Okay, good morning, everybody, and thank you for joining the Sidoti September 2024 Small-C ap Conference. My name is Julio Romero, and I'm the Building Products and Industrials analyst here at Sidoti & Company. We're really pleased to be able to host Gibraltar Industries. Their ticker is ROCK, R-O-C-K. With us today, we have Bill Bosway, Chief Executive Officer, and Tim Murphy, Senior Vice President. The format of this is going to be a 15-minute, 20-minute prepared remarks, followed by some Q&A at the very end. If you have any questions for Gibraltar, feel free to type those into the Q&A section at the bottom of your screen, and I'm happy to ask on your behalf if time allows. So with that, Bill and Tim, we appreciate you guys being here, and the floor is yours. Yeah. Thanks, Julio, and welcome, everybody. Appreciate you guys dialing in for some discussion today. Let me just start with a little bit about the business and kind of what we're seeing going on in the market right now. I think many of you are familiar with this, but let's start with the residential business. It's the largest part of Gibraltar, and obviously, there's been a lot of questions and movement around the market and how people are viewing that over the last six, nine months, and kind of what we see going forward. I would say things have changed since last time we talked publicly about the markets. We just see a little bit of a different cadence. There was some destocking going on. We saw some correction between the end of the second quarter and the beginning of the third. You know, I think yesterday's decision on interest rate cuts will be interesting to see how that plays out and when that plays out. But I would say in general, the market as we expected this year has kind of materialized as we thought. You know, a couple things we look at when we think about the end market demand, we do have access to point-of-sale information from our big box channel that we receive every week on our product categories, as well as our actual sales. So it gives you a pretty good indication of when you think about orders and think about our sales, we get a pretty good idea of inventories building and things are moving. And then of course, you break it down by region, almost to the store level. So it gives you a pretty good feel for how things are materializing. And then secondly, you've got things like ARMA data, et cetera. It's a little bit of a lag and a little different, but direction, I think, probably correlates well with the POS data. So none of that, I think, has changed dramatically from the last time we had spoken. I think, as we anticipated, the market is a little bit slower this year. That's what we built our plan around. Our plan's really built around, you know, gaining more participation, getting a little bit bigger piece of the pie. That's the way we always think about it. And then of course, as you go into the fourth quarter, you're gonna have your normal seasonal adjustment, which we started to see, last couple of years, seasonality come back into the market after really just going gangbusters for a two solid years. So, yeah, overall, I think, you know, no big change on the market. Let's see how these interest rate cuts impact kind of what's going forward. But inherently, there's still pent-up demand. You hear that a lot. I do think there'll be some movement going forward, but, you know, time will tell on that. When switching gears, talking about renewables, you know, that's an industry that's really struggled with a number of headwinds. I think many of you probably are familiar with those. Those continue to exist. I would say if you break it down into a couple different buckets, you know, there's a set of headwinds that have revolved around the supply of panels for our customers. That's more related to kind of the trade and regulatory things that have happened in the last two or three years. That's really, you know, a harsh discussion between the US and China in general, and it just so happens that, you know, the panel manufacturing depends a lot on raw material that comes from China, and so you're caught up a little bit in that. You have the UFLPA that was impactful and there are still that process. It's a law. It still requires everyone to verify they don't have raw materials, certain provinces in China, so between the DOC investigations of the Chinese that have, you know, start-up operations in Southeast Asia and the UFLPA, that's really been the big push around panel supply and the choppiness and understanding of how that supply chain is gonna flow, and as importantly, what are going to be the duties and potential tariffs associated with panels that have come in historically the last couple of years, as well as what will be assessed going forward, and that's where the two DOC investigations are impacting that. That's kind of panel supply, and I think right now, those of you familiar with the industry, there's a moratorium that's in place that actually stems from the presidential proclamation that expired in June of 2024. Effectively, when that proclamation was put in place, it gave it gives you, or it gave you six months up till December third to install the panels that you brought into the country over the previous two years, June 2022 to June 2024. If you don't get those installed by then, you know, potentially subjected to pretty significant tariffs associated with the findings from the DOC on the first investigation for the companies that are producing in Southeast Asia. There is a second investigation that kicked off here not long ago on the same four countries around the same topics of AD/CVD. There'll be those final determinations are expected in early 2025, and so that'll bring clarity as to what those potential penalties could be or additional duties might be going forward. Getting clarity on just what those are is really important for our customers. Getting through between now and December third, getting as much installed as possible so they can avoid potential retroactive penalties, is really important. So there's a lot of scrambling going on right now, trying to make that happen. And as you can imagine, that's kind of the focus of our customers and ourselves, trying to help them through that process. So it's something that I think will work itself out, and then we'll have more clarity going forward, which is great. So that's one bucket. The second bucket is really the infrastructure in the U.S., and that's more around interconnection and transmission infrastructure, and the challenge there really has to do with how do you connect to the grid, right? So the amount of time it takes to, from the time you put an interconnection request in to get an actual agreement that you can move forward with, has lengthened over the last four or five years in a pretty significant way. And I think that's something that the Federal Energy Regulatory Commission has gotten heavily involved in, and last year put some new rules in place, basically to clean up the queue. The queue of requests to connect to the grid is significant. It's 1.5 TW, I think it is, which is a, you know, 1,500 GW. That's more than the entire grid power production capability of the U.S. today. So you see the demand out there. Not all of that will flow through to a real project, but cleaning up that queue and shortening the time to where those agreements can be put in place, so people can then move forward with their piece of land and start producing, is a really important aspect of the infrastructure that has to occur. So you've heard me talk about permitting in the past. This is a big chunk of that permitting piece. It does vary in the length of time to get something approved, based on the size of the project. So when you get really below 20 MW, it's a little bit quicker than if you're above 20 MW, and that's simply related to the bigger your project is, the three studies you have to complete, which is environmental, social, and economic, get more complex, and they just take longer. So those studies have to happen. That's what gets you to an agreement, eventually, and then you move forward from there. Effectively, that economic study is to determine how much it's gonna cost and who's responsible for connecting to the grid. So it's not always on the utility. Oftentimes, it's on the developer to make that investment, to connect accordingly. So that's kinda item number two. I think item number three, for particularly large projects, has more to do with, there's still long lead times for high-voltage equipment, particularly transformers. Those lead times still remain around 150 weeks, so it's three years. As you get into smaller projects, again, the transformers are a little bit different. Obviously smaller, that's a different supply chain, if you will. So less of a challenge there than in your larger utility, but nonetheless, it's still, there's still some supply chain issues like that that people are dealing with. So, you know, I think, the next bucket is really IRA. The good news there is the benefits, I think, are well understood. Two of the three that the industry is really benefiting from are now in place and are being used. The third one, which is this last 10% domestic content bonus, should come into play here shortly, I think. We're hoping to see that out in the market so people can move forward here shortly. So it kinda gets the IRA where we need it to be, so people would take advantage of that. So, you know, you think about those headwinds and what we've been dealing with, the last three years as an industry, you see some light at the end of the tunnel, but there's still some things out there that are gonna cause a little bit of choppiness. But from where we started to where we are today, you know, hopefully we've made progress. Unfortunately, the industry just was caught up in the middle of a China-U.S. situation, and our industry just happened to be, you know, heavily dependent on areas of China that supply a lot of raw material. And so it's kind of a perfect storm that kinda came together. But the good news is, more investment's going on in the U.S. with panel manufacturing, as well as other parts of the world, and that's why I think the panel situation continues to evolve. It's just in the interim, with the panel inventory that's in the U.S., people have to work through when they can use and what they can use, and what is the cost of doing that, now that the Presidential Proclamation is over and these DOC investigation issues are out there. Once you kinda clear the air there, then I think going forward, it gets a little bit easier to understand that, and then you're just down to some of the infrastructure things we talked about. So, you know, that's... You know, if you follow the industry much, you'll see some of the larger utility scale players, they've kind of taken their plans down. They've been public about that. It's just really project shifting to the right. It has some, you know, somewhat to do with the three things we just talked about. For us, like I said, you know, we're continuing to navigate through it just like everybody else, and trying to help our customers get through December 3rd, and start then working on the projects that will come into next year, and that'll show up a little bit in bookings down the road. So we're still very optimistic about things, but it's you know, make no mistake, it's been a challenging road the last three years, and we're continuing to fight through it. I'll switch over to agtech. Agtech is something that, again, most people aren't familiar with the industry because it's not really a publicly owned, industry, so to speak. A lot of private companies involved. We've started to see more and more, business start to flow. A lot of projects are starting to come into place, particularly in produce, where, fruits and vegetables are, becoming a bigger piece of what you're, you know, buying in, not just your food retail space, your supermarket, but we're seeing more food service operators move to an indoor grow, particularly around lettuce, because of some of the climate change and supply chain disruptions that have been, in the face of the industry the last couple years. So you're gonna see more and more of that. The good news is, regardless of how much, the fact that, these guys are all sold out with their supply of fruits and vegetables, it's. They still account for a very small portion of the consumption that is still grown outdoor, for the U.S. public. You don't have to actually have indoor grow become a large portion of the overall growth, for to support the U.S. or North America. It's roughly 2%. So if you take 2%-4%, or 2%-6%, it becomes a really big opportunity, based on what we see and what we're experiencing. So a lot of interesting investment going on there. I would say the amount of activity we have going on now is as robust as we've ever seen it. I think we'll continue to see more projects come across the finish line as we finish this year and go into next year, so I look forward to that continuing. The other part of our Ag tech business, really, we spend a lot of time on the institutional side of the world, which is developing and designing and building Ag tech research centers for over a hundred different universities, modifying those, expanding those, so there's a number of those projects in flight. And then we do a lot of facilities for plant and flower growers, which is, you know, pretty large in the U.S., and those sort of businesses we've been in for the last 80 years. So, you know, that's a little bit more steady business, if you will, historically, and we wanna continue to kinda build that out and expand on our capabilities, not just in designing and building and constructing, but also servicing a lot of these opportunities as they go forward. That's the agtech space, and then finally, the smallest piece of our business, our infrastructure business, continues to execute relatively well, and, you know, it's made a lot of progress in the last couple of years. There's some interesting new technology coming out, we'll talk more about here in the next few quarters that we're excited about, that I think will be a big piece of the future of the business as well. You know, balance sheet's still very strong. I really don't have any debt. We're still generating a lot of cash. You know, we've got a lot of work to do to get better on both of those fronts, as well as continue to improve our margin performance. But I think, you know, we feel good about the overall business. We'd like to see the end market in, obviously, renewables get a little bit more predictable. I think we can execute well in that environment. I really like what we're doing in residential and infrastructure, and I really start to see some positive signs in the ag tech industry, and therefore our position in it. The message is very similar to what we talked about after last quarter, and we're looking forward to finishing up and getting ready for next year. So I'll stop there, and we can take any questions that anyone might have. Excellent. Thank you so much for that rundown, Bill. Again, if folks have any questions, feel free to type them into the Q&A section at the bottom of your screen. Happy to ask on your behalf. I'll kick it off with a couple of mine here. You know, you talked about residential, and I appreciate you touching on some of the trends that you've seen in the third quarter. You know, maybe can you talk to some of the expansion initiatives you have going on for residential through a combination of geographic expansion and new product rollouts, and maybe add a little bit of meat to the bone, if you could, of how you kind of plan to increase your participation in the top 32 MSAs in the U.S.? Yeah, sure. So the last piece and the first piece kind of go hand in hand. We... I would say, you know, at least when I started back in nineteen and I've been around residential most of my career, but, you know, we really looked at kind of regions, and we wanted to get ourselves as present as we could there, and we made investments accordingly, and I think that's really helped us drive some more participation in the last few years, and that's really what's driven a lot of the growth. If you guys recall, we said in 2021, we'd be $700 million in our residential business by 2025. We surpassed $800 million in 2023. So, you know, I think that piece has worked relatively well. But what we've also learned is, if you break that down even further, really start taking the channels and breaking those apart, and then really getting into the various MSAs, and the reason that the MSAs become important is every one of these MSAs have a set of product requirements, specs, et cetera, that have been developed and unique to that particular region or that large city. So, that's colors, it's sizes, it's dimensions, it's materials. And as frustrating as that can be sometimes, it also creates an opportunity. But if you think about making sure that you understand what those are in each individual city, and then you think about how you make the edits that are necessary to drive the business, and you then think about how do you serve your wholesale customers and focus on that, that's a different D&A than what you traditionally would use in your big box, where you do more milk runs, and you have, you know, replenishment every week or so. In the world of wholesale, it's really anywhere from will call to 24-hour turnaround. And what's important about that is, it's. Yes, the product's important, you've gotta be good quality, you've gotta be priced appropriately, but you can get, quote, "paid" for that service level at the MSA level. Number one, if you're doing everything local as much as possible around the eighties, you cut your transportation costs significantly, trying to support that from a regional facility, you know, 300 mi away. You need to be inside a small radius to where you're managing that with your own transportation, you're cutting that cost. You're doing daily deliveries, you're running errands, basically, for customers at the end of the day, getting things to job sites. So that's one thing. And I think we've seen that work pretty well. So not only do you have the opportunity to grow and pick up more business, but you can do it more profitably as you convert incremental dollars. The second thing that comes with that is, in this industry, everybody deals with rebates, and those rebates tend to be negotiated on a national basis. But in the world of wholesale, that oftentimes is left to the individual branch manager at the MSA level, where they may have one or two stores, and they have the freedom and the power to make a decision as to do they support that 8%? But if you're really, you know, say it's an 8% rebate at the national level, oftentimes you can actually reduce that to something less, and you do that because you are able to serve in 24 hours. And if you think about what we do, the basket, the value of the basket of what we do is not great, but that is not very high, but that roof doesn't happen unless we're there, right? Because we have the trims or the flashings, the ventilation that has to be there at the same time the shingles show up. So it's not from a dollar perspective. These guys are all, you know, driven off of P&L performance, and so it really is about making sure their contractors are served on a moment's notice. And I think that gives you flexibility, not just on the transportation side, but also on the rebate side. And you get paid for that, and that's how you get paid for it. So there are ways I think we believe we can drive our participation through much different service levels. It's different than we thought three years ago. So this is the next phase of our transformation, how we're trying to get into these MSAs in a much different way. Of those top 32, we're only really in 40% of them. What's interesting about that, obviously, you want to be in a greater percentage of those 32, but that also tells you that they don't necessarily have to have the end market grow through the roof for us to grow. It's really about a participation story of how do you get there, and then what do you look like when you get there? And then how do you think about the big box guys that are there, and how do you serve the wholesalers that are there? And oftentimes they're different products. Sometimes they're the same, but everything else is pretty much focused. So, long story short, I think, you know, we're surgically getting down into the nuts and bolts of how to actually support our customers in a different way than we were five years ago, and I think we'll figure some things out, you know, five years from now. But this is where our focus is now. So we opened up Salt Lake through an acquisition. We opened up Denver through an organic play. You'll see a combination on the next eight locations between organic and inorganic, and we're in the midst of kind of working that now, and more to come as we move forward. So, you know, part of our plan is just identifying exactly where to do next and then rolling that out accordingly. And, so a lot of work to do. Of course, you know, where there's an opportunity to bring new products, we're doing that. We've got some things in our ventilation business that are new, that are coming out, that are just launched. We've got some things in our mail and package business that are new, that we've recently launched. It is a combination of a lot of things, a lot of blocking and tackling, but, you know, I think we've demonstrated the last few years, we've been able to outpace the market. We've been able to increase our margin profile 400, 500, 600 basis points in so doing and obviously want to continue to do that. You know, we're not quite at the 20% margin we said we'd be by 2025 yet, but, you know, we're knocking on the door. I don't wanna give you the impression that's where we're gonna stop. I, you know, I'm excited about what our team's doing. At the same time, I'm excited about all the gold nuggets that are still on the floor that we're not picking up, and we've got work to do there. So, we will continue to plow forward. We'll continue to build on this business. I fully expect this business to have a lot of runway on the top and bottom line, regardless of how fast the market grows over that same time period, so. Really helpful color there, and I appreciate you, you know, speaking to that. So you mentioned, you know, some of the areas to success are high service levels to serve the wholesalers and being mindful about the specs and product requirements to each region. And then you talked about your success organically in Denver and acquisition in Salt Lake. So should we think about geographic expansion for residential as, as kind of using the Rocky Mountain area as kind of the, the platform to branch out of, or, or is it more of a broader national strategy where you're kind of- It's broader -but on multiple at once? It's broader. I mean, part of, excuse me. In all fairness, you know, the team looked at how we're supporting Rocky Mountain region. We were trying to do that out of California, and so the easiest thing to do on a distance like that is your big box retail because of how you run your milk runs and your transportation. But it's very difficult to participate at all in the wholesale market. You can do it, try to do it through inventory, but again, it still comes down to that unique space has certain codes and specs around the eighties, right? And so, you know, we saw that as a gap. That was a space that we weren't occupied to the degree we needed to. We had a decent big box retail business there. And then we had this huge hailstorm that hit the Denver area. So this is an opportunity, right? Where a hailstorm hits, the existing wholesalers were struggling getting product from local suppliers, reached out to us. We said, "Hey, let's do our quick assessment of what you really do need from a product perspective." We've made that, brought it in, and sold out in, you know, in a month. And call that kind of our market research. So real-time market research over the next two, three months was... That's how we were supporting that space, and that was our entry into, "All right, well, now how do we take the next step? What do we actually wanna make locally? What machines would we bring in from other parts of the country to be able to do that there?" so you try to leverage as much equipment as you can. That's why we call it an asset-light model. It's redeploying, and then that's how you get started in Denver, well, at the same time, we were supporting Salt Lake from the West Coast, and there we had an opportunity where we found, we thought, the best player in this space, small company, but serving wholesalers, and we made an acquisition, and so different approaches, both have, you know, starting to pan out really well like we expected, and so you think about that Rocky Mountain region, yes, and then but we think about, that's one area. There are other parts of the country that we're also, you know, on our list to do as part of the next eight that we're doing. So it's not just Rocky Mountain, but that's how we got started with those two. ... Okay, very helpful. Just shifting gears to Agtech for a bit. You talked about the amount of activity you're seeing there as robust. In the last quarter, you saw some really nice bookings in Agtech to the tune of $90 million. Just talk about, you know, when folks can maybe think about seeing those level of bookings hitting the P&L, and do you see bookings continuing to trend at least at an elevated level relatively? Yeah, I think bookings will continue to trend. It doesn't actually flow, you know, quarter to quarter, $90 million. It's all. You know, you're designing these relatively large projects. They can through that iterative design process, it's, you know, put it in perspective, you'll work on a, say, a, you know, a 25-acre facility to grow strawberries, and you're gonna iterate through that with your customer over, you know, 25 weeks. Weekly meetings in the office together for 3 hours, designing through everything, right? And so, you know, can that, that can push, you know, one way or the other, it can pull up and go out, and that's just the nature of how these work. Ultimately at the end of the day, yeah, I feel really good about the work that we're doing right now, our expectation of that flowing into bookings, and I think that trend will continue, and I think it's gonna build for a strong 2025 as well. Generally speaking, most of our customers will have their permits in place when they sign the contract. It's not always the case, but it's not like permitting in the renewable space, where it may take you a year to get something. They move pretty quickly. So usually within, I'd say three months, we're generating off a signed contract, that revenue is starting to flow, and the cost of whether it's POC accounting. As we go through the project, we're getting paid as we go, and then, you know, we build it out, hand over the keys, and then we wrap it up, so the idea, ultimate at the end of the day, in the Agtech side with produce is stacking those, you know, having five or six of these projects stack and just keep adding to them as you go, gives you a lot more visibility and predictability about the business, and you'll see that show up for Gibraltar, for us, going forward, this year as well as next year, so I'm pretty excited about what we have in front of us. You know, some things have to come together, but in terms of wins and, you know, size of projects, yeah, it's pretty exciting right now. Got it. And you talked about one of the, shifting to another segment, renewables, one of the three buckets of challenges being the 10% domestic content bonus and getting clarity from the IRS on that and the Treasury. You know, do you see any risk of the domestic content bonus or the Inflation Reduction Act in general changing or going away, depending on how this U.S. election cycle kind of shakes out? Yeah. Well, one, if I knew the exact answer, I probably wouldn't have to work for a living. But yeah, there's a lot of chatter about what that could mean. I think there's a lot of rhetoric in it as well, and there will be for the next 45 days or so. You know, at the end of the day, the reality is there's a momentum level that's quite large. There's gonna be probably, depending on the administration who's in it, you know, if it's one side, it's probably a little bit more balance on energy production. On the other side, it may be more of the same. But what's gonna pace renewables isn't really gonna be the tax credits. It's not what's pacing renewables now. What's pacing renewables now is infrastructure. It's the panel stuff. The panel stuff will go away, but you still have to have transmission, connection. You still have to be able to do that, and if you still have to have lead times coming down in a reasonable manner. So I would say what's gonna pace, is gonna be more around that. If, you know, someone takes, a bit of a scalpel and takes this out and, you know, redoes this, redoes that, there's a lot of, reasons, not to do that. There'll be something, but I don't think it's going to make the industry... You know, let me say it this way, if there was no election coming up, say, it wasn't for another two or three years, I don't think it would have anything to do... Whatever's driving, what's driving now is what we have to focus on getting fixed, and it's really more this infrastructure stuff. I'm not overly as concerned about it. I do think there's a lot of rhetoric around it, and there's probably some concern, but there's a lot of jobs across a number of states that a lot of constituents, depending on what side of the aisle, all of them, you know, it's important to their local community. Yeah, I think it'll settle in. I think we'll be okay. I'm not as concerned about that. I'm more concerned about the infrastructure side of it. We got to get that solved as an industry to really kind of propel, get to that 1.5 TW worth of demand. And even if, you know, look at it this way: if you said, "Look, you're not gonna get a 1.5 TW of the demand." All right, cut it in half. Take that scalpel to it, just cut it in half, right? So that's 750 GW. Spread that out, you know, the average install for the U.S. is around 30 GW. So do the math and say, "All right, well, that's about twenty years' worth of infrastructure build-out." It's still a damn good market. Cut it by two-thirds, it's still a lot of opportunity. So that's why I don't get too hung up on it. And the other thing that people realize but don't remember necessarily is, look, everyone's cost of energy is going up. That's not gonna go away. As long as our balance of energy production is what it is, those price points for what we're paying for energy, whether it's at the business or at home, 'cause it's so pervasive in everything we do, that's truly what's driving, you know, a big chunk of the inflation. But we're just gonna pay more as a society for energy is ultimately, I think, the answer, and unless you switch and go directly fossil fuel, that's just gonna be what's gonna be, and I think people have adjusted to that. So like I said, if I knew the answer for sure, I wouldn't have to work for a living, but I'm not in the camp of one wins, one doesn't, therefore, things really fall off or they don't. I just don't see that happening that way. I could be wrong. Trust me, I've been wrong before, but that's how we think about it. We just keep our head down and keep doing what we're doing. And, look, if demand gets cut in half, still a great industry for us, so we're gonna roll. Good color. Bill and Tim, thank you so much for taking the time. Absolutely. Appreciate it. Thanks, everybody, for joining. Bye. Thanks.