment sales increased 12.1% driven by solid market demand, and market participation backlog increased 3% year-over-year. They would adjust the operating and EBITDA margins improved 490 and 460 basis points, respectively, driven by strong execution, 80-20 productivity, and favorable product and customer service. The segment reported a strong year of growth and expanding profitability. We expect continued sales growth and margin expansion in 2024. Now let's move to slide 10 to discuss our balance sheet and cash. At December 31st, we had cash on hand of $99 million, and $396 million was available on our revolver.

We expect sales growth and margin expansion in 2024, as the headwinds affecting our customers shipped a tailwind and expected upcoming orders from our strong pipeline reflects improving industry demand.

Let's move to slide nine to review our infrastructure segment.

Segment sales increased 12, 1% driven by solid end market demand and market participation games.

Backlog increased 3% year over year.

Segment, adjusted operating and EBITDA margins improved 490, and 460 basis points, respectively, driven by strong execution, 80, 20 productivity and favorable product and customer mix.

Segment recorded a strong year of growth and expanding profitability and we expect continued sales growth and margin expansion in 2024.

Now, let's move to slide 10 to discuss our balance sheet and cash flow.

At December 31, we had cash on hand of $99 million and 396 million available on our revolver.

Timothy F. Murphy: During the year, we generated $218 million in cash from operations through a combination of margin improvement and $41 million generated from working capital as we reversed the impact from the prior two years, increased working capital investment, and managed through the pandemic our supply chain challenge. As a result, our free cash flow generation for 2023 was very strong at 15% of the total. There were no share repurchases in the quarter, and we enter 2024 debt free.

During the year, we generated $218 million in cash from operations through a combination of margin improvement from $41 million generated from working capital as we've reversed the impact from the prior two years increased working capital investments as we manage through pandemic era of supply chain challenges.

As a result, our free cash flow generation for 2023 was very strong at 15% of sales.

There were no share repurchases in the quarter and we enter 2024 debt free.

Timothy F. Murphy: We expect to continue to generate strong cash flow driven by revenue growth and margin expansion in 2024 and beyond. This year, our priorities in capital allocation are continuing to invest in our organic growth and operating systems for scale. We might spend more than we historically have on capital expenditures this year as we see a number of opportunities to outsource manufacturing to improve profitability. We've historically spent less than 2% of sales.

We expect to continue to generate strong cash flow driven by revenue growth and margin expansion in 2024 and beyond.

This year, our priorities and capital allocation are on continuing to invest in our organic growth and operating systems for scale.

We might spend more than we historically have on capital expenditures. This year as we see a number of opportunities to in source manufacturing.

Group profitability.

We've historically spent less than 2% of sales we could we could invest approximately 3% of sales. This year, if we're able to prove out the cost savings we anticipate.

Timothy F. Murphy: We could invest approximately 3% of sales this year if we're able to prove out the cost savings we anticipate. We also remain focused on high-quality M&A and are equipped with a strong balance sheet to pursue opportunities, realistically in the residential segment in the near term and in other segments in the medium to long term. And we'll opportunistically return value through our remaining $89 million authorization under our share repurchase program. We will fund these investments through generated cash, supplemented as needed by the use of our revolver, depending on the timing of any M&A or repurchase, and I'll turn the call back to Bill. Thanks, Tim.

We also remain focused on high quality M&A were equipped with a strong balance sheet to pursue opportunities.

Typically in the residential segment in the near term and in other segments in the medium to long term.

And we will Opportunistically return value through our remaining $89 million authorization under our share repurchase program.

And we will fund these investments through generated cash supplemented as needed by the use of our revolver, depending on the timing of any M&A or repurchase.

Now I'll turn the call back to Bill.

William T. Bosway: Let's move to slide 11 to review our 2024 strategy and key priorities. There are really five core initiatives we continue to focus on as we enter 2024. First, drive growth, margin improvement, strong cash performance, and execute M&A to expand our leadership positions across our core businesses. Secondly, execute our 80-20 initiatives, expand our participation, and drive service levels higher with speed and agility.

Thanks, Tim let's move to slide 11 to review, our 2024 strategy and key priorities.

They're really five core initiatives, we continue to focus on it as we enter 2024, our first drive growth margin improvement and strong cash performance and execute M&A to expand our leadership positions across our core businesses secondly, execute our 80 20 initiatives expand our participation and drive service levels higher speed and agility third.

William T. Bosway: Third, continue to invest in our digital transformation to scale our businesses, connect with our customers, suppliers, and the organization, and optimize our operating system. We're here to continue to strengthen the team, add the right experience and competence, drive diversity of thought across the businesses, and optimize our structure to drive focus, scalability, and accountability, and, finally, as always, conduct business in the right way every day. Let's move to slides 12 and 13, and we'll review expectations for each of our segments as we move into 2024. On slide 12, we start with renewables and current market conditions. The industry is expecting final Treasury IRA guidelines on tax credits in the first half of 2024, which, as mentioned earlier, should have a positive effect on customers.

Continue to invest in our digital transformation to scale, our businesses connect with our customers suppliers and our organization.

<unk> operating systems.

Fourth continue to strengthen the team and the right experience and competency dry diversity of thought across the businesses and optimize our structure to drive focus scalability accountability.

Finally, as always conduct business in the right way every day.

Let's move to slide <unk>.

Move to slides 12, and 13 of them are new expectations for each of our segments as we move into 2024 on slide 12, we will see.

Start with renewables and current market conditions.

Sure. He is expecting final treasury I already guidelines on tax credits in the first half of 'twenty 'twenty, four which was which has mentioned earlier should have a positive effect for customers.

<unk> module supply to be more consistent reliable and we also expect local permitting challenges to improve we are excited with our new products in the market. We launched our one P. Tracker in 2023, along with our two P. Tracker technology launched in 2022 customer reception has been very positive and new bookings are helping build our order backlog.

William T. Bosway: We expect module supply to be more consistent and reliable, and we also expect local permitting challenges to improve. We are excited about our new products in the market. We launched our 1P tracker in 2023, and along with our 2P tracker technology launched in 2022, customer reception has been very positive, and new bookings are helping build our order backlog. As well, in 2023, we experienced significant growth in our SolarBoss solution for utility scale applications, and our combined and optimized offering of Racking and eBoss is gaining momentum with more and more customers. We are the only company in the world that manufactures and offers racking, foundations, and eBoss, and our ability to create specific solutions for solar installation is really starting to create value-added differentiation for us.

As well in 2023, we experienced significant growth in our solar boss solution for utility scale applications.

And our combined an optimized offering of racking and he boss is gaining momentum with more and more customers.

The only company in the world that manufacturers and offers racking foundations and he boss and our ability to create specific solutions for solar installations.

Starting to create value added differentiation for us.

Renewables is positioned to perform well in 'twenty 'twenty four we have momentum in our backlog and order flow and we expect sales and margin to grow as the business is positioned to scale and support our growing customer base.

That's one of the residential.

Supply of existing and new homes relative to inherent demand continues to create a tailwind for the industry and despite the higher interest rate environment and demand for new homes and or repair projects like roofing.

William T. Bosway: Renewables is positioned to perform well in 2024. We have momentum in our backlog and order flow, and we expect sales and margin to grow as the business is positioned to scale and support our growing customer base. Now, let's move to residential.

Relatively consistent in 2023 as.

As well there are regions in the U S and different types of new home construction that continue to experience solid demand and we expect these trends to continue in 2024.

William T. Bosway: The supply of existing and new homes relative to inherent demand continues to create a tailwind for the industry, and despite the higher industry environment and demand for new homes and or repair projects like roofing, will remain relatively consistent in 2023. As well, there are regions in the U.S. and different types of new home construction that continue to experience solid demand, and we expect these trends to continue in 2024. From a product perspective, we have a number of new products in development or coming to market in the near future. Our new shingle vent roll, our new line of pipe flashings, our next generation mailboxes, and our wireless balance drop offering in our home improvement business. We continue to expand our presence in key product categories and geographies, both organically and through our recent acquisition.

From a product perspective, we had a number of new products in development or coming to market in the near future or new shingle.

Well, our new line of pipe flashing our next generation mailboxes in our wireless balance dropped offering at our home improvement business.

We continue to expand our presence in key product categories and geographies, both organically and through our recent acquisitions as well, we will continue to rollout our ERP and digital initiatives traditional facilities across the business spits assistance initiatives are driving customer connectivity really helping us improve productivity drive.

Our speed and agility.

Based on the success to date in the greater Salt Lake City region. We will also expand our local asset light service model into new markets and are currently launching in the greater Denver, Colorado market, leveraging an existing Gibraltar facility to do so.

Now on slide 13, let's discuss AG tech and infrastructure.

William T. Bosway: As well, we will continue to roll out our ERP and digital initiatives to additional facilities across the business. These business systems initiatives are driving customer connectivity, really helping us improve productivity, and drive our speed and agility. Based on the success to date in the greater Salt Lake City region, we will also expand our local asset line service model into new markets and are currently launching in the greater Denver, Colorado market, leveraging an existing Gibraltar facility to do so.

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We're seeing strong end market tailwind, which started to pick up pace last year in Q4, we see them continuing throughout 2024 was significant project investment for a controlled environment produce growing in both U S and Canada controlling.

Control environment growers are accelerating investment in capacity to serve growing demand from both food retailers and foodservice operators.

You know providing high quality produce while localizing the supply chain and minimizing risk related to climate events is resonating well with retailers and customers alike. Additionally, the commercial end markets remained steady with solid demand at retail garden centers, but flower growers institutional research facilities and our car wash customers.

William T. Bosway: Now on slide 13, let's discuss ag tech and infrastructure. For ag tech, we are seeing strong market tailwinds, which started to pick up pace last year in Q4. We see this trend continuing throughout 2024 with significant project investment for controlled environment produce growing in both the US and Canada. Controlled environment growers are accelerating investment capacity to serve growing demand from both food retailers and food service operators. Providing high-quality produce while localizing the supply chain and minimizing risk related to climate events is resonating well with retailers and end customers alike. Additionally, the commercial end markets remain steady, with solid demand in retail garden centers, plant flower growers, institutional and research facilities, and our car wash customers. Gibraltar is the largest provider in North America of large-scale controlled environment growing facilities, commercial greenhouses, and cultivation structures, offering design and engineering, field project management, and construction management services.

Gibraltar is the largest provider in North America large scale controlled environment growing facilities commercial greenhouses and cultivation structures offering design and engineering field project management construction management services.

I'll have a turnkey services, including the design manufacturing and construction of structures developing integrating operating sub systems.

Furbished spin optimization services for existing growing facilities.

And in 2024, we're well positioned to support U S and Canadian growers, having invested in the right resources and systems to support execution to scale more effectively.

Solid growth this year and margin expansion will be driven by the investments we made in design and engineering project and construction management and supply chain productivity.

In our infrastructure segment.

Infrastructure investment and jobs that continues to create good visibility of available federal funding for state Dot's as they plan.

With respect to projects. This has enabled states to remain focused on multiyear projects as well as planning for future projects and demand remains robust and this is reflected in the growing number of projects, we are designing quoting bidding and winning.

William T. Bosway: We deliver turnkey services, including the design, manufacturing, and construction of structures, developing, integrating, and operating subsystems, and refurbishment optimization services for existing growing facilities. In 2024, we're well positioned to support U.S. and Canadian growers, having invested in the right resources and systems to support execution more effectively. We expect solid growth this year and margin expansion will be driven by the investments we made in design and engineering, project and construction management, and supply chain productivity in our infrastructure segment. The Infrastructure Investment and Jobs Act continues to create good visibility of available federal funding for state DOTs as they plan for their respective projects. This has enabled states to remain focused on multi-year projects, as well as to plan for future projects.

In General State D O T funding remains healthy and airport runway resurfacing investment is expected to grow as well.

We are also excited with our newer products.

The market as well as the products currently in development are paved saver and Dell patch re formulations will help us grow our coatings business further and our extensive line of bearings designed for highway bridges railroads bridges stadiums buildings are well received.

And there's more coming in or modular joint product claim.

We are well positioned across the core industry, our product categories and as important we're well positioned with our partner customers in the states, where there is significant investment being made and we look forward to another good year in this business.

Now, let's move to slide 14 to review our 2020 for guidance.

For the year, we expect strong performance in all four segments.

With renewed with renewables in AG Tech returning to topline growth in residential and infrastructure position for continued performance.

We remain focused on our five key priorities, we will leverage our operating engine to drive revenue growth expand margins and deliver strong cash flow performance, Here's our guidance for earnings for the full year 2020 for Consol.

William T. Bosway: Demand remains robust, and this is reflected in the growing number of projects we are designing, quoting, bidding, and winning. In general, state DOT funding remains healthy, and airport runway resurfacing investment is expected to grow as well. We are also excited about our newer products in the market, as well as the products currently in development. Our PAVE, SAVER, and DELPATCH reformulations will help us grow our coatings business further, and our extensive line of bearings designed for highway bridges, rail line bridges, stadiums, and buildings is well received.

Consolidated revenue is expected to range between $1 43 billion and $1 four 8 billion compared to $1 37 billion in 2023 up between four and 9%.

GAAP operating margin is expected to range between $12, one and 12, 4% up between 120 150 basis points.

<unk> operating margin is expected to range between 13, 5% and 13, 7% up between 80 and 100 basis points.

Adjusted EBIT margin is expected to range between 16% and 16.3% up between 60 and 90 basis points.

GAAP EPS is expected to range between $4 and four and $4.29 compared to $3 59 in 2023 up between 12 and 19%.

William T. Bosway: And there's more coming in our Margins of Joint product line. We're well positioned across the core industry product categories, and, more importantly, we're well positioned with our partner customers in the states where there's significant investment being made, and we look forward to another good year in this business. Now, we move to slide 14 to review our 2024 guidance.

And adjusted EPS is expected to range between $4 57, and $4 82 compared to $4.11 in 2023 up between 11% and 17% respectively.

And we expect free cash flow of approximately 10% of sales for the year.

William T. Bosway: For the year, we expect strong performance in all four segments, with Renewables and Ag Tech returning to top-line growth and residential and infrastructure positioned for continued performance. We remain focused on our five key priorities, and we will leverage our operating engine to drive revenue growth, expand margins, and deliver strong cash flow performance. Here's our guidance for earnings for the full year 2024. Consolidated revenue is expected to range between $1.43 billion and $1.48 billion, compared to $1.37 billion in 2023, up between 4% and 9%. Gap's operating margin is expected to range between 12.1% and 12.4%, up between 120 and 150 basis points. An adjusted operating margin is expected to range between 13.5% and 13.7%, up between 80 and 100 basis points. The Adjusted EBITDA margin is expected to range between 16% and 16.3%, up between 60 and 90 basis points.

Our team delivered terrific results in 2023, I think we executed well with focus and flexibility and we continue to invest and improve in each of our businesses.

Really proud I'm proud of and grateful for our team's work and accomplishments.

Tire organization's commitment to what we do in <unk>.

Frankly, how we do it and we're looking forward to another good year in 2024 and expect a solid start to the year in the first quarter.

And finally as.

As you may have seen in a separate press release. This morning, Tim Murphy, our senior Vice President and Chief Financial Officer as announced he will retire from the company in early 2025.

Tim is going to continue in his current role until a successor is named and then he will lead the onboarding and transition process Accordingly.

And I think back over 10, 20 year tenure with Gibraltar. He's played an incredibly crucial role in transforming Gibraltar into the business. It is today he's been a tremendous partner for me and he has been incredibly instrumental in driving change across the organization.

Taken as a skilled and integrity and commitment and judgment they've just been.

Greatly appreciate it and I'm excited for him as he enters this new phase of this journey, but I'll also say in the meantime, given we are going to we're going to have Tim for another ear. There are a lot of work to do and I know he's excited to deliver our plans in 2024.

William T. Bosway: Gap EPS is expected to rise between $4.04 and $4.29 compared to $3.59 in 2023, up between 12% and 19%. Adjusted EPS is expected to range between $4.57 and $4.82 compared to $4.11 in 2023, up between 11% and 17%, respectively. And we expect a pre-cash flow of approximately 10% of sales for the year. Our team delivered terrific results in 2023. I think we executed well with focus and flexibility, and we continue to invest and improve in each of our businesses. I'm really proud and proud of and grateful for our team's work and accomplishments, the entire organization's commitment to what we do and, frankly, how we do it.

So with that let's open the call and we will take your questions.

Thank you.

Ladies and gentlemen at this time.

And answer session.

You'd like to ask a question you May press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue.

Yeah.

If you would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key are.

First question comes from the line of Dan Moore with CJS Securities. Please proceed with your question.

Yes, hi, good morning, it's Pete Lukas for Dan first congratulations Tim.

And then would just like to see if you could drill down a little bit more on your guidance for 'twenty four in terms of what that implies from a segment perspective.

What are your expectations for organic growth and margins across residential renewable in AG Tech and what's the cadence do you expect growth to be stronger in the first or second half or do you think a relatively uniform across the year.

William T. Bosway: We're looking forward to another good year in 2024 and expect a solid start to the year in the first quarter. And finally, as you may have seen in a separate press release this morning, Tim Murphy, our Senior Vice President and Chief Financial Officer, has announced he will retire from the company in early 2025. Tim is going to continue in his current role and tell his successor's name, and then he will lead the on-boarding and transition process accordingly.

Yes, Pete this is Phil.

I would say for residential in particular, we were as Tim had mentioned in his comments, we are back to normal seasonality so you'll see.

William T. Bosway: I think back over Tim's 20 years with Gibraltar. He's played an incredibly crucial role in transforming Gibraltar into the business it is today. He's been a tremendous partner for me, and he has been incredibly instrumental in driving change across the organization. And I think of his skill and integrity and commitment and judgment. They've just been greatly appreciated, and I'm excited for Tim as he enters this new phase of his journey.

First and foremost the business will build.

With the slowest quarter being in Q1, it builds in Q2 and Q3 and in Q4 is always a little bit of a question mark depending on weather patterns, but I would think that would be consistent what you saw in 2023.

In total I think overall, we're expecting.

Growth in the business.

Consistent with last year in terms of end market demand I think is going to be pretty consistent I think our growth.

Hopefully would be a little bit faster than end market demand through our participation opportunities in some of the things we're working on.

Operator: But I'll also say in the meantime, given we have going, we're going to have Tim for another year, we have a lot of work to do, and I know he's excited to deliver our plans in 2024. So with that, let's open up the call, and we'll take your questions. Ladies and gentlemen, at this time, we will begin to take your questions. I'd like to ask a question. [inaudible] Yes, hi, good morning. It's Pete Lukas for Dan.

And we expect margins to improve accordingly, as we do every year across each of the businesses. So that's overall the.

They are.

General plan with Q2 and Q3 being the.

So all of a sudden for four quarters.

And then I guess going to renewables can you talk a little bit about your two year outlook today relative to where you started the year previously.

William T. Bosway: First, congratulations, Tim. And then we'd just like to see if you could drill down a little bit more on your guidance for 24 in terms of what that implies from a segment perspective. What are your expectations for organic growth and margins across residential, renewable, and ag-tech? And what's the cadence?

In previous years, how much of an impediment the tax credit you did touch on that uncertainty is in the near term.

And really just trying to get a sense for your confidence in the growth over the next few years compared to where it's been over the last two or three years any major changes.

William T. Bosway: Do you expect growth to be stronger in the first or second half, or do you think relatively, Yeah, Pete, this is Bill. I would say for residential in particular, we were, as Tim had mentioned in his comments, we are back to our normal seasonality. So you'll see, first and foremost, business will build, with the slowest quarter being in Q1. It builds in Q2 and Q3. And Q4 is always a little bit of a question mark depending on weather patterns, but I would think that would be consistent with what you saw in 2023.

Yeah.

A couple of things play into that obviously, we have some end market stuff that we've been dealing with the last couple of years that is improving.

The last leg of the stool on the or the R E.

ITC credits has to do with it.

As I mentioned other domestic content bonus which is substantial is 10%. So I do think customers are.

It will free up and move it will free up some projects.

Create some demand going forward than what we've seen in the past I just think it's a yes.

That's been one of the issues with the customers pulling a trigger I do think the permitting has gotten a little bit better, but again that gets down to each individual project. So.

William T. Bosway: I think overall, we're expecting growth in the business; it's consistent with last year in terms of in-market demand, I think it's going to be pretty consistent. I think our growth will hopefully be a little bit faster than in-market demand through our participation opportunities and some of the things we're working on. And we expect margins to improve accordingly, as we do every year across each of the businesses. So, that's the overall picture. The general plan was for Q2 and Q3 to be the strongest of the four quarters.

For a particular customer depending where they are in our country.

Modules I don't think are is near a big issue at least that's what we hear from our customers. So I would say that the ability to grow going forward.

Should be.

Getting back on pace with what we saw prior to a lot of this happening.

And that was at a pretty good clip and before you know a lot of this stuff hit the industry. So we were excited with the.

William T. Bosway: And then I guess going to renewables, can you talk a little bit about your two-year outlook today relative to where you started the year before, in previous years? And how much of an impediment to tax credit you touched on that uncertainty is in the near term? And really just trying to get a sense of your confidence and the growth over the next few years compared to where it's been over the last two or three years. Any major changes? Yeah, no, I, you know, a couple things play into that.

Yeah, what we see evolving in 2024, our backlog being up 21% in the quarter. It's a good indication of that that's the kind of pace that I think would be a it's something that's a little bit better than we've seen in the last year and a half so based on that that's where we see a.

Gross starting to pick back up so we'll see how things evolve over the next quarter or two with getting the final or a piece of the puzzle in place, but assuming that happens we expect the next couple of years to be a b.

William T. Bosway: Obviously, we have some in-market stuff that we've been dealing with for the last couple years that is improving the last leg of the stool on the IRA ITC credits has to do with, as I mentioned earlier, the domestic content bonus, which is a substantial 10%. So I do think customers are, they'll free up and move, free up some projects, and they'll create some demand going forward than what we've seen in the past. I just think it's, you know, that's been one of the issues with customers pulling the trigger. But I do think the permitting has gotten a little bit better. But again, that gets down to each individual project. So for a particular customer, depending on where they are in the country, Modules I don't think are near a big issue, at least that's what we hear from our customers.

Feedback on the growth train as we had seen before.

Great. Thanks, and last one for me can you just drill down a little bit more into the landscape for AG Tech, where you're seeing the biggest opportunity and where it's funding coming for these projects and how interest rate sensitive or are they and also just who you competing with really just trying to get a sense for whether the space is becoming.

More competitive or remaining stable.

Yeah from a.

Market perspective, we're really the only ones in the in North America, particularly in the produce space, which is.

A big piece of what we do all the folks that participate in this industry tend to be a European.

William T. Bosway: So I would say that, you know, the ability to grow going forward should be getting back on pace with what we saw prior to a lot of this happening. And that was at a pretty good clip before a lot of this stuff hit the industry. So we are excited about... What we see evolving in 2024; our backlog being up 21% in the quarter is a good indication of that. That's the kind of pace that I think would be something that's a little bit better than what we've seen the last year and a half.

So, it's really kind of our home turf versus the rest of the world. If you will that's the competitive landscape.

Lending for many of our commercial growers is consistent what with their sources that they have been used for the last 30 or 40 years and and.

And.

And I think that's what most people may not understand is this industry has been around for a long long time, what's actually starting to accelerate it is a success that growers have had the last five or six years with introducing new.

William T. Bosway: So based on that, that's where we see growth starting to pick back up. So we'll see how things evolve over the next quarter or two with getting the final IRA piece of the puzzle in place. But assuming that happens, we expect the next couple of years to be... be back on the growth train as we had seen before. Great, thanks. And the last one for me, can you just drill down a little bit more into the landscape for ag tech, where you're seeing the biggest opportunity, and where funding is coming for these projects, and how interest rate sensitive are they? And also, just who are you competing with?

What they call varieties, so different types of colors sizes et cetera have a variety of not just vegetables and now its fruits. So strawberries as an example, all raspberries as the next not.

Not to crack so to speak.

Hello, et cetera, all of that stuff is starting to move more in an indoor environment, where again for what you said earlier, you're eliminating all this risks associated with outdoor farming doesn't mean outdoor for me is going to go away, but if you think about the simplicity of being able to grow something local do at more than one time, a year and get into your stores without having to use lengthy supply.

William T. Bosway: Really just trying to get a sense for whether the space is becoming more competitive or remaining stable. Yeah, you know, from a market perspective, we're really the only ones in North America, particularly in the produce space, which is a big piece of what we do. All the folks that participate in this industry tend to be European.

James all the other things you need when you have a lengthy supply chain like chemicals to keep things right picking things when they are unripe and hoping that they end up being right at the right time all of that stuff starts to go away and I think.

William T. Bosway: And so it's really kind of our home turf versus the rest of the world, if you will. That's the competitive landscape. So strawberries, as an example. Now raspberries are the next nut to crack, so to speak. Cantaloupe, etc.

Retailers as an example, I'll give you. One example, the strawberry production Thats going on from an indoor grow perspective is literally sold out and has been for the last.

A couple of years, so we have a lot of growers.

William T. Bosway: All of that stuff is starting to move more into an indoor environment where, again, like I said earlier, you're eliminating all this risk associated with outdoor farming. But that doesn't mean outdoor farming is going to go away. But if you think about the simplicity of being able to grow something local, do it more than one time a year, and get it to your stores without having to use lengthy supply chains. And all the other things you need when you have a lengthy supply chain, like chemicals to keep things ripe, picking things when they're unripe, and hoping that they end up being ripe at the right time.

How do we expand and how do we add that capacity and in their.

Their business models are such that getting funding I think is.

Relatively consistent for them and the interest rate environment. Because these guys have been around so long.

And the world of double digit interest rates than they've been in the world of 2%. So they they they understand.

And and how to manage through that and I think anytime you see an interest rate change there's always a pause we saw that the last year thinking hoping to see if it if it comes down or not but now that people understand that hey, it's elevated its probably going to stay here.

William T. Bosway: All that stuff starts to go away, and I think retailers, as an example, I'll give you one example. The strawberry production that's going on from an indoor grow perspective is literally sold out, and has been for the last couple years. [inaudible] relatively consistent for them. In the interest rate environment, because these guys have been around so long, they've dealt with the world of double-digit interest rates, and they've been in the world of 2%. So they understand and how to manage through that.

For a while and then people are starting to move forward in a.

Accordingly, so I don't expect that to.

Be a deterrent here going forward based on all the things that we're actually designing right now.

Extremely helpful. Thanks, I'll jump back in the queue.

Yep.

Our next question comes from the line of.

<unk> with Sidoti <unk> Company. Please proceed with your question.

William T. Bosway: And I think anytime you see an interest rate change, there's always a pause. We saw that last year, thinking, you know, hoping to see if it comes down or not. But now that people understand that, hey, it's elevated, it's probably gonna stay here for a while, and people are starting to move forward accordingly, so I don't expect that to be a deterrent here going forward based on all the things that we're actually designing right now. Extremely helpful. Thanks. I'll jump back in the queue. Yep, on the line for Julio Romero with Sidoti.

Thanks, Good morning, Bill and congratulations Tim.

Hey, Julio how are you.

Hey, I'm good so maybe just start on renewables.

When the department of Treasury does finally issue final guidance for the I R. A tax credit.

How do you expect orders to trend as that bottleneck is lifted.

Look more like the shorter term surge with folks kind of just waiting to sign on the dotted line or or would you expect a more gradual uptick of that point.

You know who.

Yeah. It's a good question I it it's probably going to be a bit of a combination of both so they've got projects that are probably right on the finish line that our country will get signed how they actually get yeah convert and putting them into the ground will be driven by a customer schedule itself now that they have something finished in beef theirs.

Julio Alberto Romero: Thanks. Good morning, Bill, and congratulations, Tim. Hey Julio, how are you?

William T. Bosway: Hey, I'm good. So maybe to start on renewables, when the Department of Treasury does finally issue final guidance for the IRA tax credit, how do you expect orders to trend as that bottleneck is lifted? Would it look more like a shorter-term surge with folks kind of just waiting to sign on the dotted line, or would you expect a more gradual uptick? I, you know, Julio, it's a good question.

Any permitting challenge at that time, but I think what you'll find is more of a gradual pickup.

Pick up which is.

Preferred if you will I think for the industry, just because you've got a lineup.

William T. Bosway: It's probably gonna be a bit of a combination of both. So they've got projects that are probably right on the finish line that are coming through, getting signed, how they actually get, you know, converted and put into the ground will be driven by a customer schedule itself now that they have something finished and B, if there's any permitting challenge at that time. But I think what you'll find is more of a gradual pickup, which is, preferred if you will, I think, for the industry, just because So I don't think it'll be a flash in the pan overnight and all of a sudden you get a big slug of orders, as much as it'll be, not tripling out, but I think it'll pick up demand, but I think that'll really manifest itself over the next 6, 9, 12 months. It won't all come in a short period of time. I got it.

Yeah. The the you got a lineup that delivery base. If you will so I don't think it'll it'll be a flash in the pan overnight all of sudden you get a big slug of orders.

As much as it will be a trickle.

Trickling out, but I think it'll it'll pick up demand, but I think that'll.

Battle.

It really manifests itself over the next six 912 months it won't all come in a short period of time.

Got it that's helpful. There and then you said you started to see the permitting situation improve a bit in the fourth quarter have you kind of continue to see that improve.

Throughout the first few months of the first quarter.

Yeah.

As we've talked in the past it really comes down to.

There's not a permitting issue for the country Theres, a permitting issue for each individual project it happens to be in the country. So so it really comes down to where you're putting your field and what's going on in that local community in terms of backlog and how they're processing and any other issues, they're dealing with it so.

William T. Bosway: That's helpful there. And then you said you started to see the permitting situation improve a bit in the fourth quarter. Have you kind of continued to see that throughout the first few months of this year? Yeah, you know, it's as we've talked in the past, you know, it really comes down to, There's not a permitting issue for the country. There's a permitting issue for each individual project that happens to be in the country.

If you are positioned well if your position with customers that aren't seeing those problems and you can see that become less of an issue and we start to see that in Q4 of last year, where that became less of an issue than it was at first.

Last three quarters prior to that so you know are we believe it's going to continue to get a little bit better as I mentioned in my comments.

William T. Bosway: So it really comes down to where you're putting your field and what's going on in that local community in terms of backlog and how they're processing and any other issues they're dealing with. So, you know, if you're positioned well, if you're positioned with customers that aren't experiencing those problems, then you can see that become less of an issue. And we started to see that in Q4 of last year where that became less of an issue than it had been the last three quarters prior to that. So, you know, we believe it's gonna continue to get a little bit better.

The amount of revenue shifting from.

One quarter to the next is tightening up which is.

Something good to see.

And then the other thing that ultimate the other day is look if you've experienced a shift in revenue.

Consistent in a year before you should be able to plan on that going forward right. So you don't get surprised so.

It's unless it's just well beyond 25%, where it did this year.

Fundamentally that shouldnt be new news. So therefore your plan should be reflective of what you thought going into the quarter, just because youre going off a different base.

William T. Bosway: As I mentioned in my comments, the amount of revenue shifting from one quarter to the next is tightening up, which is something good to see. And then, at the end of the day, look, if you've experienced a shift in revenue consistent with the year before, you should be able to plan on that going forward, right? So you don't get surprised.

So theres a number of things that I think are going to play into that but in general I think permitting is getting better and that's what we're hearing from customers and hopefully that will continue.

Got it that's helpful and you talked about the new one P tracker that making up a larger portion of your renewables backlog can you maybe give us some flavor as to the margin profile of that end and as the backlog you called out for manufactured orders or also installation of the tracker.

William T. Bosway: So, you know, unless it shifts well beyond 25% where it did this year, fundamentally, that shouldn't be new news. Therefore, your plan should be reflective of what you thought going into the quarter just because you're going off of a different base. So there's a number of things that I think are going to play into that. But, in general, I think permitting is getting better. And that's what we're hearing from customers. And hopefully, that will help them. Got it, that's helpful. And you talked about that new 1P tracker that's making up a larger portion of your renewables backlog. Can you maybe give us some flavor as to the margin profile of that? And is the backlog called out for manufactured orders or also installation of the tracker? Both.

Both are.

The backlog reflects both the you know we're in a ramp up phase. So we're gonna, where we're gonna have a margin mix.

Initially as you always do when you ramp up something but we expect the margin profile based on the cost reduction efforts that are going in ramping up our supply chain.

You know that a land, where we're happy with the margin profile.

That we expect the the good news here is this the uptake of this product came quicker than we originally thought so we thought it would be more of a 2024.

William T. Bosway: The backlog reflects both. We're in the ramp-up phase, so we're going to have a margin-mixed challenge initially, as you always do when you ramp up something. But we expect the margin profile, based on the cost reduction efforts that are going in, and ramping up our supply chain, that'll land where we're happy with the margin profile that we expect. The good news here is that the uptake of this product came quicker than we originally thought. We thought it would be more of a 2024 thing, where it would start building momentum in the second half of the year. We had 30 or so developers down in Florida at our main location there, and showed them a lot of this technology last year.

And you know where to start building momentum in the second half of the year.

We had 30 or so developers.

Down in Florida at our.

<unk> main location, there and show them a lot of this technology last year.

And I just think it's resonating didn't take the uptake spin quicker than we had thought so we had to move quite quickly you get a supply chain ramped up sooner. That's caused you know Tim mentioned, Hey, we're gonna be off it will be a little slower in the first quarter, that's nothing more than a lead times a little bit.

William T. Bosway: And I just think it's resonated, and the uptake has been quicker than we had thought. So we've had to move quite quickly to get our supply chain ramped up sooner. That's caused – Tim mentioned, hey, we're going to be off – we'll be a little slower in the first quarter. That's nothing more than lead times are a little bit longer. We are going to be talking a little bit longer because of the ramp that we're going through as we speak, but it will catch up as we start building the base. understood. And then the last one for me would be just on guidance. [inaudible] Well, I think it's a combination of all four. But, you know, our plan going into this year, obviously, with renewables and ag tech, where they landed it, they have to be positive, right? They have to show growth this year.

Longer because of the ramp that we're going through as we speak but it will catch up as we.

Start building the base.

Understood and then just last one for me would be just on the guidance would it be fair to say that the puts and takes of the $50 million sales range of the guidance is kind of largely dependent on what renewables doses here.

Well I think it's a combination of all four but our.

Land going into this year, obviously with renewables in AG Tech.

Where they landed it they have to be positive right. They have to show growth. This year, So I'd say both need to contribute.

<unk>.

More than they did last year, and we expect that to happen based on a backlog that we're seeing in the businesses and in all the design work we're doing on projects. So we.

Phil.

Pretty confident in those two segments are driving more than the top line than they did last year.

William T. Bosway: So I think both need to contribute more than they did last year, and we expect that to happen based on the backlog that we're seeing in the businesses and all the design work we're doing on projects. So we feel pretty confident in those two segments driving more in the top line than they did last year. Very helpful. I'll pass it on, and congratulations again. Thank you, Julio. Commander of Star 1, U.S. Well

Very helpful I'll pass it on and congratulations again to Tim.

Thank you.

As a reminder.

Wanted to ask a question.

Our next question comes from the line of Walt Liptak Seaport Global Securities. Please proceed with your question.

Hi, Thanks, Good morning, guys and congratulations to Tim.

William T. Bosway: Hi, thanks. Good morning, guys, and congratulations. I wanted to ask first about the renewables backlog, up 21 percent. Is it up because of delays in shipping in the fourth quarter, or is it up because orders are starting to come in late? We were up in the fourth quarter on sales; our orders increased. So that's what's driving the backlog. Okay, can you give us an idea of the magnitude; how much were orders up for renewables? I don't have that off the top of my head.

One.

Wanted to ask first about the renewable backlog up 21% is it up.

Because of delays in shipping in the in the fourth quarter or is that because the orders are starting to come in a little bit better.

We were well we were up in the fourth quarter on sales. It's our orders are have increased.

So that's what's driving the backlog.

Okay can you give us an idea of the magnitude of how much were orders up from renewables in the fourth quarter.

Oh right.

Don't have off the top my head.

I am guessing well without having it in front of me.

William T. Bosway: I'm guessing, well, without having it in front of me, it had to be directionally similar to the backlog growth because revenue was off. Right. It's got to be in that range.

It'd be directionally.

Similar to the backlog growth because revenue was up.

Right right.

It's got to be in that range double digit.

William T. Bosway: It's a double-digit. We'll come circle back with a number for you, but it has to be because, like Tim said, revenue is up. Okay, all right, that's fine. Okay. All right. Fair enough.

We'll circle back with that number for you, but it has to be because like.

Like I said like Tim said revenue was up.

Okay, alright that sounds good.

Double digit.

Okay, Alright fair enough.

William T. Bosway: And then I just wanted to check in on a couple of the charges in the quarter. So the renewables charge goes back to 2022. It sounds like that's a one-time thing. Was that just one customer, one project? You know, how should we think about this happening again in the future?

And then I just wanted to check in on a couple of them.

The charges in the quarter. So the renewables charge goes back to 2022. It sounds like that's one time he was that just one customer one project.

You know how should we think about this happening yeah.

William T. Bosway: Yeah. So Tim talked about this, but federally, when you have all this disruption in the end market, the timing of how projects flow and all that, we effectively delivered material to a customer at a site per schedule. In that particular case, other things happened, such as permits, et cetera, for that customer. There was rust that formed on the material that we put out there, which can happen if it's out there exposed, and in the way our contracts historically have been written, that was on us.

Jim talked about just but separately.

When you have all this disruption in the end market there.

The timing of how projects slowed all that we can effectively delivered material.

To a customer to a site.

Per schedule.

In that particular case, other things happen permitting et cetera for that customer.

There was rust that formed on the material that we put out there which can happen if it's out there exposed and.

Our contracts historically have been written.

That was on us.

William T. Bosway: Going forward, we made those changes in our T&Cs a year ago or so, because that contract was actually for 2021. And so that will be eliminated going forward, and we have a much better process working with our customers to ensure that when we deliver, it's when they're ready to roll, so we don't have, collectively, materials sitting out on site. That's why it's a one-time kind of situation.

So.

Uh huh.

Going forward, we've made those changes in our Ts and CS a year ago and or so because that contract was actually from 'twenty to 'twenty one.

And so that that will be eliminated going forward and we have a much better process working with our customers to ensure that when we deliver it when they're ready to roll. So we don't have collectively materials sitting out on site. That's why it's a one time kind of situation.

William T. Bosway: Okay, great. And then on the Res-E side, you said there was a price adjustment. I don't remember hearing about that.

Okay great.

And then on the resi side. There you said there was a price adjustment I don't remember hearing about those maybe these have been more behind the scenes I Wonder if you could just talk about Rajiv price adjustment didn't happen.

William T. Bosway: Maybe these have been more, you know, behind the scenes. But I wonder if you just talked about the Res-E price. Late 22, early 23, is when there were some pricing adjustments, but we're lapping it now, right? So, there's just a mix. We were...

Yeah late 'twenty two early 'twenty three.

Is when there were some pricing adjustments, but were lapping it now right. So there's.

There's just a mix.

We were you know some of the price adjustments went out in the fourth quarter.

William T. Bosway: Some of the price adjustments went out in the fourth quarter, first quarter, and I think a little bit in the second quarter, if you'll recall. The commodity price on steel really sort of started dropping pretty significantly in the third quarter of 22. So, when we look at the end of 23 sales against the end of 22 sales, on average, prices were higher at the end of 22 than they were at the end of 23.

First quarter, and I think a little bit in the second quarter.

You'll recall.

Commodity price on steel really sort of started dropping pretty significantly in the third quarter of 'twenty two.

So when we look at the end of 'twenty three sales against the end of 'twenty two sales.

Average prices were higher at the end of 'twenty, two and they are at the end of 'twenty three.

Okay.

William T. Bosway: Okay, great. And then maybe a last one for me is just the, you know, Tim, you talked about the slow start to the year. I wonder if you can give us kind of directionally, you know, from the fourth quarter, year over year, or maybe as a percentage of sales, you know, how are you thinking about the first quarter? Well, it's renewable specifically that I called out, and we're still working on the supply chain. We expect a slower start than what we saw last quarter, just because of the time it takes to get material available to even go out into the field and do an install, versus some of our other products where you take an order and be in production and get out within 30 days of being appealed within 45. The Tracker product right now is more than 12 weeks.

Okay, Great and then.

Then maybe a last one for me is just the.

Tim you talked about the slow start to the year I Wonder if you can give us kind of directionally.

You know from the fourth quarter year over year or maybe as a percentage of sales you know how are you thinking the first quarter sales are going to work.

Well, it's renewables specifically.

Hold out okay.

Okay, and you know we're still work in supply chain, but we expect a slower start than we would have seen.

That what we saw last quarter, just because of that.

The time it takes to get material available to even go out into the field and do an install.

Versus some of our other products, where we can take an order and be in production and without.

Within 30 days of being in the field and 45.

The tracker product right now is more than 12 weeks. So orders that were taken at the end of last year. We just can't get started in the quarter at all and some of the stuff that came in a little earlier and we'll get started building late in the quarter.

William T. Bosway: Some of the stuff that came in a little earlier will get started, but it'll be late in the quarter. Okay, so are we thinking renewables will be down from the fourth? Yeah, it's year over year.

Okay. So are we thinking of renewables will be down from the fourth quarter.

William T. Bosway: I didn't look at quarter over quarter, but we'll be down against last year's first quarter is really what the comment was about. But Walt, just to clarify, Gibraltar, we're not expecting... Okay, got it. It's okay.

Yeah.

It's year over year, I, Didnt look at quarter over quarter, but will be down against last year's first quarter is really what the comment was.

But well just to clarify.

Walter we're not expecting that.

Okay got it.

Yes, that's a renewable situation told you Walter we're not expecting that.

William T. Bosway: That's a renewable situation, totally Gibraltar, we're not expecting that. Okay, I got it. Okay, thank you. Your next question is a follow-up question. The Bulletproof Executive 2013, Hey guys, thanks for taking a couple of follow-ups here. Just on the CapEx, can you maybe expand on some of the opportunities to insource the manufacturing? Any color on you know, product lines or segments that's targeted?

Okay got it okay. Thank you.

Our next question is a follow up question from the line of Julio Romero. Please proceed with your question.

Hey, guys. Thanks for taking a couple of follow ups here.

Just on the on the Capex can you maybe expand on some of the opportunities to in source of manufacturing just any color on product lines or segments that's targeted towards.

William T. Bosway: Yeah, it's really renewable energy. No. Yeah. I was going to say, it's not any one segment that we've got opportunities in, but additional opportunities probably are around renewables, depending on how some of that IRA guidance comes out for domestic manufacturing and for domestic content. We've identified opportunities to do things, and sometimes we're down to the math of, does it make sense, and can we do it? In others, it's, hey, when this guidance comes out, here are five ideas, but we've got to wait for the guidance before we make the investment. Okay, got it. And, you know, if you think about our CapEx, call it, you know, 15 to 20 million over the past few years, we could be in the high 20s. So it's not huge dollars, but I wanted to call it out because, You know, it would be a little different than what you guys do. Yeah, for sure.

Yes, it's really renewables not.

Yeah, Tim go ahead.

Yeah, I was going to say, it's not any one segment that we've got opportunities in but additional.

Opportunities probably are around renewables.

Depending on how some of that higher rate guidance comes out for domestic manufacturing.

And for domestic content. It may we've identified opportunities to do things and yeah. It's just sometimes we're down to the math or does it make sense. It can we do it.

In others. It stay with this guidance comes out here's five ideas, but we got to wait till the guidance before making investment.

Yeah.

Okay got it.

And if you think about our Capex you know call. It 15 to 20 million over the past few years, we could be in the high twenty's. So it's not huge dollars, but I wanted to call it out because.

Yeah, It would be a little different than what you guys are used to.

Yeah for sure and you know you have a very nice balance sheet at this point and you talked a little bit about.

William T. Bosway: And, you know, you have a very nice balance sheet at this point. And you talked a little bit about, you know, the M&A pipelines, some short-term operations in Resi. But beyond that, our... maybe some of the challenges with regard to M&A are more about evaluation or a lack of available opportunities.

M&A pipeline, some short term option in resi, but beyond that our R.

Or maybe some of the challenges with regards to M&A you know more about.

Evaluation or or or or a lack of available opportunities at this point.

William T. Bosway: I think it's time, Julio, just when these opportunities are going to present themselves. There's more activity today than there was a year ago and even six months ago. So we're starting to see that percolate. So it's more of a timing issue and, you know, we'll be engaged and involved as a few of these opportunities get a little bit more clarity around them, but we're, we're, we're ready to roll. It's just a matter of when the process is started.

I think it's I mean.

Yes, just when when these opportunities are going to present themselves. There's more activity today than it was a year ago, even six months ago.

So we're starting to see that percolate, so it's more of a timing issue.

We'll be.

Engaged and involved as a few of these opportunities I get a little bit more clarity around them, but where we're.

We're ready to roll.

Just a matter of when the process to start.

William T. Bosway: Very helpful. Thanks so much. There are no further questions. I'd like to hand it back to Mr. Bosway. Great, thank you. And again, thank you, everybody, for joining us today. Coming up, we are presenting tomorrow at the Gabelli 34th Annual Pump, Valve, and Water Symposium, and in March at the BofA Power Utilities Clean Energy Leaders Conference, the Sonoti Spring Conference, and the Roth MKM Annual Growth Conference, in addition to a number of other marketing activities. So, thank you again for your ongoing support of Gibraltar, and have a great day. Have a great rest of the week, ladies and gentlemen...

Very helpful. Thanks, so much.

Uh huh.

There are no further questions I'd like to hand, it back to Mr. Bazemore for closing remarks.

Great. Thank you and again, thank you everybody for joining us today are coming up we are presenting tomorrow at the Gabelli 34th annual pump valve and water symposium and in March at the Bofa power utilities clean energy leaders conference.

Cenote Spring conference and the Roth M. K M annual growth Conference. In addition to a number of other market activity. So thank you again for your ongoing support of Gibraltar and have a great to have a great day and a great rest of the week.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a home.

Wonderful day.