Earnings call transcript: Gibraltar Industries misses Q2 2025 forecasts

Gibraltar Industries (ROCK) reported its second-quarter 2025 earnings, showing a decline from market expectations with an EPS of $1.13, missing the forecast of $1.18. Revenue came in at $309.5 million, significantly below the expected $381.38 million. According to InvestingPro data, the company maintains strong fundamentals with a P/E ratio of 13.7x and healthy profit margins of 27.4%. The stock reacted negatively, dropping 6.88% to $64.42 in pre-market trading, though analysis suggests the company is currently undervalued.

Key Takeaways

• Gibraltar Industries missed both EPS and revenue forecasts for Q2 2025.
• The company is undergoing strategic shifts, focusing on Building Products and Structures.
• The stock fell by 6.88% following the earnings announcement.
• The company anticipates continued sales growth and margin expansion in 2025.

Company Performance

Gibraltar Industries reported a challenging Q2 2025, with significant misses in both earnings per share and revenue compared to forecasts. The company is focusing on its core Building Products and Structures businesses, while divesting its Renewables segment. Despite the misses, Gibraltar reported a 14% growth in adjusted sales and an 11% increase in adjusted EPS year-over-year. InvestingPro analysis reveals the company operates with moderate debt levels and maintains strong liquidity, with a current ratio of 1.71x indicating solid financial health.

Financial Highlights

• Revenue: $309.5 million, down from the forecast of $381.38 million.
• Earnings per share: $1.13, below the forecast of $1.18.
• Adjusted operating income margin: 14.5%.
• Adjusted EBITDA margin: 17.8%.
• Operating cash flow: $44 million.
• Free cash flow: $25 million.

Earnings vs. Forecast

Gibraltar Industries’ Q2 2025 EPS of $1.13 missed the forecasted $1.18, marking a surprise of -4.24%. Revenue was also below expectations, with a surprise of -18.85% compared to forecasts. This performance contrasts with the company’s historical trend of meeting or exceeding expectations, indicating a challenging quarter.

Market Reaction

Following the earnings announcement, Gibraltar Industries’ stock fell by 6.88% to $64.42 in pre-market trading. This decline places the stock closer to its 52-week low of $48.96, reflecting investor disappointment with the earnings miss and revenue shortfall. InvestingPro subscribers have access to additional insights, including 7 more ProTips and comprehensive valuation metrics that suggest significant upside potential. The company’s management has been actively buying back shares, demonstrating confidence in the business fundamentals.

Outlook & Guidance

For 2025, Gibraltar Industries projects net sales between $1.150 billion and $1.200 billion, representing a 16% growth. The company expects an adjusted EPS of $4.20 to $4.45, indicating a 13% growth. With an Altman Z-Score of 7.68 and strong return metrics, including a 9.7% return on assets, the company’s financial foundation remains robust. Discover more detailed analysis and metrics in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. The strategic focus on Building Products and Structures, alongside the divestiture of the Renewables segment, is expected to drive future growth.

Executive Commentary

CEO Bill Bosway stated, "We anticipate a simpler portfolio with the right resources and capital focused on these markets will yield stronger growth, margin expansion, and cash flow performance." CFO Joe Loveschio added, "We continue to expect sales growth and margin expansion in this business in 2025."

Risks and Challenges

• The divestiture of the Renewables segment could lead to transitional challenges.
• Housing market downturns may continue to impact sales.
• Tariff environments and supply chain disruptions could affect profitability.
• AgTech project delays are expected to impact Q3 and Q4 performance.
• Rising interest rates may further dampen new home sales.

Q&A

During the earnings call, analysts inquired about the impact of divesting the Renewables segment and potential stranded costs. Gibraltar’s management expressed confidence in minimizing these costs and emphasized opportunities in the metal roofing sector. Analysts also questioned the impact of AgTech project delays, which the company acknowledged as a short-term challenge.

Full transcript - Gibraltar Industries Inc (ROCK) Q2 2025:

Joanna, Conference Call Operator: morning, ladies and gentlemen, and welcome to the Gibraltar Industries Second Quarter twenty twenty five Financial Results Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Wednesday, 08/06/2025. I would now like to turn the conference over to Caroline Capascio of Alliance Advisors IR.

Please go ahead.

Caroline Capascio, Investor Relations, Alliance Advisors: Thank you, Joanna. Good morning, everyone, and thank you for joining us today. With me on the call is Bill Bosway, Gibraltar Industries’ Chairman, President and Chief Executive Officer and Joe Loveschio, Gibraltar’s Chief Financial Officer. The earnings press release was issued this morning as well as the slide presentation that management will use during the call are both available in the Investors section of the company’s website, gibraltar1.com. Gibraltar’s earnings press release and remarks contain non GAAP financial measures.

Tables of reconciliation of GAAP to adjusted financial measures can be found in the earnings press release that was issued today. Further, please note that continuing operations exclude net sales and operating results of the renewables business, which has been classified as held for sale and as a discontinued operation, and that adjusted results exclude the net sales and operating results of the residential electronics locker business, which was sold on 12/17/2024. Also, as noted on Slide two of the presentation, the earnings press release and slide presentation contain forward looking statements with respect to future financial results. These statements are not guarantees of future performance, and the company’s actual results may differ materially from the anticipated events, performance or results expressed or implied by these forward looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can also be accessed through the company’s website.

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

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Thanks, Carolyn. Good morning, everyone, and thank you for joining today’s call. We’re going to take you through our second quarter results and we’re going review our guidance for continuing operations, which we are establishing today and then we’ll open the call for questions. Before we review second quarter results, I would like to discuss our recent announcement to strategically shift more focus to our Building Products and Structures businesses. So let’s turn to Slide three.

As part of our ongoing strategic assessment and portfolio evaluation process, we continuously assess the overall attractiveness and key drivers of the end markets we are participating in as well as our ability to extract value and generate returns in each of these end markets. As in previous years, our business units kicked off their annual market assessments and in parallel we asked two separate advisory firms to also conduct assessments of each of our end markets and our respective businesses. We reviewed our findings and recommendations with the board in early twenty twenty five and received approval to move forward with with executing overall plan. So on June 30, we announced our plan to simplify the portfolio and focus on building products, which really covers our residential business and focus on structures markets, which really covers our both AgTech and infrastructure businesses. And as part of the overall plan, the Renewables segment has been classified as discontinued operations and held for sale.

We do anticipate a simpler portfolio with the right resources and capital focused on these markets will yield stronger growth, margin expansion and cash flow performance, which will drive higher returns for our shareholders. For example, since 2023, when excluding renewables, our continuing operations have delivered solid and steady adjusted operating and EBITDA margin improvement despite a slower residential building products end market, which now represents just over 70% of Gibraltar’s total revenue. That being said, we are very excited to focus more on the building products and structures end markets. Markets we find attractive where we can build a leading position and participate across the broader value chain, markets which also have attractive revenue and profit pools with multiple avenues for growth, and markets driven by core fundamental demand drivers with opportunity to satisfy basic needs and solve big problems. And finally, markets that have long runways for value creation.

We are making this transition and we are currently outpacing our end markets via participation gains through localized expansion initiatives and new products serving both existing and new customers. To date in 2025, we have invested $2.00 $8,000,000 in selective M and A to build presence and scale our core competencies in these end markets with more to come. Now let’s turn to Slide four and we’ll talk about our second quarter results. We executed well in the second quarter and delivered 14% adjusted sales growth, which reflects strong contributions from our acquired metal roofing and structures businesses, additional participation gains in building accessories and growth in infrastructure. These gains collectively offset project start delays in AgTech and ongoing market softness impacted our residential mail and package business.

Overall, end market trends and demand remain consistent in residential, and we continue to gain participation in both retail and wholesaler channels. As well in our project based businesses, ag tech and infrastructure backlog increased 43% to $278,000,000 Adjusted operating income and EBITDA margin were fourteen point five percent and seventeen point eight percent respectively and adjusted EPS increased 11% over last year. We generated $44,000,000 in operating cash flow and $25,000,000 in free cash flow as we funded key capital initiatives in each of our businesses. With respect to portfolio management, we announced in June that our Board of Directors approved our plan to sell the renewables business. The sale process is active and discussions are ongoing with various potential buyers and we are targeting to complete the sale by year end.

As previously mentioned, we invested $2.00 $8,000,000 in selective M and A since January and our pipeline of additional M and A opportunities is very active particularly in the building products segment. Now let’s review the business segments and Joe will start with residential.

Joe Loveschio, Chief Financial Officer, Gibraltar Industries: Thanks, Bill, and good morning, everyone. Let’s start with residential on Slide five. Adjusted net sales for our residential segment increased by $18,800,000 or 8.9%, driven by our metal roofing business, which was acquired at the very end of Q1. Organic revenue was down less than 1%, driven by participation gains in building accessories as we continue to expand into more local markets and benefit from new products launched last year. Strength in building accessories was offset by slowness in the mail and package end market, which is driven mainly by lower new construction starts in 2024.

Now turning to margins. Adjusted operating and EBITDA margins decreased 90 basis points and 60 basis points respectively, remaining at strong levels with improvement in contribution from Building Accessories and Metal Roofing, which offset the impact from lower volume in mail and package. We continue to execute well and drive profitability benefits from eightytwenty initiatives and we remain on track to complete all business system conversions in 2026.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: So guys, let’s move to slide six and I’ll give you an update on the residential market and some new activity in our expansion initiatives. So the residential market continues to be down versus 2024, both in the quarter and on a year to date basis. I think as everyone knows housing affordability and interest rate levels continue to weigh on new and existing home sales in multiple regions. That being said, we are seeing home prices come down and inventory of homes increase in certain regions as well. From a channel perspective, retailer point of sale results in the quarter reflect roof and accessories were down between 56%, with some states and regions down more than others.

As well, ARMA reported shingle shipments to distribution for the quarter were down 4.3% and the Independent Distributor Alliance Corporation, the IDAC survey reflected sales from distribution to contractors down a similar amount. But for us overall building accessories, which correlates closely with the roofing accessories market was actually up 2.3% during the quarter driven by participation gains and the impact of new products. As we experienced in the first quarter, we believe we outpaced end market demand and we will remain focused on driving more participation in the second half of the year. And when the end market returns to growth, we will be in an even better position to accelerate our business. Our mail and package product sales specifically for our centralized mail solutions were down just over 7% in the quarter.

Historically, given a centralized mail system is one of the last things installed in a multifamily property, we tend to see revenue about one year after a new build has been started. To put this in perspective, in 2024, starts for multifamily new construction reported down over 35%, which has resulted in less demand and revenue for us in 2025. Given our sales were down 7% in a market down over 35% demonstrates our team’s ability to drive significant participation gains in challenging market conditions. We also remain active in our local market expansion initiative and recently added another location in Oklahoma City through the acquisition of Gideon Steel Panel Supply. Gideon’s last twelve months of revenue were approximately $10,000,000 with EBITDA margins of 20%.

Gideon is a leading provider of metal roofing systems and roofing accessories in the OKC market, and we are excited to have the leadership team stay on board and drive future growth and profitability. To date in 2025, we have entered nine new locations through either organic or M and A investment and we expect to expand our location efforts with three to four additional operations before year end to better support customers and also increase our participation. Now let’s move on to AgTech.

Joe Loveschio, Chief Financial Officer, Gibraltar Industries: So turning to Slide seven, AgTech net sales growth benefited from the acquisition of Lane Supply, which helped offset the effect of delays in start dates on three larger controlled environment agriculture Despite these project delays, demand continued to accelerate with backlog increasing 71%. On an organic basis, excluding Lane Supply, backlog increased 33%. And we believe that backlog is the clearest indication of our future revenue trends. Segment adjusted operating margin decreased 100 basis points, driven by the impact of the delayed controlled environment agriculture projects and resulting lower volume, partially offset by project mix and Lane Supplies contribution. Adjusted EBITDA margin increased 20 basis points as it excludes the impact of higher amortization resulting from the acquisition of Lane and its related intangible assets.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: So guys, let’s turn to Slide eight. I’ll give you a little more color on the CEA initiatives. But during the quarter, I’d mentioned we had three larger CEA projects moved from the first half to the second half of the year. I’m gonna discuss two of those three CA projects on this slide. So on the left, the Halloween retrofit project is a 90,000,000 project funded by both the owners and through a USDA loan, which is relatively typical.

We started phase one of the project in Q2 with design and engineering services and maintenance services. Phase two, which starts the major retrofit and construction of the project was originally scheduled to start in Q2 and is now scheduled to begin on September 1 when funds from the USDA loan are now expected to be released. This project will have some benefit in Q3 and then accelerate in Q4 and also be impactful for most of 2026 as well. Shortly after quarter end, we were also awarded two new projects by Pomos Farms totaling $13,600,000 in contract value. These two projects were originally scheduled to be signed in Q2, but each was delayed due to a water rights issue which has since been resolved.

The first project is what we refer to as a greenhouse lift project where we are in this case raising the height of an existing 4.9 acre growing facility by over six feet. The second project is an expansion of the existing Comas bell pepper growing facility by 18 acres, which is shown as Phase two on the first picture on the right hand side of the slide. These Pomos projects are not yet included in our backlog data shared earlier given the projects were signed after quarter end. The project is funded, we’re finalizing designs and the project is planned to start in October. On slide nine, I’d also like to highlight two other projects currently in process.

The $4,800,000 expansion of the Lewis Ginter Botanical Conservatory in Richmond, Virginia, a partner of ours for many years from the inception of the conservatory through all the additions and expansions completed over the years. In this expansion, we’re adding a 3,500 square foot tropical greenhouse and a 3,500 square foot butterfly greenhouse. The tap ins project on the right side of the slide represents a new innovative design created with our customer to utilize our greenhouse growing structures and systems knowledge to develop and build a $2,400,000 3.5 acre 30,000 square foot indoor temperature controlled miniature cutting course bar and restaurant, which is located in Overland Park, Kansas. I have to say it’s pretty exciting to see yet another creative and in use application for our structures. Given the new CEA starts plan for the second half, the performance of Lane Supply and its current backlog and our pipeline of new opportunities, we expect AgTech business to deliver growth and solid operating margins in 2025.

We also expect to continue to book additional projects in 2025 as demonstrated by the Pomos projects and further build our backlog for 2026. Now let’s move on. We’ll discuss the infrastructure business.

Joe Loveschio, Chief Financial Officer, Gibraltar Industries: So turning to Slide 10, our infrastructure net sales increased $400,000 or 1.6% driven by continued strong execution. Demand remains solid with backlog increasing 3% and quoting activity remains robust supported by ongoing investment in funding at both the federal and the state levels. Segment adjusted operating and EBITDA margins improved 300 basis points and two ninety basis points respectively, driven by strong execution, effective supply chain management and product line mix. We continue to expect sales growth and margin expansion in this business in 2025. So now let’s move to Slide 11 to discuss our balance sheet and cash flow.

At June 30, we had cash on hand of $43,000,000 and $395,000,000 available on our revolver. During the quarter, we generated approximately $44,000,000 in cash from operations from net income and management of working capital. During the quarter, we used $18,200,000 or about 5.9% of sales for capital expenditures, including investments in our residential expansion initiatives and in our AgTech facility move. We expect CapEx for the year to be approximately 3% to 4% of sales. Free cash flow generation expanded on a sequential basis to 8% of sales as expected, and we are on track to hit our 2025 target of 10% of sales.

Our revolving credit facility remains untapped and we remain debt free. We expect to continue to generate strong cash flow in 2025 and in the coming years. Our capital allocation priorities for 2025 are to continue to invest in our organic growth in operating systems for scale with capital expenditures of approximately 3% to 4% of sales for the year. We continue to explore inorganic growth opportunities with a focus on our leadership positions in our current residential and ag tech end markets and have an active pipeline of high quality M and A. Our strong balance sheet supports this effort and provides optionality and flexibility.

Lastly, we plan to continue to deploy capital for value creation through opportunistic share repurchases and have $200,000,000 remaining under our current stock repurchase authorization. Now I’ll turn the call back to Bill.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Let’s move to Slide 12 and let’s talk about the drivers that support our plan for 2025 guidance for continuing operations. First, we anticipate overall demand to remain consistent with market conditions as well as with our internal expectations. In the residential market, we expect current conditions to persist and as a result, we remain focused on driving participation gains, local market expansions and ramping and integrating our recent metal roofing acquisitions. Metal roofing acquisitions are performing as anticipated, integration activities are in process and we are excited to welcome Gideon to the team as well. In AgTech and Infrastructure, we have solid order backlog and expect additional bookings in the second half as well.

Although we had some CA project starts move out of the first half, these projects will be impactful in the second half of the year. Also, expect demand in our lane supply business to continue at its existing pace as it supports new store and retrofit initiatives across its core customer base. And lastly, with respect to tariffs, we continue to manage the dynamic tariff environment through similar initiatives we deployed through an incredibly high inflationary period we experienced in 2021 and 2022. To date, we have been able to minimize the impact of tariffs and we expect to manage accordingly throughout the remainder of the year. Now let’s turn to Slide 13 and we’ll review our 2025 guidance from continuing operations.

We expect net sales to range between $1,150,000,000 and $1,200,000,000 up approximately 16%. Adjusted operating margin to range between 14.614.9%. Adjusted EBITDA margin to range between 17.517.7%. GAAP EPS to be in the range of $3.67 and $3.91 that’s down from last year primarily due to the gain on sale from the company’s electronic locker business at the 2024. Adjusted EPS to be in the range of $4.2 and $4.45 up approximately 13% and free cash flow as a percent of sales to net sales of 10%.

To finish, we will continue to monitor the macro environment. We will make adjustments as necessary. Our team is prepared and will execute accordingly. At the same time, we are very excited to simplify our portfolio and be able to apply more focus and resources on our continuing operations. Obviously, I’m grateful to our teams across Gibraltar for their dedication and flexibility as we evolve our portfolio, execute our key initiatives and obviously deliver on our plans.

Now let’s open the call up and we’ll take your questions.

Joanna, Conference Call Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Session. First question comes from Daniel Moore at CJS Securities. Please go ahead.

Daniel Moore, Analyst, CJS Securities: Thank you. Good morning, Bill. Good morning, Joe. Thanks for taking questions.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Maybe

Daniel Moore, Analyst, CJS Securities: just start with a little housekeeping, just the revenue contribution in Q2 from metal roofing acquisitions. If I missed it, I apologize. Just trying to get a sense for what the true organic growth look like.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yes, residential is down just essentially flat, down less than 1% organically. Got it. So the growth driven by metal roofing. Perfect.

Joe Loveschio, Chief Financial Officer, Gibraltar Industries: Portfolio optimization yep, go ahead. Apologize.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yeah, no, no, my bad. So the key pieces of that are the roofing accessories, our biggest piece of residential was actually up 2.3%, metal roofing was up. And then that offset mail and package, which was down 7% that I mentioned. Those are the kind of key components to think about residential overall.

Daniel Moore, Analyst, CJS Securities: That’s really helpful. And obviously the big news, the decision to divest the renewables piece, guess, number one, probably not a lot, but anything you can say as it relates to the process there, expectations around timing, etcetera. And two, as we think about expansion from here, what are some examples of structures businesses outside of the current ag tech canopies, etcetera, that might be interesting adjacencies for you?

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yeah, on the first question, yeah, process is very active right now. We’re in discussions with potential buyers and our hope is that our plan is to try to close something close to sale by before the end of the year. So teams are going full steam ahead on that front, which is good. We’ve got a lot of interest and that’s where the process is as we know today. As it relates to additional structural opportunity, I think of it a little bit differently.

We have it think about the last three years, we’ve added CEA as a segment, which is becoming bigger. I think you’re quite familiar with that. That’s fruits and vegetables. We just added canopies and we have our core commercial business and I showed you a couple of examples of that today. I think there’s plenty of runway inside the segments we have versus adding more legs to that structural stool based on the end market sizes.

And if you recall, maybe in our last call, asked the size of the Canopy structured market is close to $2,000,000,000 So there’s a lot of runway there. We think there’s a lot of runway in CEA. And we also think there’s plenty of opportunity to grow inside our core commercial business as well, commercial institutional. So we’re going to stay focused on the ones that we have Dan versus try to add more. We’re just going to build out a bigger presence in the existing spaces we’re in.

Daniel Moore, Analyst, CJS Securities: Perfect. And then lastly, just confidence around the timing. I think you mentioned September 1 for Phase two. The USDA funding in hand or expected to be just confidence around that timing of that project?

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: I think the confidence is pretty high and we meet weekly with the owners and so we’re doing activity with them today and have been since the beginning of Q1, but it’s been mainly around doing the day to day maintenance. We’re maintaining the operations for them and we’ve been doing design engineering stuff for them as they’re going through this retrofit initiative. So I think the USDA loan which has been submitted and all the supporting documentation has been for some time and people in general feel good about September having those funds released and we’ve got our supply chain ready to roll and I think that’s where we’re going to land. Whether September 1 or September 10, I can’t give you a confidence level on that, but we feel pretty good about September being the time where we’re going to kick things into gear with that project.

Daniel Moore, Analyst, CJS Securities: Got it. Thanks. I’ll circle back with my follow ups. Appreciate it.

Joanna, Conference Call Operator: Thank you. The next question comes from Walt Liptak at Seaport Research. Please go ahead.

Walt Liptak, Analyst, Seaport Research: Hi, thanks. Good morning, guys. Hey, Walt. I wanted to ask a couple of them on the renewables business as the discontinued op. And I wondered about any tax implications of the eventual sale.

Joe Loveschio, Chief Financial Officer, Gibraltar Industries: Yeah. So Walt, yeah, we would expect that that would be a pretty efficient tax from a tax perspective, that transaction, that’s kind of how we kind of think about that, just based on what we have that on for the book, but also the fact that we have some, carry forwards as well. So we feel pretty good from a tax perspective, that’ll be pretty efficient.

Walt Liptak, Analyst, Seaport Research: Okay, great. And then, you do the divestiture, are there any efficiencies that you can gain from the divestiture, any corporate expenses or things that might enhance the profits from the divestiture?

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Nothing of great magnitude. The way we’re structured today, we’re very small corporate group to start with. And so the businesses are pretty much standalone. So I think when you separate out, there’s very little stranded cost. There’s some and we’ll manage some of that through transition services agreements.

So we’ll be efficient on that front. And then we’ll redeploy particularly as we think about some of the M and A activity we have in front of us. So I think we’re going to be it all towards it all move towards enhancing our profitability and productivity as we go through this reorganizing of the portfolio, but we’re not expecting we do not anticipate much stranded cost at all in this process.

Walt Liptak, Analyst, Seaport Research: Okay. All right, great. And just going back to the conversation about residential, you talked about the operating margin declined a little bit on volume and the mix with mail package and packaging. You know, you didn’t mention anything about tariffs or inflationary, metals, like that. I wonder if you could talk a little bit about just the price cost and how you’re feeling about the positioning of inventory for the back half of the year.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yes, I mentioned really hasn’t been an impact for us this year and we had the businesses together a week and a half ago. We have a pretty robust model that cracks tariffs by HPS code, by any type of component or raw material coming from every country that we import from. So as tariffs change, which they seem to do that a little bit here and there, we get a real week to week idea of what if any impact it will have for business and therefore that triggers what we need to do accordingly. And that’s been pretty effective for us through the first seven months, if you will. And we don’t anticipate based on what we know today that changing the rest of the year.

So as you know when you manage through these things there’s a confluence of variables that you’re trying to pull optimize. So whether it’s existing inventory or price cost management and as you know in our residential business which is now 70% of what we do and many of our contracts we have clauses in place with commodity indexes that automatically drive recovery on something that flows through. So we’ve got some built in things I think that’ll help us navigate through it. And as I’ve said before as well, look, there’s nothing today that’s anywhere near the challenge that we saw in 2021 and 2022 trying to manage inflation, price cost, supply chain, availability, etcetera, etcetera. This is nothing like that.

So I feel pretty confident in our approach and our discipline. It is a week to week thing as we learn around tariffs and how they may evolve. But so far we’ve been able to minimize it pretty well.

Walt Liptak, Analyst, Seaport Research: Okay, great. Okay, thank you.

Joanna, Conference Call Operator: Thank you. Next question comes from Julio Romero at Sidoti and Company. Please go ahead.

Julio Romero, Analyst, Sidoti and Company: Thanks. Hey, good morning, Bill and Joe.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Hey, good morning, Julio.

Julio Romero, Analyst, Sidoti and Company: Hey, good morning. I had a high level question about your strategy going forward with regards to the direct to contractor model and how you gain wallet share with the contractors. And just thinking about if the strategy is predicated on brand loyalty with regards to the contractors favoring your product when they buy from the distributor? Or would the strategy be more predicated on better serving the distributors and gaining loyalty from the distributors more so than the contractors? If you could speak to that.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yes. So Julio, when you think about wholesale and contractor, there’s two distinct ways business are being done. There’s the traditional building accessories work that we do, which is all the roofing accessories, trims, flashings, ventilation and that has historically gone through wholesalers or big box. And 80% of contractors buy contractors buy about 80% of their needs through wholesale, 20% through big box, which is why I think you saw folks like Home Depot buy SRS. That being said, yeah, there are certain products around that have brands that contractors like and they stay with.

Air vent for us as a good example is probably the leading ventilation product in the industry. That’s in our core business. Now when you talk about metal roofing, there’s two types of metal roofing business models, if you will. One, if you’re just talking about panels that would go out on say a barn or some ag type application, Those panels have traditionally been sold through wholesale and big box guys. There’s very limited variety of what’s available.

So they’re an inventory product, if you will. They’re common size, common colors and there are very few colors that are offered. In fact, usually it’s a non painted thing. And so when people talk about metal roofing through that channel, that’s what they’re really talking about. When you think about metal roofing of the companies that we have acquired in the metal roofing initiative that we’re going into, this is a direct sale to a contractor but it centers around a custom solution set for a home or light commercial facility or light commercial building.

And that’s not inventory product. That’s a product that is made either on-site which we can do or it’s made in our shop, but it really stems from a set of architectural drawings that then a contractor brings to us that we make for that specific home or that specific building. And obviously, as you might expect, wholesalers and big box retailers don’t necessarily create demand. They actually serve demand. They support demand but they’re not out practically creating demand whereas the contractor in this case is.

So this is a manufactured solution that a wholesaler or a big box retailer would not want to inventory because everything’s unique to the individual site. And therefore, that’s a direct to contractor engagement for us, which opens up a different profit and revenue opportunity being direct. So as you think about our broader strategy, we have transitioned from being heavily oriented towards wholesalers seven years ago, sorry, towards big box retail. We’ve rebalanced that to have a bigger portion of our sales going through wholesale versus retail aligned with the way the contractors historically bought our core product lines. And then we’ve added a new channel through Metal Roofing Direct for specific homes and like commercial buildings.

Those are the companies we bought. So now we’ve added a third channel. And my point is that gives us access to multiple channels, multiple aspects of revenue and profit pools that exist in each of those respective channels. As it relates to why would a contractor come back to us in a metal roofing kind of scenario as I described, it’s all about service. It’s all about making sure that that contractor gets what they need.

It’s done right, it’s done well and they make their money to get up, they get down and there’s no quality issues. So it’s speed, it’s service. And of course you have to make things well and so you’ve got to have some competency around taking architectural drawings and fitting out an exact solution for a home or like commercial building. So that’s how those sorry for the long answer, but that’s how those three channels actually stack up for us and our strategy is to be in all three for the reasons I said. And if you think about consolidation at the wholesale level with Home Depot buying what they bought with SRS and OXO buying Beacon.

I would argue that that channel has already been consolidated for years, but now you have two new owners. We want to be in a third channel as well just so we have some sense of leverage of how do we serve this marketplace. It just so happens to be through metal roofing. But as you do more of that with a contractor direct, they become more aware of you when they’re doing a shingle roof as much as they are doing a metal roof. So they’ll come direct us for metal roof.

They’ll come through a wholesaler for a shingle roof. We’re still making the same accessories that go on that roof one way or the other. The biggest difference at the end of day is when that metal roof happens for us, our basket goes from $400 $500 for that roof to $40,000 for that roof. And that’s my point earlier about getting access to a bigger profit and revenue pool by getting into metal roofing going direct to a contractor. So we’re not disrupting the wholesaler or the big box guy.

They’re not in that business today. We’re actually going very local and that’s how we’re building out our metal roofing business. Hopefully that makes some sense.

Julio Romero, Analyst, Sidoti and Company: It’s a fascinating answer. Thanks so much for the color. A couple of follow ups there. What is the key brand you go to market with in metal roofing? Is it DOT metals?

Is it Semco?

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: It’s all local. So this remember we talked about this localization effort. And the reason we’re expanding into these MSAs is those contractors, those wholesalers know that local brand. They don’t know Gibraltar. There’s no value in trying to get people to think about Gibraltar.

That contractor knows what he or she is most comfortable with and what works. And so we think our local brands actually make sense. What we try to do is the flywheel in the back end of that service speed, supply chain, etcetera is Gibraltar if you will, But the front end is as local as it can be and the secret is keeping it as local as you can while you leverage the back end.

Julio Romero, Analyst, Sidoti and Company: Understood. And then what is the turnaround time for when you receive an architectural drawing from these contractors to when they can expect delivery? And is that better than competitors or will it be better than competitors as you kind of become more localized?

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yes, you have to be able to perform in one to three day period. It depends on the size of the home or the building, the iterations you might have on the drawings themselves with the architect. Effectively when the drawings are done, that will be entered into a system automatically rips through into our machines and we start producing and that happens very quickly. Remember, said there’s two options here. Some contractors prefer we actually do it on-site.

We have portable roll formers we’ll take to the job site and we’ll roll and make adjustments as we go based on the set of drawings they have. And some will want to have everything made in the shop. But it’s either real time, meaning within hours or it may be within a one to three day period. You’ve got to be able to do both or you’re going to alienate yourself from some portion of the market.

Julio Romero, Analyst, Sidoti and Company: Great. I have one more here for you and it’s about the structures business. Can you talk a bit about the fact that structures encompasses ag tech and infrastructure? Have those two segments cross sold in the past? And what potential synergies do you see between the two of them going forward?

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yes, I would say, we’ve characterized infrastructure in the structures business simply because of the it supports a bridge structure as opposed to there’s some synergy that connects those guys in the back end because it really hasn’t in the past. I And don’t want to mislead people think that there is something there, but it’s a project based business. It’s a structure that we have to engineer to. It’s just has some similarities to the rest of our AgTech business or AgTech type applications that I referenced in the slides. So that’s the connection.

Julio Romero, Analyst, Sidoti and Company: Got it. Thanks very much.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yep.

Joanna, Conference Call Operator: Thank you. The next question is a follow-up from Daniel Moore at CJS Securities. Please go ahead.

Daniel Moore, Analyst, CJS Securities: Thank you again. Two quick follow ups. One, following along Julio’s last question. Infrastructure, obviously, you’ve done a tremendous job on the margin front with that business. Just thinking longer term from a portfolio optimization perspective, does it necessarily fit into those two buckets that we’re thinking about?

And might there be thoughts or opportunities to monetize that?

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yeah, I think we’ve talked about this a little bit Dan and with others as well. Our strategy with infrastructure is to continue to get it better and the team’s done a great job getting us to where we are today. There is some new technology that has come out, but it really that we’ve launched. But it really is a relatively niche business in the infrastructure world. Infrastructure like building products is pretty fast when you think about the different categories.

So our strategy has not been to build out around what we do into a bigger platform. We’re one of the leaders in this space today. So I wouldn’t suggest that that’s going be our approach. I do think there’s some, like I said, some new technology coming out that we think will be beneficial doing a good job for Gibraltar right now. Is it something that could play a different role in the future?

Yes, that’s possible as well. But right now, we like what we’re doing and we’re going to continue to hopefully drive the business. The second thing I would add just as a general comment around infrastructure and this I don’t think has been talked a lot about openly yet, at least publicly, but there’s a lot of effort going on right now in DC in a bipartisan way for the next phase of the infrastructure bill. I think that would be great to see. And just from folks that we were connecting with, there is a lot of good activity there.

I think you’re going to see additional funding going forward, which makes us happy to be in that space as well. So stay tuned on that as we’ll learn collectively what happens there.

Daniel Moore, Analyst, CJS Securities: Very helpful. Last one is just the question on the sort of the cadence of growth or seasonality embedded in the revised guidance. Obviously, lot of moving parts when you strip out renewables. You gave pro form a financials earlier this morning. As we look to Q3 and Q4, Joe, is there anything you can guide us to in terms of year over year revenue or EPS growth Q3 relative to Q4 off of those pro form a numbers?

Just trying to avoid a modeling headache within the confines of your revised guidance.

Joe Loveschio, Chief Financial Officer, Gibraltar Industries: Yes. I mean, would say, expect kind of the normal seasonality that we’ve seen in the past on kind of the residential side, particularly the building accessories. And then as we talked about some of these project push outs on AgTech, you’re going see more of that in Q4 versus Q3.

Daniel Moore, Analyst, CJS Securities: Okay, that’s helpful.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Thanks again for And that’s probably I would say that’s and that’s kind of unique to this year on the AgTech side. Obviously, we if you build that base and that cadence comes a little bit more predictable, just the size of the projects when they move it matters. But if we have more of them actually active, then there’s less of that seasonality issue. But ultimately at end the if you fast forward and you’re thinking about ’26, ’27 as building products becomes a bigger piece of who we are and we build the base on the AgTech side, I think the seasonality is going to be in general, probably mainly reflective of the historical view you’ve seen in building products, which is slowest first quarter, you build in second, third. And Q4 is always depending on the weather, the third strongest quarter.

So that’s the way I think things will evolve over time as well.

Daniel Moore, Analyst, CJS Securities: Okay. Thank you again.

Joanna, Conference Call Operator: Thank you. We have no further questions. I will turn the call back over to Mr. Bosway for closing comments.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Well, thank you everyone again for joining us today. Coming up, we do plan to present at the Seaport Summer Investor and Sidoti Small Cap Conferences as well as other events. Thank you again for your ongoing support of Gibraltar and we look forward to speaking to you again after our third quarter report. Take care.

Joanna, Conference Call Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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