UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number ~~0-22462~~000-22462

GIBRALTAR INDUSTRIES, INC.

(Exact name of Registrant as specified in its charter)

Delaware

16-1445150

(State orof incorporation )

(I.R.S. Employer Identification No.)

3556 Lake Shore Road

P.O. Box 2028

Buffalo

New York

14219-0228

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (716) 826-6500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value per share

ROCK

NASDAQ Stock Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May ~~4, 2021,~~3, 2022, the number of common shares outstanding was: ~~32,629,646.~~32,793,333.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

INDEX


		PAGE NUMBER
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Income for the Three Months Ended March 3 1 31 , 202 12 and 20202 201 (unaudited)	3
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 3 1 31 , 202 12 and 20202 201 (unaudited)	4
	Consolidated Balance Sheets as of March 3 1 31 , 202 12 (unaudited) and December 31, 20202 201	5
	Consolidated Statements of Cash Flows for the Three Months Ended March 3 1 31 , 202 12 and 20202 201 (unaudited)	6
	Consolidated Statement of S ~~tockholders’~~Stockholders’ Equity for the Three Months Ended March 3 1 31 , 202 12 and 20202 201 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2321
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3128
Item 4.	Controls and Procedures	3128
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	3129
Item 1A.	Risk Factors	3129
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3129
Item 3.	Defaults Upon Senior Securities	3130
Item 4.	Mine Safety Disclosures	3130
Item 5.	Other Information	3130
Item 6.	Exhibits	3231
	SIGNATURES	3332

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Net Sales	Net Sales	$	287,592	$	215,401		Net Sales	$	317,865	$	287,592
Cost of sales	Cost of sales	227,574		165,540			Cost of sales	253,021		227,574
Gross profit	Gross profit	60,018		49,861			Gross profit	64,844		60,018
Selling, general, and administrative expense	Selling, general, and administrative expense	47,203		37,084			Selling, general, and administrative expense	43,649		47,203

Income from operations	Income from operations	12,815		12,777			Income from operations	21,195		12,815
Interest expense	Interest expense	444		44			Interest expense	485		444
Other expense	Other expense	315		518			Other expense	153		315
Income before taxes	Income before taxes	12,056		12,215			Income before taxes	20,557		12,056
Provision for income taxes	Provision for income taxes	1,560		2,313			Provision for income taxes	5,101		1,560
Income from continuing operations	Income from continuing operations	10,496		9,902			Income from continuing operations	15,456		10,496
Discontinued operations:	Discontinued operations:						Discontinued operations:
Income before taxes	Income before taxes	2,570		2,830			Income before taxes	—		2,570
Provision for income taxes	Provision for income taxes	304		673			Provision for income taxes	—		304
Income from discontinued operations	Income from discontinued operations	2,266		2,157			Income from discontinued operations	—		2,266
Net income	Net income	$	12,762	$	12,059		Net income	$	15,456	$	12,762
Net earnings per share – Basic:	Net earnings per share – Basic:						Net earnings per share – Basic:
Income from continuing operations	Income from continuing operations	$	0.32	$	0.30		Income from continuing operations	$	0.47	$	0.32
Income from discontinued operations	Income from discontinued operations	0.07		0.07			Income from discontinued operations	—		0.07
Net income	Net income	$	0.39	$	0.37		Net income	$	0.47	$	0.39
Weighted average shares outstanding -- Basic		32,771		32,586
Weighted average shares outstanding – Basic							Weighted average shares outstanding – Basic	32,913		32,771
Net earnings per share – Diluted:	Net earnings per share – Diluted:						Net earnings per share – Diluted:
Income from continuing operations	Income from continuing operations	$	0.32	$	0.30		Income from continuing operations	$	0.47	$	0.32
Income from discontinued operations	Income from discontinued operations	0.07		0.07			Income from discontinued operations	—		0.07
Net income	Net income	$	0.39	$	0.37		Net income	$	0.47	$	0.39
Weighted average shares outstanding -- Diluted		33,104		32,883
Weighted average shares outstanding – Diluted							Weighted average shares outstanding – Diluted	33,022		33,104

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Net income	Net income	$	12,762	$	12,059		Net income	$	15,456	$	12,762
Other comprehensive income (loss):
Other comprehensive (loss) income:							Other comprehensive (loss) income:
Foreign currency translation adjustment	Foreign currency translation adjustment	3,198		(5,898)			Foreign currency translation adjustment	(227)		3,198

Minimum post retirement benefit plan adjustments		27		18
Minimum post retirement benefit plan adjustments, net of tax							Minimum post retirement benefit plan adjustments, net of tax	24		27

Other comprehensive income (loss)		3,225		(5,880)
Other comprehensive (loss) income							Other comprehensive (loss) income	(203)		3,225
Total comprehensive income	Total comprehensive income	$	15,987	$	6,179		Total comprehensive income	$	15,253	$	15,987

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(unaudited)					(unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	20,731	$	32,054	Cash and cash equivalents	$	15,573	$	12,849
Accounts receivable, net of allowance of $3,319 and $3,529		199,598		197,990
Accounts receivable, net of allowance of $4,433 and $3,738, respectively						Accounts receivable, net of allowance of $4,433 and $3,738, respectively	245,807		236,444
Inventories, net	Inventories, net	107,004		98,307		Inventories, net	187,255		176,207
Prepaid expenses and other current assets	Prepaid expenses and other current assets	24,684		19,671		Prepaid expenses and other current assets	36,836		21,467
Assets of discontinued operations		0		77,438

Total current assets	Total current assets	352,017		425,460		Total current assets	485,471		446,967
Property, plant, and equipment, net	Property, plant, and equipment, net	91,717		89,562		Property, plant, and equipment, net	97,720		96,885
Operating lease assets	Operating lease assets	23,465		25,229		Operating lease assets	16,082		18,120
Goodwill	Goodwill	523,446		514,279		Goodwill	510,540		510,942
Acquired intangibles	Acquired intangibles	151,877		156,365		Acquired intangibles	132,107		141,504
Other assets	Other assets	12,669		1,599		Other assets	420		483
		$	1,155,191	$	1,212,494		$	1,242,340	$	1,214,901
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	135,130	$	134,738	Accounts payable	$	159,214	$	172,286
Accrued expenses		71,946		83,505
Accrued expenses and other current liabilities						Accrued expenses and other current liabilities	67,495		67,993
Billings in excess of cost	Billings in excess of cost	51,591		34,702		Billings in excess of cost	60,992		46,711

Liabilities of discontinued operations		0		49,295

Total current liabilities	Total current liabilities	258,667		302,240		Total current liabilities	287,701		286,990
Long-term debt	Long-term debt	58,023		85,636		Long-term debt	42,367		23,781
Deferred income taxes	Deferred income taxes	37,996		39,057		Deferred income taxes	40,221		40,278
Non-current operating lease liabilities	Non-current operating lease liabilities	16,165		17,730		Non-current operating lease liabilities	9,377		11,390
Other non-current liabilities	Other non-current liabilities	25,932		24,026		Other non-current liabilities	24,272		27,204
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; NaN outstanding		0		0
Common stock, $0.01 par value; authorized 50,000 shares; 33,711 shares and 33,568 shares issued and outstanding in 2021 and 2020		337		336
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding						Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding	—		—
Common stock, $0.01 par value; authorized 100,000 shares in 2022 and 2021; 33,972 shares and 33,799 shares issued and outstanding in 2022 and 2021						Common stock, $0.01 par value; authorized 100,000 shares in 2022 and 2021; 33,972 shares and 33,799 shares issued and outstanding in 2022 and 2021	340		338
Additional paid-in capital	Additional paid-in capital	308,147		304,870		Additional paid-in capital	315,891		314,541
Retained earnings	Retained earnings	482,705		469,943		Retained earnings	561,028		545,572
Accumulated other comprehensive income (loss)		764		(2,461)
Cost of 1,082 and 1,028 common shares held in treasury in 2021 and 2020		(33,545)		(28,883)
Accumulated other comprehensive (loss) income						Accumulated other comprehensive (loss) income	(16)		187
Cost of 1,179 and 1,107 common shares held in treasury in 2022 and 2021						Cost of 1,179 and 1,107 common shares held in treasury in 2022 and 2021	(38,841)		(35,380)
Total stockholders’ equity	Total stockholders’ equity	758,408		743,805		Total stockholders’ equity	838,402		825,258
		$	1,155,191	$	1,212,494		$	1,242,340	$	1,214,901

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash Flows from Operating Activities	Cash Flows from Operating Activities					Cash Flows from Operating Activities
Net income	Net income	$	12,762	$	12,059	Net income	$	15,456	$	12,762
Income from discontinued operations	Income from discontinued operations	2,266		2,157		Income from discontinued operations	—		2,266
Income from continuing operations	Income from continuing operations	10,496		9,902		Income from continuing operations	15,456		10,496
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash used in operating activities:						Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization	Depreciation and amortization	7,974		4,780		Depreciation and amortization	6,336		7,974
Stock compensation expense	Stock compensation expense	2,368		1,665		Stock compensation expense	1,352		2,368

Exit activity costs, non-cash	Exit activity costs, non-cash	1,193		0		Exit activity costs, non-cash	1,198		1,193

Benefit of deferred income taxes		0		(178)
Provision for deferred income taxes						Provision for deferred income taxes	17		—

Other, net	Other, net	(162)		386		Other, net	1,395		(162)

Changes in operating assets and liabilities, excluding the effects of acquisitions:	Changes in operating assets and liabilities, excluding the effects of acquisitions:					Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable	Accounts receivable	(2,522)		(7,180)		Accounts receivable	(11,101)		(2,522)
Inventories	Inventories	(15,262)		(7,242)		Inventories	(20,937)		(15,262)
Other current assets and other assets	Other current assets and other assets	(435)		6,218		Other current assets and other assets	731		(435)
Accounts payable	Accounts payable	1,470		(18,909)		Accounts payable	(11,962)		1,470
Accrued expenses and other non-current liabilities	Accrued expenses and other non-current liabilities	(6,334)		(33,268)		Accrued expenses and other non-current liabilities	9,761		(6,334)
Net cash used in operating activities of continuing operations	Net cash used in operating activities of continuing operations	(1,214)		(43,826)		Net cash used in operating activities of continuing operations	(7,754)		(1,214)
Net cash (used in) provided by operating activities of discontinued operations		(2,011)		814
Net cash used in operating activities of discontinued operations						Net cash used in operating activities of discontinued operations	—		(2,011)
Net cash used in operating activities	Net cash used in operating activities	(3,225)		(43,012)		Net cash used in operating activities	(7,754)		(3,225)
Cash Flows from Investing Activities	Cash Flows from Investing Activities					Cash Flows from Investing Activities
Purchases of property, plant, and equipment	Purchases of property, plant, and equipment	(4,389)		(2,144)		Purchases of property, plant, and equipment	(4,409)		(4,389)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(2)		(54,539)		Acquisitions, net of cash acquired	—		(2)
Net proceeds from sale of business	Net proceeds from sale of business	26,991		0		Net proceeds from sale of business	—		26,991

Net proceeds from sale of property and equipment	Net proceeds from sale of property and equipment	0		52		Net proceeds from sale of property and equipment	7		—
Net cash provided by (used in) investing activities of continuing operations		22,600		(56,631)
Net cash (used in) provided by investing activities of continuing operations						Net cash (used in) provided by investing activities of continuing operations	(4,402)		22,600
Net cash used in investing activities of discontinued operations	Net cash used in investing activities of discontinued operations	(176)		(678)		Net cash used in investing activities of discontinued operations	—		(176)
Net cash provided by (used in) investing activities		22,424		(57,309)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(4,402)		22,424
Cash Flows from Financing Activities	Cash Flows from Financing Activities					Cash Flows from Financing Activities
Proceeds from long-term debt	Proceeds from long-term debt	20,000		0		Proceeds from long-term debt	47,500		20,000
Long-term debt payments	Long-term debt payments	(46,636)		0		Long-term debt payments	(29,000)		(46,636)

Purchase of treasury stock at market prices		(4,662)		(4,184)
Purchase of common stock at market prices						Purchase of common stock at market prices	(3,461)		(4,662)
Net proceeds from issuance of common stock	Net proceeds from issuance of common stock	910		24		Net proceeds from issuance of common stock	—		910

Net cash used in financing activities		(30,388)		(4,160)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	15,039		(30,388)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(134)		(916)		Effect of exchange rate changes on cash	(159)		(134)
Net decrease in cash and cash equivalents		(11,323)		(105,397)
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	2,724		(11,323)
Cash and cash equivalents at beginning of year	Cash and cash equivalents at beginning of year	32,054		191,363		Cash and cash equivalents at beginning of year	12,849		32,054
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	20,731	$	85,966	Cash and cash equivalents at end of period	$	15,573	$	20,731

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


		Common Stock			Additional Paid-In Capital				Retained Earnings			Accumulated Other Comprehensive (Loss) Income		Treasury Stock					Total Stockholders’ Equity				Common Stock					Additional Paid-In Capital				Retained Earnings			Accumulated Other Comprehensive Income (Loss)				Treasury Stock					Total Stockholders’ Equity
		Shares	Amount								Shares			Amount				Shares				Amount									Shares							Amount
Balance at December 31, 2020		33,568	$	336			$	304,870				$	469,943	$	(2,461)	1,028					$	(28,883)		$	743,805
Balance at December 31, 2021																						Balance at December 31, 2021	33,799			$	338		$	314,541			$	545,572		$	187			1,107		$	(35,380)		$	825,258
Net income	Net income	—	—		—				12,762			—		—		—			12,762			Net income	—			—		—				15,456			—				—		—			15,456
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—				—			3,198		—		—			3,198			Foreign currency translation adjustment	—			—		—				—			(227)				—		—			(227)
Minimum post retirement benefit plan adjustments, net of taxes of $10	Minimum post retirement benefit plan adjustments, net of taxes of $10	—	—		—				—			27		—		—			27			Minimum post retirement benefit plan adjustments, net of taxes of $10	—			—		—				—			24				—		—			24

Stock compensation expense	Stock compensation expense	—	—		2,368				—			—		—		—			2,368			Stock compensation expense	—			—		1,352				—			—				—		—			1,352

Stock options exercised		25	—		910				—			—		—		—			910

Net settlement of restricted stock units	Net settlement of restricted stock units	118	1		(1)				—			—		54		(4,662)			(4,662)			Net settlement of restricted stock units	173			2		(2)				—			—				72		(3,461)			(3,461)

Balance at March 31, 2021		33,711	$	337	$	308,147			$	482,705		$	764	1,082		$	(33,545)		$	758,408
Balance at March 31, 2022																						Balance at March 31, 2022	33,972			$	340	$	315,891			$	561,028		$	(16)			1,179		$	(38,841)		$	838,402

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


		Common Stock			Additional Paid-In Capital				Retained Earnings			Accumulated Other Comprehensive Loss		Treasury Stock					Total Stockholders’ Equity					Common Stock				Additional Paid-In Capital				Retained Earnings			Accumulated Other Comprehensive (Loss) Income				Treasury Stock					Total Stockholders’ Equity
		Shares	Amount								Shares			Amount				Shares					Amount								Shares							Amount
Balance at December 31, 2019		33,192	$	332			$	295,582				$	405,668	$	(5,391)	906					$	(22,227)		$	673,964
Balance at December 31, 2020																							Balance at December 31, 2020	33,568		$	336		$	304,870			$	469,943		$	(2,461)			1,028		$	(28,883)		$	743,805
Net income	Net income	—	—		—				12,059			—		—		—			12,059				Net income	—		—		—				12,762			—				—		—			12,762
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—				—			(5,898)		—		—			(5,898)				Foreign currency translation adjustment	—		—		—				—			3,198				—		—			3,198
Minimum post retirement benefit plan adjustments, net of taxes of $7		—	—		—				—			18		—		—			18
Minimum post retirement benefit plan adjustments, net of taxes of $10																							Minimum post retirement benefit plan adjustments, net of taxes of $10	—		—		—				—			27				—		—			27

Stock compensation expense	Stock compensation expense	—	—		1,665				—			—		—		—			1,665				Stock compensation expense	—		—		2,368				—			—				—		—			2,368
Cumulative effect of accounting change		—	—		—				(291)			—		—		—			(291)

Stock options exercised	Stock options exercised	3	—		24				—			—		—		—			24				Stock options exercised	25		—		910				—			—				—		—			910

Net settlement of restricted stock units	Net settlement of restricted stock units	193	2		(2)				—			—		80		(4,184)			(4,184)				Net settlement of restricted stock units	118		1		(1)				—			—				54		(4,662)			(4,662)

Balance at March 31, 2020		33,388	$	334	$	297,269			$	417,436		$	(11,271)	986		$	(26,411)		$	677,357
Balance at March 31, 2021																							Balance at March 31, 2021	33,711		$	337	$	308,147			$	482,705		$	764			1,082		$	(33,545)		$	758,408

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1) CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited consolidated financial statements of Gibraltar Industries, Inc. (the "Company") have been prepared by management in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting of normal recurring adjustments considered necessary for the fair presentation of results for the interim period have been included. The Company's operations are seasonal; for this and other reasons, such as the impact of the COVID-19 pandemic, financial results for any interim period are not necessarily indicative of the results expected for any subsequent interim period or for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, ~~2020.~~2021.

The balance sheet at December 31, ~~2020~~2021 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

~~Table of Contents~~

(2) RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements Not Yet Adopted

Standard

Description

Financial Statement Effect or Other Significant Matters

ASU No. ~~2019-12~~

~~Income Taxes~~2020-04
Reference Rate Reform (Topic ~~740)~~848), ~~Simplifying the Accounting for Income Taxes~~

Facilitation of Effects of Reference Rate Reform on Financial Reporting, and
ASU No. 2021-01 Reference Rate Reform (Topic 848), Scope

The amendments in ~~this update simplify~~ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met, and apply only to contracts, hedging relationships, and other transactions that reference the ~~accounting for income taxes~~London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued as a result of reference rate reform. The expedients and exceptions provided by ~~removing~~the amendments in ASU 2020-04 do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in ASU 2021-01 clarify that certain optional expedients and exceptions ~~to the general principles~~ in Topic ~~740~~848 for contract modifications and ~~improve consistent application~~hedge accounting apply to derivatives that are affected by ~~clarifying and amending existing guidance. The amendments of this standard are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.~~the discounting transition.

The ~~standard is~~amendments in these updates are effective ~~for the Company~~ as of ~~January 1, 2021.~~March 12, 2020 through December 31, 2022, and may be applied retrospectively to contract modifications and hedging relationships from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date the financial statements are available to be issued. The ~~Company adopted~~adoption of the amendments in ~~this update and the adoption did~~these updates is not expected to have a material impact toon the ~~Company’s~~Company's financial statements.

~~Date of adoption: Q1 2021~~

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(3) ACCOUNTS RECEIVABLE, ~~AND ALLOWANCE FOR DOUBTFUL ACCOUNTS~~NET

Accounts receivable consists of the following (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Trade accounts receivable	Trade accounts receivable	$	175,277	$	174,604	Trade accounts receivable	$	203,860	$	185,745
Costs in excess of billings	Costs in excess of billings	27,640		26,915		Costs in excess of billings	46,380		54,437
Total accounts receivables	Total accounts receivables	202,917		201,519		Total accounts receivables	250,240		240,182
Less allowance for doubtful accounts and contract assets	Less allowance for doubtful accounts and contract assets	(3,319)		(3,529)		Less allowance for doubtful accounts and contract assets	(4,433)		(3,738)
Accounts receivable, net	Accounts receivable, net	$	199,598	$	197,990	Accounts receivable, net	$	245,807	$	236,444

Refer to Note 4 "Revenue" concerning the Company's costs in excess of billings.

The following table provides a roll-forward of the allowance for credit losses, for the three month period ended March 31, ~~2021,~~2022, that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.


Beginning balance as of January 1, ~~2021~~2022	$	~~3,529~~3,738

Bad debt expense, net of recoveries	~~(159)~~865
Accounts written off against allowance and other adjustments	~~(51)~~(170)
Ending balance as of March 31, ~~2021~~2022	$	~~3,319~~4,433

(4) REVENUE

Sales includes revenue from contracts with customers ~~for:~~for designing, engineering, manufacturing and installation of solar racking ~~systems and greenhouse structures;~~systems; electrical balance of ~~systems; extraction~~ systems; roof and foundation ventilation products; centralized mail systems and electronic package solutions; ~~rain dispersion products and roofing accessories;~~ retractable awnings; gutter guards; rain dispersion products; trims and flashings and other accessories; designing, engineering, manufacturing and installation of greenhouses; botanical extraction systems; structural bearings; expansion ~~joints~~joints; pavement sealant; elastomeric concrete; and ~~structural bearings.~~bridge cable protection systems.

Refer to Note 1514 "Segment Information" for additional information related to revenue recognized by timing of transfer of control by reportable segment.

As of March 31, ~~2021,~~2022, the Company's remaining performance obligations are part of contracts that have an original expected duration of one year or less.

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Contract assets consist of costs in excess of ~~billings.~~billings presented within accounts receivable in the Company's consolidated balance sheets. Contract liabilities consist of billings in excess of cost, classified as current liabilities, and unearned ~~revenue.~~revenue, presented within accrued expenses, in the Company's consolidated balance sheets. Unearned revenue as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 was ~~$13.1~~$2.4 million and ~~$21.3~~$3.7 million, respectively. Revenue recognized during the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 that was in contract liabilities at the beginning of the respective periods was ~~$40.7~~$27.4 million and ~~$38.1~~$40.7 million, respectively.

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(5) INVENTORIES

Inventories consist of the following (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Raw material	Raw material	$	73,364	$	66,018	Raw material	$	139,449	$	135,558
Work-in-process	Work-in-process	4,844		5,382		Work-in-process	7,187		5,858
Finished goods	Finished goods	32,757		31,205		Finished goods	46,897		39,256
Gross inventory	Gross inventory	$	110,965	$	102,605	Gross inventory	$	193,533	$	180,672
Less reserves	Less reserves	(3,961)		(4,298)		Less reserves	(6,278)		(4,465)
Total inventories, net	Total inventories, net	$	107,004	$	98,307	Total inventories, net	$	187,255	$	176,207

(6) ~~ACQUISITIONS~~

~~2020 Acquisitions~~

During the year ended December 31, 2020, the Company acquired 5 businesses in separate transactions, 2 of which are included within our Renewables segment, 2 in our Agtech segment, and 1 in our Residential segment. The purchase consideration for each acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values.

On December 31, 2020, the Company purchased all the outstanding membership interests of TerraSmart LLC ("TerraSmart"), a leading provider of screw-based, ground-mount solar racking technology, particularly used for solar projects installed on challenging terrain. The results of TerraSmart have been included in the Company's consolidated financial results since the date of acquisition within the Company's Renewables segment. The preliminary purchase consideration for the acquisition of TerraSmart was $223.7 million, which includes a preliminary working capital adjustment and certain other adjustments provided for in the stock purchase agreement.

The purchase price for the TerraSmart acquisition was preliminarily allocated to the assets acquired and liabilities assumed based upon their respective fair values estimated as of the date of acquisition. The Company has commenced the process to confirm the existence, condition and completeness of the assets acquired and liabilities assumed to establish fair values of such acquired assets and assumed liabilities and to determine the amount of goodwill to be recognized as of the date of acquisition. Due to the timing of the acquisition, we continue to gather information supporting the acquired assets and assumed liabilities. Accordingly, all amounts recorded are provisional. These provisional amounts are subject to change if new information is obtained concerning facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. The final determination of the fair value of certain assets and liabilities will be completed within a measurement period of up to one year from the date of acquisition. The final values may also result in changes to depreciation and amortization expense related to certain assets such as property, plant and equipment and acquired intangible assets. The preliminary excess consideration was recorded as goodwill and approximated $153.7 million, all of which is deductible for tax purposes. Goodwill represents future economic benefits arising from other assets acquired that could not be individually identified including workforce additions, growth opportunities, and increased presence in the domestic solar energy market. The final purchase price allocation will be completed no later than December 31, 2021.

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The preliminary allocation of the TerraSmart purchase consideration to the estimated fair value of the assets acquired and liabilities assumed is as follows as of the date of the acquisition (in thousands):


~~Cash~~	$	~~1,491~~
~~Working capital~~	~~7,158~~
~~Property, plant and equipment~~	~~9,396~~
~~Acquired intangible assets~~	~~51,700~~
~~Other assets~~	~~1,855~~
~~Other liabilities~~	~~(1,636)~~
~~Goodwill~~	~~153,690~~
~~Fair value of purchase consideration~~	$	~~223,654~~

~~The intangible assets acquired in the TerraSmart acquisition consisted of the following (in thousands):~~


	~~Fair Value~~		~~Weighted-Average Amortization Period~~
~~Trademarks~~	$	~~16,400~~	~~Indefinite~~
~~Trademarks~~	~~300~~		~~7 years~~
~~Technology~~	~~2,500~~		~~15 years~~
~~Customer relationships~~	~~24,000~~		~~10 years~~
~~Non-compete agreements~~	~~2,200~~		~~5 years~~
~~Backlog~~	~~6,300~~		~~Less than 1 year~~
~~Total~~	$	~~51,700~~

On December 11, 2020, the Company purchased all the outstanding stock of Sunfig Corporation ("Sunfig"), a provider of software solutions that optimize solar energy investments through upstream design, performance and financial modeling, for a preliminary purchase consideration of $3.8 million, which includes a preliminary working capital adjustment and certain other adjustments provided for in the stock purchase agreement. The results of Sunfig have been included in the Company's consolidated financial results since the date of acquisition within the Company's Renewables segment. The excess consideration was recorded as goodwill and approximated $3.2 million, all of which is deductible for tax purposes.

On October 15, 2020, the Company purchased substantially all of the assets of Architectural Mailboxes LLC ("Architectural Mailboxes"), a complementary addition to the Company's existing mail and package solutions business within the Residential segment, for a preliminary purchase consideration of $26.9 million, which includes a working capital adjustment and certain other adjustments provided for in the asset purchase agreement. The results of Architectural Mailboxes have been included in the Company's consolidated financial results since the date of acquisition within the Company's Residential segment. The excess consideration was recorded as goodwill and approximated $7.4 million, all of which is deductible for tax purposes.

On February 13, 2020, the Company purchased substantially all of the assets of Delta Separations, LLC and Teaching Tech, LLC (collectively, "Delta Separations") for a purchase consideration of $47.1 million, which includes a working capital adjustment and certain other adjustments provided for in the asset purchase agreement. Delta Separations was a privately-held engineering company primarily engaged in the assembly and sale of centrifugal ethanol-based extraction systems. The results of Delta Separations have been included in the Company's consolidated financial results since the date of acquisition within the Company's Agtech segment. The excess consideration was recorded as goodwill and approximated $32.2 million, all of which is deductible for tax purposes.

On January 15, 2020, the Company purchased substantially all of the assets of Thermo Energy Systems Inc. ("Thermo"), a Canadian-based, privately held provider of commercial greenhouse solutions in North America providing growing infrastructure for the plant based organic food market, for a purchase consideration of $7.3 million. The results of Thermo have been included in the Company's consolidated financial results since the date of acquisition within the Company's Agtech segment. Goodwill of approximately $18.7 million was recorded, all of which is deductible for tax purposes.

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The preliminary allocation of the purchase price for Sunfig and Architectural Mailboxes remains subject to adjustments during the measurement period as third-party valuations are finalized. The preliminary and final allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed in the acquisitions of Sunfig, Architectural Mailboxes, Delta Separations and Thermo is as follows as of the respective date of the acquisition (in thousands):


~~Cash~~	$	~~200~~
~~Working capital~~	~~(14,957)~~
~~Property, plant and equipment~~	~~1,740~~
~~Acquired intangible assets~~	~~38,296~~
~~Other current assets~~	~~1,528~~
~~Other assets~~	~~2,381~~
~~Other liabilities~~	~~(5,508)~~
~~Goodwill~~	~~61,422~~
~~Fair value of purchase consideration~~	$	~~85,102~~

Goodwill represents future economic benefits arising from other assets acquired that could not be individually identified including workforce additions, growth opportunities, and increased presence in the respective markets.

~~The intangible assets acquired in the acquisitions of Sunfig, Architectural Mailboxes, Delta Separations and Thermo consisted of the following (in thousands):~~


	~~Fair Value~~		~~Weighted-Average Amortization Period~~
~~Trademarks~~	$	~~8,200~~	~~Indefinite~~
~~Trademarks~~	~~1,177~~		~~3 years~~
~~Technology~~	~~8,175~~		~~7 - 15 years~~
~~Customer relationships~~	~~18,780~~		~~5 - 13 years~~
~~Non-compete agreements~~	~~1,036~~		~~5 years~~
~~Backlog~~	~~928~~		~~Less than 1 year~~
~~Total~~	$	~~38,296~~

In determining the allocation of the purchase price to the assets acquired and the liabilities assumed, the Company uses all available information to make fair value determinations using Level 3 unobservable inputs in which little or no market data exists, and therefore, engages independent valuation specialists to assist in the fair value determination of the acquired long-lived assets.

The acquisition of TerraSmart was financed through a combination of cash on hand and borrowings under the Company's revolving credit facility. The acquisitions of Sunfig, Architectural Mailboxes, Delta Separations and Thermo were funded from available cash on hand.

The Company incurred certain acquisition-related costs composed of legal and consulting fees. These costs were recognized as a component of selling, general, and administrative expenses in the consolidated statement of operations. During the three months ended March 31, 2021 and 2020, the Company incurred $0.9 million and $1.3 million, respectively, in acquisition-related costs. The Company did 0t recognize acquisition-related costs as a component of cost of sales for the three months ended March 31, 2021 and 2020, respectively.

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~~(7)~~ GOODWILL AND RELATED INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the three months ended March 31, ~~2021~~2022 are as follows (in thousands):

Renewables Residential Agtech Infrastructure Total
Balance at December 31, 2020 $ 192,527 $ 205,452 $ 84,622 $ 31,678 $ 514,279
Adjustments to prior year acquisitions 9,951 0 0 0 9,951
Foreign currency translation (989) 0 205 0 (784)
Balance at March 31, 2021 $ 201,489 $ 205,452 $ 84,827 $ 31,678 $ 523,446


	Renewables		Residential		Agtech		Infrastructure		Total
Balance at December 31, 2021	$	188,680	$	205,452	$	85,132	$	31,678	$	510,942


Foreign currency translation	(707)		—		305		—		(402)
Balance at March 31, 2022	$	187,973	$	205,452	$	85,437	$	31,678	$	510,540

The Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing. The Company determined that a triggering event has not occurred as of March 31, 2022 which would require an interim impairment test to be performed.

Acquired Intangible Assets

Acquired intangible assets consist of the following (in thousands):


		March 31, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:									Indefinite-lived intangible assets:
Trademarks	Trademarks	$	56,670	$	0	$	56,570	$	0	Trademarks	$	52,700	$	—	$	52,700	$	—
Finite-lived intangible assets:	Finite-lived intangible assets:									Finite-lived intangible assets:
Trademarks	Trademarks	5,831		3,574		5,818		3,385		Trademarks	5,540		4,161		5,521		4,011
Unpatented technology	Unpatented technology	38,892		18,479		38,752		17,765		Unpatented technology	34,425		20,365		38,474		20,656
Customer relationships	Customer relationships	98,135		33,298		98,500		31,580		Customer relationships	104,252		40,777		108,591		39,832
Non-compete agreements	Non-compete agreements	4,888		1,913		4,885		1,747		Non-compete agreements	2,389		1,896		2,686		1,969
Backlog	Backlog	7,235		2,510		7,228		911		Backlog	6,910		6,910		7,200		7,200
		154,981		59,774		155,183		55,388			153,516		74,109		162,472		73,668
Total acquired intangible assets	Total acquired intangible assets	$	211,651	$	59,774	$	211,753	$	55,388	Total acquired intangible assets	$	206,216	$	74,109	$	215,172	$	73,668

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The following table summarizes the acquired intangible asset amortization expense for the three months ended March 31 (in thousands):

Three Months Ended

March 31,
2021 2020
Amortization expense $ 4,743 $ 1,984


	Three Months Ended March 31,
	2022		2021
Amortization expense	$	3,098	$	4,743

Amortization expense related to acquired intangible assets for the remainder of fiscal ~~2021~~2022 and the next five years thereafter is estimated as follows (in thousands):

2021 2022 2023 2024 2025 2026
Amortization expense $ 14,140 $ 12,120 $ 11,195 $ 11,014 $ 10,780 $ 8,700


	2022		2023		2024		2025		2026		2027
Amortization expense	$	8,261	$	10,221	$	10,040	$	9,900	$	8,435	$	6,756

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~~(8)~~(7) LONG-TERM DEBT

Long-term debt consists of the following (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Revolving credit facility	Revolving credit facility	$	59,000	$	85,000	Revolving credit facility	$	43,000	$	24,500
Other debt		0		636

Less unamortized debt issuance costs	Less unamortized debt issuance costs	(977)		0		Less unamortized debt issuance costs	(633)		(719)
Total debt	Total debt	$	58,023	$	85,636	Total debt	$	42,367	$	23,781

Senior Credit Agreement

On January 24, 2019, the Company entered into a Sixth Amended and Restated Credit Agreement ("Senior Credit Agreement"), which amended and restated the Company’s Fifth Amended and Restated Credit Agreement dated December 9, 2015, and provides for a revolving credit facility and letters of credit in an aggregate amount equal to $400 million. The Company can request additional financing from the lenders to increase the revolving credit facility to $700 million or enter into a term loan of up to $300 million subject to conditions set forth in the Senior Credit Agreement. The Senior Credit Agreement contains 3 financial covenants. As of March 31, ~~2021,~~2022, the Company was in compliance with all 3 covenants.

Interest rates on the revolving credit facility are based on LIBOR plus an additional margin that ranges from 1.125% to 2.00%. In addition, the revolving credit facility is subject to an undrawn commitment fee ranging between 0.15% and 0.25% based on the Total Leverage Ratio (as defined in the Senior Credit Agreement) and the daily average undrawn balance. The Senior Credit Agreement terminates on January 23, 2024.

Borrowings under the Senior Credit Agreement are secured by the trade receivables, inventory, personal property, equipment, and general intangibles of the Company’s significant domestic subsidiaries. Capital distributions under the Senior Credit Agreement are capped at an annual aggregate limit of $75 million if the Company's leverage ratio is over 3.0 times.

Standby letters of credit of ~~$6.2~~$5.5 million have been issued under the Senior Credit Agreement on behalf of the Company as of March 31, ~~2021.~~2022. These letters of credit reduce the amount otherwise available under the revolving credit facility. The Company had ~~$334.8~~$351.5 million and ~~$309.2~~$369.3 million of availability under the revolving credit facility at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

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~~(9)~~(8) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

The following tables summarize the cumulative balance of each component of accumulated other comprehensive ~~loss,~~income (loss), net of tax, for the three months ended March 31, (in thousands):


		Foreign Currency Translation Adjustment		Minimum post retirement benefit plan adjustments		Total Pre-Tax Amount		Tax (Benefit) Expense		Accumulated Other Comprehensive (Loss) Income			Foreign Currency Translation Adjustment		Minimum post retirement benefit plan adjustments		Total Pre-Tax Amount		Tax Benefit (Expense)		Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2020		$	(872)	$	(2,426)	$	(3,298)	$	(837)	$	(2,461)
Balance at December 31, 2021												Balance at December 31, 2021	$	1,640	$	(2,247)	$	(607)	$	794	$	187

Minimum post retirement health care plan adjustments	Minimum post retirement health care plan adjustments	—		37		37		10		27		Minimum post retirement health care plan adjustments	—		34		34		(10)		24
Foreign currency translation adjustment	Foreign currency translation adjustment	3,198		—		3,198		—		3,198		Foreign currency translation adjustment	(227)		—		(227)		—		(227)
Balance at March 31, 2021		$	2,326	$	(2,389)	$	(63)	$	(827)	$	764
Balance at March 31, 2022												Balance at March 31, 2022	$	1,413	$	(2,213)	$	(800)	$	784	$	(16)

Foreign Currency Translation Adjustment Minimum post retirement benefit plan
adjustments Total Pre-Tax Amount Tax (Benefit) Expense Accumulated Other
Comprehensive
(Loss) Income
Balance at December 31, 2019 $ (4,173) $ (1,939) $ (6,112) $ (721) $ (5,391)
Minimum post retirement health care plan adjustments — 25 25 7 18
Foreign currency translation adjustment (5,898) — (5,898) — (5,898)
Balance at March 31, 2020 $ (10,071) $ (1,914) $ (11,985) $ (714) $ (11,271)

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	Foreign Currency Translation Adjustment		Minimum post retirement benefit plan adjustments		Total Pre-Tax Amount		Tax Benefit (Expense)		Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2020	$	(872)	$	(2,426)	$	(3,298)	$	837	$	(2,461)

Minimum post retirement health care plan adjustments	—		37		37		(10)		27
Foreign currency translation adjustment	3,198		—		3,198		—		3,198
Balance at March 31, 2021	$	2,326	$	(2,389)	$	(63)	$	827	$	764

The realized adjustments relating to the Company’s minimum post retirement health care costs were reclassified from accumulated other comprehensive loss and included in other expense in the consolidated statements of income.

~~(10)~~(9) EQUITY-BASED COMPENSATION

On May 4, 2018, the stockholders of the Company approved the adoption of the Gibraltar Industries, Inc. 2018 Equity Incentive Plan (the "2018 Plan"). The 2018 Plan provides for the issuance of up to 1,000,000 shares of common stock and supplements the remaining shares available for issuance under the Gibraltar Industries, Inc. 2015 Equity Incentive Plan (the "2015 Plan"). Both the 2018 Plan and the 2015 Plan allow the Company to grant equity-based incentive compensation awards, in the form of non-qualified options, restricted shares, restricted stock units, performance shares, performance stock units, and stock rights to eligible participants.

In 2016, the stockholders of the Company approved the adoption of the Gibraltar Industries, Inc. 2016 Stock Plan for Non-Employee Directors ("Non-Employee Directors Plan") which provides for the issuance of up to 100,000 shares, allows the Company to grant awards of shares of the Company's common stock to non-employee Directors of the Company, and permits the Directors to defer receipt of such shares pursuant to the terms of the Non-Employee Directors Plan.

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Equity Based Awards - Settled in Stock

The following table sets forth the number of equity-based awards granted during the three months ended March 31, which will convert to shares upon vesting, along with the weighted average grant date fair values:


		2021			2020				2022			2021
Awards	Awards	Number of Awards	Weighted Average Grant Date Fair Value		Number of Awards (2)	Weighted Average Grant Date Fair Value		Awards	Number of Awards	Weighted Average Grant Date Fair Value		Number of Awards (2)	Weighted Average Grant Date Fair Value
Performance stock units (1)	Performance stock units (1)	62,778	$	87.84	123,870	$	53.29	Performance stock units (1)	108,464	$	47.00	62,778	$	87.84
Restricted stock units	Restricted stock units	33,187	$	87.91	42,101	$	52.31	Restricted stock units	58,958	$	47.00	33,187	$	87.91

(1) The Company’s performance stock units (“PSUs”) represent shares granted for which the final number of shares earned depends on financial performance or market conditions. The number of shares to be issued may vary between 0% and 200% of the number of ~~performance stock units~~PSUs granted depending on the relative achievement to targeted thresholds. The Company's PSUs with a financial performance condition are based on either the Company’s return on invested capital (“ROIC”) over a one-year ~~performance period or revenue, gross profit and operating profit thresholds over a~~ ~~twoc or three-year~~ performance period. The Company's PSUs with a market condition are based on the ranking of the Company’s total stockholder return (“TSR”) performance, on a percentile basis, over a three year performance period compared to the S&P Small Cap Industrial sector, over the same three year performance period.

(2) All PSUs granted in the first quarter of ~~2020 include 72,239 units that will be converted to shares and issued to recipients~~2021 were forfeited in the first quarter of ~~2023 at 109.5%~~2022 as the threshold level of ~~the target amount granted,~~achievement was not met based on the ~~Company’s~~Company's actual ROIC ~~compared to ROIC target~~achievement level for the performance period ended December 31, ~~2020.~~2021.

Equity Based Awards - Settled in Cash

The Company's equity-based ~~liability is comprised of~~awards that are settled in cash are the awards under ~~a management stock purchase plan. As of March 31, 2021,~~the Management Stock Purchase Plan (the "MSPP") which is authorized under the Company's equity incentive plans. The total of these share-based liabilities recorded on the consolidated balance sheet ~~were $19.3~~as of March 31, 2022 was $18.9 million, of which ~~$16.4~~$2.0 million was included in current accrued expenses and $16.9 million was included in non-current liabilities. ~~The~~Total share-based liabilities as of December 31, ~~2020~~2021 were ~~$18.2~~$22.6 million, of which ~~$14.7~~$2.9 million was included in current accrued expenses and $19.7 million was included in non-current liabilities.

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The ~~Management Stock Purchase Plan ("MSPP")~~Company's MSPP provides participants the ability to defer a portion of their compensation, convertible to unrestricted investments, restricted stock units, or a combination of both, or defer a portion of their directors’ fees, convertible to restricted stock units. Employees eligible to defer a portion of their compensation also receive a company-matching award in restricted stock units equal to a percentage of their compensation.

The deferrals and related company match are credited to an account that represents a share-based liability. The portion of the account deferred to unrestricted investments is measured at fair market value of the unrestricted investments, and the portion of the account deferred to restricted stock units and company-matching restricted stock units is measured at a 200-day average of the Company’s stock price. The account will be converted to and settled in cash payable to participants upon retirement or a termination of their service to the Company.

The following table provides the number of restricted stock units credited to active participant accounts and the payments made with respect to restricted stock units issued under the MSPP during the three months ended March 31,:


		2021		2020			2022		2021
Restricted stock units credited	Restricted stock units credited	24,085		52,411		Restricted stock units credited	2,876		24,085
Share-based liabilities paid (in thousands)	Share-based liabilities paid (in thousands)	$	3,510	$	4,433	Share-based liabilities paid (in thousands)	$	2,545	$	3,510

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(10) HELD FOR SALE AND DISCONTINUED OPERATIONS

~~(11) DISCONTINUED OPERATIONS~~Held for Sale

During the first quarter of 2022, the Company committed to a plan to sell its Processing business (the "disposal group") which is a business within the Company's Agtech reportable segment. The planned sale does not meet the criteria to be classified as a discontinued operation. As a result, the Company will continue reporting the operating results of the disposal group in the Company's consolidated operating results from continuing operations until the sale of the business is completed.

The Company classifies assets and related liabilities as held for sale when: (i) management has committed to a plan to sell the assets, (ii) the net assets are available for immediate sale, (iii) there is an active program to locate a buyer and (iv) the sale and transfer of the net assets is probable within one year. Assets and liabilities held for sale are presented separately on our consolidated balance sheets with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less costs to sell.

As of March 31, 2022, the assets and liabilities of the disposal group have been classified as held for sale. The following table summarizes these assets and liabilities which have been measured at the lower of (i) the carrying value when classified as held for sale and (ii) the fair value of the business less costs to sell.


(in thousands)	March 31, 2022
Assets held for sale
Accounts receivable, net of allowance	$	1,260
Inventories, net of reserves	8,093
Other current assets	1,627
Property, plant, and equipment, net	331
Operating lease asset	415
Goodwill (1)	—
Acquired intangibles, net	6,213
Total assets held for sale	$	17,939
Liabilities held for sale
Accounts payable	$	1,291
Accrued expenses	1,172
Non-current operating lease liabilities	172
Total liabilities held for sale	$	2,635

(1) The assignment of goodwill was based on the relative fair value of the disposal group compared to the fair value of the total reporting unit it was included in prior to being reclassified as held for sale.

Net sales and operating loss for held for sale operations for the three months ended March 31 are as follows (in thousands):


	2022		2021
Net sales	$	1,823	$	4,973
Operating loss	$	(2,525)	$	(749)

Effective with the classification of the disposal group as held for sale, depreciation of property, plant and equipment and amortization of finite-lived intangible assets and right-of-use assets are not recorded while these assets are classified as held for sale. As a result of our evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to an estimated sales price, adjusted for costs to sell, no losses were recorded during the three months ended March 31, 2022. The recoverability of the disposal group will be evaluated each reporting period until the sale of the business is completed.

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Discontinued Operations

On February 23, 2021, the Company sold the stock of its Industrial business which had been classified as held for sale and reported as a discontinued operation in the Company’s consolidated financial statements for the year ended December 31, ~~2020.~~2021. Net proceeds of $38 million, consisting of cash and a $13 million seller note, resulted in an estimated pre-tax loss of $30 million, subject to working capital and other adjustments, of which $29.6 million was recorded when the assets of the Industrial business were written down to fair market value during the fourth quarter of 2020. The seller note was paid in full to the Company during the second quarter of 2021.

The results of operations and financial position of the Industrial business have been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented. The Company allocates interest to its discontinued operations in accordance with ASC Subtopic 205-20, “Presentation of Financial Statements – Discontinued Operations.” Interest was allocated based on the amount of net assets held by the discontinued operation in comparison to consolidated net assets.

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The following carrying amounts of the major classes of assets and liabilities included in discontinued operations related to the Industrial business has been segregated from the Company's continuing operations and are reported as assets and liabilities of discontinued operations, respectively, in the consolidated balance sheet at December 31, 2020 (in thousands):

~~December 31, 2020~~

~~Assets~~

~~Accounts receivable, net~~

~~11,261~~

~~Inventories, net~~

~~13,041~~

~~Prepaid expenses and other current assets~~

~~21,310~~

~~Total current assets (1)~~

~~45,612~~

~~Property, plant, and equipment, net~~

~~16,999~~

~~Operating lease assets~~

~~6,470~~

~~Goodwill~~

~~22,475~~

~~Acquired intangibles~~

~~15,482~~

~~Loss recognized on classification as held for sale~~

~~(29,600)~~

~~Total noncurrent assets (1)~~

~~31,826~~

~~Total assets classified as held for sale~~

~~77,438~~

~~Liabilities~~

~~Accounts payable~~

~~10,708~~

~~Accrued expenses~~

~~9,274~~

~~Total current liabilities (1)~~

~~19,982~~

~~Deferred income taxes~~

~~24,657~~

~~Non-current operating lease liabilities~~

~~4,639~~

~~Other non-current liabilities~~

~~Total noncurrent liabilities (1)~~

~~29,313~~

~~Total liabilities classified as held for sale~~

~~49,295~~

(1) The assets and liabilities of the discontinued operations were classified as current on the December 31, 2020 consolidated balance sheet, as it was probable that the sale would occur and proceeds will be collected within one year.

Components of income from discontinued operations before taxes, including the interest allocated to discontinued operations, for the three months ended March 31 are as follows (in thousands):


							Three months ended March 31,
		2021		2020			2022		2021
Net sales	Net sales	$	20,391	$	34,038	Net sales	$	—	$	20,391
Operating expenses	Operating expenses	17,493		31,202		Operating expenses	—		17,493
Adjustment to loss on disposal	Adjustment to loss on disposal	328		0		Adjustment to loss on disposal	—		328
Interest expense allocation		0		6

Income from discontinued operations before taxes	Income from discontinued operations before taxes	$	2,570	$	2,830	Income from discontinued operations before taxes	$	—	$	2,570

~~(12)~~(11) EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS

The Company has incurred exit activity costs and asset impairment charges as a result of its 80/20 simplification and portfolio management initiatives. These initiatives have resulted in the identification of low-volume, low margin, internally-produced products which have been or will be outsourced or discontinued, the simplification of processes, the sale and exiting of less profitable businesses or product lines, and a reduction in our manufacturing footprint.

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Exit activity costs (recoveries) were incurred during the three months ended March 31, 2022 and 2021 which related to moving and closing costs, severance, and contract terminations, ~~and severance,~~ along with asset impairment charges related to the write-down of inventory and impairment of machinery and equipment associated with discontinued product lines, as a result of process simplification initiatives. In conjunction with these initiatives, the Company closed ~~2 facilities~~1 facility during the three months ended March 31, ~~2021. Exit activity costs were incurred from the above initiatives for~~2022. During the three months ended March 31, ~~2020. NaN~~2021, the Company closed 2 facilities ~~were closed~~ as a result of these ~~initiatives during the three months ended March 31, 2020.~~initiatives.

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The following tables set forth the exit activity costs (recoveries) and asset impairment charges ~~and exit activity costs~~ incurred by segment during the three months ended March 31, related to the restructuring activities described above (in thousands):

Three months ended March 31,
2021 2020
Asset impairment charges Exit activity costs (recoveries), net Total Asset impairment charges Exit activity costs Total
Renewables $ 1,193 $ 3,778 $ 4,971 $ 0 $ 18 $ 18
Residential 0 65 65 0 221 221
Agtech 0 204 204 0 0 0
Infrastructure 0 0 0 0 0 0
Corporate — 0 0 0 54 54
Total exit activity costs & asset impairments $ 1,193 $ 4,047 $ 5,240 $ 0 $ 293 $ 293


	Three months ended March 31,
	2022						2021
	Exit activity costs (recoveries), net		Asset impairment charges		Total		Exit activity costs		Asset impairment charges		Total
Renewables	$	1,328	$	1,198	$	2,526	$	3,778	$	1,193	$	4,971
Residential	3		—		3		65		—		65
Agtech	(9)		—		(9)		204		—		204
Infrastructure	(63)		—		(63)		—		—		—
Corporate	20		—		20		—		—		—
Total exit activity costs & asset impairments	$	1,279	$	1,198	$	2,477	$	4,047	$	1,193	$	5,240

The following table provides a summary of where the ~~asset impairments and~~ exit activity costs and asset impairment charges were recorded in the consolidated statements of income for the three months ended March 31, (in thousands):


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Cost of sales	Cost of sales	$	5,047	$	69		Cost of sales	$	2,208	$	5,047
Selling, general, and administrative expense	Selling, general, and administrative expense	193		224			Selling, general, and administrative expense	269		193
Total asset impairment and exit activity charges		$	5,240	$	293
Total exit activity and asset impairment charges							Total exit activity and asset impairment charges	$	2,477	$	5,240

The following table reconciles the beginning and ending liability for exit activity costs relating to the Company’s facility consolidation efforts (in thousands):


		2021		2020			2022		2021
Balance at January 1	Balance at January 1	$	1,030	$	2,083	Balance at January 1	$	272	$	1,030
Exit activity costs recognized	Exit activity costs recognized	4,047		293		Exit activity costs recognized	1,279		4,047
Cash payments	Cash payments	(1,464)		(1,365)		Cash payments	(116)		(1,464)
Balance at March 31	Balance at March 31	$	3,613	$	1,011	Balance at March 31	$	1,435	$	3,613

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~~(13)~~(12) INCOME TAXES

The following table summarizes the provision for income taxes for continuing operations (in thousands) for the three months ended March 31, and the applicable effective tax rates:


		Three Months Ended March 31,						Three Months Ended March 31,
		2021			2020					2022			2021
Provision for income taxes	Provision for income taxes	$	1,560		$	2,313			Provision for income taxes	$	5,101		$	1,560
Effective tax rate	Effective tax rate	12.9		%	18.9		%		Effective tax rate	24.8		%	12.9		%

The effective tax rate for the three months ended March 31, ~~2021~~2022 was greater than the U.S. federal statutory rate of 21% due to state taxes and ~~2020, respectively,~~nondeductible permanent differences partially offset by favorable discrete items due to an excess tax benefit on stock-based compensation. The effective tax rate for the three months ended March 31, 2021 was less than the U.S. federal statutory rate of 21% due to favorable discrete items due to an excess tax benefit on stock-based compensation, partially offset by state taxes and nondeductible permanent differences.

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~~(14)~~(13) EARNINGS PER SHARE

~~Basic~~Earnings per share and the weighted average shares outstanding used in calculating basic and diluted earnings ~~and weighted-average of diluted shares outstanding~~per share are as follows for the three months ended March 31, (in thousands):


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Numerator:	Numerator:						Numerator:
Income from continuing operations	Income from continuing operations	$	10,496	$	9,902		Income from continuing operations	$	15,456	$	10,496
Income from discontinued operations	Income from discontinued operations	2,266		2,157			Income from discontinued operations	—		2,266
Net income available to common stockholders	Net income available to common stockholders	$	12,762	$	12,059		Net income available to common stockholders	$	15,456	$	12,762
Denominator for basic earnings per share:	Denominator for basic earnings per share:						Denominator for basic earnings per share:
Weighted average shares outstanding	Weighted average shares outstanding	32,771		32,586			Weighted average shares outstanding	32,913		32,771
Denominator for diluted earnings per share:	Denominator for diluted earnings per share:						Denominator for diluted earnings per share:
Weighted average shares outstanding	Weighted average shares outstanding	32,771		32,586			Weighted average shares outstanding	32,913		32,771
Common stock options and stock units	Common stock options and stock units	333		297			Common stock options and stock units	109		333
Weighted average shares and conversions	Weighted average shares and conversions	33,104		32,883			Weighted average shares and conversions	33,022		33,104

The weighted average number of diluted shares does not include potential anti-dilutive common shares issuable pursuant to equity based incentive compensation awards. There were 054,000 shares issuable pursuant to equity based incentive compensation awards excluded from the diluted earnings per share calculation because the effect of their inclusion would be anti-dilutive ~~shares outstanding~~ for the three months ended March 31, ~~2021~~2022, and ~~18,000~~no shares issuable pursuant to equity based incentive compensation awards excluded from the diluted earnings calculation for the three months ended March 31, ~~2020.~~2021.

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~~(15)~~(14) SEGMENT INFORMATION

The Company is organized into 4 reportable segments on the basis of the production processes, products and services provided by each segment, identified as follows:

(i)Renewables, which primarily includes designing, engineering, manufacturing and installation of solar racking and electrical balance of systems;

(ii)Residential, which primarily includes roof and foundation ventilation products, centralized mail systems and electronic package solutions, retractable awnings and gutter guards, and rain dispersion products, trims and flashings and other accessories;

(iii)Agtech, which provides growing and processing solutions including the designing, engineering, manufacturing and installation of greenhouses, and botanical extraction systems; and

(iv)Infrastructure, which primarily includes structural bearings, expansion joints and pavement sealant for bridges, airport runways and roadways, elastomeric concrete, and bridge cable protection systems.

When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics. ~~During the first quarter~~

Table of ~~2021, the Company reassessed its reportable segments. As a result, the Company's former Renewable Energy and Conservation segment was divided into two reportable segments: Renewables and Agtech.~~Contents

The following table illustrates certain measurements used by management to assess performance of the segments described above for the three months ended March 31, (in thousands):


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Net sales:	Net sales:						Net sales:
Renewables	Renewables	$	85,512	$	47,263		Renewables	$	78,783	$	85,512
Residential	Residential	140,217		103,419			Residential	179,485		140,217
Agtech	Agtech	46,739		49,234			Agtech	42,428		46,739
Infrastructure	Infrastructure	15,124		15,485			Infrastructure	17,169		15,124
Total net sales	Total net sales	$	287,592	$	215,401		Total net sales	$	317,865	$	287,592

Income from operations:	Income from operations:						Income from operations:
Renewables	Renewables	$	(521)	$	4,359		Renewables	$	(6,984)	$	(521)
Residential	Residential	22,934		13,725			Residential	33,435		22,934
Agtech	Agtech	929		1,340			Agtech	31		929
Infrastructure	Infrastructure	2,037		1,576			Infrastructure	1,181		2,037
Unallocated Corporate Expenses	Unallocated Corporate Expenses	(12,564)		(8,223)			Unallocated Corporate Expenses	(6,468)		(12,564)
Total income from operations	Total income from operations	$	12,815	$	12,777		Total income from operations	$	21,195	$	12,815


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Total assets:	Total assets:					Total assets:
Renewables	Renewables	$	393,499	$	402,796	Renewables	$	436,054	$	445,486
Residential	Residential	427,894		407,132		Residential	487,457		453,469
Agtech	Agtech	212,507		216,275		Agtech	214,176		212,038
Infrastructure	Infrastructure	82,833		80,796		Infrastructure	85,187		82,662
Unallocated corporate assets	Unallocated corporate assets	38,458		28,057		Unallocated corporate assets	19,466		21,246
Assets of discontinued operations		0		77,438
		$	1,155,191	$	1,212,494
							$	1,242,340	$	1,214,901

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The following tables illustrate segment revenue disaggregated by timing of transfer of control to the customer for the three months ended March 31 (in thousands):

Three Months Ended March 31, 2021
Renewables Residential Agtech Infrastructure Total
Net sales:
Point in Time 6,971 139,019 5,143 5,470 $ 156,603
Over Time 78,541 1,198 41,596 9,654 130,989
Total net sales $ 85,512 $ 140,217 $ 46,739 $ 15,124 $ 287,592


		Three Months Ended March 31, 2020											Three Months Ended March 31, 2022
		Renewables		Residential		Agtech		Infrastructure		Total			Renewables		Residential		Agtech		Infrastructure		Total
Net sales:	Net sales:											Net sales:
Point in Time	Point in Time	$	3,696	$	102,331	$	14,096	$	5,457	$	125,580	Point in Time	$	5,650	$	178,131	$	1,613	$	6,303	$	191,697
Over Time	Over Time	43,567		1,088		35,138		10,028		89,821		Over Time	73,133		1,354		40,815		10,866		126,168
Total net sales	Total net sales	$	47,263	$	103,419	$	49,234	$	15,485	$	215,401	Total net sales	$	78,783	$	179,485	$	42,428	$	17,169	$	317,865


	Three Months Ended March 31, 2021
	Renewables		Residential		Agtech		Infrastructure		Total
Net sales:
Point in Time	$	6,971	$	139,019	$	5,143	$	5,470	$	156,603
Over Time	78,541		1,198		41,596		9,654		130,989
Total net sales	$	85,512	$	140,217	$	46,739	$	15,124	$	287,592

(15) SUBSEQUENT EVENTS

In May 2022, the Company's Board of Directors authorized a share repurchase program of up to $200 million of the Company's issued and outstanding common stock. The program has a duration of three years, ending May 2, 2025. Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations. Any such repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The repurchase program may be suspended or discontinued at any time at the Company's discretion. The Company has not made repurchases under the repurchase program to date.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain information set forth herein includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and, therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “anticipates,” "aspires," “expects,” “estimates,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, competition, strategies and the industries in which we operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in the “Risk Factors” ~~disclosed~~disclosures in our most recent Annual Report on Form 10-K along with Item 1A of this Quarterly Report on Form 10-Q. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, liquidity and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained herein. In addition, even if our results of operations, financial condition, liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this ~~quarterly report,~~Quarterly Report on Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statements that we make herein speak only as of the date of those statements, and we undertake no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

We use certain operating performance measures, specifically consolidated gross margin, operating margin by segment and consolidated operating margin, to manage our businesses, set operational goals, and establish performance targets for incentive compensation for our employees. We define consolidated gross margin as a percentage of total consolidated gross profit to total consolidated net sales. We define operating margin by segment as a percentage of total income from operations by segment to total net sales by segment and consolidated operating margin as a percentage of total consolidated income from operations to total consolidated net sales. We believe consolidated gross margin, operating margin and consolidated operating margin may be useful to investors in evaluating the profitability of our segments and Company on a consolidated basis.

Overview

Gibraltar Industries, Inc. (the "Company") is a leading manufacturer and provider of products and services for the renewable energy, residential, agtech, and infrastructure markets.

The Company operates and reports its results in the following four reporting segments:

•Renewables;

•Residential;

•Agtech; and

•Infrastructure.

The Company serves customers primarily in North America including renewable energy (solar) developers, home improvement retailers, wholesalers, distributors, institutional and commercial growers of food and plants, and contractors. ~~As part of our continuing operations at~~At March 31, ~~2021,~~2022, we operated 3633 facilities, comprised of 2624 manufacturing facilities, one distribution center, and ~~nine~~eight offices, which are located in 1615 states, Canada, China, and Japan. Our operational infrastructure provides the necessary scale to support ~~local,~~ regional and national customers in each of our markets.

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~~COVID-19~~COVID Update and Recent Trends

While the Company continues to encounter challenges and uncertainty associated with COVID-19, the pandemic did not have a material adverse effect on our reported results during the first quarter of 2021. Our top priority continues to be focused on our organization - keeping our team and their families as safe as possible, maintaining ~~the timely and effective functioning of~~ our supply chain ~~operating~~ and providing a high level of responsiveness to customer needs. We continue to proactively execute our pandemic “playbook” ~~in 2021~~ and make adjustments to our operating protocols as we navigate forward. ~~The extent~~

COVID-19, as well as broader market dynamics over the past two years, have resulted in impacts to ~~which~~ our ~~operations~~company, including increased material cost inflation, labor availability issues and logistics costs increases. We have also been impacted from supply constraints for materials and commodities used in our operations. In certain instances these constraints have resulted in project delays, cost inflation and logistics delays. We continue to work with our customers and suppliers in this dynamic environment to better align pricing, understand the existing and potential future impacts to our supply chain, and make efforts to mitigate such impacts as we expect these supply chain and labor availability pressures along with the impact of material cost, labor and logistics inflation will continue throughout 2022.

In early 2022, the U.S. Department of Commerce ("USDOC") was petitioned to investigate alleged circumvention of antidumping and countervailing duties on Chinese imports of solar panels produced in other countries in Southeast Asia. In March 2022, the USDOC announced that it would investigate the circumvention alleged in the petition. As the timing and progress of many of our customers’ projects depend upon the supply of solar panels, our operating results could be ~~impacted by the outbreak, including but not limited~~impacted. As such, we are working closely with customers to assess any potential exposure to the current impact of supply chain, transportation and labor challenges, along with new requirements or regulations mandated by government authorities, remains uncertain and challenging to predict, Refer to the Company's Outlook section in this management discussion and analysis for consideration relative to future periods.USDOC’s solar panel anti-circumvention investigation.

Business Strategy

The Company's mission is to create compounding and sustainable value for our stockholders and other stakeholders with strong and relevant leadership positions in higher growth, profitable end markets focused on addressing some of the world's most challenging opportunities. The foundation of the Company's strategy is built on three core pillars: Business System, Portfolio Management, and Organization Development.

1.Business System reflects the necessary systems, processes, and management tools required to deliver consistent and continuous performance improvement, every day. Our Business System is a critical enabler to grow, scale, and deliver our plans. Our ~~Business System~~focus is ~~focused~~ on deploying effective tools to drive growth, improve operating performance, and develop the ~~organization.~~organization utilizing 80/20 and lean quote-to-cash initiatives along with digital systems for speed, agility and responsiveness. Our Business System challenges existing paradigms, drives day-to-day performance, forces prioritization of resources, ~~challenges~~tests our business models, and brings focus to new product and services development and innovation.

2.Portfolio Management is focused on optimizing the Company’s business portfolio ~~and ensures~~in higher growth markets with leadership positions ensuring our financial capital and human resources are effectively and efficiently deployed to deliver sustainable, profitable growth while increasing our relevance with customers and shaping our markets. For a description of recent portfolio management activities, see the actions described below in the Recent Developments section.

3.Organization Development drives the Company’s continuous focus on ~~strengthening~~ensuring we have the right design and ~~scaling~~structure to scale the organization in order to execute the Company’s plans and meet commitments. The Company aspires to make our place of work the "Best Place to Work", where we focus on creating an environment for our people to have the best opportunity for success, continue to develop, grow, and learn. At core of this pillar is the Company’s development process focused on helping employees reach their potential, improve performance, develop career roadmaps, identify ongoing education requirements, and respective succession plans. We believe doing so helps us attract and retain the best people so we can execute our business plans.

We believe the key elements of our strategy have, and will continue to, enable us to respond timely to changes in the end markets we serve, including evolving changes due to COVID-19 and the ~~challenges noted above.~~broader market dynamics experienced over the past two years. We have and expect to continue to examine the need for restructuring of our operations, including consolidation of facilities, reducing overhead costs, curtailing investments in ~~inventory,~~working capital, and managing our business to generate incremental cash. We believe our ~~enhanced~~ strategy ~~has enabled~~enables us to ~~better react~~respond to volatility in commodity and other input costs and fluctuations in customer demand, along with ~~helping~~striving to maintain

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and improve margins. We have used ~~the improved~~ cash flows generated by these initiatives to ~~pay down~~minimize debt, improve our liquidity position, and invest in growth initiatives. Overall, we continue to strive to achieve stronger financial results, make more efficient use of capital, and deliver higher stockholder returns.

Recent Developments

24In May 2022, the Company's Board of Directors authorized a share repurchase program of up to $200 million of the Company's issued and outstanding common stock. The program has a duration of three years, ending May 2, 2025. Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations. Any such repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The repurchase program may be suspended or discontinued at any time at the Company's discretion. The Company has not made repurchases under the repurchase program to date.

~~Table~~During the first quarter of ~~Contents~~

2022, the Company committed to a plan to sell its processing equipment business, which is a business within the Company's Agtech reportable segment, as a result of its portfolio management strategy in order to focus its resources on the higher growth and more profitable growing business within the Agtech segment. The processing equipment business has been classified as held for sale as of March 31, 2022.

~~Recent Developments~~

During the first quarter of 2021, the Company sold its Industrial business ~~as a result of its Portfolio Management strategy to focus on participation in higher value and faster growing markets. The Industrial business,~~which was previously ~~reported~~included in the Company's Industrial and Infrastructure Products segment, now the Infrastructure segment and was reported as discontinued operations as of December 31, 2020.

~~During 2020, the Company completed the following acquisitions:~~


~~Business Acquired~~	~~Date of Acquisition in 2020~~	~~Purchase price~~ ~~( in millions)~~1		~~Description~~
~~TerraSmart LLC~~	~~December 31~~	$	~~223.7~~	~~Provider of screw-based, ground-mount solar racking technology, particularly used for solar projects installed on challenging terrain~~
~~Sunfig Corporation~~	~~December 11~~	$	~~3.8~~	~~Provider of software solutions that optimize solar energy investments through upstream design, performance and financial modeling~~
~~Architectural Mailboxes~~	~~October 15~~	$	~~26.9~~	~~Provider, designer, and developer of decorative residential mailboxes and related products~~
~~Delta Separations~~	~~February 13~~	$	~~47.1~~	~~Provider of ethanol-based extraction systems manufacturer and training and laboratory design and operations consultative partner~~
~~Thermo Energy Systems~~	~~January 15~~	$	~~7.3~~	~~Provider of commercial greenhouse solutions in North America supporting the biologically grown organic food market~~

Note 1: Except for TerraSmart, which was financed through a combination of cash on hand and borrowings under the Company's revolving credit facility, all of the above 2020 acquisitions were funded from cash on hand. The purchase price for the acquisitions of TerraSmart, Sunfig, and Architectural Mailboxes represents the preliminary allocation to the assets acquired and liabilities assumed in each transaction. The purchase price shown above for Delta and Thermo represents the final purchase price in each transaction.

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Results of Operations

Three Months Ended March 31, ~~2021~~2022 Compared to the Three Months Ended March 31, ~~2020~~2021

The following table sets forth selected results of operations data and its percentage of net sales for the three months ended March 31 (in thousands):


		2021				2020					2022				2021
Net sales	Net sales	$	287,592	100.0	%	$	215,401	100.0	%	Net sales	$	317,865	100.0	%	$	287,592	100.0	%
Cost of sales	Cost of sales	227,574		79.1	%	165,540		76.9	%	Cost of sales	253,021		79.6	%	227,574		79.1	%
Gross profit	Gross profit	60,018		20.9	%	49,861		23.1	%	Gross profit	64,844		20.4	%	60,018		20.9	%
Selling, general, and administrative expense	Selling, general, and administrative expense	47,203		16.4	%	37,084		17.2	%	Selling, general, and administrative expense	43,649		13.7	%	47,203		16.4	%

Income from operations	Income from operations	12,815		4.5	%	12,777		5.9	%	Income from operations	21,195		6.7	%	12,815		4.5	%
Interest expense	Interest expense	444		0.2	%	44		0.0	%	Interest expense	485		0.2	%	444		0.2	%
Other expense	Other expense	315		0.1	%	518		0.2	%	Other expense	153		0.0	%	315		0.1	%
Income before taxes	Income before taxes	12,056		4.2	%	12,215		5.7	%	Income before taxes	20,557		6.5	%	12,056		4.2	%
Provision for income taxes	Provision for income taxes	1,560		0.6	%	2,313		1.1	%	Provision for income taxes	5,101		1.6	%	1,560		0.6	%
Income from continuing operations	Income from continuing operations	10,496		3.6	%	9,902		4.6	%	Income from continuing operations	15,456		4.9	%	10,496		3.6	%
Income from discontinued operations	Income from discontinued operations	2,266		0.8	%	2,157		1.0	%	Income from discontinued operations	—		0.0	%	2,266		0.8	%
Net income	Net income	$	12,762	4.4	%	$	12,059	5.6	%	Net income	$	15,456	4.9	%	$	12,762	4.4	%

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The following table sets forth the Company’s net sales by reportable segment for the three months ended March 31, (in thousands):


								Change due to											Impact of
		2021		2020		Total Change		Acquisitions		Operations			2022		2021		Total Change		Portfolio Management		Ongoing Operations
Net sales:	Net sales:											Net sales:
Renewables	Renewables	$	85,512	$	47,263	$	38,249	$	37,256	$	993	Renewables	$	78,783	$	85,512	$	(6,729)	$	—	$	(6,729)
Residential	Residential	140,217		103,419		36,798		8,734		28,064		Residential	179,485		140,217		39,268		—		39,268
Agtech	Agtech	46,739		49,234		(2,495)		4,600		(7,095)		Agtech	42,428		46,739		(4,311)		(3,150)		(1,161)
Infrastructure	Infrastructure	15,124		15,485		(361)		—		(361)		Infrastructure	17,169		15,124		2,045		—		2,045
Consolidated	Consolidated	$	287,592	$	215,401	$	72,191	$	50,590	$	21,601	Consolidated	$	317,865	$	287,592	$	30,273	$	(3,150)	$	33,423

Consolidated net sales increased by ~~$72.2~~$30.3 million, or ~~33.5%~~10.5%, to ~~$287.6~~$317.9 million for the three months ended March 31, ~~2021~~2022 compared to the three months ended March 31, ~~2020.~~2021. The ~~33.5%~~10.5% increase in revenue was driven by the Residential and Infrastructure segments, which more than offset volume declines in both our Renewables and ~~Residential~~Agtech segments. ~~Sales generated from our prior~~The improvement year ~~acquisitions of TerraSmart, Thermo, Delta Separations and Architectural Mailboxes contributed 23.5%, or $50.6 million to the growth from the prior~~over year ~~quarter. The $21.6 million, or 10.0%~~was driven by a 15% increase in ~~organic growth~~pricing to customers, partially offset by a net volume decline of 5%. The increase during the current year quarter was ~~primarily the result of increased volume~~driven by participation gains and price in ~~both~~ our Residential segment, partially offset by continued supply chain challenges in the Renewables segment. While the Company committed to a plan of sale of its Processing business within the Agtech segment, and ~~Renewables segments, which more than offset~~has reclassified the ~~organic volume declines~~assets and liabilities as held-for-sale on the March 31, 2022 balance sheet, the Company will continue reporting its operating results in ~~both our Agtech and our Infrastructure segments.~~the Company's consolidated operating results from continuing operations until the sale of the business is completed. Consolidated backlog increased 23% to $437 million up from $355 million at the end of the prior year quarter.

Net sales in our Renewables segment ~~increased $38.2~~decreased $6.7 million, or ~~80.8%~~7.8%, to $78.8 million for the three months ended March 31, 2022 compared to $85.5 million for the three months ended March 31, 2021 compared to $47.3 million for the three months ended March 31, 2020. Sales generated from the prior year acquisition of TerraSmart of $37.3 million, primarily contributed to the increase in the current year quarter. Organic revenue increased 2.1%2021. Revenue decreased as anticipated by 7.8% during the quarter as ~~strong execution on continued demand for~~a result of solar ~~solutions was partially offset by projects impacted by the pandemic-related scheduling~~project schedule delays ~~inclement weather, ongoing~~and disruptions related to supply chain ~~dynamics including reduced customers' access to solar panels,~~challenges as well as ~~a decline~~impacts from severe winter weather early in ~~safe-harbor related demand due to~~ the ~~extension of the investment tax credit in late 2020.~~quarter. Backlog improved ~~138%~~41% year over year, ~~or 23% on an organic basis~~driven by continued end market demand for this segment.

Net sales in our Residential segment increased ~~35.6%~~28.0%, or ~~$36.8~~$39.3 million, to $179.5 million for the three months ended March 31, 2022 compared to $140.2 million for the three months ended March 31, ~~2021 compared~~2021. The increase from the prior year quarter, the seventh consecutive quarter of double-digit growth, was driven by market demand, additional price actions, and participation gains, particularly in the building products and mail and package businesses.

Net sales in our Agtech segment decreased 9.2%, or $4.3 million, to ~~$103.4~~$42.4 million for the three months ended March 31, ~~2020.~~2022 compared to $46.7 million for the three months ended March 31, 2021. Excluding the impact of the processing equipment business which has been classified as held for sale as of March 31, 2022, revenue declined in our produce and cannabis businesses due to continued licensing and permit delays, and scheduled timing of projects. Despite these headwinds, the commercial greenhouse business continued solid growth across its core product lines serving the retail, institutional and car wash markets. Backlog increased 17% year over year..

Net sales in our Infrastructure segment increased 13.9%, or $2.0 million, to $17.2 million for the three months ended March 31, 2022 compared to $15.1 million for the three months ended March 31, 2021. The increase ~~from~~in revenue was driven by growth in demand for fabricated products. While order backlog declined 7% as compared to the prior year quarter, on timing of orders and revenues, the segment's pipeline and bidding activity remain strong. Management continues to expect the impact of incremental government spending on infrastructure toward the end of 2022.

Our consolidated gross margin decreased to 20.4% for the three months ended March 31, 2022 compared to 20.9% for the three months ended March 31, 2021. The decrease was largely ~~due to~~the result of continued ~~strong activity across all residential businesses~~and anticipated supply chain disruptions, materials cost inflation along with labor availability, and severe winter weather related inefficiencies in several of our businesses.Largely offsetting these impacts were improved operating execution from lean enterprise initiatives, supply chain optimization activities, favorable revenue mix and the impact of participation gains in several of our other businesses.

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~~participation gains across that offset challenges from inclement weather, supply chain dynamics. Sales from the prior year acquisition of Architectural Mailboxes also contributed $8.7~~Selling, general, and administrative ("SG&A") expenses decreased by $3.6 million, or 7.5%, to ~~the increase in the current year quarter.~~

~~Net sales in our Agtech segment decreased 5.1%, or $2.5 million, to $46.7~~$43.6 million for the three months ended March 31, 2021 compared to $49.2 million for the three months ended March 31, 2020. Organic revenue decreased $7.1 million, impacted by the pandemic, inclement weather, supply chain dynamics, along with slower but improving market conditions for greenhouse structure and processing extraction equipment serving the cannabis and hemp markets. Partially offsetting these impacts was continued growth and momentum in the produce market. Sales generated2022 from Thermo and Delta Separations acquired in the first quarter of 2020, contributed $4.6 million, partially offsetting the decrease in this segment. While backlog decreased 12% year over year, due to the 2020 slowdown in the cannabis and hemp markets, which are improving but not fully recovered, sequentially, backlog increased 5% due primarily to strength in the produce business offsetting the impact of the slower demand in the cannabis and hemp markets.

Net sales in our Infrastructure segment decreased 2.6%, or $0.4 million, to $15.1 million for the three months ended March 31, 2021 compared to $15.5 million for the three months ended March 31, 2020. While revenue was down modestly driven by delays in customer delivery schedules related to the timing of state and federal funding, backlog remained strong increasing 15% compared to the prior year quarter.

Our consolidated gross margin decreased to 20.9% for the three months ended March 31, 2021 compared to 23.1% for the three months ended March 31, 2020. This decrease was partly the result of costs incurred during the current year quarter related to the planned discontinuation of our organic solar tracker solution as we migrate towards the solution offered by our recently acquired TerraSmart business. Additionally, lower gross margins generated from our recent acquisitions contributed to the decline as we continue to integrate them operationally. Partially offsetting the decrease was improved operating execution in all our core businesses compared to the prior year quarter.

~~Selling, general, and administrative ("SG&A") expenses increased by $10.1 million, or 27.3%, to~~ $47.2 million for the three months ended March 31, ~~2021 from $37.1 million for the three months ended March 31, 2020.~~2021. The ~~$10.1 million increase~~decrease year over year was ~~primarily~~largely due to ~~$5.5 million of incremental SG&A expenses recorded quarter over quarter for our recent acquisitions and transaction costs to complete those acquisitions, along with $3.3 million of higher~~lower performance-based compensation ~~expenses~~expense for equity-based awards tied to the Company's 200-day average stock price which declined as compared to the prior year quarter. ~~Despite the above increases,~~ SG&A expenses as a percentage of net sales decreased to 13.7% for the three months ended March 31, 2022 compared to 16.4% for the three months ended March 31, ~~2021 compared to 17.2% for the three months ended March 31, 2020.~~2021.

The following table sets forth the Company’s income from operations and income from operations as a percentage of net sales by reportable segment for the three months ended March 31, (in thousands):


																					Impact of
		2021				2020				Total Change			2022				2021				Total Change		Portfolio Management		Ongoing Operations
Income from operations:	Income from operations:											Income from operations:
Renewables	Renewables	$	(521)	(0.6)	%	$	4,359	9.2	%	$	(4,880)	Renewables	$	(6,984)	(8.9)	%	$	(521)	(0.6)	%	$	(6,463)	$	—	$	(6,463)
Residential	Residential	22,934		16.4	%	13,725		13.3	%	9,209		Residential	33,435		18.6	%	22,934		16.4	%	10,501		—		10,501
Agtech	Agtech	929		2.0	%	1,340		2.7	%	(411)		Agtech	31		0.1	%	929		2.0	%	(898)		(1,689)		791
Infrastructure	Infrastructure	2,037		13.5	%	1,576		10.2	%	461		Infrastructure	1,181		6.9	%	2,037		13.5	%	(856)		—		(856)
Unallocated Corporate Expenses	Unallocated Corporate Expenses	(12,564)		(4.4)	%	(8,223)		(3.8)	%	(4,341)		Unallocated Corporate Expenses	(6,468)		(2.0)	%	(12,564)		(4.4)	%	6,096		—		6,096
Consolidated income from operations	Consolidated income from operations	$	12,815	4.5	%	$	12,777	5.9	%	$	38	Consolidated income from operations	$	21,195	6.7	%	$	12,815	4.5	%	$	8,380	$	(1,689)	$	10,069

The Renewables segment generated an operating margin of ~~(0.6)~~(8.9)% in the current year quarter compared to ~~9.2%~~(0.6)% in the prior year quarter. The decrease in operating margin on lower volume was the ~~combined~~ result of ~~costs incurred during~~project management inefficiencies related to project delays and disruptions associated with market supply chain disruptions and an unanticipated level of inflation on structural steel used in solar canopy projects that carried over from the end of the prior year into the first two months of the current year ~~quarter related to~~quarter. Furthermore, severe winter weather resulted in project inefficiencies during the ~~discontinuation of~~quarter. We continue executing our organic solar tracker solution along with expected lower margins generated by our recent acquisitions, the result of backlog amortization and integration costs, as we continue to integrate them operationally. Partially offsetting the lower margin is improvement in our core business resulting from continued strong execution in our manufacturing facilities and field operations and diligent price to cost management initiatives. Our acquisition integration plans which remain on ~~schedule and we expect to see margins expand during 2021.~~

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track.

The Residential segment generated an operating margin of ~~16.4%~~18.6% in the current year quarter compared to ~~13.3%~~16.4% in the prior year quarter. The increase in operating margin was the result of ~~volume leverage, solid~~favorable price / cost management, ~~of price to input costs,~~segment mix, and ~~continued benefits from~~ 80/20 ~~simplification initiatives offsetting higher costs for materials, labor and logistics management challenges incurred during the current year quarter.~~initiatives.

Our Agtech segment generated an operating margin of 0.1% in the current year quarter compared to 2.0% ~~during~~in the ~~three months ended~~prior year quarter. Excluding the impact of the Processing business which has been classified as held for sale as of March 31, ~~2021 compared to 2.7% during~~2022, operating profit and margin improved year over year, the ~~three months ended March 31, 2020. The decrease in operating margin was the combined~~ result of ~~the~~ continued ~~slower greenhouse structures~~execution from 80/20 and ~~processing equipment market for cannabis~~lean enterprise initiatives, ongoing integration activities, improved business mix, and hemp that impacted mix in the quarter. Integration of Thermo continues to be impacted by the closure of the US Canadian border. We have completed the bulk of those lower margin projects that we acquired, substantially completed the integration of the processing businesses, and expect to see margins expand throughout the course of 2021.supply chain optimization projects.

Our Infrastructure segment generated an operating margin of 6.9% during the three months ended March 31, 2022 compared to 13.5% during the three months ended March 31, ~~2021 compared~~2021. The margin declined year over year as plate steel inflation impacted fixed price projects and the fabrication business experienced labor availability and inefficiencies related to ~~10.2% during the three months ended March 31, 2020. The increase resulted from continued strong execution in our fabricated products sales along with higher margin mix resulting from~~adding second shift capacity to support increased ~~non-fabricated product volumes.~~demand.

Unallocated corporate expenses ~~increased $4.3~~decreased $6.1 million from ~~$8.2 million during the three months ended March 31, 2020 to~~ $12.6 million during the three months ended March 31, ~~2021.~~2021 to $6.5 million during the three months ended March 31, 2022. The ~~increase~~decrease in expense was primarily the result of ~~$2.9 million of higher~~lower performance-based compensation ~~expenses~~expense for equity-based awards tied to the Company's 200-day average stock price which declined as compared to the prior year quarter.

Interest expense ofincreased slightly year over year with $0.5 million for the three months ended March 31, 2022 compared to $0.4 million for the three months ended March 31, ~~2021 was primarily the result of~~2021. The outstanding balances on the Company's revolving credit facility ~~during the quarter, of which~~were $42.4 million and $58.0 million ~~was outstanding~~ as of March 31, 2021. Interest expense incurred for the three months ended March 31, 2020 was negligible. No amounts were outstanding under our revolving credit facility during the three months ended March 31, 2020.2022, and 2021, respectively.

We recognized a provision for income taxes of ~~$1.6~~$5.1 million and ~~$2.3~~$1.6 million, with effective tax rates of 24.8% and 12.9% for the three months ended March 31, 2022, and ~~18.9%~~2021, respectively. The effective tax rate for the three months ended March 31, 2022 was greater than the U.S. federal statutory rate of 21% due to state taxes and

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nondeductible permanent differences partially offset by favorable discrete items due to an excess tax benefit on stock-based compensation. The effective tax rate for the three months ended March 31, 2021 ~~and 2020, respectively. The effective tax rates for the three months ended March 31, 2021 and 2020, respectively, were lower~~was less than the U.S. federal statutory rate of 21% due to favorable discrete items due to an excess tax benefit on stock-based compensation, partially offset by state taxes and nondeductible permanent differences.

~~Outlook~~

While we have solid end market demand and strong order backlog, general market challenges remain including but not limited to the pandemic, general inflation, labor availability, and supply chain dynamics .We will remain focused on execution, continue to work on our businesses, and use our strong balance sheet to invest in both organic and inorganic initiatives.

The Company is maintaining its full year guidance of revenues in the range of $1.30 billion and $1.35 billion, up from $1.03 billion in 2020 and GAAP EPS between $2.78 and $2.95, compared with $2.53 in 2020.

Liquidity and Capital Resources

Our principal capital requirements are to fund our operations' working capital and capital improvements and to provide capital for acquisitions. We will continue to invest in growth opportunities as appropriate while focusing on working capital efficiency and profit improvement opportunities to minimize the cash invested to operate our business. The following table sets forth our liquidity position as of:


(in thousands)	(in thousands)	March 31, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	20,731	$	32,054	Cash and cash equivalents	$	15,573	$	12,849
Availability on revolving credit facility	Availability on revolving credit facility	334,780		309,175		Availability on revolving credit facility	351,505		369,305
		$	355,511	$	341,229		$	367,078	$	382,154

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We believe that our cash on hand and available borrowing capacity provided under our Sixth Amended and Restated Credit Agreement (the "Senior Credit Agreement") provide us with ample liquidity and capital resources to invest in key business strategies that drive our mission. We have been able to weather the economic impacts of the COVID-19 pandemic and the broader market dynamics, including the current inflationary cost environment, while continuing to ~~invest in operational excellence, growth initiatives and the development of~~make investments that support our organization. After pausing in early 2020 as the COVID-19 pandemic unfolded, we continued with our strategic initiatives to invest in opportunities that strengthen our business platforms for the markets we serve through the acquisitions of Architectural Mailboxes, Sunfig and TerraSmart in the fourth quarter of 2020.strategy. We continue to remain focused on managing our working capital, closely monitoring customer credit and collection activities, and working to extend payment terms. We believe our liquidity, together with the cash expected to be generated from operations, should be sufficient to fund working capital needs and stock repurchases and to invest in operational excellence and growth ~~initiatives.~~initiatives for the foreseeable future.

Our Senior Credit Agreement provides us with liquidity and capital resources for use by our U.S. operations. Historically, our foreign operations have generated cash flow from operations sufficient to invest in working capital and fund their capital improvements. As of March 31, ~~2021,~~2022, our foreign subsidiaries held ~~$15.2~~$13.0 million of cash.

Outstanding balances on our revolving credit facility under our Senior Credit Agreement accrue interest at a rate based on LIBOR plus an additional margin. We do not expect a material change in interest expense as a result of transitioning from a LIBOR rate to a new reference rate. See Note 7 to the Company's consolidated financial statements in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for further information on the Company’s Senior Credit Agreement.

Uses of Cash / Cash Requirements

Our material short-term cash requirements primarily include accounts payable, certain employee and retiree benefit-related obligations, operating lease obligations, interest payments on outstanding debt, repayments of borrowing on our revolving credit facility, capital expenditures, and other purchase obligations originating in ~~U.S. dollars.~~the normal course of business for inventory purchase orders and contractual service agreements. Our principal capital requirements are to fund our operations' working capital and capital improvements, to provide capital for acquisitions and to strategically allocate capital through repurchases of Company stock. We will continue to invest in growth opportunities as appropriate while focusing on working capital efficiency and profit improvement opportunities to minimize the cash invested to operate our business. We intend to fund our cash requirements through cash generated from operations and, as necessary, from the availability on our revolving credit facility.

During 2020, we opted to defer remittance of the employer portion of Social Security tax as provided in the Coronavirus, Aid, Relief and Economic Security Act ("CARES Act"), which allowed us to retain $4.4 million in cash during 2020 that would have otherwise been remitted to the federal government. The deferred tax payments were

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required to be repaid in two installments occurring near the end of each year 2021 and 2022, of which $1.9 million was repaid in 2021 and the remaining $2.5 million will be repaid ~~equally in 2021 and~~by the end of 2022.

Over the long-term, we expect that future investments, including strategic business opportunities such as acquisitions, may be financed through a number of sources, including internally available cash, availability under our ~~revolving credit facility,~~Senior Credit Agreement, new debt financing, the issuance of equity securities, or any combination of the above. All potential acquisitions are evaluated based on our acquisition strategy, which includes the enhancement of our existing products, operations, or capabilities, expanding our access to new products, markets, and customers, with the goal of creating compounding and sustainable stockholder value.

These expectations are forward-looking statements based upon currently available ~~plans and~~ information and may change if conditions in the credit and equity markets deteriorate or other circumstances change. To the extent that operating cash flows are lower than current ~~or expected~~ levels, or sources of financing are not available or not available at acceptable terms, our future liquidity may be adversely affected.

Except as disclosed above, there have been no material changes in our cash requirements since December 31, 2021, the end of fiscal year 2021. See Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021.

Cash Flows

The following table sets forth selected cash flow data for the three months ended March 31, (in thousands):


		2021		2020			2022		2021
Cash (used in) provided by:	Cash (used in) provided by:					Cash (used in) provided by:
Operating activities of continuing operations	Operating activities of continuing operations	$	(1,214)	$	(43,826)	Operating activities of continuing operations	$	(7,754)	$	(1,214)
Investing activities of continuing operations	Investing activities of continuing operations	22,600		(56,631)		Investing activities of continuing operations	(4,402)		22,600
Financing activities of continuing operations	Financing activities of continuing operations	(30,388)		(4,160)		Financing activities of continuing operations	15,039		(30,388)
Discontinued operations	Discontinued operations	(2,187)		136		Discontinued operations	—		(2,187)
Effect of foreign exchange rate changes	Effect of foreign exchange rate changes	(134)		(916)		Effect of foreign exchange rate changes	(159)		(134)
Net decrease in cash and cash equivalents		$	(11,323)	$	(105,397)
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	$	2,724	$	(11,323)

Operating Activities

Net cash used in operating activities of continuing operations for the three months ended March 31, 2022 of $7.7 million consisted of income from continuing operations of $15.5 million and non-cash net charges totaling $10.3 million, which include depreciation, amortization, stock compensation, exit activity costs and other non-cash charges, offset by a $33.5 million investment in working capital and other net assets. The investment in working capital and other net assets was due to increases in inventory as a result of provisioning for potential supply chain disruptions and raw material and freight costs, along with an increase in accounts receivable as the result of seasonal increases in demand and a decrease in accounts payable as the result of timing of vendor payments. This was offset by an increase in accrued expenses and other non-current liabilities due to an increase in unbilled project revenues.

Net cash used in operating activities of continuing operations for the three months ended March 31, 2021 of $1.2 million consisted of income from continuing operations of $10.5 million and non-cash net charges totaling $11.4 million, which include depreciation, amortization, stock compensation, exit activity costs and other non-cash charges, offset by a $23.1 million investment in working capital and other net assets. The investment in net working capital and other net assets was largely driven by an increase in inventory due to strong sales demand in our Residential segment and rising raw material prices, along with a decrease in accrued expenses correlated to payments made during the quarter under the Company's performance based incentive programs.

Investing Activities

Net cash used in investing activities of continuing operations for the three months ended March 31, 2022 of $4.4 million was primarily due to capital expenditures of $4.4 million.

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Net cash used in operating activities of continuing operations for the three months ended March 31, 2020 of $43.8 million consisted of income from continuing operations of $9.9 million, non-cash net charges totaling $6.7 million, which include depreciation, amortization, stock compensation, and other non-cash charges, and an investment in working capital and other net assets of $60.4 million. The working capital investment was largely comprised of nearly $40 million related to our acquisition of Thermo, which was undercapitalized at the time of purchase in the first quarter of 2020.

~~Investing Activities~~

Net cash provided by investing activities of continuing operations for the three months ended March 31, 2021 of $22.6million was primarily due to $27.0 million in net proceeds received from the sale of the Company's Industrial business and capital expenditures of $4.4 million.

Financing Activities

Net cash ~~used in investing~~provided by financing activities of continuing operations for the three months ended March 31, ~~2020~~2022 of ~~$56.6~~$15.0 million ~~primarily consisted~~was the result of $47.5 million in proceeds from borrowing on our long-term credit facility, offset by $29.0 million in payments on long-term debt and $3.5 million of common stock repurchases related to the net ~~cash paid~~settlement of tax obligations for participants in the ~~acquisitions of Delta Separations of $47.2 million and Thermo of $7.3 million and capital expenditures of $2.1 million.~~

~~Financing Activities~~Company's equity incentive plans.

Net cash used in financing activities of continuing operations for the three months ended March 31, 2021 of $30.4 million was primarily the result of $46.6 million in payments on long-term debt and $4.7 million of ~~purchases of treasury~~common stock repurchases related to the net settlement of tax obligations for participants in the Company's equity incentive plans, offset by $20.0 million in proceeds from long-term debt and $0.9 million from the issuance of common stock from stock option exercises during the period.

Net cash used in financing activities of continuing operations for the three months ended March 31, 2020 of $4.2 million was primarily the result of purchases of treasury stock related to the net settlement of tax obligations for participants in the Company's equity incentive plans.

~~See Note 8 to the Company's consolidated financial statements in Part I, Item 1, Financial Statements, of this Form 10-Q for further information on the Company’s Senior Credit Agreement~~.

~~Off Balance Sheet Financing Arrangements~~

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

~~Contractual Obligations~~

~~Our contractual obligations have not changed materially from the disclosures included in Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.~~

Critical Accounting Estimates

In the current year, there have been no material changes to our critical accounting estimates during the three months ended March 31, 2021 from those disclosed in the consolidated financial statements and accompanying notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Recent Accounting Pronouncements

See Note 2 to the Company's consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on recent accounting pronouncements.

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Item 3. ~~Qualitative~~Quantitative and ~~Quantitative~~Qualitative Disclosures About Market Risk

In the ordinary course of business, the Company is exposed to various market risk factors, including changes in general economic conditions, competition, foreign exchange rates, and raw materials pricing and availability. In addition, the Company is exposed to other financial market risks, primarily related to its foreign operations. ~~Refer to~~In the current year, there have been no material changes in the information provided under Item 7A in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020 for more information about the Company's exposure to market risk.~~2021.

Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures

The Company maintains a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of ~~1934)~~1934, as amended). ~~The Company’s~~Management of the Company, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered in this report. Based upon that evaluation and the definition of disclosure controls and procedures contained in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the end of such period the Company’s disclosure controls and procedures were effective.

(b)Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined by Rule 13a-15(f) or 15d-15(f)) under the Securities Exchange Act of 1934, as amended) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~Not applicable.~~We are subject to litigation from time to time in the ordinary course of business, however, there is no current material pending litigation to which we are a party and no material legal proceedings were terminated, settled, or otherwise resolved during the fourth quarter of the year ended December 31, 2021. other than ordinary, routine litigation incidental to its business. The Company maintains liability insurance against risks arising out of the normal course of business.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risks discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operation, cash flows, and future prospects. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may materially adversely impact our business, financial condition, or operating results. ~~We believe~~During the quarter ended March 31, 2022, there have been no material changes ~~from~~to the risk factors previously disclosed under Part I, Item 1A. “Risk Factors” in our 2021 Annual Report on Form ~~10-K.~~10-K, except as follows.

Macroeconomic factors outside of our control may adversely affect our business, our industry, and the businesses and industries of many of our customer and suppliers.

Macroeconomic factors have a significant impact on our business, customer demand and the availability of credit and other capital, affecting our ability to generate profitable margins. Our operations are subject to the effects of domestic and international economic conditions, including global industrial production rates, inflation, deflation, interest rates, availability of capital, debt levels, consumer spending, energy availability, commodity prices, and the effects of governmental initiatives to manage economic conditions, including government monetary and trade policies, tax laws and regulations. Tariffs placed on imported products used by our customers, such as solar panels, could impact cost and availability of these products to our customers which could impact the demand for our products or services. In addition, fluctuations in the U.S. dollar impact the prices we charge and costs we incur to export and import products. We are unable to predict the impact on our business of changes in domestic and international economic conditions. We currently face challenging market conditions, and domestic or global economies, or certain industry sectors of those economies that are key to our sales, may further deteriorate, which could result in a corresponding decrease in demand for our products and negatively impact our results of operations and financial condition.

In addition, the United States currently imposes antidumping and countervailing duties on certain imported solar panels and components from certain countries in Southeast Asia. The antidumping and countervailing duties can change over time pursuant to annual reviews conducted by the U.S. Department of Commerce ("USDOC"), and a change in duty rates could have an adverse impact on our operating results. In early 2022, the USDOC was petitioned to investigate alleged circumvention of antidumping and countervailing duties on Chinese imports of solar panels and components produced in other countries in Southeast Asia. In March 2022, the USDOC announced that it would investigate the circumvention alleged in the petition. As the timing and progress of many of our customers’ projects depend upon the supply of solar panels and components, our operating results could be adversely impacted by any negative circumvention determinations made by the USDOC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Not applicable.~~In May 2022, the Company's Board of Directors authorized a share repurchase program of up to $200 million of the Company's issued and outstanding common stock. The program has a duration of three years, ending May 2, 2025. Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations. Any such repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The repurchase program may be suspended or discontinued at any time at the Company's discretion. The Company has not made repurchases under the repurchase program to date.

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Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

(a) Exhibits


			3.1			Certificate of Incorporation of Gibraltar Industries, Inc., as amended by: (i) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. filed October 27, 2004, (ii) Certificate of Change of Registered Agent and Registered Office of Gibraltar Industries, Inc. filed May 11, 2005, (iii) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. executed May 22, 2012, (iv) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. executed May 11, 2015, and (v) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. executed May 5, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed August 3, 2021)
			3.2			Amended and Restated By Laws of Gibraltar Industries, Inc. effective January 1, 2015 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on January 5, 2015)
			31.1			Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.*
			31.2			Certification of Senior Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.*
			32.1			Certification of the President and Chief Executive Officer pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.* **
			32.2			Certification of the Senior Vice President and Chief Financial Officer pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.* **
			101.INS			Inline XBRL Instance Document *
			101.SCH			Inline XBRL Taxonomy Extension Schema Document *
			101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document *
			101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document *
			101.PRA			Inline XBRL Taxonomy Extension Presentation Linkbase Document *
			101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document *
			104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*			Submitted electronically with this Quarterly Report on Form 10-Q.
**			Documents are furnished not filed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GIBRALTAR INDUSTRIES, INC.

(Registrant)


/s/ William T. Bosway
William T. Bosway
President and Chief Executive Officer


/s/ Timothy F. Murphy
Timothy F. Murphy
Senior Vice President and Chief Financial Officer

Date: May ~~5, 2021~~4, 2022

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