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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 000-22462
https://cdn.kscope.io/9daf9d2919a0b2267bac8fc6da9d3de5-Gibraltar_Wordmark_Blue_RGB.jpg 
GIBRALTAR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter) 
Delaware 16-1445150
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
3556 Lake Shore RoadP.O. Box 2028BuffaloNew York 14219-0228
(Address of principal executive offices) (Zip Code)
(716826-6500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par value per shareROCKNASDAQ Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No   
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No  
As of May 1, 2023, the number of common shares outstanding was: 30,410,872.


Table of Contents
GIBRALTAR INDUSTRIES, INC.
INDEX
 
 PAGE 
NUMBER
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
 
Three Months Ended
March 31,
 20232022
Net sales$293,267 $317,865 
Cost of sales216,338 253,021 
Gross profit76,929 64,844 
Selling, general, and administrative expense47,559 43,649 
Income from operations29,370 21,195 
Interest expense1,491 485 
Other (income) expense (397)153 
Income before taxes28,276 20,557 
Provision for income taxes7,177 5,101 
Net income$21,099 $15,456 
Net earnings per share:
Basic$0.68 $0.47 
Diluted$0.68 $0.47 
Weighted average shares outstanding:
Basic30,897 32,913 
Diluted31,024 33,022 
See accompanying notes to consolidated financial statements.
3

Table of Contents
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 
Three Months Ended
March 31,
 20232022
Net income $21,099 $15,456 
Other comprehensive (loss) income:
Foreign currency translation adjustment(115)(227)
Minimum post retirement benefit plan adjustments, net of tax8 24 
Other comprehensive loss(107)(203)
Total comprehensive income $20,992 $15,253 
See accompanying notes to consolidated financial statements.
4

Table of Contents
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
March 31,
2023
December 31,
2022
(unaudited)
Assets
Current assets:
Cash and cash equivalents$7,497 $17,608 
Accounts receivable, net of allowance of $4,164 and $3,746, respectively
230,132 217,156 
Inventories, net171,634 170,360 
Prepaid expenses and other current assets19,015 18,813 
Total current assets428,278 423,937 
Property, plant, and equipment, net107,701 109,584 
Operating lease assets24,432 26,502 
Goodwill512,639 512,363 
Acquired intangibles134,735 137,526 
Other assets707 701 
$1,208,492 $1,210,613 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$129,661 $106,582 
Accrued expenses67,103 73,721 
Billings in excess of cost42,929 35,017 
Total current liabilities239,693 215,320 
Long-term debt49,876 88,762 
Deferred income taxes47,030 47,088 
Non-current operating lease liabilities17,488 19,041 
Other non-current liabilities19,018 18,303 
Stockholders’ equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding
  
Common stock, $0.01 par value; authorized 100,000 shares; 34,148 and 34,060 shares issued and outstanding in 2023 and 2022
341 340 
Additional paid-in capital324,466 322,873 
Retained earnings649,077 627,978 
Accumulated other comprehensive loss(3,539)(3,432)
Cost of 3,389 and 3,199 common shares held in treasury in 2023 and 2022
(134,958)(125,660)
Total stockholders’ equity835,387 822,099 
$1,208,492 $1,210,613 
See accompanying notes to consolidated financial statements.
5

Table of Contents
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited) 
Three Months Ended
March 31,
 20232022
Cash Flows from Operating Activities
Net income$21,099 $15,456 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization6,834 6,336 
Stock compensation expense1,594 1,352 
Exit activity (recoveries) costs, non-cash(63)1,198 
(Benefit of) provision for deferred income taxes(51)17 
Other, net1,023 1,395 
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable(18,004)(11,101)
Inventories(1,586)(20,937)
Other current assets and other assets2,536 731 
Accounts payable23,077 (11,962)
Accrued expenses and other non-current liabilities1,586 9,761 
Net cash provided by (used in) operating activities 38,045 (7,754)
Cash Flows from Investing Activities
Acquisitions, net of cash acquired554  
Purchases of property, plant, and equipment, net(2,190)(4,402)
Net cash used in investing activities(1,636)(4,402)
Cash Flows from Financing Activities
Long-term debt payments(50,000)(29,000)
Proceeds from long-term debt11,000 47,500 
Purchase of common stock at market prices(7,509)(3,461)
Net cash (used in) provided by financing activities(46,509)15,039 
Effect of exchange rate changes on cash(11)(159)
Net (decrease) increase in cash and cash equivalents(10,111)2,724 
Cash and cash equivalents at beginning of year17,608 12,849 
Cash and cash equivalents at end of period$7,497 $15,573 
See accompanying notes to consolidated financial statements.
6

Table of Contents
GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited) 
 Common StockAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Treasury StockTotal
Stockholders’
Equity
 SharesAmountSharesAmount
Balance at December 31, 202234,060 $340 $322,873 $627,978 $(3,432)3,199 $(125,660)$822,099 
Net income— — — 21,099 — — — 21,099 
Foreign currency translation adjustment— — — — (115)— — (115)
Minimum post retirement benefit plan adjustments, net of taxes of $3
— — — — 8 — — 8 
Stock compensation expense— — 1,594 — — — — 1,594 
Net settlement of restricted stock units88 1 (1)— — 36 (1,929)(1,929)
Common stock repurchased under stock repurchase program— — — — — 154 (7,369)(7,369)
Balance at March 31, 202334,148 $341 $324,466 $649,077 $(3,539)3,389 $(134,958)$835,387 
Balance at December 31, 202133,799 $338 $314,541 $545,572 $187 1,107 $(35,380)$825,258 
Net income— — — 15,456 — — — 15,456 
Foreign currency translation adjustment— — — — (227)— — (227)
Minimum post retirement benefit plan adjustments, net of taxes of $10
— — — — 24 — — 24 
Stock compensation expense— — 1,352 — — — — 1,352 
Net settlement of restricted stock units173 2 (2)— — 72 (3,461)(3,461)
Balance at March 31, 202233,972 $340 $315,891 $561,028 $(16)1,179 $(38,841)$838,402 

See accompanying notes to consolidated financial statements.
7

Table of Contents
GIBRALTAR INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1)    CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements of Gibraltar Industries, Inc. (the "Company") have been prepared by management in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for the fair presentation of results for the interim period have been included. The Company's operations are seasonal; for this and other reasons financial results for any interim period are not necessarily indicative of the results expected for any subsequent interim period or for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2022.
The consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.
(2)    RECENT ACCOUNTING PRONOUNCEMENTS
The Company considers the applicability and impact of Accounting Standards Updates ("ASUs"), and ASUs effective in or after 2023, respectively, which were assessed and determined to be either not applicable, or had or are expected to have minimal impact on the Company's consolidated financial statements and related disclosures.
(3)    ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following (in thousands):
March 31, 2023December 31, 2022
Trade accounts receivable$189,281 $179,170 
Costs in excess of billings45,015 41,732 
Total accounts receivables234,296 220,902 
Less allowance for doubtful accounts and contract assets(4,164)(3,746)
Accounts receivable, net$230,132 $217,156 
Refer to Note 4 "Revenue" concerning the Company's costs in excess of billings.
The following table provides a roll-forward of the allowance for credit losses, for the three month period ended March 31, 2023, that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected (in thousands):
Beginning balance as of January 1, 2023$3,746 
Bad debt expense, net of recoveries260 
Accounts written off against allowance and other adjustments158 
Ending balance as of March 31, 2023$4,164 
(4)    REVENUE
Sales includes revenue from contracts with customers for designing, engineering, manufacturing and installation of solar racking systems; electrical balance of systems; roof and foundation ventilation products; centralized mail systems and electronic package solutions; retractable awnings; gutter guards; rain dispersion products; trims and flashings and other accessories; designing, engineering, manufacturing and installation of greenhouses; structural bearings; expansion joints; pavement sealant; elastomeric concrete; and bridge cable protection systems.
Refer to Note 14 "Segment Information" for additional information related to revenue recognized by timing of transfer of control by reportable segment.
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As of March 31, 2023, the Company's remaining performance obligations are part of contracts that have an original expected duration of one year or less.
Contract assets consist of costs in excess of billings presented within accounts receivable in the Company's consolidated balance sheets. Contract liabilities consist of billings in excess of cost, classified as current liabilities, and unearned revenue, presented within accrued expenses, in the Company's consolidated balance sheets. Unearned revenue as of March 31, 2023 and December 31, 2022 was $7.8 million and $4.6 million, respectively. Revenue recognized during the three months ended March 31, 2023 and 2022 that was in contract liabilities at the beginning of the respective periods was $18.7 million and $27.4 million, respectively.
(5)    INVENTORIES
Inventories consisted of the following (in thousands):
March 31, 2023December 31, 2022
Raw material$120,150 $111,187 
Work-in-process12,824 17,944 
Finished goods44,944 47,523 
Gross inventory177,918 176,654 
Less reserves(6,284)(6,294)
Total inventories, net$171,634 $170,360 
(6)    ACQUISITION
On August 22, 2022, the Company purchased all the issued and outstanding membership interests of Quality Aluminum Products ("QAP"), a manufacturer of aluminum and steel products including soffit, fascia, trim coil, rain carrying products and aluminum siding. The results of QAP have been included in the Company's consolidated financial results since the date of acquisition within the Company's Residential segment. The purchase consideration for the acquisition of QAP was $52.1 million, which includes a working capital adjustment and certain other adjustments provided for in the membership interest purchase agreement.
The purchase price for the acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values estimated as of the date of acquisition. The Company has completed the process to confirm the existence, condition, and completeness of the assets acquired and liabilities assumed to establish fair value of such assets and liabilities and to determine the amount of goodwill to be recognized as of the date of acquisition. The final determination of the fair value of certain assets and liabilities has been completed within a measurement period of up to one year from the date of acquisition. The excess consideration was recorded as goodwill and approximated $4.0 million, all of which is deductible for tax purposes. Goodwill represents future economic benefits arising from other assets acquired that could not be individually identified including workforce additions, growth opportunities, and increased presence in the domestic building products markets.
The allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed is as follows as of the date of the acquisition (in thousands):
Cash$1,018 
Working capital23,372 
Property, plant and equipment8,486 
Acquired intangible assets14,700 
Other assets1,813 
Other liabilities(1,295)
Goodwill3,991 
Fair value of purchase consideration$52,085 
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The intangible assets acquired in this acquisition consisted of the following (in thousands):
Fair ValueWeighted-Average Amortization Period
Trademarks$2,800 Indefinite
Customer relationships11,900 12 years
Total$14,700 
In determining the allocation of the purchase price to the assets acquired and liabilities assumed, the Company uses all available information to make fair value determinations using Level 3 unobservable inputs in which little or no market data exists, and therefore, engages independent valuation specialists to assist in the fair value determination of the acquired long-lived assets.
The acquisition of QAP was financed primarily through borrowings under the Company's revolving credit facility.
The Company recognized costs related to recent acquisitions comprised of legal and consulting fees within selling, general, and administrative ("SG&A") expenses of $21.0 thousand and $7.0 thousand for the three months ended March 31, 2023 and 2022, respectively.
(7)    GOODWILL AND RELATED INTANGIBLE ASSETS
Goodwill
The changes in the carrying amount of goodwill for the three months ended March 31, 2023 are as follows (in thousands):
RenewablesResidentialAgtechInfrastructureTotal
Balance at December 31, 2022$188,030 $209,056 $83,599 $31,678 $512,363 
Adjustments to prior year acquisitions 387   387 
Foreign currency translation(141) 30  (111)
Balance at March 31, 2023$187,889 $209,443 $83,629 $31,678 $512,639 
Goodwill is recognized net of accumulated impairment losses of $133.2 million as of March 31, 2023 and December 31, 2022, respectively.
The Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing. The Company determined that no triggering event had occurred as of March 31, 2023 which would require an interim impairment test to be performed.
Acquired Intangible Assets
Acquired intangible assets consisted of the following (in thousands):
 March 31, 2023December 31, 2022
 Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Indefinite-lived intangible assets:
Trademarks$55,500 $ $55,500 $ 
Finite-lived intangible assets:
Trademarks5,449 4,516 5,448 4,481 
Unpatented technology34,165 22,610 34,163 22,037 
Customer relationships115,027 48,609 115,125 46,557 
Non-compete agreements2,371 2,042 2,371 2,006 
157,012 77,777 157,107 75,081 
Total acquired intangible assets$212,512 $77,777 $212,607 $75,081 
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The following table summarizes the acquired intangible asset amortization expense for the three months ended March 31, (in thousands):
20232022
Amortization expense$2,766 $3,098 
Amortization expense related to acquired intangible assets for the remainder of fiscal 2023 and the next five years thereafter is estimated as follows (in thousands):
202320242025202620272028
Amortization expense$8,297 $10,883 $10,745 $9,338 $7,699 $6,832 
(8)    LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
March 31, 2023December 31, 2022
Revolving credit facility$52,000 $91,000 
Less unamortized debt issuance costs(2,124)(2,238)
Total debt$49,876 $88,762 
Revolving Credit Facility
On December 8, 2022, the Company entered into a Credit Agreement (the "Credit Agreement"), and concurrently with entering into the Credit Agreement, the Company paid off all amounts owed under the Sixth Amended and Restated Credit Agreement dated as of January 24, 2019. The Credit Agreement provides for a revolving credit facility and letters of credit in an aggregate amount equal to $400 million. The Company can request additional financing to increase the revolving credit facility to $700 million or enter into a term loan of up to $300 million subject to conditions set forth in the Credit Agreement. The Credit Agreement contains two financial covenants. As of March 31, 2023, the Company was in compliance with all financial covenants. The Credit Agreement terminates on December 8, 2027.
Borrowings under the Credit Agreement bear interest, at the Company’s option, at a rate equal to the applicable margin plus (a) a base rate, (b) a daily simple secured overnight financing rate ("SOFR") rate, (c) a term SOFR rate or (d) for certain foreign currencies, a foreign currency rate, in each case subject to a 0% floor. Through March 31, 2023, the Credit Agreement had an initial applicable margin of 0.125% for base rate loans and 1.125% for SOFR and alternative currency loans. Thereafter, the applicable margin ranges from 0.125% to 1.00% for base rate loans and from 1.125% to 2.00% for SOFR and alternative currency loans based on the Company’s Total Net Leverage Ratio, as defined in the Credit Agreement. In addition, the Credit Agreement is subject to an annual commitment fee, payable quarterly, which is initially 0.20% of the daily average undrawn balance of the revolving credit facility and, from and after April 1, 2023, ranges between 0.20% and 0.25% of the daily average undrawn balance of the revolving credit facility based on the Company’s Total Net Leverage Ratio.
Borrowings under the Credit Agreement are secured by the trade receivables, inventory, personal property, equipment, and general intangibles of the Company’s significant domestic subsidiaries. Capital distributions are subject to certain Total Net Leverage Ratio requirements and capped by an annual aggregate limit under the Credit Agreement.
For the three months ended March 31, 2022, interest rates on the revolving credit facility under the Sixth Amended and Restated Credit Agreement were based on LIBOR plus an additional margin that ranges from 1.125% to 2.00%. In addition, the revolving credit facility under the Sixth Amended and Restated Credit Agreement was subject to an undrawn commitment fee ranging between 0.15% and 0.25% based on the Total Leverage Ratio and the daily average undrawn balance.
Standby letters of credit of $4.3 million have been issued under the Credit Agreement to third parties on behalf of the Company as of March 31, 2023. These letters of credit reduce the amount otherwise available under the revolving credit facility. The Company had $343.7 million and $304.5 million of availability under the revolving credit facility as of March 31, 2023 and December 31, 2022, respectively.
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(9)    ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables summarize the cumulative balance of each component of accumulated other comprehensive (loss) income, net of tax, for the three months ended March 31, (in thousands):
Foreign Currency Translation AdjustmentMinimum Post Retirement Benefit Plan
Adjustments
Total Pre-Tax AmountTax Benefit (Expense)Accumulated  Other
Comprehensive
(Loss) Income
Balance at December 31, 2022$(3,382)$(395)$(3,777)$(345)$(3,432)
Minimum post retirement health care plan adjustments— 11 11 3 8 
 Foreign currency translation adjustment(115)— (115) (115)
Balance at March 31, 2023$(3,497)$(384)$(3,881)$(342)$(3,539)
Balance at December 31, 2021$1,640 $(2,247)$(607)$794 $187 
Minimum post retirement health care plan adjustments— 34 34 (10)24 
 Foreign currency translation adjustment(227)— (227)— (227)
Balance at March 31, 2022$1,413 $(2,213)$(800)$784 $(16)
The realized adjustments relating to the Company’s minimum post retirement health care costs were reclassified from accumulated other comprehensive loss and included in other expense in the consolidated statements of income.
(10)    EQUITY-BASED COMPENSATION
On May 4, 2022, the stockholders of the Company approved the adoption of the Gibraltar Industries, Inc. Amended and Restated 2016 Stock Plan for Non-Employee Directors ("Non-Employee Directors Plan") which increases the total number of shares for issuance by the Company thereunder from 100,000 shares to 200,000 shares, allows the Company to grant awards of shares of the Company's common stock to current non-employee Directors of the Company, and permits the Directors to defer receipt of such shares pursuant to the terms of the Non-Employee Directors Plan.
On May 4, 2018, the stockholders of the Company approved the adoption of the Gibraltar Industries, Inc. 2018 Equity Incentive Plan (the "2018 Plan"). The 2018 Plan provides for the issuance of up to 1,000,000 shares of common stock and supplements the remaining shares available for issuance under the Gibraltar Industries, Inc. 2015 Equity Incentive Plan (the "2015 Plan"). Both the 2018 Plan and the 2015 Plan allow the Company to grant equity-based incentive compensation awards, in the form of non-qualified options, restricted shares, restricted stock units, performance shares, performance stock units, and stock rights to eligible participants.
Equity Based Awards - Settled in Stock
The following table sets forth the number of equity-based awards granted during the three months ended March 31, which will convert to shares upon vesting, along with the weighted average grant date fair values:
 20232022
AwardsNumber of
Awards
Weighted
Average
Grant Date
Fair Value
Number of
Awards (2)
Weighted
Average
Grant Date
Fair Value
Performance stock units (1)81,611 $53.44 108,464 $47.00 
Restricted stock units46,646 $53.44 58,958 $47.00 
(1) The Company’s performance stock units (“PSUs”) represent shares granted for which the final number of shares earned depends on financial performance. The number of shares to be issued may vary between 0% and 200% of the number of PSUs granted depending on the relative achievement to targeted thresholds. The Company's PSUs with a financial performance condition are based on the Company’s return on invested capital (“ROIC”) over a one-year performance period.
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(2) PSUs granted in the first quarter of 2022 includes 5,653 units that were forfeited in the first quarter of 2023 and 62,201 units that will be converted to shares and issued to recipients in the first quarter of 2025 at 60.5% of the target amount granted, based on the Company's actual ROIC compared to ROIC target for the performance period ended December 31, 2022.
Equity Based Awards - Settled in Cash
The Company's equity-based awards that are settled in cash are the awards under the Management Stock Purchase Plan (the “MSPP”) which is authorized under the Company's equity incentive plans. The MSPP provides participants the ability to defer a portion of their compensation, convertible to unrestricted investments, restricted stock units, or a combination of both, or defer a portion of their directors’ fees, convertible to restricted stock units. Employees eligible to defer a portion of their compensation also receive a company-matching award in restricted stock units equal to a percentage of their compensation.
The deferrals and related company match are credited to an account that represents a share-based liability. The portion of the account deferred to unrestricted investments is measured at fair market value of the unrestricted investments, and the portion of the account deferred to restricted stock units and company-matching restricted stock units is measured at a 200-day average of the Company’s stock price. The account will be converted to and settled in cash payable to participants upon retirement or a termination of their service to the Company.
Total MSPP liabilities recorded on the consolidated balance sheet as of March 31, 2023 was $15.9 million, of which $2.0 million was included in current accrued expenses and $13.9 million was included in non-current liabilities. Total MSPP liabilities recorded on the consolidated balance sheet as of December 31, 2022 was $15.4 million, of which $2.3 million was included in current accrued expenses and $13.1 million was included in non-current liabilities. The value of the restricted stock units within the MSPP liability were $13.7 million and $13.4 million at March 31, 2023 and December 31, 2022, respectively.
The following table provides the number of restricted stock units credited to active participant accounts and the payments made with respect to MSPP liabilities during the three months ended March 31,:
20232022
Restricted stock units credited 41,743 2,876 
MSPP liabilities paid (in thousands)$2,147 $2,545 
(11)    EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS
The Company has incurred exit activity costs and asset impairment charges as a result of its 80/20 simplification and portfolio management initiatives. These initiatives have resulted in the identification of low-volume, low margin, internally-produced products which have been or will be outsourced or discontinued, the simplification of processes, the sale and exiting of less profitable businesses or product lines, and a reduction in the Company's manufacturing footprint.
Exit activity costs (recoveries) were incurred during the three months ended March 31, 2023 and 2022 which related to moving and closing costs, and severance, along with asset impairment charges (recoveries) related to the write-down of inventory associated with discontinued product lines, as a result of process simplification initiatives. In conjunction with these initiatives, the Company recorded costs during the three months ended March 31, 2023 associated with the final closure and sale of a facility closed during the fourth quarter of 2022. During the three months ended March 31, 2022, the Company closed one facility as a result of these initiatives.
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The following tables set forth the exit activity costs (recoveries) and asset impairment charges (recoveries) incurred by segment during the three months ended March 31, related to the restructuring activities described above (in thousands):
20232022
Exit activity costsAsset impairment recoveryTotalExit activity costs (recoveries), netAsset impairment chargesTotal
Renewables$ $(63)$(63)$1,328 $1,198 $2,526 
Residential114  114 3  3 
Agtech561  561 (9) (9)
Infrastructure   (63) (63)
Corporate   20  20 
Total$675 $(63)$612 $1,279 $1,198 $2,477 
The following table provides a summary of where the exit activity costs and asset impairment charges were recorded in the consolidated statements of income for the three months ended March 31, (in thousands):
20232022
Cost of sales$513 $2,208 
Selling, general, and administrative expense99 269 
Total exit activity and asset impairment charges $612 $2,477 
The following table reconciles the beginning and ending liability for exit activity costs relating to the Company’s facility consolidation efforts (in thousands):
20232022
Balance at January 1$2,417 $272 
Exit activity costs recognized675 1,279 
Cash payments(1,321)(116)
Balance at March 31$1,771 $1,435 
(12)    INCOME TAXES
The following table summarizes the provision for income taxes for continuing operations (in thousands) for the three months ended March 31, and the applicable effective tax rates:
20232022
Provision for income taxes$7,177 $5,101 
Effective tax rate25.4 %24.8 %
The effective tax rate for the three months ended March 31, 2023 and 2022, respectively, was greater than the U.S. federal statutory rate of 21% due to state taxes and nondeductible permanent differences partially offset by favorable discrete items.
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(13)    EARNINGS PER SHARE
Earnings per share and the weighted average shares outstanding used in calculating basic and diluted earnings per share are as follows for the three months ended March 31, (in thousands):
20232022
Numerator:
Net income available to common stockholders$21,099 $15,456 
Denominator for basic earnings per share:
Weighted average shares outstanding30,897 32,913 
Denominator for diluted earnings per share:
Weighted average shares outstanding30,897 32,913 
Common stock units127 109 
Weighted average shares and conversions31,024 33,022 
The weighted average number of diluted shares does not include potential anti-dilutive common shares issuable pursuant to equity based incentive compensation awards. The following table provides the potential anti-dilutive common stock units for the three months ended March 31, (in thousands):
20232022
Common stock units 64 54 
(14)    SEGMENT INFORMATION
The Company is organized into four reportable segments on the basis of the production processes, products and services provided by each segment, identified as follows:
(i)Renewables, which primarily includes designing, engineering, manufacturing and installation of solar racking and electrical balance of systems;
(ii)Residential, which primarily includes roof and foundation ventilation products, centralized mail systems and electronic package solutions, retractable awnings and gutter guards, and rain dispersion products, trims and flashings and other accessories;
(iii)Agtech, which provides growing solutions including the designing, engineering, manufacturing and installation of greenhouses; and
(iv)Infrastructure, which primarily includes structural bearings, expansion joints and pavement sealant for bridges, airport runways and roadways, elastomeric concrete, and bridge cable protection systems.
When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics.
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The following table illustrates certain measurements used by management to assess performance of the segments described above for the three months ended March 31, (in thousands):
20232022
Net sales:
Renewables$59,205 $78,783 
Residential179,495 179,485 
Agtech35,852 42,428 
Infrastructure 18,715 17,169 
Total net sales$293,267 $317,865 
Income from operations:
Renewables$2,269 $(6,984)
Residential29,509 33,435 
Agtech2,330 31 
Infrastructure2,714 1,181 
Unallocated Corporate Expenses(7,452)(6,468)
Total income from operations$29,370 $21,195 
March 31,
2023
December 31,
2022
Total assets:
Renewables$393,088 $392,368 
Residential535,423 519,567 
Agtech180,688 193,966 
Infrastructure82,795 80,264 
Unallocated corporate assets16,498 24,448 
$1,208,492 $1,210,613 
The following tables illustrate segment revenue disaggregated by timing of transfer of control to the customer for the three months ended March 31 (in thousands):
Three Months Ended March 31, 2023
RenewablesResidentialAgtechInfrastructureTotal
Net sales:
Point in Time$9,094 $177,942 $5,107 $6,061 $198,204 
Over Time50,111 1,553 30,745 12,654 95,063 
Total net sales$59,205 $179,495 $35,852 $18,715 $293,267 
Three Months Ended March 31, 2022
RenewablesResidentialAgtechInfrastructureTotal
Net sales:
Point in Time$5,650 $178,131 $1,613 $6,303 $191,697 
Over Time73,133 1,354 40,815 10,866 126,168 
Total net sales$78,783 $179,485 $42,428 $17,169 $317,865 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain information set forth herein includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and, therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “anticipates,” “aspires,” “expects,” “estimates,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, competition, strategies, margins, integration of acquired businesses, the industries in which we operate and the expected impact of evolving laws and regulation. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in the “Risk Factors” disclosures in our most recent Annual Report on Form 10-K. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, liquidity and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained herein. In addition, even if our results of operations, financial condition, liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statements that we make herein speak only as of the date of those statements, and we undertake no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
The Company uses certain operating performance measures, specifically consolidated gross margin, operating margin by segment and consolidated operating margin, to manage the Company's businesses, set operational goals, and establish performance targets for incentive compensation for the Company's employees. The Company defines consolidated gross margin as a percentage of total consolidated gross profit to total consolidated net sales. The Company defines operating margin by segment as a percentage of total income from operations by segment to total net sales by segment and consolidated operating margin as a percentage of total consolidated income from operations to total consolidated net sales. The Company believes consolidated gross margin, operating margin and consolidated operating margin may be useful to investors in evaluating the profitability of the Company's segments and the Company on a consolidated basis.
Overview
Gibraltar Industries, Inc. (the "Company") is a leading manufacturer and provider of products and services for the renewable energy, residential, agtech, and infrastructure markets.
The Company operates and reports its results in the following four reporting segments:
Renewables;
Residential;
Agtech; and
Infrastructure.
The Company serves customers primarily in North America including renewable energy (solar) developers, home improvement retailers, wholesalers, distributors, institutional and commercial growers of food and plants, and contractors. At March 31, 2023, the Company operated 33 facilities, comprised of 25 manufacturing facilities, one distribution center, and seven offices, which are located in 15 states, Canada, China, and Japan. The Company's operational infrastructure provides the necessary scale to support regional and national customers in each of the Company's markets.
Recent Trends
The broader market dynamics over the past few years, have resulted in impacts to the Company, including material cost inflation, labor availability issues and logistics costs increases. The Company has also been impacted from supply constraints for materials and commodities used in its operations and from shortages in solar panels used by
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the Company's customers in conjunction with the goods and services the Company provides. In certain instances these constraints have resulted in project delays, cost inflation and logistical delays. The Company continues to work with its customers and suppliers in this dynamic environment to better align pricing, understand the existing and potential future impacts to the supply chain, and make efforts to mitigate such impacts. The Company expects that some of these dynamics will continue in 2023 and could continue to have an impact on demand, material costs, labor and logistics.
In June 2022, the Uyghur Forced Labor Prevention Act ("UFLPA") was enacted. The UFLPA requires traceability of components of imported goods to validate that the components are not sourced from areas in the Xinjiang region of China. This has caused solar panels to be held at the border awaiting a determination that the panels do not contain components from Xinjiang. While a few of the historically significant suppliers have begun to have panels cleared for importation, the clearance is still on a shipment-by-shipment basis, and formal documentation requirements have not yet been published. Some of the Company's larger customers have continued to shift sourcing to modules manufactured outside of China in efforts to clear U.S. customs more efficiently and ramp up the execution of solar projects.
In December 2022, the U.S. Department of Commerce ("USDOC") announced its preliminary ruling regarding the circumvention of antidumping and countervailing duties (“AD/CVD”) on Chinese imports of solar panels produced in four other countries in Southeast Asia. Four of eight major manufacturers across the four countries investigated were found to have been circumventing the AD/CVD orders. The findings are preliminary and further investigation is occurring with a final determination scheduled for August 17, 2023. Independent of the DOC’s final determination, the Presidential Proclamation issued in June 2022 provides that duties will not be collected on the imports from the impacted countries until June 2024. This provides U.S. solar importers time to adjust supply chains to ensure compliance with U.S. law. As the timing and progress of many of our customers’ projects depend upon the supply of solar panels, our operating results have been and could be impacted by these actions. We continue to work with customers who are assessing their ability to source panels needed to complete projects.
On August 16, 2022, the Inflation Reduction Act ("IRA") was signed into law. Among other things, the IRA provides for Investment Tax Credits ("ITC") for renewable energy. The IRA provides a 30% ITC for projects started prior January 29, 2023. Projects started on or after this date have the opportunity to claim the 30% rate only if the project is less than one megawatt or adheres to the new prevailing wage and apprenticeship requirements. Otherwise, these projects will default to a base rate of 6%. The IRA also provides the option to earn an additional 10% credit for domestic content, and separately, an additional 10% credit for siting a project in an “energy community.” Lastly, under the IRA, Manufacturers Tax Credits ("MTC") that support clean energy manufacturing were established and expanded, and are available to suppliers of certain, specific solar tracker components, including mechanical parts and battery storage, that are made in the U.S. Final guidance is pending and expected to be issued by the Department of Treasury over the course of 2023 for the domestic content, energy community, and MTC credits. The Company believes that these enhanced tax credits under the IRA will provide long-term certainty for the industry and should reduce policy driven demand swings for our products. We will work with our customers to maximize the tax credits available to them.
Business Strategy
The Company's mission is to make life better for people and the planet, fueled by advancing the disciplines of engineering, science, and technology. The Company is innovating to reshape critical markets in sustainable power, comfortable and efficient living, and productive growing throughout North America. Furthermore, the Company strives to create compounding and sustainable value for its stockholders and stakeholders with strong and relevant leadership positions in higher growth, profitable end markets focused on addressing some of the world's most challenging opportunities. The foundation of the Company's strategy is built on three core pillars: Business System, Portfolio Management, and Organization Development.
1.Business System reflects the necessary systems, processes, and management tools required to deliver consistent and continuous performance improvement, every day. The Company's business system is a critical enabler to grow, scale, and deliver its plans. The Company's focus is on deploying effective tools to drive growth, improve operating performance, and develop the organization utilizing 80/20 and lean quote-to-cash initiatives along with digital systems for speed, agility and responsiveness. The Business System pillar challenges existing operating paradigms, drives day-to-day performance, forces prioritization of resources, tests the Company's business models, and drives new product and services innovation.
2.Portfolio Management is focused on optimizing the Company’s business portfolio in higher growth markets with leadership positions while ensuring its financial capital and human resources are effectively and
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efficiently deployed to deliver sustainable, profitable growth while increasing its relevance with customers and shaping its markets. In 2022, the Company acquired Quality Aluminum Products ("QAP") in the Residential segment and made the decision to divest its non-core Processing business within the Agtech segment to help achieve these objectives.
3.Organization Development drives the Company’s continuous focus on ensuring it has the right design and structure to scale the organization in order to execute the Company’s plans and meet commitments. The Company aspires to make its place of work the "Best Place to Work", where focus is on creating an environment for our people to have the best opportunity for success, continue to develop, grow and learn. At core of this pillar is the Company’s development process focused on helping employees reach their potential, improve performance, develop career roadmaps, identify ongoing education requirements, and respective succession plans. The Company believes doing so helps it attract and retain the best people to execute its business plans.
The Company believes the key elements of the Company's strategy have, and will continue to, enable the Company to respond timely to changes in the end markets the Company serves, including the broader market dynamics experienced over the past two years. The Company has and expects to continue to examine the need for restructuring of the Company's operations, including consolidation of facilities, reducing overhead costs, curtailing investments in working capital, and managing the Company's business to generate incremental cash. The Company believes its strategy enables the Company to respond to volatility in commodity and other input costs and fluctuations in customer demand, along with striving to maintain and improve margins. The Company has used cash flows generated by these initiatives to minimize debt, improve the Company's liquidity position, invest in growth initiatives and return capital to the Company's shareholders through share repurchases. Overall, the Company continues to strive to achieve stronger financial results, make more efficient use of capital, and deliver higher stockholder returns.
Recent Developments
On December 8, 2022, the Company entered into a Credit Agreement (the "Credit Agreement"), and concurrently with entering into the Credit Agreement, the Company paid off all amounts owed under the Sixth Amended and Restated Credit Agreement dated as of January 24, 2019, which was terminated with no prepayment penalties. The Credit Agreement provides for a revolving credit facility and letters of credit in an aggregate amount equal to $400 million. The Company can request additional financing to increase the revolving credit facility to $700 million or enter into a term loan of up to $300 million subject to conditions set forth in the Credit Agreement. The Credit Agreement contains two financial covenants. As of March 31, 2023, the Company was in compliance with both financial covenants. The Credit Agreement terminates on December 8, 2027.
On August 22, 2022, the Company purchased all the issued and outstanding membership interests of Quality Aluminum Products ("QAP"), a manufacturer of soffit, fascia, trim coil, rain carrying products and aluminum siding for an aggregate purchase price of $52.1 million. The acquisition of QAP was financed primarily through borrowings under the Company's revolving credit facility. The results of operations of QAP have been included in the Residential segment of the Company's consolidated financial statements from the date of acquisition.
In May 2022, the Company's Board of Directors authorized a share repurchase program of up to $200 million of the Company's issued and outstanding common stock. The program has a duration of three years, ending May 2, 2025. Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations. Any such repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The repurchase program may be suspended or discontinued at any time at the Company's discretion. As of March 31, 2023, the Company has repurchased 2,150,903 shares for an aggregate price of $93.2 million under this repurchase program.

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Results of Operations
Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022
The following table sets forth selected results of operations data and its percentage of net sales for the three months ended March 31 (in thousands):
20232022
Net sales$293,267 100.0 %$317,865 100.0 %
Cost of sales216,338 73.8 %253,021 79.6 %
Gross profit76,929 26.2 %64,844 20.4 %
Selling, general, and administrative expense47,559 16.2 %43,649 13.7 %
Income from operations29,370 10.0 %21,195 6.7 %
Interest expense1,491 0.5 %485