Earnings call transcript: Gibraltar Industries Q3 2025 misses forecasts, stock stable

Gibraltar Industries reported its Q3 2025 earnings, revealing a shortfall in both earnings per share (EPS) and revenue compared to market forecasts. The company posted an EPS of $1.14, falling short of the anticipated $1.31, leading to a negative surprise of 12.98%. Revenue also missed expectations, coming in at $310.94 million against a forecast of $347.4 million, a 10.5% shortfall. Despite these misses, the company’s stock price showed resilience, rising 1.83% to $67.13 in pre-market trading.

Key Takeaways

• Gibraltar Industries missed its Q3 2025 EPS and revenue forecasts.
• The company’s stock rose 1.83%, indicating stable investor sentiment.
• Strong cash flow and strategic initiatives may have bolstered market confidence.
• The residential roofing market decline poses ongoing challenges.

Company Performance

Gibraltar Industries faced a challenging Q3 2025, with earnings and revenue failing to meet expectations. The downturn in the residential roofing market, with a 5-10% decline and a significant drop in Texas, adversely impacted sales. However, the company maintained its market leadership in centralized mail solutions and expanded its geographic presence, indicating strong strategic positioning.

Financial Highlights

• Revenue: $310.94 million, missing forecasts by 10.5%
• Earnings per share: $1.14, missing forecasts by 12.98%
• Cash from operations: $57 million, up 39%
• Free cash flow: $49 million, representing 16% of sales

Earnings vs. Forecast

Gibraltar Industries’ Q3 2025 earnings per share of $1.14 fell short of the $1.31 forecast, marking a 12.98% negative surprise. Revenue was also below expectations at $310.94 million versus the anticipated $347.4 million, a 10.5% shortfall. This marks a deviation from previous quarters where the company often met or exceeded market expectations.

Market Reaction

Despite the earnings miss, Gibraltar Industries’ stock price increased by 1.83% to $67.13. This movement suggests that investors may be focusing on the company’s future potential and strategic initiatives rather than the immediate earnings shortfall. The stock remains within its 52-week range, indicating a stable market position.

Outlook & Guidance

Looking ahead, Gibraltar Industries has provided a full-year 2025 net sales guidance of $1.15 billion to $1.175 billion, reflecting a 15% increase. The company also expects adjusted EPS to rise by 10-12%, indicating confidence in its strategic initiatives and market positioning. Key growth areas include the Agtech segment, with strong bookings and a target of 15% operating income.

Executive Commentary

CEO Bill Bosway expressed optimism, stating, "We’re on track to deliver a solid year in 2025." He emphasized the company’s strategic focus, saying, "We’re trying to skate to where the puck’s going to be right now with the market." Bosway also noted, "Three or four cylinders are kind of clicking, just not showing up as well as we’d like just yet," highlighting ongoing integration efforts.

Risks and Challenges

• The decline in the residential roofing market could continue to affect sales.
• Integration costs for recent acquisitions may pressure margins.
• Market saturation in key geographic areas could limit growth.
• Macroeconomic pressures, including interest rate fluctuations, may impact consumer demand.

Q&A

During the earnings call, analysts inquired about margin challenges in the Agtech and residential segments. The management addressed integration costs related to recent acquisitions and highlighted their strategy to diversify project types and geographies to mitigate these challenges.

Full transcript - Gibraltar Industries Inc (ROCK) Q3 2025:

Conference Operator, Conference Call Moderator: Greetings and welcome to Gibraltar Industries’ 3rd Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press Star 0 on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Carolyn Capaccio of Alliance Advisors IR. You may begin. Thanks, Kate. 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 Lovecchio, Gibraltar’s Chief Financial Officer. The earnings press release that was issued this morning, as well as a 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 was classified as held for sale and as a discontinued operation with second quarter 2025 results, and that adjusted results exclude net sales and operating results of the residential electronic locker business, which was sold on December 17, 2024. Also, as noted on Slide 2 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 Bosway, Chairman, President and CEO, Gibraltar Industries: Good morning everyone and thanks for joining our call. Today we’re going to take you through third quarter results and then we’ll review our guidance for continuing ops and then we’ll open the call for questions. Let’s turn to Slide 3 titled Third Quarter 2025 Review. I’d say in a relatively dynamic business environment we’ve continued to deliver solid performance and stay on track to deliver good revenue, margin, and cash flow performance from continuing ops. For the full year and the quarter we delivered 13% adjusted net sales growth first and foremost with our building accessories business delivering 2% growth in a soft residential roofing market which is down between 5% and 10% depending on the channel and secondly from our acquired metal roofing and structures businesses delivering revenue per their plan.

That being said, the ongoing delay of a large Controlled Environment Agriculture (CEA) project in Arizona and lower demand in our mail and package business caused revenue for the third quarter to come in below plan and we’ll discuss each of these in more detail as we review the results for each of the segments. The impact of lower sales in agtech and mail and package created a bit of a business and product mix effect during the quarter and as a result adjusted EPS and operating income came in slightly below prior year, down less than 1% and adjusted EBITDA was flat to prior year. We did deliver strong cash performance, generating $57 million in cash from operations, an increase of 39% and $49 million in free cash flow, achieving 16% of sales.

With respect to portfolio management, the sale process for our renewables business is progressing and we continue to target its completion by year end and our newer acquisitions in structures and metal roofing are performing as planned, accelerating through their integration initiatives. Finally, our pipeline of potential additional M&A remains very active, particularly in the building products segment. Let’s jump into business segments and Joe will get us started with residential.

Joe Lovecchio, Chief Financial Officer, Gibraltar Industries: Thanks Bill and good morning everyone. Let’s start with residential on Slide 4. Adjusted net sales for our residential segment increased by $20.5 million or 9.8%, driven by our metal roofing businesses which were acquired at the end of Q1, as well as growth in our building accessories business. We continue to gain participation in the U.S. residential roofing market as we grow with customers, expand in more local markets, and benefit from new products recently introduced. We did experience lower demand in our mail and package business, specifically for our centralized mail solutions, which were down 8% 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 materialize approximately one year after a new build has been started.

To put this in perspective, in 2024, starts for multifamily new construction were reported down over 35%, which resulted in less demand and revenue for us in 2025. Given our sales were down 8% in a market down over 35% demonstrates our team’s ability to drive significant participation gains in challenging market conditions. Overall, residential segment organic revenue was down 1%. Now turning to margins, adjusted operating and EBITDA margins decreased 200 basis points and 130 basis points respectively, driven by business and product mix and accelerating system supply chain and customer integration initiatives across our metal roofing businesses. We also remain on track to complete business system conversions to a single system across the residential segment by the end of 2026. I thought we’d take a.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Little time and talk about the U.S. roofing market. Let’s turn to slide 5 for an update. What you see on the left is data from ARMA. According to shingle shipments reported by ARMA, Q3 shipments were down 10% in the quarter and are down 5.4% year to date. As well, the top 10 states for shingle shipments, which represent 54% of the total shipments in the U.S., were down 12.1% in Q3 and 3.3% year to date. Interestingly enough, Texas, the largest market for shingles, was down 25.2% in the quarter and 12.5% for the year. Another data point to think about is retailer point of sale results were also down in the quarter by approximately 4.5%. In general, there seems to be a few reasons driving the market today.

First, we do see inventory rightsizing happening in both the wholesale and retail channels, which we expect to continue in Q4 and maybe into early Q1 2026. Secondly, I think weather events in 2024, like California rains and Texas hailstorms, etc., really haven’t occurred at the same level of frequency in 2025, specifically in the third quarter. Third, labor availability may be becoming a challenge for general contractors operating in certain states like Texas, California, Arizona, and Florida. As the roofing market continues to be less active than we prefer, our building accessories team has found ways to outperform the market and deliver organic growth, which we did in the quarter, up 2%, and have done for the first nine months of 2025, up 2.5%. Despite today’s market situation, we still believe there is more opportunity to grow and we will maintain our playbook going forward.

Now I want to move to slide six and I’ll give you an update on our expansion initiatives that we executed in the quarter. First, we added capability in both Denver and Boise to support local retailers in these areas. In an effort to provide better service and support for retailers in the greater Salt Lake City area, we redeployed manufacturing capability from our other facilities to our Salt Lake City operation. In late July, we also acquired Gideon Steel Supply, based in Oklahoma City. Gideon’s last 12 months of revenue about $10 million with EBITDA margins approximately 20%. Gideon is a leading provider of metal roofing systems and roofing accessories in the OKC market. In 2025 we entered nine MSAs through either organic or M&A investment and we expect to expand further with additional operations coming soon. The Western Region. Let’s switch gears and let’s move to agtech.

Joe Lovecchio, Chief Financial Officer, Gibraltar Industries: Turning to slide seven, agtech net sales grew $16.1 million or 38.8% driven by the acquisition of Lane Supply which.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Continues to see solid demand.

Joe Lovecchio, Chief Financial Officer, Gibraltar Industries: The strength at Lane helped offset the impact of the delay of a larger CEA project which we highlighted in our Q2 earnings call. Demand remains strong with bookings and backlog continuing to grow substantially. Adjusted operating margin decreased 440 basis points, driven by the lower volume in the quarter and the impact of accelerating integration activities for Lane Supply. Adjusted EBITDA margin decreased 280 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: If we move to slide 8, I want to give you an update on a couple of the Controlled Environment Agriculture (CEA) projects we shared with you in our Q2 earnings call: Howlings Arizona, which we’ve already referenced once, and the Pomas Farms. On the left, let’s start with the Howlings project. Phase one of the project, the design engineering work has been completed and maintenance services continue to support existing growing operations and product shipments for retail customers. Phase two of the project, the retrofit portion of the project remains on hold as the team awaits final approval of its USDA loan, and this phase of the project is currently expected to start in December, effectively a six-month delay from its original schedule. For Pomas Farms on the right, there were two projects representing approximately $14 million in contract value.

The Greenhouse Lift project is nearing completion, and the phase two 18-acre bell pepper expansion project has recently been started. Both projects experienced initial delays related to water rights permitting, but we are pleased they are now active and moving forward. Now I want to move to slide 9. Let’s talk a little bit about bookings and backlog acceleration. Bookings and backlog continue to accelerate and grow as we expand our customer base and increase our win rate with customers. Total bookings on a year-to-date basis are up 121% with organic bookings up 44%. Our average backlog is up 110% over prior year, with our organic backlog up 70%.

Our effort to broaden our customer base over the last 12 to 18 months is also gaining traction as we have secured business with 15 new CEA growers, 24 commercial classic growers, and 20 customers focused on institutional operations like ag research and botanical gardens. We have also been rebalancing the business across end markets in between new construction and retrofit and service, all of which will provide positive impact for the business going forward. Now, finally, let’s move to slide 10. I just want to share a couple of customer wins in the commercial institutional business. We were recently awarded a design and build contract to retrofit the Franklin Park Conservatory and Botanical Gardens in Columbus, Ohio, which we expect to begin in Q1 2026.

We are equally excited with our recent win for the Kaplan Orchid Conservatory and Research Facility, a design build contract to build a new conservatory and also a separate research facility in Norfolk, Virginia. These projects are expected to be in Q2 2026. I’d say a lot of positive customer and demand activity happening across the agtech business, and as more projects come into the pipeline and our operations cadence smooths as a result, we are looking forward to generating more consistent, predictable performance accordingly. Let’s now move on to infrastructure. Let’s move to slide 11.

Joe Lovecchio, Chief Financial Officer, Gibraltar Industries: Infrastructure net sales decreased $0.1 million or less than 1% as a result of a now resolved supplier transition that shifted revenue from September into the fourth quarter. Backlog decreased 2% in the quarter, but strong order inflows are being booked. In October, both segment adjusted operating and EBITDA margins decreased 740 basis points, driven by lower volume and inefficiency related to the now resolved supplier transition. Let’s now move to slide 12 as we are excited to share a new patented technology that DS Brown recently launched to protect telecom fiber optic cables installed in shallow depth trenches in asphalt pavement and roadways. Shallow depth trenching for fiber optic installation with R Seal provides significant benefits in the expansion of fiber optic networks. It improves installation speed, minimizes roadway closures, creates less traffic disruption, while providing a more durable seal solution.

Since late Q2 2024, we have sold 350 miles of seal to support fiber optic installation projects in 13 different states, and we are excited to see this product solution ramp and grow as cities, states, and the U.S. continue to build and strengthen fiber optic infrastructure. Now let’s move to slide 13 to discuss our balance sheet and cash flow. At September 30th, we had cash on hand at $89 million and $394 million available on our revolver. During this quarter, we generated approximately $57 million in cash from operations from net income and cash generated from working capital. Free cash flow generation again expanded on a sequential basis to about 16% of sales as expected, and we are on track to hit our 2025 target of approximately 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 at approximately 3% to 4% of sales for the year. We continue to explore inorganic growth opportunities with a focus in our current residential end markets and have an active pipeline of high quality M&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 million remaining under.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Our stock purchase authorization.

Joe Lovecchio, Chief Financial Officer, Gibraltar Industries: Now I’ll turn the call back to.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Bill, so now let’s move to slide 14 and we will review our guidance for the rest of the year. Let’s start with our assumptions for end markets. In residential, we expect current market conditions to persist and adjust for normal seasonality. In Q4, we assume interest rates will become a bit more attractive, affordability will improve slightly in certain regions, and inventory rightsizing will continue in the channel. We will continue to drive participation opportunities in both our building accessories and mail and package businesses. In agtech, we have solid backlog and expect to add more bookings in Q4 with some impact from these projects in the fourth quarter while also setting us up for a good start in 2026. We also expect demand in our Lane Supply business to continue as the team supports new store and retrofit initiatives across its core customer base.

Finally, we expect infrastructure margins to return to normal levels in Q4, accelerate bookings in the quarter, and build backlog as we exit the year. With that, let’s review our 2025 guidance from continuing ops. We expect net sales to range between $1.15 billion and $1.175 billion, up approximately 15%. Adjusted operating margin to range between 14.1% and 14.2%. Adjusted EBITDA margin to range between 17.1% and 17.2%. GAAP EPS to be in the range of $3.67 to $3.77, down from last year, but driven primarily by the gain on sale from the company’s electronic locker business that we executed at the end of 2024. Adjusted EPS to be in the range of $4.20 to $4.30, up approximately 10% to 12%, and free cash flow as a percentage to net sales of 10%. In summary, we’re on track to deliver a solid year in 2025.

We will continue to navigate through a sluggish residential market, execute on growing bookings and backlog in agtech, and stay on course to complete the sale of renewables business by year end. Transforming our portfolio and focusing more on residential and structured businesses will drive improved performance for our shareholders and customers. I’m really proud of the work our team is doing to execute in this environment each day while simultaneously transforming the company for the future. With that, let’s open the call up and we’ll take some questions.

Conference Operator, Conference Call Moderator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star key. Our first question comes from the line of Walt Liptak with Seaport Research. Please go ahead with your question.

Joe Lovecchio, Chief Financial Officer, Gibraltar Industries: Good morning, everyone. One about the guidance for this year and the lower EBITDA margin that you’re forecasting, is it related largely to the lower margin this quarter? If it is, it’s largely, probably.

In the Agtech segment.

Kind of the same thing for the fourth quarter. Is the fourth quarter, is the margin.

Overall coming down because of the Agtech outlook?

Yeah, Walt, I think there’s probably two things there. One, we referenced the lower volume in.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Agtech and so you saw that particularly.

Joe Lovecchio, Chief Financial Officer, Gibraltar Industries: In the third quarter, the second part is kind of the impact of the business and product mix, particularly in the residential segment. I’d say those are the two.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Drivers that you’re seeing impact the margins for the balance of this year.

Okay, great.

Joe Lovecchio, Chief Financial Officer, Gibraltar Industries: To drill into the Agtech segment, you referenced some new customer.

Wins, and that’s great.

I wonder if you can provide us with some details about the sizes of these new projects, the implied margins, and what the future margins are for.

Agtech could look like.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yeah, it’s a variety of customers, as I mentioned, whether it’s CEA, so the things that you’ve seen, Walt, in person, or institutional, commercial, it’s been a pretty broad increase. In CEA as an example, we’ve really broadened out and it’s a combination of new and retrofit type projects in the U.S. as well as in Canada. The margin profiles vary a little bit depending on the scope and size of the project itself. We still feel really good about moving this business towards 15% operating income, maybe a little bit higher EBITDA margins in the relatively near term. Our U.S., when you get into commercial and institutional, the reason that’s important is because those margins are even a little bit higher for us because of the uniqueness and the customization around some of the things we do there.

The more we can mix our business between types of business, individual channels or markets, geographic markets, and then scope range makes a difference in how we drive our margins up. Broadening the base is great from the standpoint of getting the cadence around operating cadence. Secondly, mixing our business is also really important. The one thing about construction that we all know and the frustration about it sometimes when you depend on one or two large projects and they move, your costs don’t. They’re not as variable as you’d like them to be, like in a manufacturing, build and ship type environment.

We’re trying to emphasize to everybody and in broadening our customer base and broadening the number of projects we have, it does smooth out that, but it also helps keep your costs more in line as you go through the course of the year in the course of various projects. I’m excited about the fact that we’re adding more because that’s the balance that I think will give us more predictability, not just for you, but for us and everybody else that’s interested in the business. I’m pretty excited about how that’s evolving. That’s why I wanted to share with you guys what’s happening in the bookings and the backlog and the customer expansion. It matters a lot going forward with margins.

Joe Lovecchio, Chief Financial Officer, Gibraltar Industries: Okay, is there a change now in the sizes of these projects? Is it more diverse, smaller projects that?

Inherently have less risk?

Is that what you’re commenting on?

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yeah, I think so. In our organic business, yes, commercial and institutional inherently are smaller than they are the largest CEA. They’re smaller in scope and therefore take less time. You stack up more of those, and we inherently do more of those in a given year than we would CEA just because of the size of CEA. Lane is a little bit different in the sense that their average project is seven to 10, maybe a week to two weeks, depending on how intricate it is. The cadence they bring to the segment is helpful on that front as well. Think of Lane as probably your fastest flip and turn on project size and turn, commercial, institutional in the middle, and CEA is your bigger and larger, longer projects. Mixing that is important to us relative to driving the cadence.

Okay, great.

Joe Lovecchio, Chief Financial Officer, Gibraltar Industries: I think you called out that Lane Supply had some one-time costs this quarter.

I wonder if you can quantify those for us.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Yeah, a reference there is we’re trying to accelerate a little bit faster on the integration. We’re doing incremental systems work to pull that up faster than we originally thought. Getting them on the Gibraltar systems, not just for financial reporting, but other systems like our HRS system, supply chain, and things of that nature. We’re just putting a lot of effort to accelerate that at a faster pace than we originally planned. That’s the bulk of it. In terms of quantifying that in the quarter, I don’t have a solid number for you, but it’s a decent amount of effort.

Okay, thanks. I’ll get back in queue.

Yep.

Conference Operator, Conference Call Moderator: Our next question comes from the line of Daniel Moore with CJS Securities. Please go ahead.

Morning, Bill. Morning, Joe. Thanks for taking the questions. Maybe talk about just backlog up 50%.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: What was that?

Was that organic? I know you referenced 70% organic. Organic growth in agtech. Just wanted to parse that out a little bit better.

The backlog I showed you on the one page is all agtech. The organic was up average, backlog up 70% year over year. You got to do an average because every quarter changes your backlog. The bookings is probably more indicative. That was up 44%. That’s all organic, just flat year over year. That’s just a combination of adding more customers and winning more projects or having a better win rate. We’ve had a concerted effort the last couple years to work that hard, not just in Controlled Environment Agriculture, but also in commercial institutional. It’s exciting to see it starting to happen. I didn’t reference a whole lot of what’s in front of us, the projects we’re working on, but there’s a lot of interesting activity in front of us as well. It’s starting to pay off for us.

That’s part of that whole intent of how do you drive more cadence, consistency. Quarter to quarter you got to stack the projects and you need more of them. We’re starting to see that build for us. Excited about what that’s going to do in Q4, but also as we go into 2026, that’s helpful.

Can you remind us kind of roughly what % of your agtech revenue runs through backlog? Just trying to get a sense for how meaningful. I mean that’s very significant upgrade, step up in order rates, how meaningful that is in terms of translating the growth next year and in terms of lead times when we should start to see that translate to faster revenue growth.

Yeah, so a very high percentage of our revenue comes from our backlog, if you will. In agtech there’s a little bit where we’ll do some repair, maintenance type stuff that turns and flips, that doesn’t really go in the backlog, but the bulk of what we do goes into backlog and then translates into sales. I’d say probably 90% of our revenue comes from and is driven by the backlog that is in front of it. As we stack these projects, as I mentioned in the call, we’ll start to see impact some of that in Q4. Those projects, depending on the mix between Commercial Institutional and Controlled Environment Agriculture and Lane all have a different time element around it.

If you look, the two I showed you guys in Commercial Institutional, those will start in Q1 and Q2 as an example, we’ll turn and flip those in three to four months. Controlled Environment Agriculture projects can be up to a year. Lane will be 10 days to two weeks. It’s that mix that we think will get us off to a good start in the first quarter, but it’s going to be helpful in Q4 as well. What I probably need to provide you a better view of, Dan, honestly, is breaking the backlog down into those various groups so you get an idea of churn, which I didn’t do for today, but we can follow up with you on that as well.

Makes sense. Appreciate it. We don’t talk as frequently these days about mail and packaging. It’s been a few years of obviously slow housing turnover. What’s your updated outlook for growth for that business and margin profile and opportunity over the next few years?

The one thing about mail and package is different than our building accessories. Building accessories, 80% repair, and that’s a little bit different world than obviously new start construction, which is what mail and package is typically driven off of. As starts have been down the last two years, the business has been navigating through that. We’ve worked really hard to outperform a down market, but it really is starts driven. As you start to see interest rates and affordability kind of come in line a little bit better than it has been, you’ll start to see starts pick up, you’ll start to see that drive into our business. There’s a lot of activity out there where our dealers are quoting on developments, but those developments are the things that need to actually start kicking in.

We see a lot where civil’s been done, but the new construction guys are holding off on that. I’m talking about the larger neighborhoods, whether it’s multifamily or single family, because we put them in both. We need to start seeing that activity move forward for that to translate into business for us. We’re the leader in that space. We haven’t fallen down as much as everyone else has. That doesn’t make us feel any better, but it really is a starts thing. I would say a lot of our dealers are pretty optimistic, but we need those starts to start picking up for the business to start picking up. I don’t think we’ll see a dramatic fall going forward per se. I think we’re bottoming out. I think we’re going to mirror what you see in the new construction from the builders.

That’s traditionally what’s going on in the business, particularly in our centralized mail.

Got it. Margins pretty steady state where we kind of on a run rate basis, not necessarily this quarter, but fiscal 2024.

Particularly in mail package. I’d say in residential, we’ve done a pretty good job of, you know, you think about a sluggish market, whether it’s repair or new, some of the tariffs we’ve all been dealing with, we’ve made it somewhat of a non-issue. You still got to go execute things like pricing, cost reduction, 80/20 initiatives. I think the team’s done a pretty good job of neutralizing as much as they can in that macro environment and delivered pretty solid performance relative to the rest of the world. It doesn’t make us feel great. It just gives us some confidence that we can plow through what’s in front of us. As the market recovers, we should be in a good position to accelerate maybe a little bit quicker than everybody else.

Helpful. Last for me, adjusted. Looking at the tweaked guidance, adjusted pro forma operating margins, kind of 14% ish for the overall business implied by your fiscal 2025 guidance. We just talked about some of the pieces here, but in terms of opportunity for 2026 and beyond, not looking at guidance per se, but where do you see the biggest opportunities to improve that and what should that look like given the new portfolio of businesses if we look out, say, two to three years. Thank you again.

Yeah, no, good question. Believe it or not, we’re starting our budgeting process and our 3D look process next week. I’d say in general, from a 20,000-foot view, we would expect things in the residential space to get better. From an end market perspective, we’re in our third, maybe fourth year of a depressed market. At some point in time, that’s going to turn back and I think from a growth top and bottom line, that’s going to contribute nicely. As we get bigger in that space, either building accessories, metal roofing, mail and package, all of those things, I think we’re in a good position to drive better performance. The other big one for us is obviously Agtech. This backlog and the bookings rate that we’ve been demonstrating here recently, I think, is going to matter a lot relative to contribution over the next couple of years.

That business is going to contribute a lot more in the top line. As we get the cadence going, the mix of projects as I described, you’re going to see a margin improvement that’s going to be a nice contribution to overall Gibraltar Industries. Lastly, although it’s a relatively small business, what’s interesting about the new technology Joe Lovecchio referenced, that’s an interesting technology that’s patented and unique and we’re just getting started, but that would be a nice growth engine for us if it continues to accelerate and at a minimum support the margin profile of the business today and maybe help us a little bit more on that front too going forward. I think we have a lot of good things in front of us. I think we’re doing a pretty good job right now in this environment.

As some of these markets turn for us, some of the new products really take off for us. We’re pretty excited about what we can do in the next two to three years for sure. Let’s not forget we’re going to continue to put our balance sheet to work, whether it’s through opportunistic buybacks. There are some really interesting M&A opportunities that I think are going to help us position in our existing swim lanes to be in an even stronger position than we are today. We’re working that pretty hard, more to come on that. I’d say three or four cylinders are kind of clicking, just not showing up as well as we’d like just yet. They will and we’re starting to see that.

Very helpful. Maybe last one, I’ll jump out. Sounds like still expect the sale to go through between now and year end. Anything that might be delaying that? I guess the question is your confidence around that timing relative to where we stood maybe 90 days ago. Thanks again.

I’d say pretty good. We’re moving forward. These processes have stages, and I’ll use my baseball analogy. If it’s a nine inning game, we’re in the later innings, not the early innings. We still feel good about that and like to get that done. That’s important to us for a lot of reasons as well. Good progress.

Very good. Thank you again.

Joe Lovecchio, Chief Financial Officer, Gibraltar Industries: Yeah.

Conference Operator, Conference Call Moderator: Our next question comes from the line of Julio Romero, Sidoti & Company. Please go ahead.

Thanks. Good morning Bill and Joe on residential. Good morning. On residential you talked about some of the trends in that segment across the different business units outperforming some of the end markets in building accessories and also in centralized mail. Talked about retail point of sale down 4.5%. Was hoping you could talk about trends by geography a bit and just call out any areas of strength and weakness that you saw in the quarter and heading into fourth quarter.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: From a market perspective, that armor data is kind of interesting because you think about the largest markets between Texas, Florida, California all being down. That’s where you’ve had in the recent years a lot of migration and or build happen or just sheer size of those respective states. I think Texas is important to us, but I wouldn’t say that’s a place that we’re incredibly well positioned. We’ve been making strides there. I think that’s a location, or I’d say a region, that and generally the Southeast is probably going to see some recovery in the next year or so. The reason I think that is Florida came off of a very strong set of series of storms. We saw a big reduction last year in year-over-year type of performance, and I think it’s now normalized.

What you’re starting to see is I think they’re positive for the year or year to date so far. I think you’ll start to see that settle in and be a little bit more positive growth. We’re pretty well positioned there, but we are coming off of a year or two where it was, once you get past hurricanes, it was really depressed. We’ll see how that evolves. I think the Southeast in general, states like Georgia are still pretty strong. Alabama and that whole area, the Carolinas are pretty strong. We’ve been expanding into the Carolinas, if you saw the dots on the map, through metal roofing. Now we’re actually running some of our building accessories through those metal roofing locations because those areas, that region, that Mid Atlantic or Carolina region is underserved. We’re seeing some opportunity there. It really is somewhat surgical for us.

I would say how do you continue to do well in Florida? How do you expand in the Southeast? Get the Carolinas going and we’ll continue to expand our presence in Texas. We’ve been doing a lot in the Rocky Mountain region, as you see with Colorado, Idaho, Montana area, and we still think that has got some pockets. Salt Lake has been pretty good for us. We’ve done some things in Boise, which seem to be a pretty decent market. Really the places we’ve gone, Julio, are places we think, A, are underserved and, B, have decent markets. I can’t tell you specifically what every MSA is going to do in the next two years, but I feel like our coverage today is better than it was two years ago and we’re in more places than we would have been otherwise. As these regions return, I think that’s important.

I think the other thing to think about is it’s not just the region, it’s being with the right channel in the region. Part of our localization effort is to be stronger with wholesalers, where 80% of what contractors need, they typically buy through. There are also cases where we want to be in certain regions where we’re doing really well with retailers and wholesalers. There’s a lot more under the curtain, if you will, in terms of how we’re trying to drive our participation. I think all of that’s kind of working for us right now. We have more work to do, but that’s a long answer to your question. We’re trying to skate to where the puck’s going to be right now with the market.

It’s a little challenging to figure out exactly where the puck’s going to be, but we think about it more than just the next year or the next quarter. We’re trying to figure out migration patterns, where investments are going, where the new construction guys are going, as well as the inventory stock that’s out there. It’s a combination of a lot of things. Sorry for the long answer. Hopefully that helped a little bit.

Very helpful, thank you. Just thinking about the residential segment adjusted operating margin and residential EBITDA margin trended down a bit year over year and sequentially here. Can you kind of help us unpack the drivers of the decline and just help us think about is that primarily from the increased noise from the acquisitions in metal roofing, or is there some noise in there from inventory right sizing and less weather-related activity, et cetera?

I think it’s, you know, we talked earlier about our revenue being less than planned in the core. There’s a little bit of that outside of mail and package in our core building accessories. We were up 2%, but we went into it thinking that we would grow a little bit more. We did not anticipate the right sizing. I think after Labor Day that’s when we started to see it. We’re hearing that consistently from wholesalers and the big box guys trying to get that right. You think about going into the third quarter, that’s usually the biggest quarter, didn’t materialize as people thought. I don’t think the market’s down inherently structurally down 10% to 12%. I think it’s more like the 4% or 5% that I referenced because that’s the point of sale that reflects what’s actually being sold.

I do think that created some noise for us and the building accessories that contributed to a little bit of the margins impact. Mail and package obviously being down impacted the margin. Compression metal roofing is really more of a short term issue as we’re trying to accelerate faster than we planned. We are making investments in that now to get things integrated at a faster pace than we originally thought. That’s really around systems. It’s just supply chain things that we’re doing. I think that’s all good stuff. Those investments need to be made and we’re making those as we go. We’re in a stronger position as we go forward in 2026. The reason we’re doing that now, you might say, why?

If you have other ones that you want to bolt on, having that system structure in place makes a difference on bringing the next one or two or three into the family a little bit more efficiently than you would have otherwise. We’ve got to get that going. That’s part of the investments we’re making.

Perfect.

That kind of segues into my follow-up here. This is kind of a piggyback to what Dan was asking earlier, but more focused on residential in particular. As you continue these expansion initiatives and you invest near term into systems and integration here in the near term, how should we think about how residential margins on an operating margin and EBITDA margin basis trend over the next few quarters and into 2026? To the extent that you can talk about that at a high level, yeah.

We expect them to improve. Like I said, we’re offsetting some business and product mix simultaneously. Why? We’re integrating the things we just bought all in the same space, and we’re dealing with a relatively sluggish market. If we can get the market to cooperate just a little bit more than it has the last three years, I think that’s a big deal. We’re not chasing a falling sword for all of 2026, and we can’t control that. I get it, but I think there’s some movement that we’ve been tracking. Have we hit the bottom? I can’t tell you for sure or not, but I feel like getting that piece a little bit more stable makes a difference as we execute our base plan, what we can control.

Things like how we drive participation, our 80/20 product mix, new products, things that we’ve been doing, I think will matter towards contribution. As you think about some of these new locations and our strategy around getting closer to wholesalers and serving a local basis, those inherently are higher margin operations than what we traditionally would have done trying to serve them from. There’s a lot of things I think that will contribute to margin improvement in the space going forward. The addition of metal roofing is going to matter. That’s why we got into it in the first place. I think there’s a lot of things that will start contributing as we get into 2026 and 2027.

The thing that we haven’t talked a lot about, and I won’t be able to quantify it for you yet today, but this systems integration inherently, there’s a lot of frictional cost when you don’t have any of those systems in place for their respective teams to leverage. We’ve been working on this for quite a while, but by the end of 2026, we’ll have the entire residential business on a System 1 system. We’ve got a few more locations to do, but that’s going to matter as we think about scaling up, using technology, leveraging our cost structure in a much different way than we have in the past. We still have things like that. I think we’re going to make a difference for us going forward on margin as we move forward.

Very exciting. The last one for me here would just be if you could talk a little bit about the M&A pipeline for residential in regards to your expansion initiatives and kind of where M&A multiples are going for in the residential space.

I’m not trying to avoid the question. The guys say all over the map on multiples. As we’ve talked before, the thing that we’re trying to do is stay in our swim lane when you think about residential. We swim in certain lanes. Our M&A focuses on staying in those and building out our presence because the synergy opportunities around that tend to be better. Secondly, the return profile on the investment you make in something that you do every day tends to be better and less risky than if you’re doing something on an adjacency basis or something that’s adjacent to yours. I’d say the pipeline, number one, is pretty robust right now in our swim lanes. Whether that’s core building, accessories type stuff, metal roofing is quite interesting right now as well.

Those are the two areas that we’re, I’d say, effectively 100% focused on right now relative to M&A for all of Gibraltar. We’ll continue to drive that. Yes, we are engaged and involved in a couple of interesting things and we’ll see how those things play out during the relatively near term.

Very helpful. Thanks very much.

Yep.

Conference Operator, Conference Call Moderator: This now concludes our question and answer session. I would now like to turn the floor back over to Mr. Bosway for closing comments.

Bill Bosway, Chairman, President and CEO, Gibraltar Industries: Thank you again for joining us today and appreciate the support. Appreciate all the questions. It’s an interesting time. I think we’re doing a pretty good job of navigating through some things and looking forward to catching back up with you guys next quarter. We know we’ll do some one on ones here shortly as well. Thanks again and hope you have a good day.

Conference Operator, Conference Call Moderator: Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines and have a wonderful day.

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