What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-22 compared with 2022-02-23 · 250 added, 235 removed, 901 unchanged (35% of the section changed)

6 unchanged sentences

Consolidated Statements of Cash Flows for the Years Ended December 31, 202 2 , 202 1 , and 20 20

Consolidated Statements of S tock holders’ Equity for the Years Ended December 31, 202 1 , 20 20 , and 201 9

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 202 2 , 202 1 , and 20 20

Notes to Consolidated Financial Statements

1 unchanged sentence

Summary of Significant Accounting Policies

Accounts Receivable

Accounts Receivabl e, Net

Property, Plant and Equipment

5 unchanged sentences

Fair Value Measurements

Discontinued Operations

Held for Sale and Discontinued Operations

Exit Activity Costs and Asset Impairments

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Segment Information

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Report of Independent Registered Public Accounting Firm

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 22, 2023 expressed an unqualified opinion thereon.

Adoption of New Accounting Standards

As discussed in Note 1 to the consolidated financial statements, the Company changed its method for calculating expected credit losses as a result of the adoption of ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326), effective January 1, 2020.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Revenue Recognition on Contracts

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Our testing of the assumptions included a combination of confirmation of contract terms, billings, and project status directly with customers, inquiries of the program management and financial personnel, inspection of evidence to support future estimated costs, performance of an analysis of actual gross margin on completed contracts compared to prior estimates, evaluation of subsequent year-end expenses incurred on projects, and assessment of the historical accuracy of management’s estimates by analyzing changes in project gross margins during project lifecycles and determining if those changes were driven by cost factors that should have been known or could have been reasonably estimated at project inception.

Accounting for Acquisitions

Description of the Matter As discussed in Note 6 of the consolidated financial statements, during 2020, the Company completed five acquisitions in separate transactions, for which the aggregate consideration was $309.0 million.

All five transactions were accounted for as business combinations.

Auditing the Company’s accounting for its acquisitions was complex due to the significant estimation uncertainty in the Company’s determination of the fair values of the acquired intangible assets aggregating $102.2 million.

The Company used discounted cash flow methods and independent market appraisals to estimate the fair value of acquired intangible assets.

The significant assumptions used to estimate the value of the intangible assets included discount rates, customer attrition, and certain assumptions that form the basis of the forecasted results (e.g., revenue growth rates and operating profit margin).

The significant assumptions related to estimating the fair value of the intangible assets above are forward looking and could be affected by future economic market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting for acquisitions.

For example, we tested controls over the recognition and measurement of consideration transferred and acquired intangible assets, including the valuation models and underlying assumptions used to develop such estimates.

To test the fair value of the estimated fair value of the acquired intangible assets, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by the Company’s valuation specialists and evaluating the completeness and accuracy of the underlying data.

For example, we compared the significant assumptions to current industry, market and economic trends, to the assumptions used to value similar assets in other acquisitions, to the historical results of the acquired business and to other guidelines used by companies within the same industry.

We involved our valuation specialists to assist in our evaluation of the methodology used by the Company and significant assumptions and to assist with reconciling the prospective financial information with other prospective financial information prepared by the Company.

/s/ Ernst & Young LLP

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February 22, 2023

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GIBRALTAR INDUSTRIES, INC.

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Interest expense, net 4,047 1,639 703

Other (income) expense ( 4,213 ) ( 1,272 ) 408

Other expense (income) 14,565 ( 4,213 ) ( 1,272 )

Income before taxes 111,490 99,562 107,759

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See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

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Net income $ 82,406 $ 75,629 $ 64,566

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation adjustment ( 5,022 ) 2,512 3,301

Adjustment to post-retirement benefit liability, net of tax 1,403 136 ( 371 )

Other comprehensive income 2,648 2,930 1,843

Other comprehensive (loss) income ( 3,619 ) 2,648 2,930

Total comprehensive income $ 78,787 $ 78,277 $ 67,496

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

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Prepaid expenses and other current assets 18,813 21,467

Assets of discontinued operations — 77,438

Total current assets 423,937 446,967

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Billings in excess of cost 35,017 46,711

Liabilities of discontinued operations — 49,295

Total current liabilities 215,320 286,990

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Common stock, $ 0.01 par value;

authorized 100,000 and 50,000 shares in 2021 and 2020;

authorized 100,000 shares;

34,060 and 33,799 shares issued and outstanding in 2022 and 2021

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Retained earnings 627,978 545,572

Accumulated other comprehensive income (loss) 187 ( 2,461 )

Accumulated other comprehensive (loss) income ( 3,432 ) 187

Cost of 3,199 and 1,107 common shares held in treasury in 2022 and 2021

3 unchanged sentences

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

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Intangible asset impairment — 8,300 —

Gain on sale of business — ( 1,881 ) —

Held for sale valuation allowance 13,990 — —

Stock compensation expense 8,334 8,652 8,173

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Cash Flows from Investing Activities

Purchases of property, plant, and equipment ( 17,705 ) ( 13,068 ) ( 8,776 )

Purchases of property, plant, and equipment, net ( 20,062 ) ( 17,491 ) ( 12,991 )

Acquisitions, net of cash acquired ( 51,621 ) 4,143 ( 313,686 )

Net proceeds from sale of property and equipment 214 77 92

Net proceeds from sale of business — 38,062 2,000

Net cash provided by (used in) investing activities of continuing operations 24,714 ( 324,677 ) ( 17,279 )

Net cash (used in) provided by investing activities of continuing operations ( 71,683 ) 24,714 ( 324,677 )

Net cash used in investing activities of discontinued operations — ( 176 ) ( 2,033 )

Net cash provided by (used in) investing activities 24,538 ( 326,710 ) ( 19,673 )

Net cash (used in) provided by investing activities ( 71,683 ) 24,538 ( 326,710 )

Cash Flows from Financing Activities

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Effect of exchange rate changes on cash ( 1,242 ) ( 201 ) ( 1,166 )

Net decrease in cash and cash equivalents ( 19,205 ) ( 159,309 ) ( 105,643 )

Net increase (decrease) in cash and cash equivalents 4,759 ( 19,205 ) ( 159,309 )

Cash and cash equivalents at beginning of year 12,849 32,054 191,363

1 unchanged sentence

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

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Paid-In Capital Retained Earnings Accumulated

Comprehensive (Loss) Income Treasury Stock Total

Comprehensive

(Loss) Income Treasury Stock Total

Stockholders’ Equity

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Net settlement of restricted stock units 296 4 ( 4 ) — — 122 ( 6,656 ) ( 6,656 )

Issuance of restricted stock units 8 — — — — — — —

Awards of common stock 4 — — — — — — —

Stock options exercised 76 — 1,119 — — — — 1,119

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Stock compensation expense — — 8,652 — — — — 8,652

Cumulative effect of accounting change — — — ( 291 ) — — — ( 291 )

Net settlement of restricted stock units 192 2 ( 2 ) — — 79 ( 6,497 ) ( 6,497 )

Issuance of restricted stock units 4 — — — — — — —

Awards of common stock 3 — — — — — — —

Stock options exercised 36 — 1,021 — — — — 1,021

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Net settlement of restricted stock units 245 2 ( 2 ) — — 95 ( 4,404 ) ( 4,404 )

Issuance of restricted stock units 3 — — — — — — —

Stock options exercised 36 — 1,021 — — — — 1,021

Awards of common stock 16 — — — — — — —

Common stock repurchased under stock repurchase program — — — — — 1,997 ( 85,876 ) ( 85,876 )

Balance at December 31, 2022 34,060 $ 340 $ 322,873 $ 627,978 $ ( 3,432 ) 3,199 $ ( 125,660 ) $ 822,099

See accompanying notes to consolidated financial statements.

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GIBRALTAR INDUSTRIES, INC.

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The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

Actual results could differ from those estimates due to uncertainty in current economic environment.

Actual results could differ from those estimates due to uncertainty in the current economic environment.

Segment Reporting

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Revenue recognition

Revenue is recognized when, or as, the Company transfers control of promised products or service to a customer in an amount that reflects the consideration the Company expects to be entitled in exchange for transferring those products or service.

Revenue is recognized when, or as, the Company transfers control of promised products or services to a customer in an amount that reflects the consideration the Company expects to be entitled in exchange for transferring those products or services.

Performance obligations satisfied at a point in time and significant judgments

The majority of the Company's revenue from contracts with customers is recognized when the Company transfers control of the promised product at a point in time, which is determined when the customer has legal title and the significant risks and rewards of ownership of the asset, and the Company has a present right to payment for the product.

Revenue from contracts with customers is recognized when the Company transfers control of the promised product at a point in time, which is determined when the customer has legal title and the significant risks and rewards of ownership of the asset, and the Company has a present right to payment for the product.

The Company allocates the transaction price, which is generally the quoted price per terms of the contract and the consideration the Company expects to receive, to each performance obligation.

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For the above contracts with customers with respect to which the Company satisfies a performance obligation over time, the Company recognizes revenue based on the extent of progress towards completion of the performance obligation using the cost-to-cost measure of progress.

Under the cost-to-cost measure of progress, for which the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.

Under the cost-to-cost measure of progress, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.

Revenues are recognized proportionally as costs are incurred.

Costs to fulfill a contract include all direct costs related to contract performance.

Selling and administrative expenses are charged to operations as incurred.

Selling and administrative expenses are

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charged to operations as incurred.

Provision for loss on an uncompleted performance obligation is recognized in the period in which such loss is determined.

The Company regularly reviews the progress under the cost-to-cost method and any adjustments are recognized as necessary.

Changes in estimates are recognized as they become known using cumulative catch-up basis.

Changes in estimates are recognized as they become known using the cumulative catch-up basis.

The Company also recognizes revenues from services contracts over time.

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Contract assets primarily represents revenue recognized for performance obligations that have been satisfied but for which amounts receivable have not been billed.

These are included as current assets and included within accounts receivable on the Company's consolidated balance sheet.

These are included as current assets and included within accounts receivable on the Company's consolidated balance sheets.

Contract liabilities include payments received from customers in advance of the satisfaction of performance obligations for a contract.

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These estimates are based on assessment of anticipated payment and all other historical, current and future information that is reasonably available.

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The following table summarizes activity recorded within the allowance for doubtful accounts and contract assets balances for the years ended December 31 (in thousands):

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The home improvement retailer purchases from the Residential segment.

Accounts receivable as a percentage of consolidated accounts receivable from the home improvement retailer was 14 % and 11 % as of December 31, 2021 and 2020, respectively.

Net sales to the home improvement retailer as a percentage of consolidated net sales were 13 % during the year ended December 31, 2021 and 14 % during each of the years ended December 31, 2020 and 2019.

Accounts receivable as a percentage of consolidated accounts receivable from the home improvement retailer was 14 % as of December 31, 2022 and 2021.

Net sales to the home improvement retailer as a percentage of consolidated net sales were 14 %, 13 %, and 14 % during the years ended December 31, 2022, 2021 and 2020, respectively.

Inventories are valued at the lower of cost, determined using the first-in, first-out method, or net realizable value.

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The reporting units are at the component level, or one level below the operating segment level.

Goodwill is assigned to each reporting unit as of the date the reporting unit is acquired and based upon the expected synergies of the acquisition.

The Company may elect to perform a qualitative assessment that considers economic, industry and company-specific factors for some or all of our selected reporting units.

Goodwill is assigned to each reporting unit as of the date the reporting unit is acquired.

The Company may elect to perform a qualitative assessment that considers economic, industry and company-specific factors for some or all of the Company's selected reporting units.

If, after completing the assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company proceeds to a quantitative test.

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If the carrying value of the reporting unit exceeds its fair value, goodwill is

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considered impaired, and a loss measured by the excess of the carrying value of the reporting unit over the fair value of the reporting unit must be recorded.

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Otherwise, the Company uses undiscounted cash flows to determine whether impairment exists and measures any impairment loss by approximating fair value using acceptable valuation techniques, including discounted cash flow models and third-party appraisals.

For additional disclosure on impairment of the Company's long-lived assets refer to Note 7 "Goodwill and Related Intangible Assets" and Note 15 "Exit Activity Costs and Asset Impairments."

For additional disclosure on impairment of the Company's long-lived assets refer to Note 7 "Goodwill and Related Intangible Assets," Note 14 "Held for Sale and Discontinued Operations" and Note 15 "Exit Activity Costs and Asset Impairments."

The Company determines if an agreement is, or contains, a lease at the inception of the agreement.

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The initial lease liability is recognized at the present value of remaining lease payments over the lease term.

Leases with an initial term of twelve months or less are not recorded on the Company's consolidated balance sheet.

Leases with an initial term of twelve months or less are not recorded on the Company's consolidated balance sheets.

The Company recognizes lease expense for operating leases on a straight-line basis over the lease term.

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Deferred charges associated with initial costs incurred to enter into new debt arrangements are included as a component of long-term debt and are amortized as a part of interest expense over the terms of the associated debt agreements.

The Company expenses advertising costs as incurred.

For the years ended December 31, 2021, 2020 and 2019, advertising costs were $ 8.0 million, $ 7.2 million, and $ 5.7 million, respectively.

The Company expenses advertising and marketing costs as incurred.

For the years ended December 31, 2022, 2021 and 2020, advertising and marketing costs were $ 10.9 million, $ 8.0 million, and $ 7.2 million, respectively.

Foreign currency transactions and translation

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The Company records a valuation allowance to reduce deferred tax assets when uncertainty exists regarding their realization.

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Equity-based compensation

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Recent accounting pronouncements

Recent Accounting Pronouncements Adopted

Standard Description Financial Statement Effect or Other Significant Matters

Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes

The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and improve consistent application by clarifying and amending existing guidance.

The amendments of this standard are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The standard was effective for the Company as of January 1, 2021.

The Company adopted the amendments in this update and the adoption did not have a material impact to the Company’s financial statements.

Date of adoption:

Recent Accounting Pronouncements Not Yet Adopted

Standard Description Financial Statement Effect or Other Significant Matters

Reference Rate Reform (Topic 842), Facilitation of Effects of Reference Rate Reform on Financial Reporting , and

2021-01 Reference Rate Reform (Topic 842), Scope

The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met, and apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued as a result of reference rate reform.

The expedients and exceptions provided by the amendments in ASU 2020-04 do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022 The amendments in ASU 2021-01 clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

The amendments in these updates are effective as of March 12, 2020 through December 31, 2020, and may be applied retrospectively to contract modifications and hedging relationships from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date the financial statements are available to be issued.

The adoption of the amendments in these updates are not expected to have a material impact on the Company's financial statements.

The Company considers the applicability and impact of all ASUs.

ASUs not listed above were assessed and determined to be either not applicable, or had or are expected to have minimal impact on our financial statements and related disclosures.

The Company considers the applicability and impact of ASUs, and ASUs effective in or after 2022, respectively, 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.

(2) ACCOUNTS RECEIVABLE, NET

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designing, engineering, manufacturing and installation of greenhouses;

botanical extraction systems;

structural bearings;

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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.

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The following table presents the ending and beginning balances of costs in excess of billings, billings in excess of cost and unearned revenue, respectively, as of December 31 (in thousands):

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Revenue recognized during the years ended December 31, 2022, 2021, and 2020 that was in contract liabilities at the beginning of the respective periods was $ 44.4 million, $ 53.0 million, and $ 57.8 million, respectively.

The increase in costs in excess of billings as of December 31, 2021 compared to December 31, 2020 was primarily due to the timing of the Company's right to invoice customers for performance satisfied by the Company for significant contracts in the Renewables and Agtech segments near the end of December 31, 2021.

At December 31, 2020, costs in excess of billings, billings in excess of cost, and unearned revenue included approximately

$ 6.8 million, $ 12.4 million, and $ 9.0 million, respectively, from acquisitions during the year ended December 31, 2020.

The decreases in costs in excess of billings and billings in excess of cost as of December 31, 2022 compared to December 31, 2021, respectively, were primarily due to decline in volume in the Renewables and Agtech segments in 2022 compared to 2021.

(4) INVENTORIES

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Total inventories $ 170,360 $ 176,207

The Company's gross inventory balances are reduced by reserves for excess, obsolete and slow moving inventory and estimates for determining net realizable value of the inventory that are reported on a net basis on the Company's consolidated balance sheet.

The increase in the Company's total inventories balance as of December 31, 2021 from December 31, 2020 was largely the result of higher input costs, including raw material costs and in-bound freight, as compared to prior year, along with higher levels of inventory carried to accommodate for supply chain challenges in procuring adequate inventory to meet customer needs.

The following table summarizes activity recorded within the reserve for excess, obsolete and slow moving inventory for the years ended December 31 (in thousands):

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Ending balance $ 6,179 $ 4,400 $ 4,161

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(5) PROPERTY, PLANT, AND EQUIPMENT

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2022 Acquisitions

During the year ended December 31, 2020, the Company acquired five businesses in separate transactions, described further below, two of which are included within the Company's Renewables segment, two in our Agtech segment, and one in our Residential segment.

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 preliminary purchase consideration for the acquisition of QAP was $ 52.1 million, which includes a preliminary working capital adjustment and certain other adjustments provided for in the membership interest purchase agreement.

The purchase price for the acquisition was preliminarily allocated to the assets acquired and liabilities assumed based upon their respective fair values estimated as of the date of acquisition.

The Company has commenced 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.

Due to the timing of the acquisition, the Company continues to gather information supporting the acquired assets and assumed liabilities.

Accordingly, all amounts recorded are provisional.

These provisional amounts are subject to change if new information is obtained concerning facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.

The final determination of the fair value of certain assets and liabilities will be completed within a measurement period of up to one year from the date of acquisition.

The final values may also result in changes to depreciation and amortization expense related to certain assets such as property, plant, and equipment and acquired intangible assets.

The preliminary excess consideration was recorded as goodwill and approximated $ 3.6 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 final purchase price allocation will be completed no later than the third quarter of fiscal year 2023.

The preliminary 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):

Working capital 23,759

Property, plant, and equipment 8,486

Acquired intangible assets 14,700

Other assets 1,813

Other liabilities ( 1,295 )

Goodwill 3,604

Fair value of purchase consideration $ 52,085

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The intangible assets acquired in this acquisition consisted of the following as of the date of acquisition (in thousands):

Fair Value Weighted-Average Amortization Period

Trademarks $ 2,800 Indefinite

Customer relationships 11,900 12 years

Total $ 14,700

2020 Acquisitions

During the year ended December 31, 2020, the Company acquired five businesses in separate transactions, described further below, two of which are included within the Company's Renewables segment, two in the Company's Agtech segment, and one in the Company's Residential segment.

The purchase consideration for each acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values.

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Fair value of purchase consideration $ 223,867

The intangible assets acquired in the TerraSmart acquisition consisted of the following (in thousands):

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The intangible assets acquired in the TerraSmart acquisition consisted of the following as of the date of acquisition (in thousands):

Fair Value Weighted-Average Amortization Period

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The excess consideration recorded as goodwill approximated $ 19.1 million, all of which is deductible for tax purposes.

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The allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed in the acquisitions of Sunfig, Architectural Mailboxes, Delta Separations and Thermo is as follows as of the respective date of the acquisition (in thousands):

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Total $ 38,066

2019 Acquisition

On August 30, 2019, the Company acquired all of the outstanding membership interests of Apeks LLC ("Apeks"), a designer and manufacturer of botanical oil extraction systems and equipment.

The results of Apeks have been included in the Company's consolidated financial results since the date of acquisition within the Company's Agtech segment.

The aggregate purchase consideration for the acquisition of Apeks was $ 12.6 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.

The excess consideration was recorded as goodwill and approximated $ 6.4 million, all of which is deductible for tax purposes.

The allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed is as follows as of the date of the acquisition (in thousands):

Working capital ( 1,515 )

Property, plant and equipment 1,059

Acquired intangible assets 3,000

Other assets 508

Other liabilities ( 1,081 )

Goodwill 6,436

Fair value of purchase consideration $ 12,561

The intangible assets acquired in this acquisition consisted of the following as of the date of the acquisition (in thousands):

Fair Value Weighted-Average Amortization Period

Trademarks $ 1,400 Indefinite

Technology 900 7 years

Customer relationships 700 6 years

Total $ 3,000

The acquisition of QAP was financed primarily through borrowings under the Company's revolving credit facility.

The acquisition of TerraSmart was financed through a combination of cash on hand and borrowings under the Company's revolving credit facility.

The acquisitions of Sunfig, Architectural Mailboxes, Delta Separations, Thermo and Apeks were funded from cash on hand.

The acquisitions of Sunfig, Architectural Mailboxes, Delta Separations, and Thermo were funded from cash on hand.

The Company recognized costs as a component of cost of sales related to the sale of inventory at fair value as a result of allocating the purchase price of recent acquisitions.

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Total acquisition related costs $ 1,972 $ 949 $ 3,864

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(7) GOODWILL AND RELATED INTANGIBLE ASSETS

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Balance at December 31, 2020 $ 192,527 $ 205,452 $ 84,622 $ 31,678 $ 514,279

Acquired goodwill 147,004 7,377 50,862 — 205,243

Adjustments to prior year acquisitions ( 2,433 ) — 323 — ( 2,110 )

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Balance at December 31, 2021 188,680 205,452 85,132 31,678 510,942

Adjustments to prior year acquisitions ( 2,433 ) — 323 — ( 2,110 )

Acquired goodwill — 3,604 — — 3,604

Adjustment to prior year acquisition 904 — — — 904

Foreign currency translation ( 1,554 ) — ( 1,533 ) — ( 3,087 )

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As a result of the Company's annual testing for 2022, 2021 and 2020, none of the reporting units with goodwill as of the testing date had carrying values in excess of their fair values.

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Acquired Intangible Assets

Acquired intangible assets consist of the following (in thousands):

Acquired intangible assets consisted of the following (in thousands):

December 31, 2022 December 31, 2021

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Total acquired intangible assets $ 212,607 $ 75,081 $ 215,172 $ 73,668

The Company did not recognize impairment charges related to intangible assets during the year ended December 31, 2022.

During the year ended December 31, 2021, the Company recognized impairment charges of $ 8.3 million related to indefinite-lived trademark intangible assets due to a rebranding initiative that resulted in the discontinuation of certain indefinite-lived trademarks in the Company's Agtech segment.

The Company did no t recognize impairment charges related to indefinite-lived trademark intangible assets for the year ended December 31, 2020.

The Company recognized amortization expense related to the definite-lived intangible assets.

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(8) ACCRUED EXPENSES

Accrued expenses at December 31 consist of the following (in thousands):

Accrued expenses at December 31 consisted of the following (in thousands):

Compensation $ 17,010 $ 15,293

Customer rebates 16,768 15,253

Insurance 7,310 6,915

Current operating lease liability 8,620 7,239

Insurance 6,440 7,310

Accrued warranties 6,251 5,686

Interest and taxes 5,696 5,463

Unearned revenue 4,572 3,681

Current portion of cash-settled share-based liabilities 2,947 3,504

Current portion of MSPP liabilities 2,267 2,947

Other 6,097 5,121

1 unchanged sentence

Accrued expenses for insurance are primarily for general liability, workers’ compensation and employee healthcare policies for which the Company is self-insured up to certain per-occurrence and aggregate limits.

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accrued represent the Company's best estimates of the probable amount of claims to be paid.

Differences between the amounts accrued and the amount that may be reasonably possible of payment are not material.

The current portion of share-based liabilities represents the Company's equity-based awards that are settled in cash, further described in Note 12 "Equity-Based Compensation".

Long-term debt consists of the following (in thousands):

Accrued expenses for unearned revenue primarily relate to up-front customer deposits received on contracts for goods and services to be provided by the Company as further discussed in Note 3 "Revenue." The current portion of Management Stock Purchase Plan liabilities ("MSPP liabilities") represents the Company's equity-based awards that are settled in cash, further described in Note 12 "Equity-Based Compensation."

Long-term debt consisted of the following (in thousands):

December 31, 2022 December 31, 2021

Revolving credit facility $ 91,000 $ 24,500

Other debt — 636

Less unamortized debt issuance costs ( 2,238 ) ( 719 )

Total debt $ 88,762 $ 23,781

Senior Credit Agreement

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, and which was terminated without any 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 December 31, 2022, the Company was in compliance with all financial covenants.

The Credit Agreement terminates on December 8, 2027.

Interest rates on the revolving credit facility 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 has 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.

On January 24, 2019, the Company entered into the Sixth Amended and Restated Credit Agreement ("Senior Credit Agreement"), which amended and restated the Company’s Fifth Amended and Restated Credit Agreement dated December 9, 2015, and provided a revolving credit facility and letters of credit in an aggregate amount equal to $ 400 million.

The Senior Credit Agreement contains three financial covenants.

As of December 31, 2021, the Company was in compliance with all three covenants.

Interest rates on the revolving credit facility are based on LIBOR plus an additional margin that ranges from 1.125 % to 2.00 %.

In addition, the revolving credit facility is 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.

The Senior Credit Agreement terminates on January 23, 2024.

Borrowings under the Senior 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 Leverage Ratio requirements and capped by an annual aggregate limit under the Senior Credit Agreement.

Standby letters of credit of $ 6.2 million have been issued under the Senior Credit Agreement to third parties on behalf of the Company as of December 31, 2021.

The Company had the ability to 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 Senior Credit Agreement.

Interest rates on the revolving credit facility under the Senior 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 Senior 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.

The Senior Credit Agreement terminated on December 8, 2022.

Table of Co n tents

Standby letters of credit of $ 4.5 million have been issued under the Credit Agreement to third parties on behalf of the Company as of December 31, 2022.

These letters of credit reduce the amount otherwise available under the revolving credit facility.

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Given the status of this plan, it is reasonably possible that future contributions to the plan will increase although the Company cannot reasonably estimate a possible range of increased contributions as of December 31, 2022.

Table of Co n tents

The following table presents the changes in the accumulated postretirement benefit obligation related to the Company’s unfunded postretirement healthcare benefits at December 31 (in thousands):

Projected benefit obligation at January 1 $ 6,202 $ 6,443

Service cost — 10

Interest cost 127 125

Plan amendments — 162

Actuarial (gain) loss ( 200 ) 580

Actuarial gain ( 1,784 ) ( 200 )

Benefits paid, net of contributions ( 316 ) ( 328 )

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Unamortized prior service cost 352 412

Unrecognized actuarial loss 1,530 1,843

Unrecognized actuarial (gain) loss ( 278 ) 1,530

Net amount recognized $ ( 4,155 ) $ ( 4,260 )

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Pre-tax accumulated other comprehensive loss – unamortized post-retirement healthcare costs ( 74 ) ( 1,942 )

( 1,942 ) ( 2,137 )

Net amount recognized $ 4,155 $ 4,260

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7.8 % 7.0 % 7.0 %

(1) It was assumed that these rates would gradually decline to 3.8 % by 2075.

(2) Actuarial (gains)/losses are amortized utilizing the corridor approach.

Differences between actual

experience and the actuarial assumptions are reflected in (gain)/loss.

(1) For 2022, it was assumed that these rates would gradually decline to 4.0 % by 2075.

For 2021 and 2020, it was assumed that these rates would gradually decline to 3.8 % by 2075.

(2) Actuarial losses are amortized utilizing the corridor approach.

Differences between actual experience and the actuarial assumptions are reflected in (gain)/loss.

If the total net (gain) or loss exceeds 10 percent of the greater of the accumulated postretirement benefit obligation or plan assets, this excess must be amortized over the average remaining service period of the active plan participants.

If most of the plan participants are inactive, the amortization period is the expected future lifetime of inactive plan participants.

Table of Co n tents

Expected benefit payments from the plan for the years ended December 31 are as follows (in thousands):

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Stock compensation expense recognized during the period is based on the value of the portion of equity-based awards that is ultimately expected to vest during the period reduced by the expense on unvested awards forfeited during the period.

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 shareholders of the Company approved the adoption of the Gibraltar Industries, Inc.

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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.

In 2016, the shareholders of the Company approved the adoption of the Gibraltar Industries, Inc.

2016 Stock Plan for Non-Employee Directors ("Non-Employee Directors Plan") which allows the Company to grant awards of shares of the Company's common stock to 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.

Table of Co n tents

At December 31, 2022, approximately 326,000 and 80,000 shares were available for issuance under the 2018 Plan and 2015 Plan, respectively, as incentive stock options or other stock awards, and approximately 101,000 shares were available for issuance under the Non-Employee Directors Plan as awards of shares of the Company's common stock.

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2022 2021 2020

Awards Number of

Awards Weighted

Fair Value Number of

Awards Weighted

Fair Value Number of

Awards Weighted

Awards Number

of Awards Weighted

Fair Value Number

of Awards Weighted

Fair Value Number

of Awards Weighted

Deferred stock units 2,460 $ 42.69 7,536 $ 83.58 12,402 $ 45.98

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Performance stock units (1) 108,464 $ 47.00 62,778 $ 87.84 160,426 $ 55.98

(1) The Company’s performance stock units (“PSUs”) represent shares granted for which the final number of shares earned depends on financial performance or market conditions.

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 either the Company’s return on invested capital (“ROIC”) over a one-year period performance period or other criteria such as revenue, gross profit, and operating profit thresholds over a three-year performance period.

The Company's PSUs with a market condition are based on the ranking of the Company’s total shareholder return (“TSR”) performance, on a percentile basis, over a three-year performance period compared to the S&P Small Cap Industrial sector, over the same three-year performance period.

Stock Options

No options were granted in 2021, 2020 and 2019.

No options were granted during the years ended December 31, 2022, 2021 and 2020.

The Company determines the fair value of stock options granted based on the Black-Scholes option pricing model on the date of grant, and the expected stock volatility is based on volatility of the Company’s stock price using a historical period commensurate with the expected life of the options.

The following table summarizes the ranges of outstanding and exercisable options at December 31, 2021:

Range of Exercise Prices Options

Outstanding Weighted Average

Table of Co n tents

At December 31, 2022, the Company has one grant of options outstanding.

The following table summarizes the Company's outstanding and exercisable options at December 31, 2022:

Exercise Price Options

Outstanding Weighted

Contractual Life

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5,000 4.26 $ 39.55 5,000 $ 39.55

5,000 5.33 $ 39.55 5,000 $ 39.55

The following table summarizes information about stock option transactions:

Options Weighted

Price Weighted Average

Price Weighted

Remaining Contractual

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Balance at December 31, 2022 5,000 $ 39.55 4.26 $ 31,650

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on the $ 66.68 per share market price of the Company’s common stock as of December 31, 2021, which would have been received by the option holders had all option holders with an exercise price below the per share market price on December 31, 2021, exercised their options as of that date.

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on the $ 45.88 per share market price of the Company’s common stock as of December 31, 2022, which would have been received by the option holder had the option holder with an exercise price below the per share market price on December 31, 2022, exercised the options as of that date.

Stock Units and Common Stock

The following table summarizes information about non-vested restricted stock units, performance stock units (that will convert to shares upon vesting) and common stock:

The following table summarizes information about non-vested restricted stock units and performance stock units (that will convert to shares upon vesting) and common stock:

Units Weighted

Fair Value Common

Stock Weighted

Fair Value Performance

Stock Units Weighted

Fair Value Common Stock Weighted

Fair Value Performance Stock Units (1) (2) Weighted Average Grant Date Fair Value Deferred Stock Units (3) Weighted Average Grant Date Fair Value

Fair Value Deferred

Units (2) Weighted

Balance at December 31, 2021 204,584 $ 52.90 — $ — 363,474 $ 55.44 52,472 $ 43.99

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Balance at December 31, 2022 235,370 $ 49.87 — $ — 211,368 $ 50.96 40,350 $ 45.16

(1) The Company’s performance stock units (“PSUs”) represent shares granted for which the final number of shares earned depends on financial performance or market conditions.

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 market condition are based on the ranking of the Company’s total shareholder return (“TSR”) performance, on a percentile basis, over a three year performance period compared to the S&P Small Cap Industrial sector, over the same three year performance period.

(2) The Company's PSU adjustments during 2021 represent shares earned for achievement in excess of targeted thresholds at the end of the performance period.

The Company's PSUs with a financial performance condition, based on the Company ROIC, granted in 2020 accounted for the 7,400 PSUs that will be converted to shares and issued to recipients in the first quarter of 2023 at 109.5 % of the target amount granted, based on the Company's actual ROIC compared to ROIC target for the performance period ended December 31, 2020.

(1) The Company's PSU adjustments during 2022 represents (i) 55,959 shares for which the performance condition was not achieved and the PSUs were adjusted in the first quarter of 2022 to reflect zero PSU earned as the threshold level of achievement was not met based on the Company's actual ROIC achievement level for the performance period ended December 31, 2021 and (ii) 9,250 shares not earned that related to two separate PSU awards granted in 2019 and 2020 that the threshold level of achievement based on other performance criteria as defined in the respective awards over a two-year or three-year performance periods were not met for the performance periods ended December 31, 2021.

(2) Vested and issuable upon termination from service as a member of the Company's Board of Directors.

Table of Co n tents

The fair value of the common stock, restricted stock units, and deferred stock units, as well as the performance stock units with a financial performance condition granted during the three years ended December 31, 2022 was based on the Company stock price at grant date of the award.

The fair value of the performance stock units with a market condition granted during the three years ended December 31, 2022 were determined using a Monte Carlo simulation as of the grant date of the award.

The Company granted performance units with a market condition during 2020, however, no such awards were granted in 2021 and 2019.

The Company granted performance units with a market condition during 2020;

however, no such awards were granted in 2022 and 2021.

The following table sets forth the aggregate intrinsic value of options exercised and aggregate fair value of restricted stock units and restricted shares that vested during the years ended December 31 (in thousands):

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Aggregate fair value of vested restricted stock units $ 3,920 $ 6,320 $ 11,851

Aggregate fair value of vested common and restricted shares $ 370 $ 190 $ 285

Aggregate fair value of vested common stock $ 665 $ 370 $ 190

Aggregate fair value of vested performance stock units $ 6,729 $ 9,080 $ 4,197

Aggregate fair value of vested deferred stock units $ 105 $ 630 $ 570

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Management Stock Purchase Plan

At December 31, 2021, the Company's equity based awards that are settled in cash are the awards under the Management Stock Purchase Plan ("MSPP").

The total of these share-based liabilities recorded on the consolidated balance sheet as of December 31, 2021 was $ 22.6 million, of which $ 2.9 million was included in current accrued expenses and $ 19.7 million was included in non-current liabilities.

Total share-based liabilities as of December 31, 2020 were $ 18.2 million, of which $ 14.7 million was included in non-current liabilities.

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.

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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 December 31, 2022 were $ 15.4 million, of which $ 2.3 million was included in current accrued expenses and $ 13.1 million was included in non-current liabilities.

Total MSPP liabilities recorded on the consolidated balance sheet as of December 31, 2021 were $ 22.6 million, of which $ 2.9 million was included in current accrued expenses and $ 19.7 million was included in non-current liabilities.

The value of the restricted stock units within the MSPP liability were $ 13.4 million and $ 20.7 million at December 31, 2022 and 2021, respectively.

The following table provides the number of restricted stock units credited to active participant accounts, balance of vested and unvested restricted stock units within active participant accounts, payments made with respect to restricted stock units issued under the MSPP, and MSPP expense during years ended December 31:

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Share-based liabilities paid (in thousands) $ 3,689 $ 4,915 $ 15,401

MSPP expense, in thousands $ 6,034 $ 4,518 $ 2,699

MSPP (recovery) expense (in thousands) $ ( 4,459 ) $ 6,034 $ 4,518

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(13) FAIR VALUE MEASUREMENTS

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The Company had no financial assets or liabilities measured at fair value on a recurring basis and did not have any financial instruments for which carrying value differed from its fair value at December 31, 2022 and 2021.

As of December 31, 2021, the Company had $ 24.5 million outstanding on its revolving credit facility under its Senior Credit Agreement.

As of December 31, 2022, the Company had $ 91.0 million outstanding on its revolving credit facility under its Credit Agreement.

The Company determined the carrying value of the outstanding balance on its revolving credit facility approximates fair value due to the variable market interest rate terms of the credit facility.

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Other non-recurring fair value measurements

The Company recognized impairment charges related to certain intangible assets during the year ended December 31, 2021, and recorded impairment of property, plant, and equipment during the year ended December 31, 2020.

The Company did not recognize any impairment charges related to certain intangible assets or property, plant, and equipment during the year ended December 31, 2019.

The Company recorded impairment of property, plant and equipment during the years ended December 31, 2022 and 2020, and recognized impairment charges related to certain intangible assets during the year ended December 31, 2021.

The Company uses unobservable inputs, classified as Level 3 inputs, in determining the fair value of these assets.

See Note 7 "Goodwill and Related Intangible Assets" and Note 15 "Exit Activity Costs and Asset Impairments" for more disclosure regarding the impairment of certain intangible assets and property, plant, and equipment, respectively.

See Note 7 "Goodwill and Related Intangible Assets," Note 14 "Held for Sale and Discontinued Operations" and Note 15 "Exit Activity Costs and Asset Impairments" for more disclosure regarding the impairment of certain intangible assets and property, plant, and equipment, respectively.

The Company also applied fair value principles for the goodwill impairment tests performed during 2022, 2021, and 2020.

The Company used two valuation models to estimate the fair values of its reporting units, both of which primarily use Level 3 inputs.

See Note 7 of the consolidated financial statements for the results of the Company’s goodwill impairment tests.

See Note 7 "Goodwill and Related Intangible Assets" of the consolidated financial statements for the results of the Company’s goodwill impairment tests.

Additionally, the Company's recent acquisition activity, as described in Note 6 "Acquisitions," used Level 3 inputs to estimate fair values allocated to the assets acquired and liabilities assumed.

(14) DISCONTINUED OPERATIONS

On February 23, 2021, the Company sold the stock of its Industrial business which had been classified as held for sale and reported as a discontinued operation in the Company’s consolidated financial statements for the year ended December 31, 2020.

Net proceeds of $ 38 million, consisting of cash and a $ 13 million seller note, resulted in an estimated pre-tax loss of $ 30 million, subject to working capital and other adjustments, of which $ 29.6 million was recorded when the assets of the Industrial business were written down to fair market value during the fourth quarter of 2020.

The seller note was paid in full to the Company during the second quarter of 2021.

The results of operations and financial position of the Industrial business have been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented.

The Company allocates interest to its discontinued operations in accordance with ASC Subtopic 205-20, “Presentation of Financial Statements – Discontinued Operations.” Interest was allocated based on the amount of net assets held by the discontinued operation in comparison to consolidated net assets.

The following carrying amounts of the major classes of assets and liabilities included in discontinued operations related to the Industrial business have been segregated from the Company's continuing operations and are reported as assets and liabilities of discontinued operations held for sale, respectively, in the consolidated balance sheet at December 31, 2020 (in thousands):

December 31, 2020

Accounts receivable, net $ 11,261

Inventories, net 13,041

Prepaid expenses and other current assets 21,310

Total current assets (1) 45,612

(14) HELD FOR SALE AND DISCONTINUED OPERATIONS

Held for Sale

During the first quarter of 2022, the Company committed to a plan to sell its Processing business (the "disposal group") which is a business within the Company's Agtech reportable segment.

The planned sale does not meet the criteria to be classified as a discontinued operation.

As a result, the Company will continue reporting the operating results of the disposal group in the Company's consolidated operating results from continuing operations until the sale of the business is completed.

The Company classifies assets and related liabilities as held for sale when:

(i) management has committed to a plan to sell the assets, (ii) the net assets are available for immediate sale, (iii) there is an active program to locate a buyer and (iv) the sale and transfer of the net assets is probable within one year.

Assets and liabilities held for sale are presented in prepaid expenses and other current assets and accrued expenses on the Company's consolidated balance sheets with a valuation allowance to recognize the net carrying amount at the lower of cost or fair value, less costs to sell.

Table of Co n tents

As of December 31, 2022, the assets and liabilities of the disposal group have been classified as held for sale.

The following table summarizes these assets and liabilities which have been measured at the lower of (i) the carrying value when classified as held for sale and (ii) the fair value of the business less costs to sell.

(in thousands) December 31, 2022

Assets held for sale

Accounts receivable, net of allowance $ 266

Inventories, net of reserves 6,748

Other current assets 1,999

Property, plant, and equipment, net 331

Operating lease assets 6,470

Goodwill 22,475

Acquired intangibles 15,482

Loss recognized on classification as held for sale ( 29,600 )

Total noncurrent assets (1) 31,826

Total assets classified as held for sale $ 77,438

Operating lease asset 495

Acquired intangibles, net 6,213

Valuation allowance ( 13,990 )

Total assets held for sale $ 2,062

Liabilities held for sale

Accounts payable $ 733

Accrued expenses 1,159

Total current liabilities (1) 19,982

Deferred income taxes 24,657

Non-current operating lease liabilities 70

Other non-current liabilities 17

Total noncurrent liabilities (1) 29,313

Total liabilities classified as held for sale $ 49,295

(1) The assets and liabilities of the discontinued operations were classified as current on the December 31, 2020 consolidated balance sheet, as it was probable that the sale would occur and proceeds would be collected within one year.

Total liabilities held for sale $ 1,962

Net sales, operating loss and valuation allowance recorded for this disposal group for the years ended December 31 are as follows (in thousands):

Net sales $ 7,840 $ 20,328

Operating loss $ ( 6,769 ) $ ( 3,539 )

Valuation allowance $ ( 13,990 ) $ —

Effective with the classification of the disposal group as held for sale, depreciation of property, plant, and equipment and amortization of finite-lived intangible assets and right-of-use assets are not recorded while these assets are classified as held for sale.

As a result of the Company's evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to an estimated sales price, adjusted for costs to sell, a valuation allowance of $ 14.0 million was recorded during the twelve months ended December 31, 2022 and has been presented within other expense (income) in the consolidated statements of operations.

The recoverability of the disposal group will be evaluated each reporting period until the sale of the business is completed.

Discontinued Operations

The seller note was paid in full to the Company during the second quarter of 2021.

The results of operations of the Industrial business have been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented.

Table of Co n tents

Components of the income (loss) from discontinued operations before taxes, including the interest allocated to discontinued operations, for the years ended December 31 were as follows (in thousands):

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On June 30, 2020, the Company sold its self-guided apartment tour application business to a third party from its Residential segment.

The $ 2.0 million net proceeds from the sale resulted in pre-tax net gain of $ 1.9 million and has been presented within other (income) expense in the consolidated statements of income.

This divestiture does not meet the criteria to be reported as a discontinued operation nor did it have a major effect on the Company's operations.

The $ 2.0 million net proceeds from the sale resulted in pre-tax net gain of $ 1.9 million and has been presented within other expense (income) in the consolidated statements of operations.

This divestiture did not meet the criteria to be reported as a discontinued operation nor did it have a major effect on the Company's operations.

(15) 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, in the sale and exiting of less profitable businesses or products lines, and the reduction in our manufacturing footprint.

Exit activity costs were incurred during 2022 related to moving and closing costs, severance and contract terminations, along with asset impairment charges related to the write-down of inventory and impairment of machinery and equipment associated with discontinued product lines, as a result of process simplification initiatives.

In conjunction with these initiatives, in 2021, the Company closed four facilities.

In conjunction with these initiatives, in 2022, the Company exited a facility, relocating to a new one, and separately, closed two other facilities.

In 2021, the Company closed four facilities.

In 2020, the Company closed two facilities and, separately, sold a facility closed in 2017.

The Company closed and consolidated one facility during 2019.

These closures resulted in exit activity costs and asset impairment charges.

The following table sets forth the exit activity costs and asset impairment charges incurred by segment during the years ended December 31 related to the restructuring activities described above (in thousands):

The following table sets forth the exit activity costs (recoveries) and asset impairment charges incurred by segment during the years ended December 31 related to the restructuring activities described above (in thousands):

2022 2021 2020

Exit activity costs Asset impairment charges Total Exit activity costs Asset impairment charges Total Exit activity costs Asset impairment charges Total

Exit activity costs (recoveries) Asset impairment charges Total Exit activity costs Asset impairment charges Total Exit activity costs Asset impairment charges Total

Renewables $ 3,256 $ 1,198 $ 4,454 $ 4,769 $ 1,193 $ 5,962 $ 15 $ — $ 15

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Corporate 250 — 250 145 — 145 375 — 375

Total exit activity costs & asset impairments $ 7,020 $ 1,193 $ 8,213 $ 2,207 $ 81 $ 2,288 $ 5,166 $ 408 $ 5,574

Total $ 6,039 $ 2,276 $ 8,315 $ 7,020 $ 1,193 $ 8,213 $ 2,207 $ 81 $ 2,288

The following table provides a summary of where the above exit activity costs and asset impairments are recorded in the consolidated statements of operations for the years ended December 31 (in thousands):

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Total exit activity costs and asset impairments $ 8,315 $ 8,213 $ 2,288

Table of Co n tents

The following table reconciles the beginning and ending liability for exit activity costs relating to the Company’s facility consolidation efforts (in thousands):

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Provision for income taxes $ 29,084 $ 25,046 $ 24,468

Table of Co n tents

The provision for income taxes from discontinued operations for the years ended December 31 consisted of the following (in thousands):

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Federal — ( 340 ) ( 876 )

State 2 10 23

Foreign — ( 11 ) ( 138 )

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Provision for income taxes $ — $ 366 $ 2,123

The provision for income taxes from continuing operations differs from the federal statutory rate of 21 % due to the following (in thousands) for the years ended December 31:

The provision for income taxes from continuing operations differs from the federal statutory rate of 21 % due to the following for the years ended December 31 (in thousands, except for percentages) :

2022 2021 2020

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Excess tax benefit on stock based compensation ( 214 ) ( 0.2 ) % ( 2,039 ) ( 2.0 ) % ( 1,674 ) ( 1.6 ) %

Uncertain tax positions — — % — — % ( 260 ) ( 0.3 ) %

Executive compensation 960 0.9 % 1,781 1.8 % 1,114 1.0 %

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$ 29,084 26.1 % $ 25,046 25.2 % $ 24,468 22.7 %

Deferred tax liabilities at December 31 consist of the following (in thousands):

Deferred tax liabilities at December 31 consisted of the following (in thousands):

Depreciation $ 14,570 $ 9,633

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Equity compensation ( 5,993 ) ( 8,236 )

Assets held for sale ( 13,669 ) —

Capitalized research and development costs ( 4,503 ) —

Other ( 17,493 ) ( 15,641 )

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Net deferred tax liabilities $ 46,881 $ 40,229

Table of Co n tents

At December 31, 2022, the Company had total net operating loss carry forwards of $ 7.9 million, which included $ 0.4 million for federal, $ 6.6 million for state, and $ 0.9 million for foreign income tax purposes.

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The Company recognized a total of $ 0.7 million of deferred tax assets, net of the federal tax benefit, related to these net operating losses prior to any valuation allowances, which included $ 0.1 million of federal and $ 0.4 million of state deferred tax assets and $ 0.2 million of foreign deferred tax assets.

As a result of the sale of the Industrial business during 2021, the Company will generate a capital loss of $ 113.8 million for federal and state purposes to the extent allowable under state tax regulations.

As a result of the sale of the Industrial business during 2021, the Company generated a capital loss of $ 113.7 million for federal and state purposes to the extent allowable under state tax regulations.

Amended Federal returns were filed to carry back $ 3.7 million of capital loss.

As of December 31, 2022, the remaining capital loss carry forward is $ 110.0 million.

The capital loss carryforward will expire in 2026.

The Company recognized a total of $ 26.5 million of deferred tax assets, net of the federal benefit, related to this carryforward prior to any valuation allowances, which included $ 22.2 million of federal and $ 4.3 million of state deferred tax assets.

The Company has a full valuation allowance on the capital loss carry forward and as a result there is no deferred tax asset.

Deferred taxes include net deferred tax assets relating to certain state and foreign tax jurisdictions.

A reduction of the carrying amount of deferred tax assets by a valuation allowance is required if it is more likely than not that such assets will not be realized.

In 2019, a valuation allowance was recorded in China.

In 2020, the valuation allowance in China was reversed and a tax attribute valuation allowance was also reversed as the Company expects to utilize the attribute.

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income tax liability related to the Company's remaining unremitted foreign earnings is not practicable due to the complexities associated with its hypothetical calculation.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

2021 2020 2019

Balance as of January 1 $ — $ — $ 329

Additions for tax positions of the current year — — —

Additions for tax positions of prior years — — —

Reductions for tax positions of prior years for:

Settlements and changes in judgment — — —

Lapses of applicable statute of limitations — — ( 329 )

Divestitures and foreign currency translation — — —

Balance as of December 31 $ — $ — $ —

In 2021 and 2020, the Company did not have any unrecognized tax benefits.

In 2019, unrecognized tax benefit of $ 0.3 million was reversed as a result of the lapse of the statute of limitations.

In 2022, 2021 and 2020, the Company did not have any unrecognized tax benefits and no activity related to such benefits has occurred in any of the years presented in the consolidated financial statements.

The Company classifies accrued interest and penalties related to unrecognized tax benefits in income tax expense.

5 unchanged sentences

state jurisdictions have statute of limitations generally ranging from four to ten years .

An examination of the Company's

federal consolidated income tax return for 2015 through 2018 was closed during 2021 with no changes.

No other open periods are currently under examination.

The Company is currently in appeals for an audit of tax years 2016 through 2019 in Massachusetts and believes the technical merits of the position will be sustained.

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(17) EARNINGS PER SHARE

Basic earnings per share is based on the weighted average number of common shares outstanding.

Diluted earnings per share is based on the weighted average number of common shares outstanding, as well as dilutive common shares which include shares issuable pursuant to equity based incentive compensation awards under the equity compensation plans described in Note 12 of the consolidated financial statements.

The weighted average number of diluted shares does not include potential anti-dilutive common shares issuable pursuant to equity based incentive compensation awards.

There were no anti-dilutive shares outstanding at December 31, 2021.

There were 13,000 and 30,000 shares issuable pursuant to equity based incentive compensation awards excluded from the diluted earnings calculation because the effect of their inclusion would be anti-dilutive for the years ended December 31, 2020 and 2019, respectively.

The treasury stock method is used to calculate dilutive shares, which reduces the gross number of dilutive shares by the number of shares purchasable from the proceeds of the options assumed to be exercised and the unrecognized expense related to the options, restricted shares, restricted stock units, and performance stock units assumed to have vested.

Weighted average shares outstanding for basic and diluted earnings are as follows for the years ended December 31 (in thousands):

Weighted average shares outstanding for basic and diluted earnings were as follows for the years ended December 31 (in thousands):

2022 2021 2020

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Weighted average shares and conversions 32,192 33,054 32,918

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 options and stock units for the years ended December 31 (in thousands):

2022 2021 2020

Common stock options and stock units 43 — 13

The Company's leases are classified as operating leases and consist of manufacturing facilities, distribution centers, office space, vehicles and equipment.

1 unchanged sentence

The exercise of lease renewal options is at the Company's sole discretion.

As of December 31, 2021, the Company's renewal options are not part of the Company's operating lease assets and operating lease liabilities.

As of December 31, 2022 and 2021, the Company's renewal options are not part of the Company's operating lease assets and operating lease liabilities.

Certain leases also include options to purchase at fair value the underlying leased asset at the Company's sole discretion.

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Amounts recognized in the Company's consolidated balance sheet at December 31 were as follows (in thousands):

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The Company is a party to certain claims and legal actions generally incidental to its business.

For certain divestiture transactions completed in prior years, the Company has agreed to indemnify the buyer for various liabilities that may arise after the disposal date.

The Company is a party to certain claims made under these indemnification provisions.

As of December 31, 2021, the Company has a contingent liability recorded for such provisions related to discontinued operations.

Management does not believe that the outcome of this claim, or other claims which are not clearly determinable at the present time, would significantly affect the Company's financial condition or results of operation.

Management does not believe that the outcome of any claims, or other claims which are not clearly determinable at the present time, would result in a material adverse effect on the Company's financial condition or results of operations.

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(20) SEGMENT INFORMATION

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(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 and processing solutions including the designing, engineering, manufacturing and installation of greenhouses, and botanical extraction systems;

(iii) Agtech, which provides growing solutions including the designing, engineering, manufacturing and installation of greenhouses;

(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.

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Renewables and Agtech.

The following table illustrates certain measurements used by management to assess the performance of the segments described above as of and for the years ended December 31 (in thousands):

The following tables illustrate certain measurements used by management to assess the performance of the segments described above as of and for the years ended December 31 (in thousands):

2022 2021 2020

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$ 26,167 $ 31,966 $ 20,915

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2022 2021 2020

Renewables $ 392,368 $ 445,486 $ 402,797

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Total $ 238,107 $ 522,814 $ 209,460 $ 62,197 $ 1,032,578

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Net sales by region or origin and long-lived assets by region of domicile for the years ended and as of December 31 are as follows (in thousands):

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Total $ 136,787 $ 97,368 $ 91,161

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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data