Gibraltar Industries, Inc.

Greetings. Welcome to the Q4 2021 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. Please note this conference is being recorded. I will now turn the conference over to your host, Carolyn Capaccio of LHA. You may begin.

Thanks, operator. Good morning, everyone, and thank you for joining us today. With me on the line 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 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. 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 financial results. These statements are not guarantees of future performance, and the company's actual results may differ materially from the anticipated events, performance, or results expressed or implied by these forward-looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can also be accessed through the company's website. Now I'll turn the call over to Bill Bosway. Bill?

Thanks, Carolyn. Hey, good morning, everyone, and thank you for joining us today. We'll start with an overview of the fourth quarter as well as full-year results, and then Tim will review our financial performance. We'll then pivot and discuss 2022, discuss our plans and guidance for the year, and then we'll open the call for your questions. So let's turn to slide three, titled 2021 Year in Review. So our fourth quarter results were within the range that we previewed on January 27th, capping off a year of good top-line growth as we continue to build leadership positions in markets. The overall business grew 29.8% with organic growth contributing 9% driven by market price and participation gains across the businesses. Our acquisitions contributed growth of 21% and continue to support our demand momentum as we enter 2022. Customer order activity remained robust during the year, with order backlog up 16%, reaching $344 million at the end of the year, or at year end, sorry. While margins were lower than expected, we generated positive growth in adjusted operating income, adjusted EBITDA, and adjusted EPS, despite headwinds throughout the year from accelerated inflation and availability of materials, labor, and transportation. As well, we worked diligently to manage and to minimize disruptions from COVID and keep our team safe, particularly in the first and fourth quarters when COVID infection rates were at their highest. Adjusted operating income grew 7% to $124 million. Adjusted EBITDA increased 9.1% to $157 million, and adjusted net income grew 2.5% to $92 million, or $2.78 per share. Although our profitability improved modestly during the year, it was well below our expectations. and reflects an environment that in hindsight really pressure tested our systems and processes, our organization, and some of our operating paradigms, all of which we have had to modify and improve to drive better performance as we move into 2022. In the fourth quarter, we turned the margin corner in our residential business. Margin improved 70 basis points over last year, and we delivered revenue growth of 24.4%. In ag tech, margin again improved sequentially, and versus last year, we held margin effectively flat on 17% lower volume while managing through inflation and supply chain challenges. We also made significant progress integrating our business, improving systems, and just general execution. In infrastructure, we delivered strong growth in the quarter and for the year, while improving operating margin for the year as well. And in renewables, despite a difficult fourth quarter, we really fought hard to offset industry supply chain issues and significant inflation the entire year, The executed customer demand delivered adjusted EBITDA of $44 million, an increase of 31% over 2020. Let's switch gears, turn to slide four, and talk a little bit more about inflation in the current operating environment. You know, the fourth quarter marked the fifth consecutive quarter of high commodity prices, and the market also experienced price movement across our seven core commodities. Although still at elevated prices versus the beginning of 2021, we started to see market price reductions in hot-rolled coil steel, aluminum, polypropylene resin, and ocean freight rates during the quarter. Unfortunately, aluminum pricing reversed its course and increased again in January. Structural and plate steel continue to rise during the fourth quarter, and both are currently forecasted to remain elevated or rise further in Q1 2022. Over-the-road transportation prices also increased during the quarter, and we anticipate these will remain high during 2022. Despite an elevated price situation, today's commodity environment is somewhat different. First, we are not currently seeing, nor do we expect to see, severe and rapid price increases like we experienced throughout 2021. For example, starting back in Q4 2020, hot-rolled-coil steel increased $25 per ton per week over a 12-month period, creating really an incredibly challenging and record-setting situation that we really don't expect to repeat. We expect better supply consistency and have made investments to minimize the type of supply chain disruption we experienced in 2021. So given our learning in 2021, we've had to evolve our operating playbook to manage through a much different market environment. And we continue to focus on five key initiatives, all of which were active or activated during 2021. First, keeping price and cost in balance and continue to manage in a timely and effective manner. As demonstrated in Q4, the residential business was able to balance price cost and generate both revenue growth and margin improvement over last year. Our project-based businesses, that's renewables, ag tech, and infrastructure, continue to improve their ability to better align project pricing and cost throughout the project lifecycle. Our teams have implemented various pricing approaches, whether it be increases, surcharges, et cetera, and demand shaping strategies for better alignment with customers and projects. Secondly, Really have to continue 80-20 with focus on product line and customer simplification initiatives, as well as lean enterprise and system optimization support our project-based businesses and field operations. Third, introduce new products with enhanced value propositions and cost-reduced products through design modification, alternate materials development, supply chain optimization. Fourth, implement more automation for labor optimization, specifically during times of the year where our markets experience higher seasonal demand. We're launching initiatives in our residential business and investing in more autonomous installation vehicles to support our renewable skilled operations business. And lastly, fifth, invest in inventory of key components where we believe there is ongoing availability and price inflation risk. But 2021 was a challenging year, a year with multiple headwinds converging simultaneously with both speed and magnitude, something I think many in business just have never experienced, including our team. i am proud of our team throughout the year we enhanced our leadership position across our end markets we generate significant revenue growth we remain steadfast and focused on macroeconomic and various industry headwinds as well the long-term fundamentals of our end markets haven't changed they remain very attractive and although we expect some short-term industry headwinds particularly in the solar energy market investments and improvements made in both 2020 and 2021 we're going to drive better performance starting in 2022. And really, that is demonstrated by our progress in residential ag tech and infrastructure businesses in the second half of 2021. With that, let me turn it over to Tim for a more detailed review of our results. Tim?