Gibraltar Industries, Inc.

Good morning, ladies and gentlemen, and welcome to the Gibraltar Industries first quarter 2026 financial results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Thursday, May 7, 2026. I would now like to turn the conference over to Carolyn Capaccio. Please go ahead.

Thanks, Joanna. 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 Investors 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 continuing operations exclude net sales and operating results of the renewables business, which was classified as held for sale and as a discontinued operation with second quarter 2025 results, the EBOS portion of which was subsequently sold on February 20, 2026. The acquisition of OmniMax International closed on February 2, 2026. 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 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. Good morning, everybody, and thanks for joining us for today's call. A lot of interesting and exciting things to talk about. We'll take you through our Q1 results, which include OmniMax operations for the last two months, and then we'll update you on our integration and synergy initiatives, our deleveraging progress, and our 2026 guidance, which we are reaffirming today. And I'll talk about some positive trends we have seen in April and early May, and then we'll open the call for questions. So let's start by turning to slide three, and we'll talk about the first quarter. So the first quarter is very dynamic and busy with the closing of the OmniMax acquisition in the middle of the quarter on February 2nd, the subsequent launch of our integration efforts, managing through some additional inflation of aluminum in February and March, and incremental commodity inflation in March post the start of the Middle East conflict. That all being said, I'm very pleased with how our team responded and executed in the quarter, and I was excited to see good operating performance in March as we exited the quarter and head into Q2. So starting with the quarter, for the quarter, adjusted net sales were $356 million, up 44.6%, driven by two months of having Omnimax as part of Gibraltar and our metal roofing and structures acquisitions. From a market perspective, residential remains soft, and we'll talk more about that today. And despite the start of the Middle East conflict in late February, we actually started to see customer order activity improve and become more consistent in March. Ag tech and infrastructure markets remained solid with good backlog, but both businesses had some volume move into the second quarter, which we'll talk about. This is really related to some project schedules and timing of some shipments. Adjusted EBITDA increased 16.1%, and adjusted EPS was down 50%, driven by a net interest impact of $14.6 million. and unfavorable price material economics from a 16% increase in aluminum market prices during the quarter, which really impacted mainly residential. But we also had increases in steel, resin, and fuel prices in March after the start of the Middle East conflict. Despite the inflation and the lower volume and absorbing some of the inefficiencies with the Onumax close in the middle of the quarter, we did perform very well in March with adjusted EBITDA accelerating to high teens, which is supportive of our plan going into the second quarter. We used $35 million of operating cash flow, which included payments related to closing of the OmniMax transaction, and we applied the $70 million of the proceeds from the EBOS divestiture to debt reduction. We ended the quarter with net debt of $1.2 billion. And finally, we continued to make progress with the sale of the renewables tracking business, and are still targeting completion in Q2. So with that, now let's dig into the business segments, and we'll have Joe start with residential. Thanks, Bill. Let's start with residential on slide four. Net sales increased just over $100 million to $281 million, which is up 56%, driven by the inclusion of two months of OmniMax results of operations, which contributed $89 million, and our metal roofing acquisitions, which contributed $18 million. Organic growth for the segment decreased 3%, with building products down 3.8%, and mail-in package down 1.5%, as the overall residential market continued to remain soft. Our metal roofing acquisitions, which we acquired at the end of Q1 2025, performed well. And overall, we are seeing a good start to Q2 in our residential segment. Adjusted operating EBITDA margins were down due to lower volume and inflation in the quarter, particularly with aluminum increasing 16% and other commodity inflation ramping up in March, post the start of the conflict in the Middle East. Early in the quarter, we implemented price increases to help offset 14% aluminum price inflation in Q4 2025, And subsequently, we executed price increases in March and April across 14 of our brands and operating units to counter the additional aluminum inflation in Q1. The timing of our price increases and therefore our price realization is governed by a well-defined approval process that takes 30 to 60 days, depending on the customer, the amount requested, and the justification. Our teams did a good job addressing Q1 inflation in a timely manner, but we were not able to offset the full impact during the quarter. With these increases now in place, we expect price material economics to be positive in Q2. As well, there was no incremental tariff impact in the quarter, and as it relates to the recent changes to Section 232 of the Trade Expansion Act, we are proactively managing any potential impact. Adjusted EBITDA margin for the quarter came in at 15.6%, but as Bill mentioned, we performed well in March with adjusted EBITDA accelerating to high teens, which is supportive of our plan going into the second quarter. Let's move to slide five. We'll talk a little bit about the U.S. residential roofing market. The market remains soft in Q1, with Armour reporting shingle shipments down 10% versus prior year, with results varying quite widely by region and or state. You know, when we see big changes or swings in a particular quarter, it's typically related to a weather event that occurred in an earlier period. in a region or a state. And you can see, for instance, Florida down pretty significantly in Q1. General customer feedback remains consistent around affordability and interest rates. Limited weather impact in 25, helping create demand in 26. A lot of focus on inventory optimization while waiting for the season to start. And then, of course, most recently the conflict in the Middle East and the timing when that may be resolved. We believe we outperform the market in Q1. Our retail sales and units were down 6% to 8%. Our sales dollars were down 1% to flat, and our sales to distribution were also down roughly the same. In contrast to year-over-year ARMA shipments, Q1 shipments were up 41% sequentially. It's an increase of approximately three times the average Q4 to Q1 increase we have seen during the last four years, and likely driven by a correction to the market over-indexing on inventory correction in Q4 2025, some pull ahead related to upcoming OEM shingle price increases, and I also believe some better end market demand with some green shoots in certain markets and regions. And although it's early in the season, we have started to see positive activity. We started to see positive activity in April, which is really reflected in our actual April shipments and bookings, which were on plan and ahead of 2025 levels. We'll see how the market evolves, and once the conflict in the Middle East is resolved, I expect the market to have tailwinds as oil and gas prices improve. I think mortgage rates move back to pre-conflict levels, which, if you recall, the 30-year mortgage rate went below 6% back in February, and existing home sales activity starts to improve. Until then, we're going to focus on winning more of the market, and our team sees there is quite a bit of opportunity, given the U.S. has an installed base of over 80 million existing aging homes at an average age of 40-plus years, and a significant multifamily market, which is starting to pick up, that today or in the future will require, obviously, new roofs or roof maintenance and repair. Let's move to slide six. I want to discuss some of the commercial synergies. and what we're doing to expand our participation in the market and what we've done in a relatively short period of time. You know, when we announced the OmniMax deal, we emphasized the importance of being able to shape the future of our industry versus having someone shape it for us. And over the last 24 months, with customer consolidation happening across the industry and new ownership in the industry, we believed then and we believe even more now that we are and will be an important partner for our customers moving forward. The combination of Gibraltar and OmniMax creates the local presence on a national basis to do things for this industry that others cannot. So we now have 39 locations serving most of the U.S., and by itself, this footprint in our local presence doesn't necessarily guarantee success. What matters is our ability to provide consistent, high-level performance through obviously great service and speed and flexibility. We have to have the right products and obviously great quality from each of our locations. So we have a good foundation with which We're going to further involve, but there are really three core initiatives that you're going to see us start to focus more on as we go forward to help our customers even more. Number one, it's become very obvious, and we've had conversations with our customers about this, that we can help streamline their supply base, particularly with customers that currently have between 50 and 100 suppliers making products similar to what we make. And this is a tremendous 80-20 opportunity where we simplify a supply chain, what we think will drive substantial productivity and efficiency for a customer's supply chain. And being local on a national basis gives us a chance to do that better than anyone else can. Secondly, there's a lot of emphasis around what kind of digital solutions are going to be needed to connect more seamlessly with customers to increase service levels while also reducing costs and reducing the cost of doing business with us. Now, this takes investment and technology, and we are in a position to support this effort going forward again, both on a local and national basis. And third, and I think this is our biggest 80-20 opportunity we have that we can bring to the industry, but also bring to our business, and that's our ability to better optimize codes and specs and material selection. And that's going to be done by working through local municipalities, working with our contractors, as well as distributors and retailers, to really focus on SKU and product harmonization. And we'll do that, which is a lot of heavy work, but pretty exciting stuff, as well as bringing in new products. Again, the result is taking an 80-20 approach to an entire quote-to-cash process that our industry has grown up with. And we're, again, in a position to do that. If you step away and say, well, today, you know, we actually do believe we bring the broadest product and service offering to the market. And that has, in a very short period of time, enabled us more geographic expansion and some cross-selling opportunities, and private labor programs I'm going to talk about now. Now, in a short period of time, we've made good progress with each of these three initiatives. First, we expanded our presence geographically. We established new business in over 40 branch locations across nine different customers located in Texas, Florida, the Midwest, Northeast, Southeast, and Mid-Atlantic regions. These are branches we were not serving before when Gibraltar and Avimax were independent of each other. Secondly, we now have over 60 locations where existing customers are buying a new product category from the combined business. And there are over 1,700 branch locations in the U.S., so a lot of opportunity in front of us to do more and more cross-selling. Our ventilation family of products is a great example, but there are others as well where we've had some success. And then thirdly, we have manufacturers with adjacent and complementary product lines that are starting to source private label product from us or grow their private label business with us. So I believe some of this work, not all of it, is starting to create new business and or opening new doors for us. These commercial synergies also represent participation gains and people realize $4.3 million in our 2026 EBITDA as a result of these initiatives. As I mentioned earlier, we started to see positive results in April with our shipments and orders on plan and 2025 levels. I think These initiatives are contributing accordingly to some of the trends that we're currently seeing. Now let's turn to slide seven, and I'm going to give you an update on integration and what we've been doing over the last 90 days with really a lot of effort over the last 75 days. First, the combined business has evolved from an organization transition when we started to integration discipline focused on building and executing synergy capture, inventory optimization, network rationalization opportunities, and further optimizing procurement. The integration management office and our 22 integration teams have delivered 500-plus milestones, and organizationally we've accomplished quite a bit as well. We've completed phase one of the organization structural work with phase two to be completed in May and in June. We have integrated and consolidated Gibraltar's corporate supply chain team and are leveraging this team to support other businesses, including the mail and package business. and we've combined and communicated a single 2026 financial plan and goal, set of goals for the new team. Let's turn to slide eight, and I'm going to discuss a little bit of how the integration management office is now pivoting. In February, in our paper earnings call, I shared our leadership team, the role of integration management office, the structure and the process to drive integration across the combined business in the first 100 days. The first 100 days focused primarily on organization transition to build one culture, ensure we get our internal structure right, and build an ownership mindset across the team. Our teams have done excellent work to create and execute charters and work plans for effectively every function in the business. We now have a good foundation in place as we move into our next phase, post-100 days, where we'll narrow focus to 11 high-value work streams with key synergies, continue to execute the 2026 work plans, and start working on plans for 2027. and finalize all our business cases for the remaining work streams. This is an important step as we move from integration to transformation, which means moving into a way that we expect the organization to execute the business going forward. Now we'll move to slide nine. I'll give you a quick update on our 2026 synergy savings. As our team digs in, we continue to identify additional costs in commercial synergy opportunities, and we have raised our synergy commitment an additional $2 million to $26 million with $16.3 million realized in our full year of 2026 adjusted EBITDA. Over 50% of our 2026 commitment has been executed and realized savings will ramp up in the second quarter and accelerate further in the second half of the year. We have also created a corporate synergy category where we are identifying structural and spend reduction opportunities across Gibraltar as we continue to evolve the portfolio and further leverage shared service capabilities. Recently, we identified $600,000 in insurance premium savings based on a rate differential with the same provider, which will be realized on renewal of the policy. Looking at every cost line item, you find things like the example of insurance premium, where we think there'll be more and more opportunity. And as I mentioned earlier, we have already consolidated and integrated our corporate supply chain team. Finally, I want to recognize our commercial team. It's really coming together. We've had the right leadership. with great experience and a very good reputation, and really focused on execution. We also have very strong leaders dedicated specifically to business development and sales enablement. This is really foundational for us as we drive more wins in participation games. So with that, let's move on to AgTech. Slide 10. Okay, so AgTech net sales grew about 10 million or 23.6%, driven by the lane supply acquisition, which continues to perform as expected with solid demand. This offset organic volume decreasing approximately 3% in the quarter with project movement during the year. Total backlog at 84 million supports the four-year plan, but it's down 13% in Q1 with the removal of the Arizona CEA project. Adjusted operating and EBITDA margin decreased mainly due to lower volume and the impact of a full quarter result of the lane acquisition in 2026, which included January and February, which are the lowest margin months of the year. Now let's move to infrastructure on slide 11. Net sales decreased 2.1 million, or 10%, as two separate weather events occurred in March that resulted in our factory losing power and impacted our production schedules. One event caused the entire community where we operate to lose power, and the second event was a lightning strike to the plant's key power source. As a result, some customer shipments were pushed into April. Backlog decreased 3%, driven by the timing of project awards. while quoting and bid activity remained strong. Segment adjusted operating EBITDA margins declined due to the low volume as well as business mix. Let's move to slide 12 to touch on our balance sheet and cash flow. The company's current position with respect to cash allocation will be to keep a minimum of 20 to 25 million of cash on hand, use the revolver as needed to fund seasonal needs, and pay down debt with excess cash flow. During the quarter for continuing operations, Gibraltar used $35 million in cash from operations and used $41 million of free cash flow, or 11% of sales. Of the $35 million in special charges that occurred in Q1 related to the close and initial integration efforts of OmniMax, $25 million of those were cash. Also, we used $43 million for working capital, including a use related to OmniMax, as is typical given the seasonality of the business. Capital expenditures were $6 million, or 1.6% of sales in the quarter. At quarter end, the drawn balance on the revolver was $25 million, and our cash on hand was $20 million. Debt prepayment was $75 million, including the proceeds from the EVOS renewable sale. So as a result, at quarter end, our net debt on the balance sheet was $1.2 billion, and our net leverage ratio is defined by our credit agreement, which includes $35 million of anticipated cost synergies in the pro forma adjusted EBITDA, was 3.9 times. The availability on our revolving credit facility was $467 million and total available liquidity was $487 million. Let's talk now on slide 13 about our deleveraging roadmap. As we noted on our last call, our priority and focus is to deleverage as quickly as possible over the next two years through, as shown on the left side, a plan of strong EBITDA delivery and synergy realization working capital optimization, and utilization of cash tax benefits. Planned uses of cash include capital expenditures of 2% to 3% of sales, interest payments on our debt, and special charges related to the acquisition, transaction, integration, and restructuring related costs. The special charges we reported today represent approximately two-thirds of the charges we expect to record this year. During the second year post-transaction close, we expect continued strong EBITDA margin, the realization of additional synergies, benefits from continued working capital optimization and cash taxes, lower interest payments as our debt level is reduced, and a reduced amount of special charges. We expect these factors to drive additional free cash flow and our net debt down even further. We may also create additional liquidity from other non-core asset divestitures. Our deleverage path targets a leverage ratio of approximately two and a half times adjusted EBITDA in 24 months ended first quarter of 2028. Again, during this two-year period, our capital allocations will be focused on funding the growth of our business through capital expenditures and on debt reduction. Also during the quarter, the renewables business, which has been reclassified as discontinued operations, reached a settlement agreement regarding unresolved warranty claims related to projects with certain discontinued products installed dating back as far as 2017. This settlement in the amount of approximately $25 million is expected to be paid in Q2, and has been factored into our deleveraging plan. Let's now move to slide 14 to talk about our key assumptions for 2026 for continuing operations. First, given OmniMax closed on February 2nd, we will recognize 11 months of ownership in 2026. The expected contribution from OmniMax plus synergy realization, which will occur both within legacy OmniMax and the legacy Gibraltar business, is approximately $570 million to adjusted net sales and approximately $70 million to adjusted operating income. and 120 million to adjusted EBITDA. As we execute our integration efforts across the combined business, we expect synergies to start to flow through in Q2 and accelerate in Q3 and Q4. More broadly in residential, we see a continued soft market as we already discussed. In ag tech, we have removed the Arizona project from our plan and will continue to monitor the funding status accordingly. Within infrastructure, engineering backlog and quoting activity remains strong. In regard to free cash flow for continuing operations, given the seasonality of earnings in the business, the ramp up in synergies and working capital initiatives starting in Q2, and the cash outlays of the special charges related to the close and initial integration of OmniMEX that already occurred in Q1, we would expect free cash flow generation throughout the rest of the year. We continue to expect CapEx to be 2% to 3% of sales, free cash flow of approximately 8% of sales, and we will be focused on debt paydown. Lastly, some additional assumptions to factor in. With the combined company, we expect depreciation, amortization, and stock compensation expense to be approximately $90 million for the year, which includes approximately $40 million annual assumption for non-cash amortization related to intangibles due to the OmniMax acquisition. We anticipate approximately $50 million in special charges related to the acquisition, transaction, integration, and restructuring costs, of which two-thirds already occurred in Q1. We expect greater than $70 million in interest expense, financing, and commitment fees, which will be dependent on the timing of our debt repayments and interest rates. And lastly, we are assuming a 26% tax rate. Now let's move to slide 15, where we are reconfirming our 2026 school year guidance. For continuing operations, we still expect consolidated net sales between $1.76 billion and $1.83 billion, compared to $1.14 billion in 2025. Adjusted operating income between $222 million and $238 million compared to $151 million. Adjusted EBITDA between $310 million and $326 million compared to $185 million for 2025. GAAP EPS between $2.40 and $2.80 compared to $3.25 in 2025, including the expected impact of special charges. And adjusted EPS between 365 and 405 compared to 392 in 2025. Now let me turn it over to Bill. Just to summarize for today, a lot to unpack and a lot of heavy lifting, as I mentioned. We have accomplished a lot of the heavy lifting and made good progress in the quarter. And we continue as we move into Q2. And the entire team has contributed, obviously, over the last 90 days to make that happen. You know, we are transforming the business, as we said, going into the year, and we're going to continue to do that. In residential, and I would say in regards to the near-term market situation, we're going to stay really focused on winning more with our customers. We're going to continue to expand. As we showed earlier, geographically, we're going to continue to do more cross-selling initiatives, as well as support our private label programs. And if the market remains soft throughout the year, for whatever reason – I'd say we're already working on all the right integration, cost, and commercial synergy capture and price management initiatives to deliver our plan. And our building products leadership team and IMO teams will maintain their intensity and discipline and focus on executing our plan while improving safety, service levels, productivity, 80-20 initiatives, and winning more businesses. In ag tech, the business is in a position to deliver a solid year with $84 million of backlog at the end of Q1 with robust design and good activity across North America in process. We also expect infrastructure to deliver another good year and transition some key projects in engineering backlog to order backlog over the next two quarters. So with that, let's open the call up and we'll take some questions.