Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the Gibraltar Industries First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Carolyn Capaccio of LHA. Thank you. Carolyn, you may begin.

Carolyn Capaccio

operator. Thanks, and joining everyone, today. you thank morning, us for Good Financial Bosway, call Chairman, and With Chief the Bill Tim Gibraltar Gibraltar's Officer; me on Executive is Industries Chief President Murphy, Officer. and

was company's issued earnings a presentation website, the are management that Investors release call The use the available this slide during press will both as well morning section as that in of the be release Tables adjusted earnings press today. and in can of financial of Gibraltar's non-GAAP issued measures. remarks press gibraltarX.com. financial earnings to reconciliation GAAP measures was release found the contain that

and on events, of filings, These company's and company's results. with through may from Also, Slide read as actual you press advises performance forward-looking results to statements. expressed earnings respect these detailed can presentation, to SEC statements accessed release which are noted materially results presentation also by statements the the the in contain or X or performance forward-looking website. the not implied differ financial its the Gibraltar factors the guarantees risk anticipated be future slide future of

I Now call turn Bosway. to will Bill? Bill the over

Bill Bosway

results. overview Thanks, the today's call. open call walk you an morning, outlook, then for first XXXX you and joining our Carolyn. start for take we'll with the quarter and everyone, Good We'll you then then I'll and thank Tim your XXXX through performance, will of financial through questions. our

backlog to into really pace the XXXX sales, the titled going the a Quarter the X to business Results. got performance delivered let's So increase. start of started in sequential Slide growth saw cash and we earnings a net First in order XX% off We turn as quarter year and and expected to good

flow income on we quarter, adjusted X%. XX% cash net growth EPS the For and a sales XX% free of improvement, XX% decrease margin operating adjusted delivered

large authorization. our and portion paid revolver share repurchase funded We on purchases of our a draw also down additional

are activity XXXX expected aligned customer our and and expectations in markets end also Current and developing support positive order trends and our as guidance.

of snapshot end Let me our markets. a give quick you

start quarter sequentially. renewables. a increased solid Let's nearly doubled during very the Bookings at with pace and

XX% to As backlog pace continues expected sequentially and a the to backlog of our positive turn are strengthen. business as result, comparisons increased year-over-year

and continue also their who curve UFLPA customers partner securing to other for projects. through align panels are with We learning advancing from respective and sources the

new begins. are new geographies market In results norms. customer positive in are and seasonal are beginning growth our to customers positive markets. is with with of back market see momentum. have end season has existing Residential, point-of-sale an acquisition to we presence Channel starting balance illustrating and end as the Recent expanded in impact inventory gains Anticipation residential QEP and the

commercial In as some we our increase couple our we and driven drive and in backlog bookings pipeline and this is Agtech, rescoping at saw level project largest customers the designs. And finalized, our by year of we project across business, as company In experienced when capability expect good projects. quarter, cannabis active demand the size today. the highest and history, produce currently large its segment to greenhouse growing momentum a increase there

up Our experiencing order is business drive backlog continue accordingly. is and momentum year. to as really bookings is new demand infrastructure and business expected accelerate set This a solid for good

staying quarter we in most. key by summary, executing first the and good matters focused on results what in So our delivered initiatives

guidance as in We a first well. delivered focus. with and as quarter confident in expectations. our line full the simplify to And year we continue remain We result, our

it turn Tim I'll for that, results. our of a with over to review Tim? And

Tim Murphy

and quality results decreased starting alumina by partially Adjusted decreased on impact residential $XXX.X Thanks, consolidated in the XX%, first sales Bill, you the offset and our good sales X. quarter infrastructure sales in business. million. morning, growth everyone. through take to of segment X% I'll Organic products Slide revenue and

The growing and the at versus organic demand Agtech reprioritizing in renewable in XXXX, the business. XX% business renewables was customer segment, in residential began in end quarter $XXX correction business from infrastructure the market in rescoping XX% channel specifically produce related million, inventory of quarter and up as seasonal down to Backlog to but to pace quarter, decrease business. projects the approximately patterns of historical the volume end and and the accelerate dynamics impacts a sequentially first the return

the increased of quarter quarter each renewables, up the first with operating average EPS continued in shares a and and and XX% decreased solid driven X.X% and in in share residential program I'll adjusted moment. repurchase execution Agtech quarter, Weighted improvement to in adjusted infrastructure as margins income Adjusted EBITDA our XX%. shares dollars Margin the was first the by million outstanding anticipated. delivering segments XX review

segment Slide let's Now with by impacted variables. review X The each the was Renewable segment. sales decrease starting X, in

or the First, and June, winter the impacted. to of Labor and projects UFLPA, slowing regions Act, of once in bookings second in second construction Forced effect the Prevention the XXXX weather late delaying went Uyghur the of half in adverse

strengthened with of a secured However, bookings of sources. variety and doubling sequentially quarter, from activity bookings throughout panel the the customers nearly pace as

result, a during also XX% and As quarter. backlog sequentially improved the grew

as curve positive expect to year. We comparisons continue the move with are customers turn the coming learning year-over-year to work who we up through and UFLPA backlog

contracts without with stated, orders our agreements with purchase signed verbal of contract don't signed deposits. MSAs bookings only our a include customers We in new we've work consists specific without As backlog. or or orders and backlog of deposit,

segment improved margins and we with increasing EBITDA operating expected, XXX adjusted points basis we and X,XXX As respectively. profitability year-over-year,

challenging management. basis and overall weather -- sequential XX% declined installation and improved field a more volume initiatives, as quarter. our and driven the weather crews than space Margins was were Margins XX/XX supply chain productivity the fourth by on declined in operations

to systems, establish UFLPA margin practices in-sourcing of accelerate throughout year to with make operating IT and continue sales and initiatives. expect supply, continue continue supply We and sources more trends we management strengthen enhance progress to and best execute the integrate the and as importation, additional customers panel to chain

that X were additional drive to Segment segment. contributors review in with participation Let's growth, market industry the the products gains flat sales seasonal to overall the surge across in year. to normal regions sales X the Slide going last reductions driven and markets aluminium Residential Quality able the of offset our and business. decline price patterns, The headwinds organic move These returned winter contributed year. X% inventory to were we into channel tied weather was by the late correction, to a commodities key U.S.

repair customer End-user data the and markets solid over positive remain growth demand point-of-sale in reflects last year. remodel recent

in similar number participation gain of We recent to also expect success to to the a years. that to and have opportunities continue in see XXXX,

contracted material respectively. points, half aluminum price was somewhat demand quality margins a pattern slower commodity is continue EBITDA realign during and and The the seasonal XXX start. its returned as with price normal product seasonal of operating decrease. basis XXX deflation and anticipated to costs decrease Adjusted the to organic The about contributing market

XXX improved On points, value. going continue during quality and first basis, margins respectively, the basis aluminum to sequential create integration a products and quarter. material of is cost opportunities expanded additional XXX alignment The as to price well, identify we

efficiencies products into residential to peaks, volume a systems will throughout the of and continue to business, drive quality ERP also price we we further the course standardize over integration margins in expect aluminum benefits platform alignment on in common which cost during seasonal accelerates the the our better realized. as are improve future. to expect material comes the And our expect year year We

future launch Let's Adjusted projects of and fruit X to to segment. temporary as start Slide the vegetable XX% review move Agtech customers prioritize to driving delays. project produce growing our decreased sales resized existing facilities,

bookings company and producing to pipeline is While projects. expected backlog increase cannabis driven quarters by sequentially, decreased active as accordingly in level X% the at highest backlog and the history, XX% coming in its year-over-year are project

Segment unified and XXX stronger XXX points, and continue business in and are EBITDA across the efficiency chain and mix, now supply productivity systems, operating margin adjusted XXXX. improvements in business, respectively, margins basis improvements, to fully expect through we operating which solid performance additional increased

X the investment by demand, increased Slide Act. the in our Infrastructure X.X%, impact gains to of infrastructure sales to Segment review move and Jobs positive segment. driven strong participation Let's

momentum and expected, product with access state continues funding gain demand and backlog strong as increasing year-over-year non-fabricated to federal persists lines. fabricated both we As XX% governments in

this strength Act increase efforts the related to participation. to and ongoing Infrastructure year infrastructure increased continued expect We spending market our from

income respectively, driven The points, more XXX adjusted and improved progress by operating price than doubled and segment adjusted XXX XX/XX volume, basis and operating and management. strong in initiatives EBITDA improved with margin chain supply

of We year. expect profitability continued through the strength in rest the

and discuss Now on on to cash flow. we X million Slide $X let's XX, and sheet cash March At had available million. revolver hand balance our our of $XXX move and

million in margin generated cash During the from operations working through capital. we and million $XX a improvement in reductions from $X generated combination of quarter,

of of normal levels more to beginning payable level inventory. to year-end timing the Accounts to destocking related the at return is from depressed our

and outstanding a net turn. X.X% seasonal flow We we hand with And our of end, the at generation X/X our for $XX counter of $XX cash along on strong during during down quarter on million cash sales. to result, on cash used generated, As free pay revolver our a the the leverage quarter. quarter first was revolver had million under

continued of on working for in targeting year. driving free and cash XX% We in capital flow sales in stronger remain XXXX in of generation our operating excess investment focused with cash improvement lower on are the profitability

along borrowings, with timing fund to investments to stock opportunistic or purchases our expect needed on to the supplemented flow growth of M&A in continue organic by We use any use outstanding inorganic depending revolver generated of repurchases. as and cash repay

let's to Slide And on you share update We'll XX. repurchase program. the move

of repurchased repurchase we cash $XX.XX, we flow. quarter, the operating an $X.X funded average During XXX,XXX at shares of value a with through million market approximately price this and

million buyback quarter. XX.X expended From shares we of during approximately of the weighted shares we've end to outstanding authorization. XX million with XX% end, quarter, the million And the the inception a had our at first of average $XXX of shares quarter

Now back I'll turn the to Bill. call

Bill Bosway

Tim. Thanks,

strategy Slide Let's discuss to move priorities. XX our XXXX and to

managed As call, and focus change we on on by fourth our quarter our we maintaining uncertainty successfully simplification. have said

in environment areas chain, So still remains terms there has fluidity. some and somewhat the external while inflation supply of settled of

participation to and markets. us momentum stay required of course drive and that all So in our this gains you

priorities really, quality strong our focus Number performance. for So X, our drive and growth, unchanged. are and cash earnings improvement margin XXXX and of

regardless more markets what service going. drive our higher. margin, dynamic expand they're serves of when direction XX/XX foundation. well It us end remains are initiatives, execute win our participation, levels Secondly, XX/XX

experience to We're way. responsible conduct disciplined of new our team. And inside development and education really just the through fact focused. right business and and in X the nonnegotiable walls. and to the members the to stayed our and transformation, speed with diversity the help course our of improvements in HRIS are and scale agility thought, Third, business really strengthen CRM and us terms system our of in Fourth, investments ERP, with productivity. capability digital organization with continue addition in It's going

Now Slide solid to let's XXXX as bookings the business and demand quarter. are we and That's second review our shaping XX where for across anticipated, move are on to up guidance. a we track

with along unchanged. expansion first is this, outlook and assumes for XXXX margin modest quarter growth, performance, our continued our full Given cash performance. year strong It

to year. XX% in through momentum range consolidated billion to guidance billion to to our expansion to the in scenario net adjusted XX.X% operating recap, of in operating range down XXXX. X.X% $X.XX is at the building to To X.X% XXXX, high range $X.XX and billion XX.X% of assuming a growth organic compared compared margin GAAP sales and between modest at expansion with low And as XX.X% follows: in compared the XXXX. margin end end $X.XX a

in $X.XX $X.XX between sales of between free in a XXXX. percent of range net and $X.XX $X.XX $X.XX a a as in XXXX XX% compared in to to and XXXX. and to compared range cash adjusted compared finally, And flow EPS $X.XX X% EPS to GAAP

out our the My thanks go entire good results. focus, frankly, and to for and enthusiasm appreciation the really team

a we As to to and everything continue continue start we're doing, resilience agility, fortitude on to going and XXXX. good an organization, we're to and demonstrate build

that, with call, and now open So questions. the take let's up your we'll

Question and Session Answer

Operator

your question is Instructions] Thank Securities. Dan Moore you [Operator from Please Our question. with first proceed with CJS

Lee Jagoda

this It's morning. morning. for Dan actually Lee good Hi, Jagoda

playing your Can you revenue First renewable side. the question is of out coming of talk backlog through of through together and really backlog line updated pin turning like the just points the how thoughts balance nicely. looks envision that the related to you is that It the year? some on time into

Bill Bosway

Yes, thanks. Lee,

see the the order is to project, X in start likely of that It you so finish But beginning year, range. the following do to months. Our build see backlog brought across turn you're they size X an X at to once month revenue line on typical backlog to period the thereafter. in the of depends X really from conversion on to anywhere and the is

but beyond, extend that's about could it. the general Some way think to

Lee Jagoda

year? line there's out would prevent supply time as then or from of moment, And that the otherwise, normal that the this at nothing kind in playing chain

Bill Bosway

No.

last I signed, customer a try to point hand, contracts think that once that's been that's signed has at really, we the there way of a other big holding that panel. a there why contract with a as change dilemma any couple But you emphasize of is and a was. once get the this things years up the done that's prior entails business from in that's And happening. was that, thing what been as UFLPA to that hasn't deposit the

better contract a have runway you pretty getting the to signed, So execute is once it's good accordingly.

Lee Jagoda

very That's helpful. it. Got

question capital regarding Just more allocation. one

then areas that the the And look you from multiples is environment, return leverage and net perspective? terms the net M&A a pretty see you down opportunities to the having make given from a Just attractive are towards there, thoughts your you? wondering it perspective, of on you the out trending anything hope that sort some sense good in coming in multiple market gives seeing of a neutral,

Bill Bosway

Yes.

on see some you as up, opportunities the do we're would environment later I expect. broader we rates think last to will started year year interest So in there as slow what the came be anticipating. M&A is the And front,

processes We discussions had of pretty well-defined with actually last that past, targets were in have but the a we've stopped year. group

be I up. some that process of think opportunities start I additional think those pop up, new may and there'll will some

rates, may valuation combination But and there's the shifts with on to need to that a that what corrections that anticipating time probably a macro referred people interest you occur depending happen element environment. just is of

idea how And that to of that there on a of have we'd with in think the folks evolve. in play things like see do. things pretty holding type like terms so we'd this there's are But a what we where few of that good of I front, But and some to back. work we'll

Lee Jagoda

back the queue. Thanks in Okay. very much. will I hope

Bill Bosway

Thanks.

Operator

Julio from Our & next Please Instructions] Company. question [Operator proceed question. Sidoti with your is Romero with

Julio Romero

Thanks. Good sequential improvement residential, start performance on morning, to and Bill and Maybe Tim. nice really there.

may of just -- price results regards are could price help us with we're speak of far to think cost alignment. be more quarter you of margin alignment? sense Do kind If represents first far come a inning that of Just alignment? get uplift to are along to much the you you how you and in from kind how what how bulk cost to the there

Bill Bosway

Yes.

going year-over-year, So in the So growing into Julie, we said that year backdrop. built your plan as our is right? keep remember, on residential us and margin that improving let's

to going QX We in half and the X-inning just be better also you'll the the said where start we transition more that of would that second see X-ingame,and but X, in the QX improvement beyond it's would was of almost QX, to complete, expect get that. be game happened

that's as in second well through, half, flushing the with we alignment as the the cost commodity that think, -- pretty deflation well price we offsetting saw anticipated. price, of So as had channel XXXX, rebalancing inventory the I

where onwards turn the going think we supports improvement which you'll in had the kick as So see our QX and in, plan the into is I year.

Julio Romero

if helpful. just really then to runway have segment? speak That's gains could the the Okay. for participation you And in you

Bill Bosway

Yes. Yes. pretty excited part It's playbook. about our We're that. of been

And well. As different is I last we've this as in having then and an opportunity momentum a with strong regions. and there's well of to things, very more lot there as the just combination X it's talked years, about customers think as an them, opportunity new you the some do in existing know, a

when segments into, with that we some new about i.e., QAP, lot we've talked housing. things bought gotten one So remember, manufactured we've you is the of a

we upper in are geographies that before. the new Midwest that we in, the parts some more and present now of are weren't East There

a So yes, of market started of start open opportunities. year. just lot a to last will shift a create PLR that And lot those good up have any really work you price in just time points, major and

we're opportunity. sure making of aggressive think last the year I good pretty every years. the been pretty of as going success to doorstep have couple we're we've we've so had And And at customer this

Julio Romero

of QX? to a of expect QX still some segment In words, QX, you do the kind this and And year? kind have Great. of better other seasonal reversion seasonality more

Bill Bosway

Yes.

to the industry that. back think is I

little don't the it's historically will supply another regional, affects for issue the tends we the last to late the I what return Assuming have season start global bit to been is tends QX again, a world, that think to March. chain you to years, but which slower it's seasonality a XX as and in then typically build start start

But be it in snow pushes argue this look tend in little a other, every had that way season and last to big of that some of the weeks one at you had of can we can they the weeks there. back happens We you can -- where the because go seasonality March, year startup happened a couple -- of if couple you pushed delay bit it events, up start year. that or which but pretty

QX little And as bit go X-year holds But and peak, and strongest. long QX because dependent. more weather as QX probably QX, the is out can all it's So construction our think solid major, this is QX get a back is It those weather always the lowest. and to again, I to get forward, we'll industry in year will supply norms And going disruption and - think back chain barring any issue. QX I your season.

Julio Romero

could here one Great. just renewables. on in And more I if sneak

issue worse three the or are months panel to supply state? how if expected wondering trending ago, expectations steady Just that better, is to than -- speak relative how getting

Bill Bosway

into comes we would success, and thought. couple is would X account it's those, on U.S., that's the it's large good. really particular, I in I say with where a having for track guys, that which volume The of one Tier - It's of the more improving. Yes. portion say a

second half. been panels that way remember, you the out are still or start now. accelerate said, first UFLPA, If half channels I year, to process it's in say through the traditional the where learning the it through we've the coming curve, industry from through going really And and will impacted for that that will we would playing look, be right that's of by going the the etcetera.

with because to But customers, it of to you're lot folks be the the folks find necessarily world has fortunate with depend right same well. management months and sources you're in parallel of partnered In that, chain capability. supply folks, does really not partnering or every customer a with hard the last other as XX to the other really those if worked right have partnering the from parts

so our larger frankly, think I And and anticipated. And at there. of faster success started that's we're some faster really accelerate had than why rate bookings - to customers QX we seeing some in a

all plan I'd say goodness. go, maybe of yes, getting say better. have the are know, there, that's we're still our I'd a was that's year. would slow That as a that. to towards So things second And ahead if but accelerate. But built, would how first half be into going not you little ways We half

Julio Romero

I'll it Got on. color very it. pass Thanks Good questions. there. taking much for our

Bill Bosway

Thanks.

Operator

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

Bill Bosway

report the Industrials to do I you, Ideas and expect everyone, today. our the quarter Basic in for results. when you Well, Summer CJS look we Conference again, July. forward And New thank We And at updating in second then us June. KeyBanc present Materials Conference again to joining at

you, and a have thank day. great So

Operator

This concludes today's conference.

time. for your disconnect you may lines You participation. Thank at your this

Gibraltar Industries (ROCK) 3 May 232023 Q1 Earnings call transcript