Q1 2024 Gibraltar Industries Inc Earnings Call

Operator: Greetings. Welcome to the Gibraltar Industries first quarter 2024 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. Please note this conference is being recorded. I'll now turn the conference over to your host, Carolyn Capaccio of LHA Investor Relations. You may begin

Greetings and welcome to the Gibraltar Industries first quarter 2024 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.

Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I'll now turn the conference over to your host Carolyn.

Elly Chen Investor Relations you may begin.

Carolyn M. Capaccio: Thank you operator, good morning, everyone and thank you for joining US today with me on the call is still Baas way Gibraltar Industries', Chairman, President and Chief Executive Officer, and Tim Murphy, Gibraltar as Chief Financial Officer.

Carolyn M. Capaccio: Thank you, Operator. Good morning, everyone, and thank you for joining us today.

Carolyn M. Capaccio: 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 Investors section of the company's website, GibraltarOne.com. Gibraltar's earnings press release and remarks contain non-GAAP financial measures. Tables of reconciliation of GAAP to adjusted financial measures can be found in the earnings press release that was issued today.

Carolyn M. Capaccio: 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 Gibraltar its earnings press release and remarks contain non-GAAP financial measures tables, a reconciliation of GAAP to adjusted financial measures can be found in the earnings.

Carolyn M. Capaccio: Press release that was issued today.

Carolyn M. Capaccio: Further please note the adjusted results exclude the net sales and operating results of the Japan renewables business that was sold on December 1st 2023, a P. D F containing 2023 quarterly and annual consolidated in our renewable segment results recast for the sale of the Japan business has been posted to the investors section of the company's web.

Carolyn M. Capaccio: Gibraltar one dot Com 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.

Carolyn M. Capaccio: Further, please note that adjusted results exclude the net sales and operating results of the Japan Renewables business that was sold on December 1st, 2023. A PDF containing 2023 quarterly and annual consolidated and renewable segment results, recast for the sale of the Japan business, has been posted to the Inventors section of the company's website, GibraltarOne.com. 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.

Carolyn M. Capaccio: 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 also be accessed through the company's website.

Carolyn M. Capaccio: Or implied by these forward looking statements.

Carolyn M. Capaccio: Walter advises you to read the risk factors detailed in our SEC filings, which can also be accessed through the company's website now I'll turn the call over to Bill Dunaway Bill.

Carolyn M. Capaccio: Now I'll turn the call over to Bill Bosway. Bill?

William T. Bosway: Good morning everyone, and thank you for joining today's call. We're going to do this a little differently this quarter. We're going to start with an overview of the first quarter results, and then Tim and I are going to take you through our segments, giving you both a financial and operating update along with a closer look at what's happening now in each of the segments. Then I will walk through our 2024 outlook, and then we'll open the call to questions. So let's turn to slide three, our first quarter 2024 review.

Bill Dunaway: Hi, Good morning, everyone and thank you for joining today's call we're going to do this a little differently. This quarter, we're going to start with an overview of the first quarter results and then Tim and I are going to take you through our segments, giving us both a financial and operating update along with a closer look at what's happening out in each of the segments that are I will walk through our 'twenty 'twenty four outlook and then we'll open the call.

Bill Dunaway: For questions. So, let's turn to slide three our first quarter first quarter 'twenty 'twenty four reviews.

William T. Bosway: We had a good first quarter, in line with our plan, and on an adjusted basis, net sales increased 1%, operating income increased 4%, EBITDA increased 6%, and EPS increased 13%, all while absorbing a $4 million, or $0.10 per share, headwind associated with performance-based compensation. We also generated $53 million of operating cash flow through margin expansion and better working capital performance, which resulted in a free cash flow rate to sales of 17%.

Bill Dunaway: We had a good first quarter in line with our plan and an adjusted basis net sales increased 1%.

Bill Dunaway: Operating income increased 4% EBITDA increased 6% and EPS increased 13%, all while absorbing a $4 million or 10 cent per share headwind associated with performance based compensation.

Bill Dunaway: We also generated 53 million of operating cash flow to margin expansion and better working capital performance, which resulted in a free cash flow rate to sales of 17%.

William T. Bosway: Overall demand was in line with plan, with net sales up 1% despite renewables being down 10% as planned going into the first quarter. Residential, ag tech, and infrastructure businesses collectively generated 4% revenue growth, reflecting solid in-market activity, as well as additional participation. Total backlog for Gibraltar was impacted at core end by both ag tech and infrastructure businesses. The ag tech backlog was down 21% at quarter end, but this does not reflect the current strength of the business.

Bill Dunaway: Overall demand was in line with plan with net sales up 1%, despite renewables being down 10% as planned going into the first quarter residential AG tech and infrastructure businesses collectively generated 4% revenue growth, reflecting solid end market activity as well as additional participation games.

Bill Dunaway: Total backlog for Gibraltar was impacted our core and I, both AG tech and infrastructure businesses the.

Bill Dunaway: <unk> backlog was down 21% at quarter end, but this does not reflect the current strength of the business, we signed over $40 million of new orders in April which were previously expected in the first quarter and we will start these projects in Q2, and they will accelerate in Q3 and Q4.

William T. Bosway: We signed over $40 million in new orders in April, which were previously expected in the first quarter. We will start these projects in Q2, and they will accelerate in Q3 and Q4. And obviously, we're very excited about our additional pipeline of projects as well. The infrastructure backlog was impacted by a significant year-over-year comparison, which was driven by a large project signed in late 2022 and started in early 2023. We expect the infrastructure backlog to turn positive during the year as bookings in Q1 were up 18% versus Q4.

Bill Dunaway: Obviously, we're very excited about additional pipeline of projects as well.

Bill Dunaway: The infrastructure backlog was impacted by a significant year over year comparison, which was driven by a large project signed in late 2022 and started in early 2023.

Bill Dunaway: We expect infrastructure backlog to turn positive during the year as bookings in Q1 were up 18% versus Q4 backlog was up two 6% versus Q4, and the overall strength of design and quoting activity.

William T. Bosway: Backlog was up 2.6% versus Q4 and the overall strength of design and coding activity. So a quarter in, total backlog was down 3% versus last year, but we are confident backlog and sales will grow as planned in 2020. For the full year, our outlook remains positive and unchanged, and we continue to expect all four segments to deliver revenue and margin growth, as well as strong cash flow performance. Now we're going to review this segment, and Tim will take it from here.

Bill Dunaway: At quarter end total backlog was down 3% versus last year, but we are confident backlog and sales will grow as planned in 2024.

Bill Dunaway: For the full year outlook, our outlook remains positive and unchanged and we continue to expect all four segments to deliver revenue and margin growth as well as strong cash flow performance.

Bill Dunaway: Let's review this segments and well and we will take Tim will take it from here.

Timothy F. Murphy: Thanks, Bill, and good morning, everyone. Let's start with renewable energy on slide four. And as expected, segment net sales, which have been adjusted for the divestiture of our Japanese renewables business, decreased 10.1%. The decrease in sales is the result of a delay in revenue as a number of customers started switching their technology preference in late 2023 from fixed tilt-racking to our recently launched 1P TerraTrac tracker technology. This transition has created some iterative redesign work and additional time to re-scope and finalize projects for customers and, therefore, push revenue into the second quarter and second half of the year.

Timothy F. Murphy: Thanks, Bill and good morning, everyone, let's start with renewables on slide four.

Timothy F. Murphy: As expected segment net sales, which have been adjusted for the divestiture of our Japanese renewables business decreased 10, 1%.

Timothy F. Murphy: The decrease in sales is the result of a delay of revenue as a number of customers started switching their technology preference in late 2023 from fixed tilt racking to our recently launched one P turret track tracker technology.

Timothy F. Murphy: This transition has created some iterative redesign work and additional time to re scope and finalized projects for customers and therefore push revenue into the second quarter and second half of the year.

Timothy F. Murphy: We're excited to see the rapid uptake of our 1P tracker, and we're working diligently with suppliers to ramp capacity sooner to support customer demand. Backlog of the renewables business finished up 8% at the end of the quarter, and we continue to have an active pipeline of projects across our TerraTrac track. Fixed Tilt, Canopy, and eBoss products. At the same time, customers continue to experience permitting delays, and the industry is still waiting on final domestic content tax credit guidance from the Department of Treasury. Adjusted operating and EBITDA margins decreased 80 and 40 basis points, respectively, versus the prior year as volumes in the quarter were lower because of the product line mix shift associated with the ramp up of the 1P tracker product We continue to expect momentum to build throughout the year, assuming continued improvement in permitting and relative timeliness in Department of Treasury guidance on the ITC tax credit.

Timothy F. Murphy: We're excited to see the rapid uptake of our one P tracker and were working diligently with suppliers to ramp capacity sooner to support customer demand.

Timothy F. Murphy: Backlog in the renewables business finished up 8% at the end of the quarter and we continue to have an active pipeline of projects across our Terra track tracker fixed tilt canopy and he boss product lines.

Timothy F. Murphy: At the same time customers continued to experience permitting delays and the industry is still waiting on final domestic content tax credit guidance from the department of Treasury.

Timothy F. Murphy: Adjusted operating and EBITDA margins decreased 80, and 40 basis points, respectively versus the prior year as volumes in the quarter were lower because of the product line mix shift associated with the ramp up of a one P tracker product line.

Timothy F. Murphy: We continue to expect momentum to build throughout the year, assuming continued improvement in permitting and relative timeliness and the department of Treasury guidance on the ITC tax credit Bill.

Timothy F. Murphy: So, in sustaining with renewables, let's take a closer look at TerraSmart's TerraTrac technology on slide 5. TerraSmart introduced its 2P Tracker product in late 2021 to really provide our C&I customers an additional technology option to meet growing demand in existing as well as new parts of the country. Then, in late 2023, we further expanded our tracker offering with the introduction of our Terratrack 1P tracker product. And like our 2P technology, 1P can be applied to different foundations, making it adaptable for use in any terrain.

Timothy F. Murphy: Staying with renewables, let's take a closer look at their smarts terror attack technology on slide five first.

Timothy F. Murphy: First part introduce R to P tracker product in late 2021 really to provide our C&I customers and additional technology option to meet growing demand and existing as well as new parts of the country.

Timothy F. Murphy: Then in late 2023, we further expanded our tracker offering with the introduction of our terror attack one P tracker product line.

Timothy F. Murphy: Unlike our two P technology or one P can be applied to different foundations, making it adaptable for use in any terrain. It's also controlled and managed through our <unk> operating system our.

Timothy F. Murphy: It's also controlled and managed through our PQLT operating system. Our peak yield continuously manages yield and uptime. It also boosts energy production with backtracking guided by machine learning. It employs on-site smart weather stations and weather forecasting, and does all this in a very secure way.

Timothy F. Murphy: Our peak yield continuously manages yield and uptime. They also do synergy production with backtracking guided by machine learning.

Timothy F. Murphy: And employees on onsite smart weather stations in weather forecasting and does all of this in a very secure way.

Timothy F. Murphy: The addition of the Terratrack Tracker platform provides customers with a broader suite of options to ensure project performance and returns regardless of the terrain, the topography, soil conditions, weather environment, and other local variables. And to date, we have installed over 500 megawatts of tracker, both 2P and 1P, with 18 C&I customers across 84 projects. While our average project size has been around between 6 and 7 megawatts, we have larger projects in our backlog, with the largest to date being 97 megawatts.

Timothy F. Murphy: Secondly, the addition of the territory soccer platform provides customers with a broader suite of options to ensure project performance and returns regardless of the train the topography soil conditions weather environment and other local variables.

Timothy F. Murphy: And to date, we've installed over 500 megawatts of tracker, but to pin one Pete with 18 C&I customers across 84 projects.

Timothy F. Murphy: Average project size has been around between six and seven megawatts, we have larger projects in our backlog with the largest to date being 97 megawatts.

Timothy F. Murphy: Regarding the size of the project, we typically have the opportunity to provide turnkey design, engineering, manufacturing, and field installation services for foundations, racking systems, and eBoss systems. On the left side of the slide are a couple pictures of what we refer to as the Solitude 2 project located in Lowestand, Illinois.

Timothy F. Murphy: Regardless of the size of the project, we typically had the opportunity to provide turnkey design engineering manufacturing and field installation serves our services for foundations racking systems and <unk> systems.

Timothy F. Murphy: On the left hand, and left side of the slide a couple of pictures of what referred to as a solitude two project located in low stand, Illinois. This is a three megawatt community solar project, where we installed a screw foundations the one P tracker and modules.

Timothy F. Murphy: This is a three-megawatt community solar project where we installed our screw foundations, the 1P tracker, and modules. More and more developers continue to view Illinois as a key growth market, given its consistent runway of new capacity blocks, i.e., land, and favorable incentives through the state's primary incentive program called Illinois SHINE, and we look forward to doing many more projects in the state.

Timothy F. Murphy: More and more developers continue to view, the Illinois, a key growth market given its consistent runway of new capacity blocks I E land and favorable incentives through the state's primary incentive program called Illinois shines and.

Timothy F. Murphy: And we look forward to doing many more projects are in the state.

Timothy F. Murphy: Let's turn to slide six, and I'll give you an update on the overall solar market, starting with the status of the 10% domestic content tax credit. The industry continues to wait for final guidelines from the Department of Treasury, and given the additional 10% can greatly influence project returns and financing, obviously, the delay continues to cause customers to pause and or delay moving forward on some of their new projects. The industry continues to expect guidelines to be finalized at any time.

Timothy F. Murphy: Let's turn to slide six and I'll give you an update on the overall solar market and we'll start with the status of the 10% domestic content tax credit.

Timothy F. Murphy: The industry continues to wait for final guidelines from the department of Treasury.

Timothy F. Murphy: And given the additional 10% can greatly influence project returns and financing obviously the delay continues to cause customers to pause indoor delay moving forward on.

Timothy F. Murphy: Some some of their new projects the industry continued to expect guidelines to be finalized at anytime.

Timothy F. Murphy: Jumping to permitting, customers continue to experience delays, and we are working closely with them to effectively improve planning and scheduling so revenue recognition expectations are better matched with project execution schedules. As well, earlier this month, the Solar Energy Industry Association, referred to as SIA, sent a letter on behalf of 200 companies to the House and Senate leadership, asking Congress to step in and resolve challenges with permitting, siting, transmission, and public land access for solar.

Timothy F. Murphy: Jumping at permitting customers continue to experience delays and we are working closely with him to effectively improved planning and scheduling. So revenue recognition expectations are better matched with project execution schedules.

Timothy F. Murphy: Well early this month, the solar energy industry Association referred to see sent a letter on behalf of 200 companies to the house and Senate leadership.

Timothy F. Murphy: Asking Congress to step in and resolve challenges with permitting citing transmission and public land access for solar.

Timothy F. Murphy: I think the industry is very hopeful congressional leadership will respond and accelerate the necessary changes to resolve these core issues facing the industry. Meanwhile, there has been a new development in the U.S. solar industry. There is a second anti-dumping and countervailing duty complaint that was filed on April 24. A new petition was filed with the U.S. International Trade Commission and the U.S. Department of Commerce, alleging potentially illegal trade practices by Cambodia, Malaysia, Thailand, and Vietnam and asking them to apply new tariffs, both anti-dumping and countervailing duties, to imported solar cells and modules from these countries. The language in the new petition excludes products covered by the China ADCBD orders in the Auxin case to avoid doubling tariffs on an import.

Timothy F. Murphy: And I think the industry is very hopeful congressional leadership will respond and accelerate necessary changes to resolve these core issues facing the industry.

Timothy F. Murphy: And there hasn't been a new development in the U S. Solar industry. There is a second antidumping countervailing duty complaint that was filed on April 24th.

Timothy F. Murphy: The DOC now has 20 days from April 24th to decide whether to open an investigation. While this complaint is new, the industry has been anticipating it for some time. And in discussing the situation with customers, many are much better prepared to manage their business in the event another investigation takes place. For example, we have a number of customers who have established panel supplies outside of China and Southeast Asia. We're going to continue to assess the situation, but as of now, we do not expect a new DOC investigation to have a significant impact on the industry in 2024. Let's move on to residential.

Timothy F. Murphy: A new petition was filed with the U S International Trade Commission and the U S Department of Commerce, alleging potentially illegal trade practices by Cambodia, Malaysia, Thailand, and Vietnam, and asking them to apply new tariffs, both antidumping and countervailing duties.

Timothy F. Murphy: Imported solar cells and modules from these countries the.

Timothy F. Murphy: The language in the new petition excludes products covered by the China 80, CVD orders any auction case to avoid doubling tariffs on an important.

Timothy F. Murphy: Did you see now has 20 days from April 24th to decide whether to open an investigation. While this complaint is new the industry has been anticipated for some time and in discussing the situation with customers. Many are much better prepared to manage their business in the event. Another investigation takes place for example.

Timothy F. Murphy: We have a number of customers who have established panel suppliers outside of China and Southeast Asia.

Timothy F. Murphy: We're going to continue to assess the situation, but as of now do not expect a new D. C investigation had a significant impact on the industry in 2024.

Timothy F. Murphy: Let's move on to residential.

Timothy F. Murphy: Residential segment sales increased 3.1% from last year. Organic growth was 2.4%, and our recent acquisition added 0.7%. Organic growth was driven by participation gains with new and existing customers and through additional geographic expansion in the Rocky Mountain region. Customer demand continues to follow historical seasonality, and our most recent acquisitions are performing to our expectations. Suggested operating EBITDA margins of 18.5% and 20.1%, respectively, both expanded 200 basis points through solid execution, effective price-cost management versus last year's quarter, and leverage of higher volume.

Timothy F. Murphy: Residential segment sales increased three 1% from last year organic growth was two 4% and our recent acquisition added <unk>, 7%.

Timothy F. Murphy: Organic growth was driven by participation games, with new and existing customers and through additional geographic expansion in the Rocky Mountain region.

Timothy F. Murphy: Customer demand continues to follow historical seasonality and our most recent acquisitions are performing to our expectations.

Timothy F. Murphy: Adjusted operating and EBITDA margins of $18, five and 21% respectively. Both expanded 200 basis points through solid execution effective price cost management versus last year's quarter and leverage of higher volume.

Timothy F. Murphy: We're on plan to move additional locations to our common ERP system this year, and we expect to continue to leverage our investments made to date. And we continue to expect modest revenue growth with continued improvement in margins this year as increasing market participation gains and recent acquisitions contributions to the top line, along with continuing 80-20 in operating efficiency, drive profitability. Bill?

Timothy F. Murphy: Where I'm planning to move additional locations shortcoming ERP system. This year and we expect to continue to leverage our investments made to date.

Timothy F. Murphy: And we continue to expect modest revenue growth with continued improvement in margins. This year is increasing market participation games and recent acquisitions contributions to the top line along with continuing to 80, 20 and operating efficiencies drive profitability Bill.

William T. Bosway: All right, let's switch to slide eight. We have two important residential initiatives I want to share with you, expanding our market presence and the launch of two new product lines. And let's start with expanding our market presence. From 2019 to 2020-23, the residential business has grown over 15% per year, with revenue increasing over $350 million to more than $800 million in 2023. Also, during this same period, operating margins increased 370 basis points.

Timothy F. Murphy: Alright, let's switch to slide eight we have two important residential initiatives I want to share with you our expanding our market presence and the launch of two new product lines.

Timothy F. Murphy: And let's start with expanding our market presence.

Timothy F. Murphy: From 2019 to 2020 'twenty three residential business has grown over 15% per year with revenue increasing over $350 million to more than $800 million in 2020 three.

Timothy F. Murphy: During the same period operating margin increased 370 basis points.

William T. Bosway: Our performance has been driven by 80-20, more consistent execution, better overall service, and participation gains. And what's most interesting is we accomplished this despite only serving 40% of the top 32 markets in the U.S., which provides even more opportunity for expansion and growth going forward. So in 2023, we continue our expansion initiatives by becoming more local in the Denver market, where we are leveraging an existing Gibraltar facility and are now supporting wholesalers serving this market.

Timothy F. Murphy: Our performance has been driven by 80 20, more consistent execution better overall service and participation games.

Timothy F. Murphy: And what's most interesting is we accomplished this despite only serving 40% of the top 32 markets in the U S, which provides even more opportunity for expansion and growth going forward.

Timothy F. Murphy: So in 'twenty two 'twenty three we continued our expansion initiatives like coming more local in the Denver market, where we are leveraging an existing Gibraltar Gibraltar facility and are now supporting wholesaler, serving this market as well we acquired a company based in Salt Lake City, serving the wholesalers in this market and surrounding region.

William T. Bosway: As well, we acquired a company based in Salt Lake City serving wholesalers in this market and surrounding regions. Both of these locations provide us with very flexible and cost-effective operations supporting the 80s of demand with a goal to serve customers within 24-hour lead time. We will continue to expand into the 32 major U.S. markets and drive growth, participation, and higher margins accordingly. We're also launching new products in the third quarter of 2024, which I referred to during our Q4 call.

Timothy F. Murphy: Both of these locations provide us with very flexible and cost effective operations supporting the eighty's a demand with a goal to serve customers within 20 far lead times.

Timothy F. Murphy: We continue to expand into 30 into the 32 major U S markets and drive growth participation and higher margins accordingly.

Timothy F. Murphy: We're also launching new products in the third quarter, 'twenty, 'twenty, four which I referred to during our Q4 call. Our news, our new shingles vent role, which we have applied for design utility in process patents creates a simpler and more cost effective installation process for contractors versus the four foot stick ventilation products traditionally used in roofing relation.

William T. Bosway: Our new shingle vent roll, which we have applied for design, utility, and process patents, creates a simpler and more cost-effective installation process for contractors versus the four-foot stick ventilation products traditionally used in roof ventilation. We will also launch our next generation patented mailbox, recently approved by the U.S. Postal Service. This is the first of its kind to be released to the market. It is consumer assembled, and the packaging for this product has been reduced by 60%, eliminating waste and helping optimize shelf space for a customer. Given the packaging footprint, freight costs for this mailbox will be lowered by up to 50% versus a standard factory-assembled mailbox. Let's move on to Ag Tech.

Timothy F. Murphy: We will also launch our next generation patented mailbox recently approved by the U S. Postal service. This is the first of its kind of market. It is consumer assemble in the packaging for this product has been reduced by 60% eliminate waste and helping optimize shop shelf space for our customers.

Timothy F. Murphy: The packaging footprint in freight costs for this mailbox would be lower by up to 50% versus standard factory assembled mailboxes.

Timothy F. Murphy: Let's move on to AG Tech.

Timothy F. Murphy: Yeah.

William T. Bosway: If we move to slide 9, Agtech suggested net sales increased 2.1%, and as mentioned, new bookings accelerated significantly in April with over $40 million of new projects. Had these projects been signed in Q1 as originally planned, quarter-end segment backlog would have increased over 30%. The increase in bookings was mainly driven by demand for produce projects, but we also had some good order activity in our commercial business. We'll start these new projects this quarter and then accelerate execution in the third and fourth quarters.

Timothy F. Murphy: If we move to slide nine our <unk> adjusted net sales increased two 1% and as mentioned new bookings accelerated significantly in April with over $40 million of new project side.

Timothy F. Murphy: Had these projects been signed in Q1 as originally planned quarter end segment backlog would've increased over 30%.

Timothy F. Murphy: The increase in bookings was mainly driven by demand in produce projects, but we also had some good order activity in our commercial business.

Timothy F. Murphy: Well start these new projects this quarter, and then accelerate execution in the third and fourth quarters.

William T. Bosway: We're engaged in additional design-build contracts and expect bookings to increase further in the coming months. Segment margin was impacted as adjusted operating and EBITDA income decreased less than a million dollars due to stark delays in some higher-margin refurbishment service work and market mix across the business. We expect volume leverage on stronger sales growth as we move through 2024. Bill?

Timothy F. Murphy: We're engaged in additional design build contracts and expect bookings to increase further in the coming months.

Timothy F. Murphy: Segment margin was impacted as adjusted operating and EBITDA and income decreased less than $1 million. Due this due to start delays with some higher merger refurbishment service work and market mix across the business.

Timothy F. Murphy: We expect volume leverage on stronger sales growth as we move through 2024.

William T. Bosway: So let's move to slide 10. I'd like to provide some background on our high-tech CEA business, which stands for Controlled Environment Agriculture, and why we are so enthusiastic about our position in this market and our future going forward. As mentioned in our last call, we are experiencing good demand momentum driven by accelerating investment in CEA growing capacity in both the U.S. and Canada. DA Growers continue to expand capacity to meet retailer and end consumer demand.

Timothy F. Murphy: So let's move to slide 10, I'd like to provide some background on our hi Tech C E business, which stands for controlled environment agriculture, and why we're so enthusiastic about our position in this market and our future going forward.

William T. Bosway: And we also see outdoor growers move into additional production indoor environments. Our growers are mostly focused on growing high-quality fruits and vegetables, localizing the supply chain for end consumers, minimizing the potential impact of disruptive climate-related events on production, and doing this in a much smaller and efficient footprint versus outdoor farming. For example, shown here is Boomberry Farms, which is quickly becoming the largest high-tech strawberry farm in North America. And with our customer, we have completed four phases of design and construction, covering 80 acres of strawberry growing production.

Timothy F. Murphy: As mentioned in our last call. We are experiencing good demand momentum driven by accelerating investment for C. A growing capacity in both the U S and Canada.

Timothy F. Murphy: D. A growers continue to expand capacity to meet retailer and consumer demand.

Timothy F. Murphy: We also see outdoor growers moving additional production indoor environments.

Timothy F. Murphy: Our growers are mostly focused on growing high quality fruits and vegetables localizing the supply chain for end consumers minimizing the potential impact of disruptive climate related events on production and doing this in a much smaller inefficient footprint versus outdoor farming.

Timothy F. Murphy: For example, shown here is been Berry farms, which is quickly becoming the largest high tech Strawberry farm in North America.

Timothy F. Murphy: With our customer we have completed four phases of design and construction covering 80 acres of Strawberry growing production. We're currently building an additional 40 acres.

William T. Bosway: We're currently building an additional 40 acres, and with the final 55 acre phase planned for 2025 and 2026, a total of 175 acres will be producing 100,000 pounds per acre or 17.5 million pounds of strawberries per year by 2026.

Timothy F. Murphy: And with the final 55 acre phase plan for 2025, and 2026, a total of 175 acres will be producing 100000 pounds per acre or $17 5 million pounds of strawberries per year by 2026.

William T. Bosway: And if you think about what we do in this market, we are the leading turnkey provider in North America of large-scale controlled environment growing facilities, commercial greenhouses, and cultivation structures. We oversee every aspect of structure and systems design in engineering. We manufacture structures and systems. We integrate systems, both manufactured and sourced. And we construct and install the entire facility. Our strength is based on our organization. We have significant growing experience and expertise.

Timothy F. Murphy: When you think about what we do in this market.

Timothy F. Murphy: Are the leading turnkey provider in North America large scale controlled environment growing facilities commercial greenhouses in cultivation structures.

Timothy F. Murphy: You ever see every aspect of structure and systems design and engineering, we manufacture structures and systems, we integrate systems, both manufactured and sourced and we construct and install the entire facility.

Timothy F. Murphy: Our strength is based in our organization, we have significant growing experience and expertise.

William T. Bosway: Strong Domain Knowledge in Design, Engineering, Manufacturing, Integration, and Construction Management. With our current demand momentum, as well as our design activity across a broadened customer base, we expect to deliver both revenue and margin growth in 2020. Now for an infrastructure visit.

Timothy F. Murphy: Strong domain knowledge in design engineering manufacturing integration and construction management.

Timothy F. Murphy: But our current demand momentum as well as our design activity across a broadening customer base, we expect to deliver both revenue and margin growth in 2024.

Timothy F. Murphy: Now for an infrastructure business.

Timothy F. Murphy: Let's move to slide 11. Infrastructure segment sales increased 17.1% on strong execution, continued solid market demand, and market participation gain. Backlog decreased 10%, which was expected due to our continued progress on a large project that was booked in mid-2022 and we began to work on in 2023. Driven by strong funding for infrastructure projects, demand, project design, and quoting activity remain strong, and we expect order flow to increase progressively over the course of the year.

Timothy F. Murphy: Let's move to slide 11.

Timothy F. Murphy: Infrastructure segment sales increased 17, 1% on strong execution continued solid end market demand and market participation games.

Timothy F. Murphy: Backlog decreased 10%, which was expected due to our continued progress on a large project that was booked in mid 'twenty 'twenty. Two we began to work on in 2023.

Timothy F. Murphy: Driven by strong funding for infrastructure product projects demand project design and quoting activity remains strong and we expect order flow to increase progressively over the course of the year.

Timothy F. Murphy: Segment-adjusted operating and EBITDA margins improved 790 and 710 basis points, respectively, driven by volume, price-cost alignment, ongoing strong execution, 80-20 productivity, and improving product quality. We expect continued sales growth and margin expansion in 2020. Let's move to slide 12 to discuss our balance sheet and cash flow. As of March 31st, we had cash on hand of $147 million, and $396 million available on our revolver. During the quarter, we generated $53 million in cash from operations through a combination of margin improvement and counterseasonal generation of about $17 million from working capital.

Timothy F. Murphy: Segment, adjusted operating and EBITDA margins improved 790, and 710 basis points respectively.

Timothy F. Murphy: By volume price cost alignment ongoing strong execution, 80, 20 productivity and improving product mix.

Timothy F. Murphy: We expect continued sales growth and margin expansion in 2024.

Timothy F. Murphy: As a result, our free cash flow generation for the quarter was very strong at 16.7% of sales, and our objective for free cash flow of approximately 10% for the year is unchanged. There were no share repurchases in the quarter, and we remain debt-free.

Timothy F. Murphy: Let's move to slide 12 to discuss our balance sheet and cash flow.

Timothy F. Murphy: At March 31st we had cash on hand of $147 million and $396 million available on our revolver.

Timothy F. Murphy: During the quarter, we generated $53 million in cash from operations through a combination of margin improvement and counter seasonal generation of about 17 million from working capital.

Timothy F. Murphy: As a result, our free cash flow generation for the quarter was very strong at 16, 7% of sales.

Timothy F. Murphy: And our objective for free cash flow of approximately 10% for the year is unchanged.

Timothy F. Murphy: There were no share repurchases in the quarter and we remain debt free.

Timothy F. Murphy: We continue to expect to generate strong cash flow, driven by revenue growth and margin expansion in 2024 and beyond. Our priorities in capital allocation this year are to continue to invest in our organic growth and operating systems for scale, with capital expenditures planned between 2% to 3% of sales. At the higher end, assuming we're able to prove out cost savings, we anticipate a number of opportunities to outsource manufacturing to improve profitability.

Timothy F. Murphy: We continue to expect to generate strong cash flow driven by revenue growth and margin expansion in 'twenty four and beyond.

Timothy F. Murphy: Our priorities and capital allocation. This year are to continue to invest in our organic growth and operating systems for scale.

Timothy F. Murphy: With capital expenditures planned between 2% to 3% of sales at the higher end, assuming we're able to prove out cost savings, we anticipate on a number of opportunities to in source manufacturing to improve profitability.

Timothy F. Murphy: We also remain focused on high-quality M&A, and we are equipped with a strong balance sheet to pursue opportunities with a higher probability in the near term in the residential segment and the medium to long term in other segments, and will opportunistically return value to shareholders through the remaining $89 million authorized under our repurchase program, funded by cash generated from operations and supplemented, as needed, by the use of our revolver, depending on the Now I'll turn the call back to Bill. Thank you, Tim.

Timothy F. Murphy: We also remain focused on high quality M&A work.

Timothy F. Murphy: We're equipped with a strong balance sheet to pursue opportunities with a higher probability in the near term in the residential segment in the medium to long term in other segments.

Timothy F. Murphy: And we'll opportunistically return value to shareholders through the remaining $89 million authorized under our repurchase program.

Timothy F. Murphy: Funded by cash generated from operations and supplemented as needed by the use of our revolver, depending on the timing of any M&A in repurchases.

Timothy F. Murphy: Now I'll turn the call back to Bill.

William T. Bosway: Thanks Tim. Now, let's move to slide 13, and we'll talk about our 2024 priorities. You know, our five core areas of focus for 2024 really are unchanged, and they've been pretty consistent over the last year or two. Number one, just continue to focus on driving growth, margin improvement, and strong cash performance. Secondly, continue to focus on our 80-20 initiatives, expand our participation and our presence in the marketplace, and just continue to drive service levels higher with speed and agility.

Bill: Thanks, Tim let's move to slide 13, and we will talk about our 'twenty 'twenty four priorities.

Bill: Our five core areas of focus for 'twenty 'twenty, four really are unchanged and they've been pretty consistent over the last year or two.

Bill: Number one just continuing to focus on driving gross margin improvement strong cash performance.

Bill: Secondly continue to focus on our 80 20 initiatives.

Bill: And our participation and our presence in the marketplace and just continue to drive service levels higher with speed and agility.

William T. Bosway: We're going to continue to invest in digital transformation to scale the business, connect better with our customers, suppliers, and organization, and optimize our operating system. Obviously, we're also going to continue to focus on strengthening the team, adding the right experience and competence, and finally, just conduct business the right way and do it every day.

Bill: We're going to continue invest in digital transformation to scale the business connect better with our customers suppliers and organization and operate optimize operating systems I was hoping to continue to focus on strengthening the team, adding the right experience and competency and finally, just conduct business the right way and do it every day.

William T. Bosway: Now let's turn to slide 14, and we're going to review our 2024 guidance. Our first quarter results and momentum to date validate our full year expectation for positive performance in all four segments, and we are reiterating our 2024 outlook. 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%. GAAP operating margin is expected to range between 12.1 and 12.4 percent, up between 120 and 150 basis points.

Bill: Now, let's turn to slide 14, and we're gonna view, our 'twenty 'twenty four guidance.

William T. Bosway: And adjusted operating margin is expected to range between 13.5 and 13.7 percent, up between 80 and 100 basis points. Adjusted EBITDA margin is expected to range between 16% and 16.3%, up between 60 and 90 basis points. Gap EPS is expected to range between $4.04 and $4.29, compared to $3.59 in 2023, up between 12% and 20%. Adjusted EPS is expected to range between $4.57 and $4.82, compared to $4.09 in 2023, up between 12% and 18%.

Bill: Our first quarter results and momentum to date validate our full year expectation for positive performance in all four segments.

Bill: We're reiterating our 2024 outlook.

Bill: Consolidated revenue is expected to range between $1 43 billion and $1 40 billion compared to 1.37 billion in 2023 up between four and 9%.

Bill: GAAP operating margin expected to range between $12, one and 12, 4% up between 120, and 150 basis points and adjusted operating margin is expected to range between $13 five and 13, 7% up between 80 and 100 basis points.

Bill: Adjusted EBIT margin is expected to range between 16% and 16, 3% up between 60 and 90 basis points.

Bill: GAAP EPS is expected to range between $4 and four and $4 29 compared to $3.59 in 2023 up between 12 and 20%.

Bill: And adjusted EPS is expected to range between $4 57, and $4.82 compared to $4.09 in 2023 up between 12 and 18% and.

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

William T. Bosway: And we expect free cash flow of approximately 10% of sales for the year. 2024 is off to a good start with our first quarter performance and current momentum supporting our full year expectations. We look for renewables and ag tech to accelerate top-line growth during the year and all four businesses to improve revenue, expand margins, and deliver strong cash flow performance in 2024. Our performance, frankly, is just the result of a great team effort and the ownership our people take each and every day for making things happen. And our team knows each day truly does matter. So I want to say a big thank you to everyone in our organization. So now, let's open the call up, and we'll take your questions.

Bill: 'twenty 'twenty four is off to a good start with our first quarter performance and current momentum supporting our full year expectations. We look for renewables in AG tech to accelerate topline growth 30 year in all four businesses, improving revenue expanding margins and delivering strong cash flow performance in 2024.

Speaker Change: Our performance frankly is just simply result of a great team effort and the ownership of our people take each and everyday for making things happen and our team knows each day truly does matter. So I wanted to say a big thank you to everyone.

Bill: And our organization.

Speaker Change: Let's open the call up and we'll take your questions.

Operator: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. And our first question comes from the line of Daniel Moore with CJS Securities. Please proceed with your question.

Speaker Change: At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad and confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary, if we kept going.

Bill: Handset before pressing the star.

Bill: And our first question comes from the line of Daniel Moore with CJS Securities. Please proceed with your question.

Daniel Joseph Moore: Thank you. Good morning, Bill. Good morning, Tim. Thanks for taking the questions. Obviously, congratulations on a solid start to the year. Maybe start with Rezi.

Daniel Joseph Moore: Thank you good morning, Bill Good morning, Tim Thanks for taking my questions.

Daniel Joseph Moore: Congrats on a solid start to the year, maybe start with rosy I you know we've heard a little bit of incremental Choppiness from you know some other building products companies clearly you were more tied to R&R, but just curious if you're seeing any change in order patterns or demand over the last call. It 90 days.

Daniel Joseph Moore: We've heard a little bit of incremental choppiness from some other buildings, products, and companies. Clearly, you're more tied to R&R, but just curious if you're seeing any change in order patterns or demand over the last, call it, 90 days. And then perhaps more importantly, when we think about the expansion into the Rockies area, and you're quoting only serving 40% of the top 32 markets today, how much incremental TAM is there to go after, both with this initial initiative and then longer term from a geographic perspective?

Daniel Joseph Moore: And then perhaps more importantly, when we think about the expansion into the Rockies area and you know you're quoting are only serving 40% of the top 32 markets today, how much incremental Tam is there to go after you know both with with this initial.

Bill: Initiative, and then you know kind of longer term from a geographic perspective.

William T. Bosway: Yeah, Dan, thanks. You know, on the last part of your question, obviously, we'd like to see ourselves in 80% of those top 32 markets. So, theoretically, if you're, you can take your business and do something pretty significant with it. I guess that's the answer. We're learning every day as we expand into a number of these markets that we haven't been in about what the possibilities are. So, yeah, I think Salt Lake and Denver were really eye-opening opportunities for us.

Speaker Change: Yeah, Dan. Thanks, you know on the last part of your question, obviously, we'd like to see ourselves at 80% of of those top 32 markets. So theoretically if you're you could take your business and do something pretty significant with it I guess is the answer we're learning every day as we expand into.

Speaker Change: A number of these markets that we haven't been and what the possibilities are so yeah.

Speaker Change: I think salt Lake in Denver, where really eye opening opportunities for US we were trying to serve those those markets from afar and the more local we became a more success, we had in both top and bottom line.

William T. Bosway: We were trying to serve those markets from afar, and the more local we became, the more success we had on both the top and bottom lines, serving wholesalers, in particular, with quick service. So you'll see us continue to expand this year in a number of other locations, and that could be a combination of both organic and inorganic efforts, but we have a pretty good roadmap as to where we want to go and how we're going to go about doing that. So more to come on that front.

Speaker Change: Having wholesalers in particular with quick service. So, we'll you'll see us continue to expand.

Speaker Change: This year in a number of other locations and that'll be you know it could be a combination of both organic and inorganic.

Speaker Change: Efforts, but we have a pretty good roadmap as to where we want to go and how we're going to go about doing that so.

Speaker Change: More to come on that front as it relates to just demand you know where the lowest period of time as you know seasonality wise for the industry I would say if you look at like P. O S sales that we see from some of our big box guys. It's it's slower now than it was a year ago.

William T. Bosway: As it relates to just demand, we're in the lowest period of time, as you know, seasonality-wise for the industry. I would say if you look at POS sales that we see from some of our big box guys, it's slower now than it was a year ago. We actually grew during that same time period in the first quarter, and I think that goes back to, as you know, our playbook has a lot to do with how we drive participation.

Speaker Change: We actually grew during that same time period in the first quarter and I think that goes back to as you know our playbook has a lot to do with how do we drive participation. So when I talk about as an example, you know our salt Lake in Denver.

William T. Bosway: So when I talk about, as an example, Salt Lake City and Denver, that's participation gains, right, in an existing marketplace. So even if those two cities were down a bit or those two markets were down, for us, it's new, and for us, it's sheer gains. So we're going to continue to drive that path, and our plan going into this year was built on assuming the market would not be robust; it was going to be, again, more of the playbook of driving participation. So that's how we have seen the first quarter materialize, and that's the game plan going forward.

Speaker Change: Participation games right, an existing marketplace. So even if that those two cities were down a bit or those two markets were down for us, it's new and for US. It's share gain. So you know we're going to continue to drive that path and our plan going into this year was built on assuming the market would not be robust. It is going to be again more of a playbook of driving our participation.

Speaker Change: So.

Speaker Change: That's how we have seen in the first quarter materializing in.

Speaker Change: That's that's the game plan going forward.

William T. Bosway: Very helpful. I might jump around a bit, so forgive me, but moving to, you know, renewables, just remind us of any delta, any meaningful delta in price and or margin for the 1P tracker line. And, you know, what does the kind of EBOS attachment rate look like for that line relative to, you know, the prior tracker line and or fixed tilt before that?

Speaker Change: Very helpful and my jumped around a bit so forgive me, but I'm moving to.

William T. Bosway: [inaudible]

Speaker Change: Renewables, just remind us of any delta any meaningful delta in pricing or margin for the one P tracker line and you know what.

Speaker Change: He boss attachment rate look like for that line relative to you know the the prior tracker line and or fixed tilt yet before that.

William T. Bosway: Yeah, so on the second part of that, I'll circle back. We're taking eBoss with all of our racking. [inaudible] So now that we feel we're in a better position to do that. We're actually out Talking with customers more and more about that. We're getting more and more uptake so it's still in the early stages But we're getting more of that success, which is helpful But it's not really tied to one of our racking technologies more than the other It's actually a customer initiative the biggest challenge that we've been dealing with is actually customers to buy from us differently Because since the inception of the industry they've they only had one option was to buy from a separate company Racking and any boss solutions, so they're incented that way to buy that way They're structured that way and now we have some of our larger customers that We're working with and are now starting to look at that collectively and that's been very helpful for us So I think you'll see more and more of that happen from a margin perspective.

Speaker Change: Yeah. So on the second part of that I'll Circle back we're taking E boss are with all of our racking.

Speaker Change: Opportunities, regardless, whether it's fixed tilt it could be canopy or it could be tracker it could be one or two P.

Speaker Change: So getting a R.

Speaker Change: The boss business, which we've talked about in the last couple of years in a position where it can.

Speaker Change: Actually support a.

Speaker Change: A a customer base that's made up of.

Speaker Change: There's a lot of opportunities you know a lot of projects per week, that's really working on the design the estimating the manufacturing getting that capability in place. So that we feel we're in a better position to do that we're actually out.

Speaker Change: Talking with customers more and more about that and we're getting more and more uptake. So it's still the early stages, but we're getting more of that success, which is helpful. But it's not really tied to one of our racking technology is more than the other it's actually a customer initiatives. The biggest challenge that we've been dealing with is actually getting customers to buy from us differently because since the inception of the industry.

Speaker Change: They've they only had one option was to buy from a separate company.

Speaker Change: Racking and he boss solution. So theyre intended that way to buy that way. They are structured that way and now we have some of our larger customers that we're working with and are now starting to look at that collectively and that's been very helpful. For us. So I think you'll see more and more of that happen from a margin perspective, you know we're in the ramp up of one piece. So we're gonna have.

William T. Bosway: You know, we're in the ramp-up of one piece So we're going to have a bit of that Ramp and margin that's going to take place over time. But effectively when you get to the the the ramped up state Our margin profile is not going to be too dissimilar than what we see in our core business Whether it's fixed tilt or otherwise and the reason is remember we're not selling the technology per se we're selling a return on that project and we do have projects that will take a combo of different racking technologies on the same land or We could be doing multiple projects with same developer that are using different technologies based on the location So it all comes down to return profile for us, And the more that we can package in with that, all the way through field services, remember we're quoting an entire package of stuff, not necessarily just the technology. Our intent is to drive a margin profile that is similar to what we've been experiencing and hopefully be able to springboard off of that in the future, as we continue to grow and build the base.

Speaker Change: A bit of that.

Speaker Change: The ramp in margin, that's going to take place over time, but effectively when you get to the.

Speaker Change: The ramped up state our margin profile is not going to be too dissimilar than what we see in our core business, whether it's fixed tilt or otherwise and the reason is remember we're not selling the technology per se, we're selling a return on that project and we do have projects that will take a combo of different racking technologies on the same land.

Speaker Change: Or we could be doing multiple projects with the same developer that are using different technologies based on the location. So it all comes down to return profile for us.

Speaker Change: Effectively in and the more that we can package and with that all the way through field services remember, where we're quoting an entire package of stuff not necessarily just the technology. So you.

Speaker Change: Our intent is to drive our margin profile that is similar to what we've been experiencing and hopefully be able to.

Speaker Change: Springboard off of that in the future.

Speaker Change: As we continue to grow and build the base.

William T. Bosway: Very good, maybe one more, I'll jump back in the queue, but on the ag tech side, if you look at a project like Berry Farms, you know, how do we think about the kind of the upfront revenue opportunity of a project of that size and scale? And what is the ongoing maintenance and repair opportunity like relative to the initial investment?

Speaker Change: Very good maybe one more I'll jump back in queue, but hum on the AG Tech side. If you look at a project like Berry farms.

Speaker Change: Now how do we think about kind of the upfront revenue opportunity of a project of that size and scale and what does the ongoing maintenance repair opportunity look like relative to the initial investment. Thanks again.

William T. Bosway: Thanks again.

William T. Bosway: Yeah, good question. So, when we sign a contract, there are some renewals, and we'll get a deposit up front. Once we get that deposit, we will start issuing POs simultaneously, and that will then trigger the flow of revenue pretty quickly thereafter. So, these projects, as long as they're permitted and ready to go, can start pretty soon after, you know, they come into the books. And for the ones we have signed recently, we are ramping up pretty quickly, and you'll start to see some flow in Q2, but it's really going to ramp up in Q3 and Q4, but they're ready to roll. So, that's what's exciting about the 40 million that have come in so far.

Speaker Change: Yeah. Good question, so when we sign a contract their solar renewables will get a deposit.

Speaker Change: And once we get that deposit we will start issuing P. O's simultaneously and that will then trigger the flow of revenue.

Speaker Change: Quickly thereafter, so these projects as long as they're permitted and ready to go can start pretty soon after.

Speaker Change: Come into the books and the ones. We have signed recently, we are ramping up pretty quickly and youll start to see some flow in Q2, but it's really going to ramp up in Q3, and four but theyre ready to roll. So that's what's exciting about a 40 million that's come in so far.

William T. Bosway: We also have started about, probably nine months ago; the team has done a fabulous job of getting into this refurbishment aspect of the business, where we're going in and helping people either convert or fix or optimize something that was designed and built for them some time ago. And we're able to do that with a couple customers, which has subsequently led to some new design deal contracts for new facilities that are yet to come into the pipeline in terms of backlog that we're actively working on.

Speaker Change: We also have started about probably nine months. The team has done a fabulous job of getting into this refurbishment aspect of the business, where we're going in and helping people either convert or fix or optimize something that was designed and built for them. Some time ago, and we're able to do that with a couple of customers that has subsequently led to some new designs.

Speaker Change: Contracts for new facilities that are yet to come into the pipeline in terms of backlog, but we're actively working on and those obviously for us or.

William T. Bosway: And those, obviously, for us, can be better margins, but that's where we're going in and again doing refurbishment. So I wouldn't necessarily call it necessarily recurring revenue per se, but it's a different type of business that we're executing. It's a different source.

Speaker Change: It can be better margin, but that's where we're going in and again doing refurbishment. So it's I wouldn't call it necessarily recurring revenue per se, but it's a different type of business that we're executing this a different source.

William T. Bosway: But it's actually helped us broaden our customer base versus where we were three or four years ago. The number of customers we're serving now and the route that we took to get there is a lot to do with this refurbishment initiative that has really taken hold, and that's then now starting to result in some of these new projects that are being signed. So we have some new customers that are part of the $40 million, we have some existing customers that are part of the $40 million, and if you think about what's in the pipeline, which arguably is even more so than what we just talked about signing, there's just a lot of really positive momentum right now.

Speaker Change: But it's actually helped us broaden our customer base, where versus where we were three or four years ago or the number of customers. We're serving now and the end that we took to get there is a lot to do with this refurbishment initiative that has really taken hold and that's now starting to result in some of these new projects that are being signed.

Speaker Change: Yes, the new customers that are part of the 40 million, we have some existing customers that acquire the $40 million and if you think about what's in the pipeline, which arguably is.

Speaker Change: Even more so than what we just talked about signing.

Speaker Change: They're just there's a lot of really positive momentum right now.

William T. Bosway: All right. Very helpful. I will jump back with a follow-up or two. Thanks.

Speaker Change: Alright, very helpful. I will jump back with a follow up or two thanks.

Speaker Change: Great. Thanks, Dan.

Julio Alberto Romero: Thank you. Our next question comes from the line of Julio Romero with Sidoti & Company. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of Julio Romero with Sidoti and company. Please proceed with your question.

Julio Alberto Romero: Hey, good morning, Bill and Tim. Appreciate the updated slides. Nice work. Thank you. Maybe to start on renewables, anything in the first quarter that kind of changes the way you're thinking about the cadence of renewable sales growth momentum expected throughout 2024?

Julio Alberto Romero: Hey, good morning, Bill and Tim I appreciate the updated slides nice work.

Julio Alberto Romero: Thank you.

Julio Alberto Romero: Maybe to just start on renewables anything in the first quarter that kind of changes the way you're thinking about the cadence of renewable sales growth momentum expected throughout 2024.

William T. Bosway: Now, you know, we came in a year, we knew Q1 was going to be, was going to be slower just because of this transition. Just to remind everyone that this transition isn't.

Julio Alberto Romero: No you know I think we came in a year, we knew Q1 was going to be.

Speaker Change: Gonna be slower just because of this transition.

Julio Alberto Romero: Just to remind everyone that transition isn't.

William T. Bosway: What caused a bit of a delay and push was that a lot of our key customers were thinking fixed. They moved to Tracker, and that was somewhat correlated with moving to different states where Tracker they felt more comfortable with because of weather patterns and different environments versus what they either grew up with or were used to using, say, if they were in the Northeast. And that's why Illinois, as an example I used, is so important.

Julio Alberto Romero: What what would cause a bit of a delay and push us a lot of a lot of our key customers were thinking fixed.

Julio Alberto Romero: They moved to tracker and that was somewhat correlated with moving to a different states, where tracker they felt more comfortable with because of weather patterns and different different environment versus what they either grew up with where we are used to using say if they were in the north East and that's why Illinois as an example, I used so important that was our first one P.

William T. Bosway: That was our first 1P, a job that we did, that we finished here recently, and that was with one of our customers we kind of grew up with in the Northeast, but they grew up mainly with fixed tilt because of the weather conditions. And that was one of our customers we kind of grew up with in the Northeast, but they, So as we move more towards places like Illinois, you have different landmasses, different weather patterns.

Speaker Change: Job that we did.

Speaker Change: We finished here recently and that was with.

Speaker Change: One of our customers, we kind of grew up with in the North east, but they grew up mainly with fixed tilt because of the weather conditions. So as we move more towards places like Illinois, and you have different landmasses different weather patterns.

William T. Bosway: And they saw incentives from Illinois Shines becoming more attractive where permitting was less challenging, or the siting or zoning was less challenging. They migrated there pretty quickly, and then, as a result, they switched pretty quickly to Tracker where they could take advantage of that. So it's a combination of things that really caused what we're referring to as this delay in sales. And so the bookings are there, it's just a matter of when you change from Fixed to Tracker. You can imagine you go back through and rehash your designs and everything that you do because you're generating more power and that just drives a lot of different things, right? So how you attach that to a foundation is different than if you do Fixed Tilt.

Speaker Change: And they saw incentives from Illinois shines, becoming more attractive we're permitting was less a challenging the siding or zoning was less challenging.

Speaker Change: They migrated their pretty quickly and then as a result of that switched.

Speaker Change: Pretty quickly too tracker, where they can take advantage of that so that it's a combination of things that really cause what we're referring to is this delay of.

Speaker Change: Sales and so the bookings are there it's just a matter when you changed from fixed to a tracker you can imagine.

Speaker Change: You go back through and Rehash your designs and everything that you do because you're generating more power and that just drives a lot of different things right. So and how you attach that to a foundation is different than if you do fixed out so.

William T. Bosway: You know, it's a good news story, but at the same time, it's a bit of a delay for us, but we'll take it, just because the uptake has been so rapid, much more than we thought, all 30 developers in Florida came to our Drakker engineering location to look at the technology for two days back in March. I think there's just been a combination of things that have helped customers move a little bit quicker, and that caught us a little bit off guard.

Speaker Change: It's a good news story, but at the same time, it's a short term.

Speaker Change: A bit of a delay for us, but but we'll take it just because the uptake has been so rapid much more than we thought we just had.

Speaker Change: You know 30 developers in Florida at our at our tracker.

Speaker Change: Engineering location to look at the technology for two days back in March.

Speaker Change: And typically.

Speaker Change: You know things take a little bit longer, but I think there's just been a combination of things that have helped customers moved a little bit quicker and that caught us a little bit off guard. So we're ramping up as quick as we can with our supply chain will get it and get our arms around it.

William T. Bosway: So we're ramping up as quick as we can with our supply chain. We'll get our arms around it, but that's really pushed more of their revenue into the second half related to that. Some of that Q1 into Q2 as well.

Speaker Change: But that's really pushed.

Speaker Change: More of that revenue into the second half are related to that end.

Speaker Change: So some of that Q1 into Q2 as well.

Julio Alberto Romero: Yeah, good caller and good reminder that, you know, that one P tracker in the longer lead times kind of caused that expected dynamic in the first quarter, just on that point. Yeah, how much revenue do you expect from one P tracker in the second quarter and maybe for the full year?

Speaker Change: Yeah, good color and good reminder, that you know that one P tracker and the longer lead times, you know kind of caused that expect the dynamic in the first quarter or just on that point.

Speaker Change: Yeah, how much how much revenue do you expect from one P tracker in the second quarter and maybe for the full year.

William T. Bosway: Yeah, it's hard. I don't have an exact number for you. Our backlog on 1P is up significantly. Now, it's coming off a very small base, so it's still going to come down to just like any other racking system we'd use, those projects flowing and their permits and all that good stuff, but it's becoming, it'll be a bigger piece of what we're doing this year than it has been, obviously, because it's new, but the acceleration is going to make it a, I can't give you an exact number right now, just on where everything's going to flow, but it's going to be a bigger piece of what we're doing.

Speaker Change: Yeah, It's hard I don't have an exact number free who are our backlog on one P is up significantly.

Speaker Change: No it's coming off a very small base. So it's it's still going to come down to just like any other racking system, we'd use those projects, Florida and get their permits and all that good stuff, but it's becoming a it'll be a bigger piece of what we're doing this year than it has been obviously because it's it's new but the acceleration is going to make it up.

Speaker Change: I can't give you an exact number right now just on where everything is going to flow but.

Speaker Change: It's gonna be a bigger piece of what we're doing once we get this space year behind us I think it would be better it'll be easier for us to.

William T. Bosway: Once we get this base year behind us, I think it'll be easier for us to figure out where the mix is going to be going for between fixed, canopy, and tracker, and then inside tracker 1P and 2P. So we're kind of looking at all five and how they're moving, but it is accelerating for sure.

William T. Bosway: Figure out where the mix is going to be going forward between fixed canopy and tracker and then inside track or one P to P. So we're kind of looking at all five and how they're moving.

Speaker Change: But it's it is accelerating for sure.

William T. Bosway: Now, just to clarify one thing: it's not the lead time from the supply chain that is the problem. It's the fact that we switched from one tech to the other tech in a short period of time. If we had known that we were going to transition to 1P, we would have brought inventory in much sooner to help with the startup. That's where we got caught.

Speaker Change: Just to clarify one thing it's not the lead time from the supply chain that is the problem.

Speaker Change: It's the fact that we switched from one tech to the other tech in a short period of time, if we would have known that we were going to transition to one P. We would've brought inventory and much sooner to help with a startup that's where we got caught so it's not the.

William T. Bosway: So it's not the push, and sales, I would say, are more of a one-time event. It's not because we have 12 weekly times or eight-week or 10 versus our traditional four, unexpectedly sooner than we thought. So that will work itself out, I guess is my point. And we have ways to do that such that the lead time of the supply chain does not become an issue in the future.

Speaker Change: The the pushing sales is oh savings as more of a onetime event, it's not because we have 12 week lead times are eight week or 10 versus our traditional four it's we'll get there eventually but it's because we didn't have inventory plan for the launch because it happened unexpectedly sooner than we thought so that will work itself out I guess is my point.

Speaker Change: And we have ways to do that such that the lead time with the supply chain does not become an issue in the future.

Speaker Change: That makes sense.

Julio Alberto Romero: It does, and that's helpful. And maybe just last one for me is, you know, you had a really good cash flow quarter. You talked a little bit about the M&A pipeline, and I think you said a better probability of the near term, uh... deployment towards some inorganic growth in some residential blockades. Is that a function of evaluations more than anything, and with those Residential Tuckins, would you be more inclined to focus towards either of your initiatives Yeah, when I

Speaker Change: It does and Thats helpful and maybe.

William T. Bosway: Maybe just last one for me is you had a really good cash flow quarter.

Speaker Change: You talked a little bit about the M&A pipeline and I think you said better probably better probability of a near term.

Julio Alberto Romero: Deployment towards some inorganic growth and some residential tuck ins is that a function of evaluations more than anything and would those.

Julio Alberto Romero: Residential tuck ins would be more inclined to focus towards either of your initiatives.

Julio Alberto Romero: That'd be their geographical expansion or a new product.

William T. Bosway: I was thinking, when I was talking about the expansion. We have, as an example, as I mentioned in Denver, we're leveraging an existing Gibraltar facility to actually get into the wholesale market, which traditionally we were not. And so we have opportunities like that at www.larryweaver.com. And that's really critical because that's all 24 hour kind of service. And if you can do that consistently, then you can grow, and the margin profile of that business is different than it would otherwise be. So that's my comment on that.

Speaker Change: Yeah, well when I was thinking when I was talking about expansion.

William T. Bosway: We have as an example, I had mentioned in Denver, we're leveraging an existing Gibraltar facility to actually get into the wholesale market, which traditionally we were not and so we have opportunities like that.

William T. Bosway: That exists for us and that would be more of an organic play there are parts of the country, where we're just not and there are companies that are there.

William T. Bosway: Similar to what we just described that are serving Denver and salt Lake that may be available to bring into the fray as well. So those are the tuck ins I think they would help us with our expansion initiative, where we're really focused on driving the wholesale business.

William T. Bosway: And that's really critical because that's all 24 hour kind of service and if you can do that consistently then you can grow and the margin profile of that business is different.

William T. Bosway: Than it would otherwise be so that's that's my comment around that there is other M&A activity.

William T. Bosway: There is other M&A activity. Tim mentioned in his comments that there is more activity that we're seeing develop in the residential space, as an example, than there has been in the last year or two. So that would be separate from the initiatives I just talked about, necessarily. So yeah, we're in a good position to act on some of the opportunities. There is more activity. We're engaging, and we'll see how things evolve as the year moves on, but I think you'll hopefully see some opportunities there for us to get across the finish line.

William T. Bosway: Tim mentioned in his comments around.

William T. Bosway: I'd say, there's more activity that we're seeing developed in the residential space as an example than there has been in the last year or two so.

William T. Bosway: That would be separate from the initiatives I just talked about necessarily so yeah. We're we're in a good position to act on some of the opportunities are there is more activity.

William T. Bosway: We're engaging and we'll see how things evolve.

William T. Bosway: As the year moves on but I think you'll see hopefully some opportunities there for us to bring across finish line.

Julio Alberto Romero: Very helpful. Thanks very much.

Speaker Change: Very helpful. Thanks, very much.

Julio Alberto Romero: Okay, thanks, Julio.

Speaker Change: Okay. Thanks for that.

Operator: Thank you, and just as a reminder, if anyone has any questions, they may press star 1 on your telephone keypad to join the question and answer queue. Our next question comes from the line of Walt Liptak with Seaport Global Securities. Please proceed with your question.

Speaker Change: Thank you and just as a reminder, if anyone has any questions that you May press star one on your telephone keypad to join the question and execute.

Walter Scott Liptak: Our next question comes from the line of well the Tac with Seaport Global Securities. Please proceed with your question.

Walter Scott Liptak: Hey, good morning guys, good quarter. Thanks, Paul. Thanks, Walt. So, I wanted to ask about the bookings in the renewable segment, how are bookings looking, and how is the funnel looking? I know you kind of went into it in the last question a little bit, but I wonder if you could just provide a little bit more detail.

Walter Scott Liptak: Hey, good morning, guys good quarter.

Speaker Change: Thanks, well thanks al.

Speaker Change: Hey, so I wanted to ask about.

Walter Scott Liptak: The bookings are.

Walter Scott Liptak: In the renewable segment, how we're how are bookings looking in and how's the funnel looking I know you kind of.

Walter Scott Liptak: Went into it and the last question a little bit, but I wonder if you can just provide a little bit more.

Walter Scott Liptak: Detailed.

Walter Scott Liptak: Yeah, I'd say, uh... Despite, you know, I mentioned this new AD TBD potential investigation, we still have these ongoing permitting things that we're working through as an industry. It's as active now as it has been. Nothing's changed on that front.

Speaker Change: Yeah, I would say.

Walter Scott Liptak: Despite you know I've mentioned this new 80 CVD potential investigation, we still have these ongoing permitting.

Walter Scott Liptak: Things that we're working through as an industry.

Walter Scott Liptak:

Walter Scott Liptak: It says are active now is as it has been nothing has changed in that front I think the industry has been relatively resilient despite not having the extra 10% I would say you know you get to a point when you like in the 10% does.

William T. Bosway: I think the industry's been relatively resilient despite not having the extra 10%. I would say, you know, you get to a point when you, like, in this 10% domestic content credit, where it shows up is when you engage in, you get to, say, stage three or stage four on a seven-stage, you know, process with a customer. I would say the activity across the seven gates that we measure in our sales process is pretty filled up, probably as much as it ever has been, if not more.

William T. Bosway: Domestic content credit.

William T. Bosway: <unk>.

William T. Bosway: Where it shows up as you engage you get to say stage three or.

William T. Bosway: Stage, four and the seven stage process with the customer.

William T. Bosway: And then thinking that hey, they may get this may not and then they pause and then they're going to move forward or they won't but I would say the activity across the seven gates that we measure in our sales process, it's pretty filled up probably as much as it ever has been if not the most some of that's related to just a lot of activity coming with one P.

William T. Bosway: Some of that's related to just a lot of activity coming with 1P and 2P as it's come out here recently. And some of the larger projects that I mentioned, we have one we brought across the finish line, 97 megawatts. These take a little bit longer in the design cycle versus our traditional 6 to 7 megawatts, so we've got a lot of things going on inside, under the hood, if you will, around demand profiles, mixes of the different aspects of the business, customer activity, but it's all pointing to, I'd say, a pretty interesting pipeline of things that are out there in front of us.

William T. Bosway: He is at two P is it's come out.

William T. Bosway: Here recently.

William T. Bosway: And some of the larger projects that I mentioned, we have when we brought across finish line 97 megawatt those take a little bit longer in the design cycle versus our traditional six to seven megawatts. So we've got a lot of a lot of things going on inside under the Hood. If you will around demand profiles mixes of the different aspects of the business.

William T. Bosway: <unk>.

William T. Bosway: Customer activity, but it's all pointing towards.

William T. Bosway: I'd say pretty pretty.

William T. Bosway: Pretty interesting pipeline of things you know are.

William T. Bosway: They are out there in front of us so.

William T. Bosway: I know that's not a very specific answer, but there are a lot of moving parts, but it seems to us to be, you know, relatively positive despite some of the macro things that continue to be in the industry.

William T. Bosway: I know that has had a very specific answer but it's there's a lot of moving parts, but it seems to us to be relatively positive. Despite some of the macro things that continue to be in the industry.

William T. Bosway: Yeah.

William T. Bosway: Okay, and I wonder if we could just talk about the 1P tracker versus, you know, some of those macro things, like the IRA tax credit. What do you think will be the bigger catalyst for future orders? Is it getting the 1P tracker, just ramping that up with your customers, or is it getting this tax credit thing behind us?

Speaker Change: Okay, and then yeah I wonder if we could just talk.

William T. Bosway: Talk about the one P tracker versus.

William T. Bosway: Some of those macro things like from the Irish tax credits.

William T. Bosway: What what do you think will be the bigger catalyst for for future orders as it if you're getting the one P tracker.

William T. Bosway: Ramping that with your customers or is that or.

William T. Bosway: Or is it getting this tax credit thing behind us.

William T. Bosway: I think it's just gaining traction with our customers. You know, everyone's been waiting for the tax credit for two and a half years.

William T. Bosway: I think its just ramping with our customers.

William T. Bosway: You know that everyone's been waiting for the tax credit for two and a half years.

William T. Bosway: And I think people are anticipating it's coming, and it will be helpful. I mean, you think about how things are financed; a large chunk of these projects are financed through tax equity. So cash flow associated with an extra 10% of the total project is a big deal, right? So, absolutely it would be helpful, but I don't think it's necessarily holding up, you know, what we're seeing on 1P. I think it's just more of us; we're ramping up accordingly as we've talked about our... Our order board continues to grow in that space. So I would say it that way, Walt.

William T. Bosway: And I think people are anticipating it's coming and it will be helpful. I mean, you think about how things are financed.

William T. Bosway: A large chunk of these projects are financed through tax equity so cash flow associated as an extra 10% of the total project is a big deal right.

William T. Bosway: So it absolutely will be helpful, but I don't think it's holding up necessarily.

William T. Bosway: What we're seeing on one P. I think it's just more of US we're ramping up accordingly, as we've talked about her.

William T. Bosway: Our order board continues to grow in that space. So I.

Speaker Change: I I would say it that way well and you know once the 10% comes in.

William T. Bosway: And once the 10% comes, then I guess that's just a... I don't know if that will ramp things up quicker, but it may prevent some of the iterative pauses that have been going on. It may give, you know, our developers just a better sense of confidence that they can get more in the pipeline and work it themselves. We'll see, but that's how we characterize it.

William T. Bosway: I guess just.

William T. Bosway: We also had a ramp things up quicker, but it may prevent the iterative pauses that had been going on it may give you know our developers just a better sense of confidence that they can get more in the pipeline and work it themselves.

William T. Bosway: Well, we'll see but that's how I would characterize.

Walter Scott Liptak: Okay, great. And then just switching gears to, you know, just the corporate expenses. It ran a little bit higher than I was thinking of. You know, in the first quarter last year, you were lower, and you were at sort of a 10 million a quarter run rate. Was there something in the corporate expenses that was one-time in nature? And what do you think corporate expenses will be for the full year?

Speaker Change: Okay, Great and then just switching gears to.

Walter Scott Liptak: The corporate expense it ran a little bit higher than I was thinking of.

Walter Scott Liptak:

Walter Scott Liptak: In the first quarter last year, you were lower than you were in it sort of a $10 million a quarter run rate.

Walter Scott Liptak: Was there something in the corporate expenses.

Walter Scott Liptak: But was onetime in nature.

Walter Scott Liptak: What do you think Ah corporate expenses will be for the full year.

William T. Bosway: So, not really one-time wealth, but our performance-based comp was, we called it up, about four million dollars or ten cents a share in the first quarter. And I think it's more probably timing, then a lot of difference, but

Speaker Change: So not really one time, well, but our performance based comp.

William T. Bosway: Was we called it up about $4 million or 10 cents a share in the first quarter.

William T. Bosway: And I think it's it's more.

William T. Bosway: Robert Lee timing.

William T. Bosway: And then a lot of difference but.

William T. Bosway: Part of it's driven by the stock price in our deferred comp plans. Part of it's driven by the fact that we had really good performance last year. And so some of that cost gets spread over a period. And I think, you know, last year we had one tranche of some of that equity. A few years ago, we didn't earn anything. So we sort of probably normalized that. So I think you'll see that lesson as we move through the year, but this quarter, it was pretty noticeable.

William T. Bosway: Part of it's driven by stock price and our deferred comp plans part of it is driven by we had really good performance last year.

William T. Bosway: And so some of that cost gets spread over a period.

William T. Bosway: And I think you know last year, we had one tranche of some of the equity that.

William T. Bosway: We are a few years ago, we didn't earn anything so we sort of probably normalize that so.

William T. Bosway: I think you'll see that lessen as we move through the year, but this quarter it was pretty noticeable.

Walter Scott Liptak: Okay, great. Thank you.

Speaker Change: Okay, great. Thank you.

Operator: Thank you. Our next question comes from the line of Daniel Moore with CJS Security. Please proceed with your question.

Walter Scott Liptak: Thank you. Our next question comes from the line of Daniel Moore with CJS Securities. Please proceed with your question.

Daniel Joseph Moore: Thanks again. Just wanted to touch on infrastructure, which doesn't get quite as much attention, but certainly a bright spot. And 22% might be a record margin, I have to look back. What drove that, and how sustainable is it near term? And talk about just pipeline, as well as reasonable kind of longer-term expectation ranges for as far as margins.

Daniel Joseph Moore: Thanks again.

Daniel Joseph Moore: Just wanted to touch a little on infrastructure, which.

Daniel Joseph Moore: It doesn't get us quite as much attention, but certainly a bright spot and 22% might be a record margin up to look back what drove that and how sustainable is it near term and.

Daniel Joseph Moore: And I'll talk about just the pipeline as well as you know reasonable kind of longer term expectation ranges for it as far as margin is concerned.

William T. Bosway: Yeah, you know, we've been on this trajectory for a bit of time, Dan. I think we've got a good ground game going now. We've got our supply chain linked with the business in a much stronger way. If you recall way back, go back three years when, [inaudible] This was also a business that we weren't necessarily linked closely to contracts and the supply chain, locking that in. So our input costs were aligned with our prices.

Speaker Change: Yeah, you know what.

Daniel Joseph Moore: We've been on this trajectory for a bit of time, Dan I think you know.

William T. Bosway: It's we've got a good ground game going now.

William T. Bosway: Fly chain.

William T. Bosway: Linked with the.

William T. Bosway: The business in a much stronger way if you recall way back go back three years when our two years whenever it was it's hard to imagine these days when supply chain really took off this business at the same time like renewables anything else when steel is really going haywire.

William T. Bosway: This was also a business that we weren't necessarily linked closely with contracts and supply chain locking that in so our input costs were in line with our pricing.

William T. Bosway: And arguably, you could say in this business, it's even more of a challenge because you may sign projects two, three years before a change, right? And so we worked through all that and, subsequently, have come back and changed the way we manage a lot of our agencies in this business. So I think that's helped take some of the variability out and some of the surprises in the business, and it then has allowed us to focus on really doing a lot more 80-20. We've been investing accordingly in 80-20, but also some new automation in this business. And I think that's really helped with the margin profile.

William T. Bosway: And arguably you could say in this business and it's even more of a challenge because you may seen signed projects two or three years previous to a change right.

William T. Bosway: So we worked through all that and subsequently had come back and change the way, we manage a lot of our Ts and CS with this business. So I think that's help take some of the variability out and some of the surprises on on.

William T. Bosway: On the business and it then it has allowed us to focus on really doing a lot of more 80 20, we've been investing accordingly, 80, 20, but also some new automation in this business and.

William T. Bosway: And I think that's really helped on the margin profile. We've also 80 20 from a customer perspective look at our product lines to see where we were and where we're not making money and then really honed in on how do we actually.

William T. Bosway: We've also 80-20 from a customer perspective, looked at our product lines to see where we were and where we're not making money, and then really honed in on how we actually generate better margins. And then we just got good top-line opportunities that we're able to take advantage of. Arguably, some of those we wouldn't have touched three or four years ago because we weren't in the position to make the type of money we wanted to, and now we are, so that's facilitating more growth.

William T. Bosway: Generate better margins and then we just got good topline.

William T. Bosway: Opportunities are that we're able to take advantage of arguably some of those we wouldnt have touched three or four years ago, because we weren't in a position to make the type of money. We wanted to and now we are so that's facilitating more growth. Obviously you have the infrastructure bill that is giving our customers more.

William T. Bosway: We have the infrastructure bill that has given our customers more visibility beyond the year with federal funding, so I think that's helped. And I just think we've gained more, you know, business than we did in the past. So, you know, as I mentioned in my comments, bookings were up 18% sequentially. We're trying to overcome arguably the largest job we've ever had. We signed in late 2022 or started early 2023. So that's why, you know, the backlog was a little wonky for the quarter.

William T. Bosway: Visibility beyond the year with federal funding so that I think that's helped.

William T. Bosway: And I just think we've gained more.

William T. Bosway: Business than we were in the past so you know as I mentioned in my comments.

William T. Bosway: Bookings were up 18% sequentially.

William T. Bosway: Trying to overcome arguably the largest job we've ever had we signed in late 2022 were started early 2023. So that's why backlog was a little lumpy for the quarter, but the reality is that will correct itself.

William T. Bosway: But the reality is that it will correct itself just with the momentum we have. So we don't see the end market. [inaudible] You did, and I just wanted to add to that. Go ahead. If you look sequentially, last year... our second quarter margins were a lot higher than our first. And so, you know, we'll see improvement, but I wouldn't expect 800 basis points off of what we did last year for the remainder.

William T. Bosway: Just with the momentum we have so we don't see the end market.

William T. Bosway: Slowing down a whole lot right now.

William T. Bosway: We've got some other products that we're working on as well I think will help us down the road and we still have another couple of years of infrastructure build that I think it will support the industry. So you know.

William T. Bosway: Right now, it's a pretty solid outlook for the end market and.

William T. Bosway: We feel good about the type of performance that we've achieved and we think we can maintain.

Speaker Change: Yeah, Dan I really have to that go ahead.

Speaker Change: If you look sequentially last year.

William T. Bosway: Our second quarter margins were a lot higher than our first last year and so you know, we'll see improvement, but I wouldn't expect 800 basis points.

William T. Bosway: Off of what we did last year for the remainder of the year.

William T. Bosway: just to be set that expectation.

Speaker Change: Just to be set that expectation yep Yep makes sense last for me just going back to M&A. It sounds like near term, whereas he is more likely.

William T. Bosway: Yep, that makes sense. Last for me, just going back to M&A, it sounds like near-term Res-E is more likely, and it sounds like the dialogues are picking back up. Is that simply a function of availability or strategic as well as you look to build out some of your geographic penetration?

William T. Bosway: And Oh it sounds like the dialogues are picking back up is that simply a function of availability or strategic as well as U.

William T. Bosway: Yeah look to build out some of your geographic penetration.

William T. Bosway: Well, I think I would...characterize it mainly as strategic, number one. Again, I think there's going to be an organic and inorganic play as we expand into the markets I mentioned earlier. And then there are some other opportunities that we're finding pretty interesting as well that we've been engaged with and have been engaged with for some time. And I think I mentioned in previous calls where we were in processes that stopped that have that look to be restarting.

William T. Bosway: Well I mean, I think I would say.

William T. Bosway: Is it mainly as as a strategic number one.

William T. Bosway: Again, I think there's a there's going to be an organic and inorganic play as we expand into new markets I mentioned earlier and then there's some other opportunities that.

William T. Bosway: We we're finding pretty interesting as well that we've been engaged with them and and engaged with for some time.

William T. Bosway: And I think I've mentioned in previous calls where we were in processes that are stopped that.

William T. Bosway: That have that looked to be restarting.

William T. Bosway: So we will, hopefully, we'll see those things happen as we expect, and as they do, we'll participate, and we'll see which of those make most sense for us when we get across the finish line. There's definitely more activity now than, more potential now than there was, you know, the last 12, 18, 24 months. And it's mainly residential.

William T. Bosway: So.

William T. Bosway: We will hopefully we will see those things happen as we expect and as they do we will participate and we will see which of those that make most sense for us we get across finish line, but.

William T. Bosway: There's definitely more activity now than more potential now than there was you know the last 12 18 24 months.

William T. Bosway: And I'd say that, Dan, probably as much of a function of what ag tech and renewables as an industry are going through, right? It's not a robust M&A environment necessarily in renewables, just because there are a lot of moving parts. And I think sellers and buyers are kind of holding patterns till they work through some of these things, as we've all discussed in the last couple of years. And valuations have changed dramatically in the last two or three years.

William T. Bosway: And it's mainly residential.

William T. Bosway: I'd say that Dan probably as much of a function of what any tech and renewables as an industry are going through right. It's not a robust M&A environment necessarily in renewables, just because theres a lot of moving parts and I think sellers and buyers are kind of holding pattern until they work through some of these things as we've all discussed in last couple of years.

William T. Bosway: Valuations have changed dramatically in the last two or three years.

William T. Bosway: So there's a lot of nuances there that I think in the renewable space, and I think AgTech, there are some similar things going on, yet a little bit different. So we've said, and we said a couple of years ago, we've got to get those two businesses running, get them generating the type of performance that we expect, and then we'll focus on some additional opportunities, maybe to bolt on or build them out. But we've got, you know, our first responsibility is making sure they get up and running. And that's really 90... Right there, right? So. That's the way we continue to look at it.

William T. Bosway: So theres a lot of nuances there that I think in the renewable space and I think AG Tech.

William T. Bosway: There's some similar things going on and get a little bit different. So we've said and we said a couple of years ago, We've got to get those two businesses running and get them generating the type of.

William T. Bosway: Performance that we expect and then we will focus on some additional opportunities maybe to bolt on or built them out, but we got our first responsibility is making sure they get up and running and that's really 90.

William T. Bosway: Percentage of royalty right there right so.

William T. Bosway: That's the way we continue to look at it.

Speaker Change: Alright, Thank you again.

William T. Bosway: Alrighty.

William T. Bosway: Thank you. And we have reached the end of the question and answer session. I'll now turn the call back over to Bill Bosway for a closer discussion.

William T. Bosway: Thank you and we have reached the end of the question and answer session I'll now turn the call back over to Bill.

William T. Bosway: Lastly for closing remarks.

William T. Bosway: Great. Again, thank you everyone for joining us today. Coming up, we do plan to present at the Seaport Third Annual Growth Discovery Conference and the CJS Summer Conference.

William T. Bosway: Great again, thank you everyone for joining us today are coming up we do plan to present at the Seaport third annual growth Discovery conference and the C. G. H C. J S Summer conference. So thanks again for your ongoing support of Gibraltar and I Hope you guys have a great day to good rest of the week.

William T. Bosway: So thanks again for your ongoing support of Gibraltar, and I hope you guys have a great day and a good rest of the week. Thank you. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

William T. Bosway: Yeah.

William T. Bosway: Yeah.

Operator: And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

William T. Bosway: And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

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