Gibraltar Industries, Inc.

Greetings and welcome to Gibraltar Industries' third quarter 2024 financial results conference call. At this time, all participants are on 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 Capafio with Alliance Advisors IR. Thank you. You may begin.

Thanks, Rob. 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 Joe Lavecchio, 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. Further, please note that adjusted results exclude the net sales and operating results of the Japan Renewables business that was sold in December 1st of 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 the future performance, and the company's actual results may differ materially from these 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. Good morning, everyone, and thank you for joining our call today. First, this morning we did issue a press release announcing that James Metcalf has joined the Board of Directors for Gibraltar. Jim brings significant experience to Gibraltar given his successful tenures as both a public company chief executive officer as well as a board member, and we are excited to have Jim join our team and be part of Gibraltar's future. I'd like to introduce Joe Lavecchio, who joined our team in August as our new Chief Financial Officer, and Joe will present our financial results today. As we announced earlier this year, after 20 years with Gibraltar, Tim Murphy will retire in early 2025. Tim and Joe are working closely together to ensure a smooth transition, and as Joe continues to accelerate through his learning curve and spend time in the field with each of our businesses, Tim continues to lead a number of important initiatives across the organization we plan to complete prior to his retirement early next year. So I will start with an overview of third quarter results, and then Joe and I will provide both a financial and operating update and a closer look at what's happening in our markets. Then I will walk you through our 2024 outlook, and then we'll open the call for your questions. So let's turn to slide three, titled Third Quarter 2024 Review. Our third quarter results were within the revised range we announced on October 11th. Consolidated net sales on an adjusted basis were down 6%. with revenue in the renewables and residential businesses down in the quarter, partly offset by significant growth in ag tech, which was up 34%. On an adjusted basis, operating income decreased 13.6%, EBITDA 11.7%, and EPS 7%, with the renewables business having a sizable impact on our overall margin performance. In fact, during the quarter, excluding the renewables business, the rest of our portfolio performed relatively well and collectively delivered operating income improvement of 9.3% or 170 basis points, EBITDA improvement of 7.8% or 170 basis points, and EPS improvement of 18.2% while sales were down approximately 2%. We generated $65 million in operating cash flow and $59 million in free cash flow during the quarter as well. Backlog for the quarter was down approximately 15 percent, again driven by the solar industry challenges facing our renewables business, which I will discuss when I review the solar market situation. Ag tech backlog was down slightly from last year's level, which is related to the timing of signing contracts before quarter end, but the number and value of customer-approved projects in the pipeline for signature remains very robust. Infrastructure backlog increased over last year, and quoting activity also remains very active in this segment. Overall, while fighting through the ongoing solar industry challenges, we are managing the rest of the portfolio relatively well, and we carry this momentum into the fourth quarter. If you consider the midpoint of our full year guide and compare it with our year-to-date results, you'll see a plan in Q4 for us to deliver relatively flat sales and improve year-over-year margin performance, despite anticipated ongoing challenges continuing in the solar industry and with our renewables business. So let's dive into the business segments, and I'll hand it over to Joe.