Gibraltar Industries, Inc.

Greetings and welcome to the Gibraltar Earnings 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Carolyn Capuccio of LHA Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for joining us today. With me on the call is Bill Bosway, Gibraltar Industries 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 the slide presentation that management will use during the call, are both available in the investor info section of the company's website, GibraltarOne.com. Please note that Gibraltar has classified the industrial business, which was divested on February 23rd, 2021, as a discontinued operation with fourth quarter 2020 results. Results of TerraSmart, which was acquired at the end of December 2020, are included in year-to-date 2021 results. 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. 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 guaranteed for 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. Now I will turn the call over to Bill Bothway. Bill?

Hey, good morning, everybody, and thank you for joining today's call. Let's start this morning with an overview of the third quarter results, and then we'll spend a few minutes discussing the ongoing market environment we continue to manage through. Then Tim's going to provide a financial review of the quarter, and then I'll give you an update on our 2021 priorities and our guidance revision for the year. Then we'll open up the call for your questions. So with that, let's turn to slide three, titled Q3 Results. Consistent with our experience in both the first and second quarter and with our expectations going into the third quarter, revenue remained healthy and grew 24.5%, 3.9% of which was organic and 20.6% from acquisitions. Growth was driven by additional price increases, participation gains, and steady end market demand as the momentum from the first half of the year carried into the third quarter. Customer backlog at quarter end driven by new order activity reached $385 million, increasing 10% on a pro forma basis. Our backlog represents a record level for the third quarter and supports a robust demand trend as we enter the fourth quarter. Adjusted net income decreased $2.1 million, or 6.5%, to $30.2 million, or $0.91 per share, as inflation across material, transportation, and labor further accelerated above our expectations in the quarter. Sequentially, adjusted net income per share improved 13.8% or 11 cents per share, driven by strong focus on material productivity, execution of additional price actions, and implementing more 80-20 and lean quote-to-cash initiatives. Now, before I dive deeper into the broader operating environment, I want to provide an update on two important initiatives and investments. First, the integration of TerraSmart, which after nine months is making really good progress. Organizationally, we have integrated our leadership across sales, marketing, supply chain, finance, and human resources with leaders contributed from both of our businesses. The team is doing a fantastic job as it builds and strengthens our systems and processes, which makes it easier for us to scale the business and support growth and also integrate more seamlessly across the total business. And on top of this work, the team is also trying to do their day job, executing in a very strong demand environment, while helping our customers manage through the impacts of solar panel supply challenges and significant inflation. Operating margin for the business has improved sequentially since the first quarter, and the team has navigated relatively well through project management disruptions as our customers deal with inconsistent supply of key components for their projects. I also want to comment on another key initiative, the upgrading of our operating systems and digital capability. These investments are critical to delivering additional value and service levels to our customers and our suppliers as well. We believe we can create more value beyond what we actually make by effectively simplifying and automating more intelligent business processes with our partners. We also believe our systems will help facilitate additional 80-20 and lean quote to cash initiatives and accelerate productivity margin improvement as a result. Both our renewables and residential business groups are engaged in upgrading their operating systems and digital simplification activities are in flight across Gibraltar as we launch brand and a variety of customer initiatives. Now let's turn to slide four to discuss inflation and the broader operating environment. The current environment, along with general supply challenges, has probably been one of the most dynamic situations most of us have ever experienced. You know, the magnitude of change, the speed at which it has happened, and its broad reach covering materials, transportation, labor, and about every other operating cost we manage. Effectively, we've had 52 consecutive weeks, four straight quarters of accelerating cost increases. In the third quarter, And for the third quarter, you know, we did not anticipate another significant increase in broad-based inflation as shown on this slide. But this is the environment we're in, and we have to keep our focus on the things we can control. First, you know, we have to keep executing our price plans. We have a well-defined and effective price management process in place with our customers to help govern the review and approval of price actions, and we did execute additional price actions during the third quarter. The challenge in this environment is keeping pace with the daily acceleration of input costs, trying to close the price-cost gap on a moving target. As inflation stabilizes, we do expect to see margins recover as our price actions better align with input costs. Second, we have to execute additional 80-20 and lean quote-to-cash initiatives, which will help us optimize operating profit dollars and improve margin. Our renewables, ag tech, and residential teams have been very active with manufacturing, field operations, and business system improvements We have also been developing automation solutions to be piloted in a few of our facilities. Third, we must remain incredibly responsive and flexible for customers, which we recently demonstrated in the aftermath of Hurricane Ida. Our ability to respond continues to result in new business opportunities and participation gains in each of our businesses. And finally, and really most importantly, we and our entire team have to maintain the safest workplace possible for each other. And the team has done a very good job since the beginning of the pandemic, helping each other make this a reality. Our active cases of COVID have remained very low over the last 18 months, and we will remain diligent with our operating protocols to help maintain this environment going forward. We're going to continue to fight with everything we have to perform well in what I believe to be a very unique and challenging environment. I'm very proud of everyone on our team. The team has really been unrelenting in embracing and attacking our challenges, and it continues to bring passion and intensity for the task at hand. Now with that, let me turn it over to Tim for a more detailed review of our results. Tim?