Gibraltar Industries Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 19, 2025
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Operator

Greetings, and welcome to the Gibraltar Industries Fourth Quarter twenty twenty four Financial Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. At this time, it is now my pleasure to introduce Carolyn Capacio with Alliance Advisors IR.

Operator

Thank you, Carolyn. You may now begin.

Carolyn Capaccio
Investor Relations at Alliance Advisors

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 a side 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.

Carolyn Capaccio
Investor Relations at Alliance Advisors

Tables of reconciliation of GAAP to adjusted financial measures can be found in the earnings press release that was issued today. Please note further, please note that adjusted results exclude the net sales and operating results of the Japan Renewables business that was sold on 12/01/2023. 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 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.

Carolyn Capaccio
Investor Relations at Alliance Advisors

Now, I'll turn the call over to Bill Bosway. Bill?

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Good morning, everyone, and thank you for joining today's call. I'll start with our 2024 results and then we'll review our outlook and plan for 2025, and then we'll open the call up for questions. So let's turn to Slide three. We'll talk about our 2024 year end review and we'll start actually with our fourth quarter. Our fourth quarter performance is closely aligned with expectations in each segment, ending the year with EPS at the top end of the outlook range and net sales just under the range.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

During the quarter, net sales were down 7.9% driven mainly by ongoing market issues facing the renewables business. But despite down revenue, we improved operating income 11% or two ten basis points. We increased adjusted EPS 17.4% and we improved adjusted EBITDA two twenty basis points. As well, when you look at the collective performance of the rest of the portfolio, the residential, ag tech and infrastructure businesses, our results in the quarter showed additional performance improvement with net sales down 3.9% versus 7.9% for the total business and operating income improving 45% and operating margin expanding four eighty basis points and EBITDA improving 32% and EBITDA margin improving four sixty basis points. So solid performance in these three businesses, which helped to offset some of the market and business challenges our renewables team continued to work through.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Now let's talk about the full year. Consolidated net sales were down 3.9% to 1,310,000,000 as both our residential renewables businesses navigated less than favorable end market dynamics. That being said, on an adjusted basis, operating margin, EBITDA margin and EPS all expanded with margin improvement in three of our four segments. We also generated $174,000,000 in operating cash flow and $154,000,000 in free cash flow or 12% of net sales. The collective performance of the residential, ag tech and infrastructure businesses was also positive for the full year.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Net sales were down slightly 1.9% versus 3.9% for the total business and operating income improved 12% with operating margin up 180 basis points and EBITDA improved 10% with EBITDA margin also up 180 basis points. So again solid performance in these three businesses as we work through market execution improvements in the renewables business. Backlog at year end was down 24% as new bookings driven mainly by the time of new orders for both Renewables and AgTech moved from the fourth quarter into the first quarter of twenty twenty five. Since the start of the year, order activity has increased for both businesses and to date versus prior year, Renewables bookings are up 33% and AgTech bookings are up over 300% and both businesses maintain an active pipeline of additional opportunities as well. Our infrastructure business is also seeing solid demand with its backlog up 10% coming into 2025 and residential demand has also improved as participation gains awarded in 2024 are now beginning to materialize in the first quarter.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Relative to portfolio management, just last week, we expanded our AgTech Structures business with the acquisition of Lane Supply, an industry leader in the design, manufacture and installation of canopies serving convenience stores, quick serve restaurants, travel centers, food retailers and EV charging stations. We are very excited to have Lane join Gibraltar and we'll talk more about them later in the presentation. Now we're going to jump into each

Joe Lovechio
Joe Lovechio
CFO at Gibraltar Industries

of the business segments and Joe will get us started. Thanks Bill and good morning everyone. Let's start with Residential on Slide four. Net sales for our Residential segment decreased by $8,600,000 or 4.8% driven in part by point of sale softness in some regional residential markets, eightytwenty product line simplification initiatives for safety harnesses and drywall metals and by the delayed transition of new business awarded in 2024. Order activity in our building products business has accelerated since January and we're now benefiting from participation gains earned last year.

Joe Lovechio
Joe Lovechio
CFO at Gibraltar Industries

New products that we launched in the second half of twenty twenty four are gaining momentum and we expect that to contribute in 2025. Now turning to margins, our adjusted operating and EBITDA margins decreased slightly and were flat respectively, primarily related to volume and product mix. Our execution, price cost management and eightytwenty initiatives delivered solid results in the quarter and largely offset this volume and mix pressure. During 2024, we successfully rolled out our ERP system to additional locations expect to have all locations completed by the beginning of 2026. Also during the quarter, we divested our electronic blocker business and reported a $25,000,000 gain on that sale.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Phil, let's move to Slide five for an update on the residential market and our participation expansion initiatives. For most of the year really starting in the second quarter, the market has been relatively sluggish with ongoing softness at new and existing home sales. The degree and or magnitude of market strength or weakness really has varied by region, stated in many cases at the local MSA market level. In general, point of sale comps reflect a down market of 3% to 4%, but again it's important to understand this data at the store and local market level to get a more accurate depiction of the market. When you review the ARMA data, which really reflects shingle shipments or receipts around the country for 2024 and you look at it from the state level, you'll see a wide variety of results.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

For example, Texas, which is the number one state or which was the number one state for shingleship receipts in 2024 was up 10% for the year, but has been growing at a client rate over the last few quarters. Break that down by an individual MSA within the state, you'll see Florida, which was the number two state for shingle receipts in 2024 was down 18% for the year, but showed positive growth in the fourth quarter. And we expect that the Florida market to normalize more in 2025 now that the impact of Hurricane Ian is no longer a factor. So ultimately the market and our ability to grow is dependent on unique circumstances impacting specific MSAs, really interest rate levels and general affordability and how well we are positioned in the most attractive MSAs, which we continue to work on. Also as Joe mentioned, our revenue in the quarter was impacted by eightytwenty product line simplification issues exiting both our safety harness and drywall metal accessories product lines, both of which were not providing revenue growth and margin profile we need to support our overall plan.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

In addition, as I mentioned in our last quarter call, the timing of orders from new business awards in 2024 did not come in 2024 as originally expected, but we have started to see orders materialize since the beginning of the year. So we are looking forward to 2025 with our top priority being the expansion of our presence in the local markets. We've identified that are the most attractive for us. We recently opened a new location in Boise, Idaho and we will expand and optimize our presence in the West, the Pacific Northwest and three additional locations in two other regions. We'll execute this plan for both organic and inorganic initiatives and I would say we are actively involved in both at this time.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

As well our new products both our rolled vent and our pipe boot ventilation are gaining traction and will contribute to growth in 2025. We will also continue to invest in our omni channel customer market initiatives both technology and competencies to best support optimized local market channel requirements. And finally, we've been developing plans since January in each of our businesses to deal with the potential impact of recently announced tariffs on aluminum steel. Each of our businesses will approach this in a timely manner with solutions tailored for their businesses, the market and customer situation and our businesses will be proactive and flexible as it is likely the tariff landscape will continue to be dynamic, but change is driven by a number of reasons. Overall, we expect to generate growth and margin expansion in our residential business in 2025.

Joe Lovechio
Joe Lovechio
CFO at Gibraltar Industries

So let's move on to renewables. So turning to Slide six, renewables adjusted net sales decreased $16,300,000 or 18.8% and backlog decreased 32% during the quarter. As we discussed in our third quarter call, sales and bookings were suppressed in the second half of the year as customers focused on completing panel information and administrative documentation ahead of the 12/03/2024 deadline related to the June 2024 expiration of the Presidential Proclamation. Since the start of 2025, new bookings have accelerated and were up 33% versus prior year. Adjusted operating EBITDA margins decreased six thirty and five fifty basis points respectively, impacted by the ramp up in product mix shift toward our recently launched 1P tracker products along with lower volumes that resulted from the above mentioned deadline.

Joe Lovechio
Joe Lovechio
CFO at Gibraltar Industries

Adjusted margins expanded sequentially by 70 basis points as a result of improving tracker operating efficiencies. And on a GAAP basis, we incurred a $5,300,000 non cash charge for the discontinuation of our legacy RVI trade names in this segment.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

So let's move to Slide seven and I'll give you an update on overall renewables demand and 1T Tracker launch. If you recall, as we discussed in our last earnings call, we said we would expect new orders to start improving once we finished helping customers meet the December 3 deadline that Joe just referenced. Since the start of 2025, new bookings have accelerated and are up 33% versus prior year as Joe mentioned and all of our technologies, whether it's tracker, fixed tilt, canopy and EBOS are contributing accordingly. The pipeline of new opportunities is also positive as customers continue to invest in solar and build their project portfolios. On the next slide, I'll share more thoughts on the latest industry dynamics and how customers seem to be approaching the current environment.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

The right side of this slide provides an update on our TerraTrack 1P technology, which continues to see positive customer support and we see that through ongoing growth in new bookings. Since our launch in November 2023, we've booked over 400 megawatt of projects across 77 well across 77 projects with 22 different customers. We started at seven additional projects in Q4 with another 18 scheduled for the first half of twenty twenty five. As well, we are actively pursuing and engaging customers that are looking to build up to 1.9 gigawatt in The U. S.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Distributed generation market. So the market remains relatively robust. On the operations front, our team worked diligently throughout 2024 to keep pace with the speed and magnitude of demand we experienced shortly after our 1T pilot launch. Frankly, we did not anticipate the customer uptake nor were we or our key suppliers ready to support the demand in the timeframe it happened. We were also challenged with quickly scaling the processes required to coordinate ship and tracker project in an effective way and we did not have our internal distribution center operating to support our growing list of projects.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Throughout the year, we improved our supply chain and really on three fronts. First, we now have most of our suppliers on permanently tooled versus temporary tooling that we started this with and we are close to being caught up with our demand. Secondly, we have onshore and in sourced some of our most critical components thus reducing some of the logistics complexity as well as working capital and cost. And third, we have a single site for suppliers to ship to, which is our internal distribution center and our first shipments from our distribution center to the field are happening as we speak. So we know we have more work to do, but I'd say our ability to execute 1P projects today and in the future has improved substantially versus where we started over a year ago.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

And I believe this will drive improved performance as we move through 2025. Let's turn to the next slide, Slide eight and I'll give you a quick update on the market. I believe everyone is somewhat familiar with the various regulatory and trade issues the industry has or continues to manage. Today, I highlight the second ADTVD complaint, which was filed last April. This complaint alleged legal trade practices by Cambodia, Malaysia, Thailand and Vietnam and asked the Department of Commerce as well as the U.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

S. International Trade Commission to apply new tariffs for both anti dumping and countervailing duties related to imported solar cells and modules from these countries. Effectively, as you can see in the table in the bottom right hand corner of the slide, issuance of final orders for both antidumping and countervailing duties should be complete by 04/03/2025. At that point, there should be more clarity for our customers as to the cost associated panels imported from these countries. Now let's switch gears and talk about the current environment, which like

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

the rest of the industry, we are also monitoring daily.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

In general, there is the scenarios to evolve, but our view today for 2025 is that there may be some, but not drastic change in the various tax benefits currently available to the industry. Currently tax credits do not seem to be in focus for the administration, but there is a view the administration may take some changes or modifications like lowering the ITC benefit or phasing it down faster and potentially assigning a domestic content requirement on developers to earn it. If a domestic content requirement happens, domestic sourcing will become more critical. So the fact that we started our U. S.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Supply chain on shoring effort in 2024 should put us in a solid position to support this new requirement. Regardless, we and our customers will need to be prepared for change and be flexible accordingly. For 2025, again as I mentioned last quarter, our revenue plan is built on a slower first half and a stronger second half. The rationale is relatively straightforward. Down bookings in the second half of twenty twenty four drive lower sales in the first half of twenty twenty five and positive bookings early in 2025, which are up 33% to date support higher sales in the second half of twenty twenty five.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Also without better clarity on what changes the administration might take in 2025, if any, we are taking a conservative view on industry demand for now. As a result, we built our full year renewables plan based on flat to down revenue and delivering stronger margin performance through better execution versus prior year. Finally, I believe the second half run rate of this for this business in 2025 should be very reflective of the operating cadence we expect going forward and into 2026. So with that, let's move on to AgTech.

Joe Lovechio
Joe Lovechio
CFO at Gibraltar Industries

So moving to Slide nine, AgTech net sales increased about 1% as project start dates moved from the fourth quarter into the first half of twenty twenty five. The timing of new project signings caused Q4 backlog to decrease 23%, which has already reversed in the first quarter. Since fourth quarter end, we have signed over $45,000,000 of new bookings and demand remains strong with a solid pipeline of opportunities in process. For the year, AgTech net sales grew over 8%. Segment adjusted operating EBITDA margins each expanded over 2,200 basis points, driven by strong execution and business mix, as well as the benefit from a customer payment received this quarter that had been written off in the prior year's quarter.

Joe Lovechio
Joe Lovechio
CFO at Gibraltar Industries

Excluding this payment, operating margins expanded 1,000 basis points to approximately 15%. Our GAAP results also include a $6,000,000 non cash charge for the discontinuation of our legacy RVI trade names in this segment.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

All right. Let's move to Slide 10. I want to talk a little bit more about our revenue momentum in this business as well as the work being done to broaden our customer base. We do continue to broaden our customer base across North America and win opportunities to support customers as they expand brand capacity through not just the construction of new facilities, but also opportunities to retrofit expand and service existing facilities. In the last six weeks, as Joe just mentioned, we've signed $45,000,000 of new contracts, which represents an increase of over 300% versus last year.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

And I expect positive booking momentum to continue continue in 2025. We are fortunate to have great customers that are continuously pushing us to help them innovate, solve problems and create opportunities. And today, I wanted to highlight two customers, Sensei Group, just founded by Larry Ellison and Doctor. David Agus and Tommy's Car Wash, a large family owned car wash business operating across North America. The Sensei Group has a vision to improve human nutrition while preserving the world's natural resources using controlled environment agriculture, facilities to supply fresh produce for local communities.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Fundamentally, the group understands there are more people than there is food. And this imbalance is something they would like to focus on and fix. Sensei now has growing capacity of 15,000,000 pounds per year fresh lettuce, melons and tomatoes. This picture shows one of the Sensi facilities we have worked together to redesign and retrofit to increase capacity as well as flexibility to additional types of produce. Our respective design engineering project teams meet every week and are fully engaged on what's next.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

On the structure side of the business, we are partnered with Tommy's Car Wash for for turnkey solutions including design, manufacturing and installation. This is an example applying our many years of structural engineering and structures competency to a car wash application where performance, aesthetics and structural integrity contribute significantly to our customer strategy. For this business in 2025, organically, we expect the AgTech business to deliver solid growth and operating margin improvement versus 2024. Based on the current timing of project schedules, the business should accelerate in Q2 with a a good cadence and pace throughout 2025. We also expect to book additional projects and further build our backlog for 2025 and 2026.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Now let's move to Slide 11 and I'll talk a little bit about the acquisition of Lane Supply. So on February 11, just last week we acquired Lane Supply. It was a market leader in the design, manufacturing and installation of canopies applied in a variety of in use applications as I mentioned earlier. U. S.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Canopy market is approximately $1,800,000,000 growing at mid single digits and Lane has established itself as one of the industry leaders. Lane was founded in 1950 and it's headquartered in Arlington, Texas.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

And its core competencies match really well with Gibraltar and includes structural engineering and

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

And its core competencies match really well with Gibraltar and include structural engineering, construction management, water moisture management, electrical design optimization and applying customer branding badging solutions to its structures. We paid $120,000,000 in cash and in 2024 Lane recorded net sales of $112,000,000 and adjusted EBITDA margin of 14.8%. We expect this transition to be accretive in 2025 and Lane currently has over $150,000,000 backlog heading into this year. And we really look forward to partnering on customer and operating synergy opportunities. Now let's move on and we'll talk about the infrastructure business.

Joe Lovechio
Joe Lovechio
CFO at Gibraltar Industries

So let's move to Slide 12. Our infrastructure net sales decreased $1,300,000 impacted by the timing of a large project in prior year. Backlog at quarter end increased 10% driven by new projects and strong conversion of bid volume. Demand in quoting remained robust supported by ongoing investment at the federal and state levels. Segment adjusted operating and EBITDA margins improved one hundred and eighty and one hundred and seventy basis points respectively driven by a favorable mix shift and continued strong operating execution.

Joe Lovechio
Joe Lovechio
CFO at Gibraltar Industries

And we expect continued strength in sales and margin expansion in 2025. Let's now move to Slide 13 to discuss our balance sheet and cash flow. At December 31, we had cash on hand at $270,000,000 and $395,000,000 available on our revolver. During the quarter, we generated $19,900,000 in cash from operations from net income, which funded a working capital investment of $23,300,000 dollars For the year, we generated $174,000,000 in cash from operations, including cash generated from working capital of approximately $7,000,000 Our free cash flow generation for the year was 11.8%

Joe Lovechio
Joe Lovechio
CFO at Gibraltar Industries

of sales, above our outlook of approximately 10% of sales for the year.

Joe Lovechio
Joe Lovechio
CFO at Gibraltar Industries

During the year, we used $10,000,000 to repurchase approximately 155,000 shares of common stock. At year end, over the life of our current share repurchase program, we have repurchased approximately 2,700,000.0 shares of common stock at an average price of $45.14 And we had approximately $79,000,000 or roughly 40% remaining under this $200,000,000 stock purchase authorization. Our revolving credit facility remains untapped and we remain debt free. As mentioned, we acquired Lane Supply on February 11 for hundred and $20,000,000 in cash, subject to customary working capital and other adjustments. We expect to continue to generate strong cash flow in 2025 and our capital allocation priorities for 2025 are to continue to invest in our organic growth in operating systems for scale with cash flow expenditures approximately 3% of sales.

Joe Lovechio
Joe Lovechio
CFO at Gibraltar Industries

As Bill indicated, we're exploring inorganic growth opportunities and have an active pipeline of high quality M and A. Our strong balance sheet provides optionality and flexibility and we're focused in the near term on our residential and ag tech sectors. Last, we plan to continue to opportunistically return value to shareholders through the remaining authorization under our share repurchase program, funded by cash generated from operations and the use of our revolver, depending on the timing of any M and A or repurchases. Now I'll turn the call back to Bill.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

All right. So let's turn to Slide 14 and let's talk about our 2025 guidance. Let me first clear the chart. The first column represents our 2024 results as reported. And the second column represents our 2024 results excluding our electronic locker business, which was divested in late twenty twenty four.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

For 2025, here's our guidance. We expect net sales will range between $1,400,000,000 and $1,450,000,000 growing between 812% driven by organic growth in residential, ag tech and infrastructure, flat to down sales and renewables and the inclusion of Lane Supply results from operations. Adjusted operating margin will range between 13.914.2% expanding 110 basis

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

points to 140

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

basis points. Adjusted EBITDA margin will range between 16.717% expanding 100 basis points to 130 basis points. GAAP EPS will be in the range of $4.25 to $4.5 approximately flat to 2024. Adjusted EPS will be in the range of $4.8 to $5.05 representing growth of 13% to 19% and free cash flow as a percent of net sales will reach 10% or greater. Our 2025 plan is balanced and is built with consideration for the current macro environment as well as specific end market dynamics our businesses have planned for and or continue to work through.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Overall, we expect to grow, expand margins, generate strong cash flow. We will drive growth through participation gains in our existing businesses and the addition of Lane Supply. And we improved margins in each business through core eightytwenty productivity, price cost management and better execution in renewables. Overall margin expansion and stronger working capital will drive our cash performance as well. I do want to thank our entire team for delivering a solid year and closing out 2024 with good momentum.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

We are prepared and ready for 2025 and looking forward to delivering our commitment. So with that, let's open the call up and we'll take your questions.

Operator

Thank you. We'll now be conducting a question and answer session. And our first question today is from the line of Daniel Moore with CJS Securities. Please proceed with your questions.

Daniel Moore
Partner - Director of Research at CJS Securities

Thank you. Good morning, Bill. Good morning, Gerald. Thanks for taking questions.

Daniel Moore
Partner - Director of Research at CJS Securities

Maybe start with residential. Revenue obviously last year held up really well in a tough demand environment through the first half, started to feel the effects of kind of a slower resi and R and R market by H2. Do you see perhaps '25 being kind of a mirror of '24? And what kind of organic revenue growth range should we think about for H1 versus H2 on a year over year basis?

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Yes. Dan, I don't know if it's going to be a mirror per se. We went into this year's plan with a obviously a view of the market continue to be where it has been. We went into last year with something similar and we had participation gains that were driving the top line, which we talked about kind of got delayed and now those are starting to kick in. So we don't have a I wouldn't say we have a ton of growth built into the plan, but I think it's reasonable based on our market assumptions and the participation gains that are starting to kick in January.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

And so I'd say low mid single digits in that range for the residential top line.

Daniel Moore
Partner - Director of Research at CJS Securities

Got it. That's helpful. And then the I appreciate the recast. I was going to ask the revenue contribution from some of the divested businesses, but it looks like if I build in about $100,000,000 for Lane supply organic growth kind of 0% to 4%. Is that how you're thinking about 2025 top line?

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Yes, I think that's fair. I'd say more closer towards four than 0%, but and listen, I'll also tell you that with the macro environment the way it's been, there's still a lot of questions out there. I mean, we're fairly confident. As I mentioned, the way we built the plan was taking a lot of that into consideration. But I would also tell you, we're probably leaning a little bit more on the conservative side than we would otherwise just because.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

But we feel good about the organic plan in that range. And obviously Lane is going to contribute a nice chunk this year as well. And hopefully, we'll see how things evolve throughout the year, but we feel good about the way the top line plan is built between organic and inorganic at this stage.

Daniel Moore
Partner - Director of Research at CJS Securities

Okay. And then maybe one more and I'll jump back, but shifting to renewables, new bookings accelerated up 33% in January, obviously, good initial sign.

Daniel Moore
Partner - Director of Research at CJS Securities

Can you just put

Daniel Moore
Partner - Director of Research at CJS Securities

that in perspective? Is that mainly catch up from Q4 bookings or are we seeing more sustained turn? And then similar question, H1 revenue versus H2, how do we think about the cadence of revenue built out over the year? Thanks again.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Yes. So if you guys if everyone remembers a little bit, we talked about this a bit. Our bookings were down in the second half of last year, which we knew that was going to be the case because we had a lot of our customers laser focused on getting through this December 3 deadline and that was quite consuming. And if you recall in the last call, I said that will start to turn beginning of the year as we get these everyone gets this stuff behind them. The second thing I'd mentioned was the ADCVD, the DOC investigation number two, that should be close to say, I'd say market item prior to the new administration coming on that people were thinking through.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

So we were suppressed I would say on bookings. We knew that would turn and the team's done a nice job of making that happen. So because your bookings from time we sign a contract and get a deposit till we start generating revenue, we can do that in the same year, but it's about a six to nine month timeframe. So if your bookings were down in the second half of last year, your first half of revenue this year is going to be suppressed as a result of that. The bookings that have been coming in beginning of this year will actually contribute to revenue starting in the second half of twenty twenty five.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

So our second half is going to be stronger. It normally is anyway because of seasonality. But because of the bookings phenomena I just described, it's going to be stronger than first half. So we've said that we would start out slow and we would start to build momentum in Q3 and Q4. We need the bookings to start happening the way they have for that to be the case.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

And so we built our plan as I mentioned to be down to a little bit, but it's assuming first half light, second half more indicative of where we think the business will be running from other cadence and pace perspective. So that's what I'd look for both top and bottom line, first half versus second half.

Daniel Moore
Partner - Director of Research at CJS Securities

Okay, helpful. I'll jump back with any follow ups. Thanks.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Yes.

Operator

Our next question is from the line of Julio Romero with Sidoti and Company. Please proceed with your question.

Justin Mechetti
Equity Research Associate at Sidoti & Company, LLC

Good morning. This is Justin Machetti on for Julio. Thank you for taking questions.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Hey, Justin.

Justin Mechetti
Equity Research Associate at Sidoti & Company, LLC

So on M and A, could you tell us more about your decision to acquire Land Supply? Maybe how you filter down to that business and how you're thinking about its immediately accretive nature?

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Yes. So number one, we've been in the structures business for quite a long time, Justin, really going back about eighty years and it started in our basic greenhouse business. But we do have a lot of different types of structures that we design and create and manufacture and install today, whether it's botanical gardens or retail centers, car watches as I showed in the slide today. We've been at that for quite a long time. And so the types of things that Lane does are very much similar to what we've grown up with and they've grown up with.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

And so we think it's a good fit on a number of fronts. Our the synergies around what we do really do overlap. And we found an end market that we've been looking at for some time that one is quite sizable and secondly is experiencing some pretty solid growth rate mid single digits both historically and projected. So yes, we're excited about them coming into the fold. It's a nice complement to what we've been doing for quite a long time.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

There's a nice opportunity to leverage not only just on the customer side, but also on the supply side as well as field installation and construction. So that's how we got to that point. Lane is a good operating company and feel like there's a lot of runway. And yes, we believe if you just took the last year's results, they would be accretive to us. And so we expect that to happen again in 2025 and looking forward to that being the case.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

So that's the story around Lane.

Justin Mechetti
Equity Research Associate at Sidoti & Company, LLC

Great. Thanks for the color there. Sure. And then on guidance, looking out on the year beyond the first half and second half cadence, can you talk about what would bring you to the upper and lower ends of guidance in terms of revenue and EPS?

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Well, there's a story for each business that kind of is built up to get to that total as you see. But the way that we thought about this year's plan, what's going to happen in this renewables end market? What's the administration going to do with energy policy and so forth? So I would say there's a bit of that built into the downside piece of this. And if things don't get thrown a wrench, if you will, in that particular marketplace around the IRA or the ITC benefits, then that's one scenario.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

And we don't and we think we kind of think that's probably the case in renewables this year. But again, there's still a lot of pause going on in portions of the market as to what is going to happen. And so we'll play that by ear. And as we see things evolve this year, it'll be quarter to quarter from an end market perspective that will give us a better feel. But we took a conservative approach coming in just because there's still a lot of things in flight.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

I think on the if you think about residential, we're not expecting that market to be super robust and interest rates aren't going to move dramatically different. All those base assumptions are probably consistent with last year. And it really comes down to the timing of our participation gains. So if some of those happen a little bit sooner, if we open up additional locations a little bit quicker then there may be more upside in that business than what we're showing. Vice versa, they don't all happen at the time that's built into plan.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Maybe there's a little downside. So but that's not going to swing one way or the other dramatically in the residential business. And AgTech is going to be a big contributor this year. So is there more upside opportunity there with the way orders are flowing in? Yes, there could be.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

But again, these are large projects and you've got a timing element there sometimes that can play into that. But then you have something like Lane that's being added to the business that should bring more of a cadence in the AgTech business because the way their projects roll out are really weekly. In other words, if you think about where they support and the types of customers they support, they get a view of words of ten to up to fifty weeks worth of schedule around installing canopies designing and installing canopies around these applications. So hopefully that will give us a little more cadence and understanding and foundation on the core business. And we'll see how that evolves.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

It's a new business for us, but we think that there's some it's a solid business, but we've kind of got that built in with a little bit of growth over last year. So as I said right upfront, you could give us for a little bit of being conservative this year going into this plan, but I feel it's really balanced based on the things that are going on in the end market. I think our businesses are in a good position. We're not requiring renewables to have a blowout year to deliver this plan. I think that's prudent way to think about that given everything we talked about.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

So I think we're balanced and I think we have a solid plan, but that's probably more than you're looking for, but that's

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

the way we've been thinking about it.

Justin Mechetti
Equity Research Associate at Sidoti & Company, LLC

Thanks very much. That's all for me. I'll turn it back.

Operator

Thank you. Our next question is from the line of Walt Liptak with Seaport Research. Please proceed with your questions.

Walter Liptak
Industry Analyst at Seaport Research Partners

Hey guys, good morning. Thanks for the good quarter. I wanted to ask first about the resi delays as sort of a follow on. So there's been a couple of earnings releases so far with these delays. And I wonder if you could help us understand a little bit more maybe about the size of these gains and how much is kind of layering in now and how much more is there to go get?

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Yes. So, well, you remember, I think I said in Q3, it impacts around $4,000,000 I would say just on seasonality, it's probably a little less than Q4, but that was probably the for 2024, I'd say that $5,000,000 to $6,000,000 range was the impact. That has started as I mentioned, we started to see those orders. So our views will pick that up this year and hopefully get a full year effect of that. So we'll see how that evolves, but that's at a minimum the starting point to be incremental growth versus the previous year, right?

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

If you just do the simple math. So that's one thing that I think we're excited about is the fact that we started to see. I think our new products particularly the pipe boot that I've shown pictures of here the last couple of quarters, those orders are starting to materialize. The opening of our Boise, Idaho facility, which we didn't have last year is going to be impactful in 2025. And that was through really asset acquisition.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

So it enables us to get a quicker going there. So we've got a variety of these things sprinkled around the country and certain markets and whether it's geographic play or we've won more branches at a wholesaler or we've been awarded more business with a retailer. We've got a number of those things happening. But I look for our participation gains to be pretty impactful in the year. I don't think we're going to have right now in the docket, we don't really have anything planned from a PLS perspective, where we'd impact sales negatively, meaning getting out of something something like we did with our safety harness and metal some of our metal business, our drywall metal business, which was also impactful during 2024.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

And that was probably -five million dollars to $7,000,000 on the top line. So I think we've put our DEX on that. And so our focus is really about those participation gains and take advantage of the ones that we won last year and the ones that we're working on this year at the same time. So that's how the plan has been built.

Walter Liptak
Industry Analyst at Seaport Research Partners

Okay, great. Yes, thanks. And thanks for going into the product line simplification program that you did. We generally think of those as being pretty healthy and like a good thing, even though the revenue goes away. And I wonder, are you doing regular reviews of product lines as part of your eightytwenty program?

Walter Liptak
Industry Analyst at Seaport Research Partners

I mean, how robust is the eightytwenty program at this point?

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Yes, I wouldn't say we've let our foot off the gas, which is why you saw some of those PLS activities in our build accessories business last year. But yes, our pipeline of different types of eightytwenty initiatives is as big as it's ever been. It's kind of core to what we do. So, but there are other things that obviously each business is working on that will make a big difference, but it's a big contributor towards our margin improvement opportunities and frankly, in a lot of cases are top line growth opportunities as well. Okay,

Walter Liptak
Industry Analyst at Seaport Research Partners

great. Just a couple more kind of follow ons on the tariff issue. I understand that it's a dynamic situation. And so I was wondering about the issue of at some point if prices go up, is there a chance for like alternatives in the regions that you operate or is there no alternative cost prohibitive, I guess, to switch to alternative growth in material?

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

No, it's a good question. And I would say, we get our leadership team together twice a year or for a couple of days and it's the business unit leaders and the corporate team, it's 12 of us if you will. But in early January, we went ahead

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

and said, look, let's assume that we're going to

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

get tariffs. There was a lot of room around it, but let's start factoring that in. And so each business has a different starting point with what that might mean from either competitive customer or internal perspective, right? So if you're in the construction businesses, if you recall when we all went through this in a much more extraordinarily challenging way three years ago, people got caught. And so we want to make sure, number one, we're proactive in front of it.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

So whether if you're in project based businesses, you have contracts, you want to make sure you have your causes right, you want to have your supply chain aligned appropriately with you and so on and so forth. If you're in the build and ship kind of business like residential, you want to go through the same type of assessment except for in residential, if you recall, we have indexes already built into our contracts that support movement on things like our costs. And so whether it's driven by tariffs or general inflation or otherwise, that process is in place. So I would tell everybody this that, get in a position where you're ready to roll, be prepared to make adjustments as needed. But we've been through Helen back with inflation three years ago that is was much more challenging in a lot of ways than whatever this tariff situation is going to lend itself to be.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

I'm not saying it's a non issue. I'm just saying we know how to deal with this kind of situation. If you recall, we had steel going up $50 a week for 50 straight weeks, right? That's not what this is. And so getting our plans in place, having initial conversations with customers the last four weeks, planting seeds about what's coming, everyone knows this is going to happen or some element of it will happen.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

So just getting each business ready to go, whether it's whatever those actions are, looking at and understanding your inventory, looking at and understanding where you're getting all your key components and trying to understand how far the tariffs go down. Is it just the raw material? Is it value added products? And putting a plan in place for each of those. So the work's been ongoing now for the last five, six weeks.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

We have plans, I think, in place in most of our businesses to execute when the time is right and when things come into play, but I suspect some things will change between now and then and that's okay. We'll be ready to go. So it's a non issue from a standpoint of we've been there, done that, we know how to deal with it, we have processes in place, we've got a playbook. It's still an issue ultimately at the end of the day if it impacts other things, macro wise. So we'll take it as it comes and I think we're well prepared to deal with it accordingly.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

So that's where we are today across East Bay.

Walter Liptak
Industry Analyst at Seaport Research Partners

Okay. Thank you for that. And in your review, are there anywhere if the price goes up, there might be a switch to an alternative, especially in residential?

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

No, I don't think so. Here's the reason why. I mean, first and foremost, in residential, remember, it's a very conservative marketplace. So contractors in general don't like to change quickly. Now if you back them up into a corner to where they don't have a choice, that might be the case.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

But when this happened, remember, we have an experience that's only twenty four months old, thirty months old where that was the case and what options did they have. And oftentimes, I think what happens is A, I don't want to change because I'm not familiar with that product. And if I'm a contractor, I'm very concerned because I can't afford to not do it right the first time. And it's time value money out on the roof and I got to get on and off and move on, right? So anything that disrupts that model, they're going to think hard about that.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Secondly, if there is a substitution effect option, I suspect that will people will take advantage and raise that price as well. That's what we saw a couple of years ago. So I'm not as concerned about that. But some of our new products by the way are putting us in a better position than we would have been two years ago as well. They're either patented and or cost reduced such that we have some flexibility in how we could support the environment differently would have otherwise.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

So a lot of different levers there Walt will play, but I'm not overly concerned about a substitution issue at this stage.

Walter Liptak
Industry Analyst at Seaport Research Partners

Okay. And then maybe one last one for me. It's good to see also the divestiture too. And I think the why around the divestiture was low revenue, lower margins. And I just wondered with the portfolio, do you go through regular annual reviews of the different businesses and segments and do they fit, is that part of the annual process?

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

It is. And we just had our board together for two days in January on that very topic. Well, as one of many topics is that as we go through our next strategy plan or the continuation of our strategic plan. So yes, and if you recall, we do have a committee in place and we discuss that every quarter. So if there is something with the portfolio that we say we're going to go do, that's reviewed annually at a minimum and those can be big or small.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

But whatever it is we decide to do every quarter, we track that progress with the committee to see how we're doing and how that's coming along. So yes, it's front and center from the Board throughout our leadership team on a regular basis.

Walter Liptak
Industry Analyst at Seaport Research Partners

Okay, great. Appreciate it. Thank you. Good luck this year.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Yes. Thank you.

Operator

Thank you. At this time, there are no further questions. And I'll turn the floor back to Mr. Bosway for closing remarks.

Bill Bosway
Bill Bosway
Chairman, President & Chief Executive Officer at Gibraltar Industries

Yes. Listen, I just want to thank everyone again for joining us today. Coming up, we do plan for 2% at the Cabela Pump and Water Symposium, the Sidoti Small Cap Conference and the thirty seventh Annual Roth Conference. Again, I want to thank everyone for your support for Gibraltar and we look forward to speaking again after our first quarter report. Thank you.

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation. Have a wonderful day.

Executives
    • Bill Bosway
      Bill Bosway
      Chairman, President & Chief Executive Officer
    • Joe Lovechio
      Joe Lovechio
      CFO
Analysts
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Earnings Conference Call
Gibraltar Industries Q4 2024
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