Gibraltar Industries, Inc.

Greetings and welcome to the Gibraltar Industries Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce your host, Carolyn Capaccio of LHA. Thank you, Carolyn. You may begin.

Thank you very much. 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, Gibraltar1.com. Gibraltar's earnings press release and remarks contain non-GAAP financial measures. Cables of reconciliation of GAAP to adjusted financial measures can be found in the earnings press release that was issued today. Further, please note that adjusted results exclude the sales of, excuse me, exclude the net sales and operating results of the Japan Renewables business that was sold on December 1, 2023. 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 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 filing, which can also be accessed through the company's website. Now I'll turn it over to Bill Bosway.

Bill? Thanks, Carolyn. Good morning, everyone, and thank you for joining today's call. I'll start with an overview of second quarter results, and then Tim and I will take you through each of the segments, and we'll give you a financial and operating update and a closer look at what's happening now in each. Then I'll walk you through our 2024 outlook, and we'll open the call for questions. So let's turn to slide three, titled Second Quarter 2024 Review. Our adjusted net sales were down 2% driven mainly by market headwinds impacting growth in our residential and renewables businesses in the quarter. The residential market experienced a slower end market and an unexpected channel of de-stocking, which started really late May and early June. We offset some of this impact through some participation gains, and these gains actually are going to support us in our residential growth plan in the second half. Although adjusted net sales for renewables were up over 8% versus prior year, it was less than expected as some customers continued to have project delays related to ongoing trade and regulatory issues in the market. Backlog for the quarter was down 4% impacted mainly by the timing of project bookings and renewables and a challenging -over-year comparison related to a large infrastructure project signed in early 23 that was completed in the quarter. Infrastructure bookings improved during the quarter and backlog was up 3% sequentially, and our design and quoting activity remained very strong as well. Our ag tech bookings surpassed $90 million in the quarter, driving backlog up 32%, and this supports strong revenue growth in the second half. We increased adjusted net income .8% and adjusted EPS .6% while generating $36 million in operating cash flow. We continue to work toward achieving growth per year in all four segments as well as drive additional 80-20 and productivity initiatives, continue to execute our digital transformation plan and strengthen the organization. Now let's dig into the segments. Tim?

Thanks, Bill, and good morning, everyone. Let's start with the residential on slide 4. Residential segment sales decreased .1% from last year driven by a slowing market and channel de-stocking that began in the second half of the quarter. These factors were partially offset by participation gains with new and existing customers, growth and ventilation product lines, and expansion initiatives in the Rocky Mountain region. Our recent acquisition in that region added about 1% to second quarter sales. Adjusted operating EBITDA margin of 20.3 and 21.7 respectively expanded 100 and 120 basis points through solid execution, 80-20 initiatives, and effective price-cost management. And a Rocky Mountain region acquisition is performing to plan. We continue to expect modest revenue growth with continued margin improvement in the second half of the year as the conversion of recent geographic and market participation gains ramp further, contributing to top line and its continued 80-20 in operating efficiencies and the expected improved volume drive profitability.

So let's turn to slide

5 and I'm going to talk a little bit more about the residential market as well as our market expansion initiatives we discussed in our last call. Let's start with in-market. The market did slow more during the quarter which is reflected in lower point of sale results, down approximately 10%, in both retail and distribution channels. Point of sale results can vary significantly by region, by market, customer, and channel, but in general we saw a reduction versus Q1 for the overall market. As well, the point of sale results correlated with the Q2 shingle shipment market data published by ARMA which reflected the market being down almost 10%. As well, starting in late May and really throughout June we experienced channel D stocking in both retail and distribution channels with inventory reductions up to three weeks which reduced channel inventory from about 12 weeks to nine weeks depending on the region, the market area, and the customer. We did see some restocking occur at the beginning of July which I suspect was in response to a bit of an overcorrection during Q2. We were able to partially offset the full impact of the slow market through participation gains and customer conversions which resulted in business being down less than market. These wins and others starting in the second half should also help us continue to outpace the overall market going forward. On the right side of the chart, a geographic expansion initiative continues to move forward and as a reminder we are serving only 40% of the top 32 markets in the US. Increase in our participation in these markets is important to us and we have identified our next eight markets with at least three of those locations planned to be up and running in the next two to three quarters. There are plenty of additional markets beyond the 32 we are currently addressing as well and as I have said previously we will execute our plans through both organic investment and acquisitions. So with that let's move to renewables.

Tim? Let's turn to slide six.

Adjusted net sales increased .2% from last year and 54% from last quarter driven by strong demand from new and existing customers for the new 1P tracker product. Despite solid growth in the quarter our revenue and bookings were lower than expected as some customers continued to experience trade and regulatory issues disrupting the timing of signing of their contracts and or locking in their schedules. As a result, second quarter backlog was down 10% while the pipeline of late stage and early stage projects remains positive. Adjusted operating EBITDA margins decreased 270 and 290 basis points respectively driven by a mix shift to our new 1P tracker product and the related new product ramp learning curve. Our supply chain and engineering teams are making progress in satisfying this accelerated demand. We expect segment net sales to increase for the full year with sequential improvement in 3Q profitability as 1P tracker supply chain continues to mature and the field installation process becomes more efficient. Let's move to slide seven for a quick update on our 1P tracker. Since the fourth quarter of 2023 we booked over 300 megawatts across 58 projects with 15 different customers. We booked about 70 megawatts across 13 projects in this last quarter. We're pleased with the ongoing uptake of our 1P technology and our laser focus on executing controlled launch of new projects we have signed. At the same time new and existing customers are inviting us to pursue a pipeline of over 1.2 gigawatts in the US distributed generation solar market. The photos on this slide show two 1P tariff track projects we recently completed. The one on the top right of the page is the Wedge Farm and the one on the bottom is Alice Hill.

Bill? Bill, is your line on mute? I'm sorry, can you hear me?

Yes, we can hear you now.

Oh, I apologize. So let's start again. Sorry, as referencing the industry, it continues to work through a variety of trade and regulatory challenges and since our last earnings call I wanted to highlight some of the changes and or movement to four of them which are highlighted on the dotted line boxes on the slide. Let's start with the first three items which are related to module supply. First, the Presidential Proclamation weighting tariffs while the Department of Commerce investigated the first AVCVD complaint expired on June 6, 2024. So for modules imported without an exemption from the manufacturers that were under investigation during the proclamation period, customers have until December 2024 to install these modules in service or anti-dumping duties of 240% and countervailing duties of 15% can be applied to projects. Secondly, a second AVCVD complaint was filed with the U.S. International Trade Commission and the Department of Commerce on April 24 alleging illegal trade practices by Cambodia, Malaysia, Thailand and Vietnam and is asking both government agencies to apply new tariffs, both anti-dumping and countervailing duties to imported solar cells and modules imported from these countries. The ITC launched a preliminary investigation on April 24 and the DOC initiated an investigation on May 14. Given the complexity of the case, the DOC is expected to issue a preliminary determination for the countervailing duty complaint by September 23 and for the anti-dumping complaint by November 20. Final determinations for both aspects of the complaint are expected by April 4, 2025. And third, on June 26, the Section 201 bifacial exemption was removed for bifacial solar panels. These are panels which have solar cells on both sides and can significantly improve energy production efficiency. The industry has been given a 90-day grace period before the tariff takes effect and to avoid a tariff, customers must be able to verify their contracts were signed on or before May 17, 2024 and these panels must be delivered by September 24, 2024. Lastly, with respect to the 10 percent domestic content bonus in May in an effort to avoid forcing commercial taxpayers to disclose their direct costs, the IRS created a new elective safe harbor. This allows manufacturers to determine a project's domestic content percentage based on additive fixed percentages for specifically identified U.S. manufactured components or subcomponents. This avoids developers and sponsors of energy projects having to track down all manufacturers' costs and helps manufacturers avoid having to share confidential cost information for their business. This is a positive development for the industry and we anticipate final guidelines from Treasury to be issued before the end of the year. So let's move on to AgTech. Tim?

Moving to slide nine, AgTech suggested net sales increased 0.6 percent but were lower than we expected as new projects started later than planned in the quarter. In June sales were up over 30 percent from May sales so it was just a later in the quarter ramp. Second quarter backlog increased 32 percent over last year and 95 percent from the last quarter as new bookings materialized as planned. We remain very active with additional projects and expect positive booking momentum to continue into the second half. Segment adjusted operating income declined roughly $1 million impacted by lower volumes in April and May and business and product line mix. This is partially offset by strong execution particularly on produce projects and we expect to deliver improved margin performance on stronger growth in the second half of the year. Bill?

So in slide ten, let's move to slide ten. We are pleased that our AgTech business is beginning to accelerate and grow as we expand our customer base and really help the industry at capacity to bring locally grown high quality fresh fruits and vegetables to end consumers provided by both food retailers and food service operators. Our business momentum is robust with revenue and bookings accelerating month to month during Q2. We secured over $90 million in new orders during the quarter which is a record for the business. Most of these projects started in June and are launching now which supports our second half outlook. As well we have a number of additional projects currently in the design phase expected to support continued strengthen bookings. We look for our AgTech business to deliver both revenue margin growth in 2024 given our domain momentum and broadened customer base and our healthy pipeline and new projects under design. Let's now move on to our infrastructure business.

Let's move to slide 11. The infrastructure segment sales increased .5% reflecting timing of projects, continued strong execution and market participation gains. Backlog decreased 12% as a very large project book last year reached its final stages. Bookings increased 3% sequentially reflecting strong customer activity. Design work and coding activity remains strong. Segment adjusted operating and EBITDA margins improved 170 basis points respectively driven by price cost alignment, solid execution, 80-20 productivity and improving product mix. We continue to expect sales growth and margin expansion in 2024. Let's move to slide 12 to discuss our balance sheet and cash flow. At June 30th we had cash on hand of $179 million and $395 million available on a revolver. During the quarter we generated $36 million in cash from operations through a strong contribution from operating income and a more modest than average seasonal investment of $7 million in working capital. Our free cash flow generation for the quarter was .1% of sales and our objective for free cash flow approximately 10% for the year is unchanged. There were no share repurchase in the quarter and we remain debt free. We expect to continue to generate strong cash flow and our capital allocation priorities for 2024 are to continue to invest in our organic growth and operating systems for scale. We expect capital expenditures between 1 and 2% of sales. Our pipeline of high quality M&A opportunities is active. We have many discussions in process and our strong balance sheet provides flexibility. We think there's a higher probability in the near term in the residential segment and the medium and long term in other segments. We finally will opportunistically return value to shareholders through the remaining $89 million authorized under our share repurchase program funded by cash generated from operations and the use of our revolver depending on the timing of any M&A or repurchases. Now I'll turn the call back to Bill.

Hey, Sid. Let's turn to slide 13. We'll talk a little bit about our priorities for 2024 which really remain unchanged. Our three pillars are foundational for what we do and our playbook is consistent in regards to recent market movements. We remain very focused on those five initiatives. So just as a reminder, number one, continue to look to drive growth, quality of earnings, cash performance and focus on M&A. Secondly, executing our 80-20 initiatives, expanding our participation and expanding margin. Three, continue to digitally transform to scale and optimize our operating systems. Four, strengthen the organization and fifth, as important as anything, conducting business in the right way every day. Let's turn to slide 14 and we'll talk about 2024 guidance. We are making a slight adjustment to revenue and profitability measures while maintaining our outlook for EPS and delivering full year sales growth and significant profitability improvement. We look for participation gains and operational improvements to support solid second half and full year margin expansion and cash flow generation. Consolidated net sales are now expected to range between $1.38 billion and $1.42 billion compared to $1.36 billion on an adjusted basis in 2023, representing 2 to 4 percent growth. Gap operating margin is expected to range between 11.8 percent and 12.1 percent, up between 90 and 120 basis points. An adjusted operating margin is expected to range between 13.3 percent and 13.6 percent, up between 60 and 90 basis points. Adjusted EBITDA margin is expected to range between 15.9 percent and 16.2 percent, up between 50 and 80 basis points. EPS expectations are unchanged with gap between $4.04 and $4.29 compared to $3.59 in 2023, up between 12 and 20 percent. An adjusted between $4.57 and $4.82 compared to $4.09 in 2023, up between 12 and 18 percent. We continue to expect 2024 free cash flow of approximately 10 percent of sales. So to summarize, our execution performance has been solid and we feel good about our second half plan and full year outlook. I also want to thank our team for their agility and responsiveness in each of the markets that we serve and their focus on delivering performance for our shareholders. And as I said earlier, most importantly, doing it the right way. So now let's open the call up and we'll take your questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question is from Dan Moore with CJS Securities. Please proceed with your question.

Thank you. Good morning Bill. Good morning Tim. Let me start with residential. It sounds like July you started to see a little bit of restock but has the destocking you saw in June run its course and what are your expectations for market growth, not necessarily Gibraltar growth but market growth embedded in your, for the remainder of the year embedded in the revised full year guidance?

Yes, so Dan I think we believe we're going to grow this year in residential for the rest of the year. It's difficult to predict exactly where the stocking destocking is landing but we feel like it has settled in and that's what we've assumed going forward in the second half. Q1 off to decent start, Q2 is a bit of a correction if you look at, as I mentioned earlier, the point of sale in the ARMA data but you really need to let that flow out over some period of time because it really comes down to state by state and how well you're positioning each state to see the true impact of what that's going to mean for the market and how you're relating, how you're positioning each of those states and therefore the market. So we've gone through that in I think great depth by state and we've built an outlook for the year that we think is still positive year over year and with our participation gains that we referenced and the ones that are in flight now we feel pretty good about how the plan is rolling up for the second half.

Helpful and then shifting gears, renewables, certainly appreciate the update as you give every quarter on kind of the market conditions. Obviously a ton of cross-currents so you know what's the punchline? Do we still expect 2025 to be the year when revenue starts to ramp meaningfully or is that more uncertain now in your view?

Yeah well I think the slide that we showed will get less complex over time as some of these things come off the table and so you know we've listed five things around module supply as an example. Well when you look at that slide and you say well UFLPA is number one on that slide that's going to come off as the industry has gotten used to dealing with that right. So it's really I think what you're going to find going forward is more around permitting and interconnectivity and transmission which is still out there that people are dealing with but as these A, B, C, D investigations kind of work through the system what it's doing right now is just causing some people to pause and it's choppiness as we have seen. I think that's going to work itself out as we get through this last investigation and some of these things start coming off the table. You know the positive element on the IRA piece if you look at the bottom of that chart two of those three things are in place and up and running and this domestic content bonus is getting close now that we have this new elective safe harbor that was put in place by the IRS that's a big deal. So if we can get that across the finish line that comes off the chart those three things are easy to track and use as an industry. So I think you'll see a narrowing of some of these items the hope is that we will be able to work through this over time. That doesn't mean there won't be some things in 2025 particularly around permitting and as I said interconnectivity and transmission but we feel like it's you know moving in the right direction but in the interim it's still causing you know probably 20 percent of our customers to have a little bit of a challenge with specific projects. So hopefully we'll see that start to be minimized a second half a bit as we roll into next year. That's how I characterize it today.

Yeah and then lastly for me I'll jump back in queue just talk about margins. So you know still it continues to be obviously kind of a tale of two cities. Rezzy performing extremely well in a tough environment and renewables and Agtech still well below your longer term goals. So what are the keys to generating you know consistent double-digit margins in those two segments? And you know it appears that that's what's likely embedded in your ability to maintain the EPS guide. So just talk about you know how do we get there when your confidence in that margin uplift in the back half of the year. Thanks.

Yeah the second half for Agtech is obviously driven around the bookings that we generate during the quarter which have now started to materialize in the sales and profitability. So you pick up that volume and the quality of those projects we feel they're going to contribute nicely in the second half to both top and bottom line. And you know sequentially we believe renewables will obviously continue to improve. You know ramping up the 1P tracker in a short period of time is what we're working through now and just getting suppliers from kind of temporary tooled to permanent tooled world and then you know getting these components into the field and getting our teams ramped up in a control launch. It just you know it takes a little bit time to do that and that's part of you know we're getting better and better at that in the second half. So sequentially I think you'll see renewables deliver, improve margin and you'll see Agtech do the same and Agtech is really driven by the volume that is now in the business in a much bigger way than it was before.

All right I'll turn back to the follow-ups. Thank you.

Thank you. Our next question is from Julio Romero with Sedotian Company. Please proceed with your question.

Yes hi good morning this is Alex on for Julio. Hey Alex. My first question. Hey good morning. Yeah so you know very nice to see Agtech new bookings up significantly this quarter. I saw in the release you know you noted strong support for revenue growth in the second half. So I'm curious, can you just walk us through you know the confidence you have around the timing of the Agtech sales you know kind of ramping up in the near term in a meaningful way?

Yeah so Alex when you sign these projects they tend not to be signed in the Agtech world until you have most if not all your ducks in a row particularly around permitting because you're things like gas, water, etc for the you know town or city that you're in is a big deal because these are massive structures. So usually when you sign it's close to go time on getting started. So the projects that we have signed they're already active. They started becoming active in June so you saw that impact with the business being up 30 percent over April May and that momentum will continue based on the actual projects that are in flight now. Now we'll continue to add more projects and that will help us build a backlog not just for some portion of revenue that will come into this year but it will start building up for next year as well. So that's that consistency that we're looking for that cadence around you know the projects that we're bringing on on path. And if you look at you know you take you know 90 million dollars that were signed in the quarter and you annualize that you'd say well that would roll out to 360 million, 270 million dollars around there. I'm not suggesting that we'll have 90 million every quarter but as you get that cadence being built they stack on each other and they bring that revenue and profitability comes with it in a much more predictable way. They tend to start pretty soon after you're signed. So we're active on a number of the projects that are in the 90 million dollars and that's why our confidence level starting in Q3 is pretty strong for the

second half. Gotcha great color on the cadence thank you. And then one follow-up from us you're still very strong free cash flow in the quarter and you know the cash on the balance sheet continues to build. So could you speak to plans you know to deploy some of that?

Yeah so right now we are in a number of active discussions on the M&A front. Tim referenced that a bit. I think you'll see there's probably more of that near-term focused in residential that we're involved in. It's not exclusive to residential but you know our intent is to deploy an M&A. You know we don't spend a lot you know one to two percent to run the business so that doesn't absorb a lot. We have a you know a bit of a buyback. We still have 89 million dollars of buyback approved in our plan which we may move on as well. So but really our focus is you know moving forward with the M&A and it's just a matter of you know timing on that front. It is more active in the market today than it was a year ago. Not by our choice per se but but just in general and so that's what has driven some of the activity that we're currently in the forward and the timing of that will depend on each individual case right. It's a process between a buyer and a seller and you know we'll see how that plays out but we're excited about what the opportunities are that exist and the ones that come up we're in a great position to act pretty quickly.

Great thank you. Appreciate the color there. That's all from us. Thank

you. Thank you. Our next question is from Walt Lipta with Seaport Research. Please proceed with your question.

Hey good morning guys. Thanks for the answers so far. That's helpful. You know I wonder if we could just try and quantify a couple of things like in Ag Tech. You know if you can help us understand how much revenue is going to ramp in the second half of the year like how much of that 90 million ships in the second half of the year versus 2025 and you know what could the revenue look like you know for the full year.

Yeah so Walt the way I think about it is you saw what June looked like relative to May and so you're going to have a pretty big upshot relative to what we've seen in the first half is the way I characterize it for the business. So you know the projects in hand the project's active. You can do the math that way if you're thinking about modeling what the second half would look like. It's you know we saw June up 30 percent and I think that's that's you know directionally the way I would think about the second half for this business based on that the backlog that we now have.

Okay great and then you know appreciate the prior question comment about profitability in Ag Tech and you know but with these projects sometimes there's percentage of completion that you don't book profits until you know the things almost done. You know can you talk about what the second half could look like on the flow through for profits?

Yeah I know I think we'll have a you know a nice improvement there as well. We you know we because it's percentage of complete as we're recognizing sales are recognizing profitability hand in hand as we go. So there's not a lot of this that is you know recognized at the end of the project both top and bottom line. They kind of go hand in hand as you go through the project. So again as that volume starts to materialize in the second half you should see an impact on both top and bottom line accordingly.

Okay great and then you know switching over to renewables. Can you quantify for us the amount of orders that got pushed out due to the the regulatory environment? You know like were the orders you know down year over year? How much were they down? You know can we get some idea of the magnitude here?

Are you talking about the orders

that were pushed? Yeah exactly. I think about

yeah I would say about 20% of our business continues to be impacted and think about that as you know we have we serve over 200 different customers. So you've got a chunk of your customer base that's dealing with a variety of projects that are you know moving around and it and yeah that's been pretty consistent over the last year or two. But I would say that you know it's impacted about 20% of our orders and that's part of the reason or you know bookings and and therefore orders and that's part of the reason that we said look we were up 8.2%. We were up 54% sequentially but we weren't up as much as we thought we as we wanted to be or expected to be just because of some of that movement got pushed. So I mean I guess you could back into it if you kind of thought about it that way. We should have been up more if we wouldn't have had that that kind of movement. But it you know each each quarter to those different group of customers and and a number of projects but I would say 20% of the business has been impacted shifting around. So that gives you an idea.

Okay and just so I understand the slide that you had up on renewables with the regulatory. I think what I heard you saying is that this pause will remain in place probably until September of this year. Is that right? Well yeah there's

a lot of moving parts and the point of that is on a module supply it's just causing pauses right now depending on an individual's project situation. So you know you can have a number of different examples here but as an example if you had panels in your inventory, if you had panels that you had availability to and they were not brought in on an exemption from during the first AV-CVD investigation and then you have until December to get those things installed or they could be subjected to both AD and CVD penalties. So on one hand you've got a lot of folks are trying to stay laser focused on existing projects to get these panels up onto their foundations and racking systems that either have been installed or maybe haven't been installed but you have a deadline. Otherwise you're going to be subject to some very large penalties potentially. So you've got customers laser focused on that right now. They're saying look I need to get this done and so what they're fighting through are things like well I've got to get make sure I get all my permitting right so I can actually get my panels on so I don't have these penalties and so it is a bit of a multivariate equation for each project for a customer depending on where their situation is going forward and that's that 20% of business that I think we have customers dealing with. You know 80% of business folks are kind of navigating through this so but for us because our timelines are so short between when you sign a contract and you execute something like this with immediate grace periods of 90 days or 120 days really changes focus on projects that are in flight right now for customers versus what are they going to do next. So you know it's a little bit you know causes a little anxiety right now for the industry but it will work itself through once this you know I think this last or the second investigation finishes up and you know the IRA stuff clears off the table. That gives people a little more clarity what's going on but yeah we are seeing I think the second half you know still going to be a challenge in that but we're going to grow you know sequentially and both top and bottom line and as we get through the balls as it relates to planning for 2025.

Okay great and the sequential improvement that you're thinking about for next quarter that's usually the third quarter is a seasonally stronger period right that's why so yeah third and fourth but maybe not more orders.

Correct third and fourth quarter are traditionally our strongest quarters for renewables. You know we've got bookings now that are pretty solid relative to covering 2024 in terms of revenue again because we have a relatively short timeline so we still have you know the ability to take an order in in the third quarter and execute that yet in the fourth quarter so we got good coverage for sales in the second half we got a little bit more work to do there but inherently Q3 and Q4 are the biggest quarters for the business and that's why sequentially you'll see a better second half and a better Q3 than Q2.

Okay but in terms of orders it sounds like third quarter fourth quarter might still be weaker.

Maybe not you know let's see again it's it's it comes down these individual projects and folks getting across the finish line so if you've got this 20% where people are having some success with you know what they're going to do and and getting on with it then yeah the focus can turn pretty quickly towards getting some of these other projects pulled up and across the finish line and contracted. So we have a you know a lot of these projects in our late stage which we have a seven stage process but we've got them in late stage but you know that's they're they're sitting there now until they're some of our customers are sitting in there until they work through the next 90 days on some of these things that they're they're dealing with.

Okay great okay thanks much.

Thank you there are no further questions at this time I'd like to hand the floor back over to Mr. Bill Bosway for any closing comments.

So again I want to thank everyone for joining us today. We are planning on to present at the Seaport annual summer investor conference as well as the September conference and we've got a number of other investor events so I want to thank you again for your ongoing support of us and Gibraltar and look forward to speaking to you again after our third quarter report. Have a good day.

This concludes today's conference you may disconnect your lines at this time thank you for your participation.