Gibraltar Industries, Inc.

Greetings and welcome to the Gibraltar industry second quarter 2023 financial results 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 Capaccio with LEJ. 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 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 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. Also, as noted on slide two of the presentation, the earnings press release and slide presentation contain forward-looking statements with respect to future financial results. These statements are not guarantees of future performance, and the company's actual results may differ materially from the anticipated events, performance, or results expressed or implied by these forward-looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can be accessed through the company's website. Now I'll turn the call over to Bill Bosway. Bill?

Thank you, Carolyn. Hey, good morning, everyone, and thank you for joining today's call. We'll start with an overview of our second quarter results. Tim will then take you through our financial performance, and I'll walk you through our 2023 outlook, and then we'll open the call up for some questions. So let's start. on slide three, titled Second Quarter 2023 Results. We executed well in the quarter, building on solid performance momentum we created coming out of the first quarter. New bookings continued to improve, and our backlog increased 15% sequentially, and also turned positive versus prior year, up 1% at the end of the quarter. For the quarter, on an adjusted basis, operating income increased 18%, EPS increased 23%, and free cash flow reached 20% of net sales. We continue to improve execution across the business as we accelerate more 80-20 and productivity initiatives, improve our service levels, launch new products, manage our price cost, and optimize working capital. Our full-year revenue plan for modest growth remains intact, and as mentioned in our last earnings call, assumes revenue increasing in the second half. Our end markets have also evolved as expected, and in general have solid momentum going into the second half, And here's just the current situation for each end market segment. Let me start with renewables. Customer demand and project development activity continue to be strong. The industry is making steady progress with solar module importing through the UFLPA, and we expect this to continue in the second half as well. The industry still requires more module manufacturers to demonstrate consistency and success importing their panels, and our revenue plan assumes our customers will continue to see improvement with module supply. Customers have also been recently dealing with the permitting approval process. This seems to be mostly related to local government offices needing to ramp up capacity to support increasing project demand activity. And we expect this to improve in the second half and beyond as well. In a residential market, channel inventory rebalanced as expected and demand started to improve as seasonality for the market returned and normalized, and customers began their restocking process. As anticipated, in-market demand slowed significantly versus prior year, but remain positive in the quarter. We continue to see positive point of sale results for our products within customers and expect this to continue. On a macro basis, we expect the ongoing demand supply imbalance for housing, single family and multifamily, as well as interest rates and the current U.S. economic outlook to continue playing an important role in the strength of the residential market in 2023 and beyond. Switching to ag tech, the order pipeline and quoting activity remains very active for the produce market, as long-standing commercial growers look to expand capacity to meet consumer demand for indoor-grown produce. Growers are also focused on supporting increasing demand for additional varieties of fruits and vegetables, which tend to be developed and grown indoors as well. We signed a large $30 million produce project in the quarter, which we will start designing and building in the second half. This $30 million project represents phase one of the overall project, and it is the smaller of two phases. Once completed, we expect the second phase to begin shortly thereafter. The produce market activity is currently offsetting a slower commercial market, particularly in the retail and car wash structures businesses. We expect these businesses to start improving later in the year as customers have adjusted to the current interest rate environment, have more clarity on their financing solutions and overall project returns, and are seeing relatively positive in-market demands. And finally, infrastructure. The Infrastructure Investment and Jobs Act continues to provide a strong tailwind for the market, as well as good spending support visibility for state DOTs over the next three to four years. There is strong demand for our expansion joint systems and structural bearing solutions used for bridge applications and compression joint sealants and coatings for pavement applications. Management expects in-market demand to keep pace for the rest of 2023 and continue beyond this year. So to summarize, we delivered a strong second quarter and first half by executing our key initiatives and staying focused on delivering for our customers. Given our performance to date and our assumption, end markets will evolve as expected. We are raising our earnings guidance for the year, which we'll discuss in a few moments. Now let's turn to slide four, and I'll give you an update on the solar module supply. As I mentioned, solar panel supply is improving as more module suppliers gradually come up the UFLPA enforcement learning curve. Additional panel suppliers beyond the Tier 1 suppliers are now fully engaged with the U.S. Custom and Border Protection Agency, learning the necessary requirements and steps for consistent importation success. However, the industry needs to see more progress with this process to effectively support current and future demand in the U.S. market. We believe the flow of imported panels will improve and be more consistent for our customers in the second half and generate positive momentum as we enter 2024. As well, the industry continues to watch for the Department of Commerce's final ruling on anti-dumping and countervailing duties, which is now expected sometime in August. It is important to note that the DOC's preliminary ruling found four of the eight panel suppliers based in Southeast Asia were not circumventing duties or dumping, and these suppliers can continue to export to the U.S. without penalty. Also, module suppliers with non-China wafer supply are not subject to duty either. The administration's executive order instructing the DOC to waive tariffs on all modules exported from Southeast Asia for two years will continue through June 2024 and may be reevaluated at that time. With that, let me turn it over to Tim for a review of our financial results.