GIBRALTAR INDUSTRIES, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Certain information set forth herein includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and, therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “anticipates,” “aspires,” “expects,” “estimates,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, competition, strategies, margins, integration of acquired businesses, the industries in which we operate and the expected impact of evolving laws and regulation. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in the “Risk Factors” disclosures in our most recent Annual Report on Form 10-K. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, liquidity and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained herein. In addition, even if our results of operations, financial condition, liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statements that we make herein speak only as of the date of those statements, and we undertake no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data. The Company uses certain operating performance measures, specifically consolidated gross margin, operating margin by segment and consolidated operating margin, to manage the Company's businesses, set operational goals, and establish performance targets for incentive compensation for the Company's employees. The Company defines consolidated gross margin as a percentage of total consolidated gross profit to total consolidated net sales. The Company defines operating margin by segment as a percentage of total income from operations by segment to total net sales by segment and consolidated operating margin as a percentage of total consolidated income from operations to total consolidated net sales. The Company believes consolidated gross margin, operating margin and consolidated operating margin may be useful to investors in evaluating the profitability of the Company's segments and the Company on a consolidated basis. Overview Gibraltar Industries, Inc. (the "Company") is a leading manufacturer and provider of products and services for the renewable energy, residential, agtech, and infrastructure markets. The Company operates and reports its results in the following four reporting segments: • Renewables; • Residential; • Agtech; and • Infrastructure. The Company serves customers primarily in North America including renewable energy (solar) developers, home improvement retailers, wholesalers, distributors, institutional and commercial growers of food and plants, and contractors. At March 31, 2023, the Company operated 33 facilities, comprised of 25 manufacturing facilities, one distribution center, and seven offices, which are located in 15 states, Canada, China, and Japan. The Company's operational infrastructure provides the necessary scale to support regional and national customers in each of the Company's markets. Recent Trends The broader market dynamics over the past few years, have resulted in impacts to the Company, including material cost inflation, labor availability issues and logistics costs increases. The Company has also been impacted from supply constraints for materials and commodities used in its operations and from shortages in solar panels used by 17 Table of Contents the Company's customers in conjunction with the goods and services the Company provides. In certain instances these constraints have resulted in project delays, cost inflation and logistical delays. The Company continues to work with its customers and suppliers in this dynamic environment to better align pricing, understand the existing and potential future impacts to the supply chain, and make efforts to mitigate such impacts. The Company expects that some of these dynamics will continue in 2023 and could continue to have an impact on demand, material costs, labor and logistics. In June 2022, the Uyghur Forced Labor Prevention Act ("UFLPA") was enacted. The UFLPA requires traceability of components of imported goods to validate that the components are not sourced from areas in the Xinjiang region of China. This has caused solar panels to be held at the border awaiting a determination that the panels do not contain components from Xinjiang. While a few of the historically significant suppliers have begun to have panels cleared for importation, the clearance is still on a shipment-by-shipment basis, and formal documentation requirements have not yet been published. Some of the Company's larger customers have continued to shift sourcing to modules manufactured outside of China in efforts to clear U.S. customs more efficiently and ramp up the execution of solar projects. In December 2022, the U.S. Department of Commerce ("USDOC") announced its preliminary ruling regarding the circumvention of antidumping and countervailing duties (“AD/CVD”) on Chinese imports of solar panels produced in four other countries in Southeast Asia. Four of eight major manufacturers across the four countries investigated were found to have been circumventing the AD/CVD orders. The findings are preliminary and further investigation is occurring with a final determination scheduled for August 17, 2023. Independent of the DOC’s final determination, the Presidential Proclamation issued in June 2022 provides that duties will not be collected on the imports from the impacted countries until June 2024. This provides U.S. solar importers time to adjust supply chains to ensure compliance with U.S. law. As the timing and progress of many of our customers’ projects depend upon the supply of solar panels, our operating results have been and could be impacted by these actions. We continue to work with customers who are assessing their ability to source panels needed to complete projects. On August 16, 2022, the Inflation Reduction Act ("IRA") was signed into law. Among other things, the IRA provides for Investment Tax Credits ("ITC") for renewable energy. The IRA provides a 30% ITC for projects started prior January 29, 2023. Projects started on or after this date have the opportunity to claim the 30% rate only if the project is less than one megawatt or adheres to the new prevailing wage and apprenticeship requirements. Otherwise, these projects will default to a base rate of 6%. The IRA also provides the option to earn an additional 10% credit for domestic content, and separately, an additional 10% credit for siting a project in an “energy community.” Lastly, under the IRA, Manufacturers Tax Credits ("MTC") that support clean energy manufacturing were established and expanded, and are available to suppliers of certain, specific solar tracker components, including mechanical parts and battery storage, that are made in the U.S. Final guidance is pending and expected to be issued by the Department of Treasury over the course of 2023 for the domestic content, energy community, and MTC credits. The Company believes that these enhanced tax credits under the IRA will provide long-term certainty for the industry and should reduce policy driven demand swings for our products. We will work with our customers to maximize the tax credits available to them. Business Strategy The Company's mission is to make life better for people and the planet, fueled by advancing the disciplines of engineering, science, and technology. The Company is innovating to reshape critical markets in sustainable power, comfortable and efficient living, and productive growing throughout North America. Furthermore, the Company strives to create compounding and sustainable value for its stockholders and stakeholders with strong and relevant leadership positions in higher growth, profitable end markets focused on addressing some of the world's most challenging opportunities. The foundation of the Company's strategy is built on three core pillars: Business System, Portfolio Management, and Organization Development. 1. Business System reflects the necessary systems, processes, and management tools required to deliver consistent and continuous performance improvement, every day. The Company's business system is a critical enabler to grow, scale, and deliver its plans. The Company's focus is on deploying effective tools to drive growth, improve operating performance, and develop the organization utilizing 80/20 and lean quote-to-cash initiatives along with digital systems for speed, agility and responsiveness. The Business System pillar challenges existing operating paradigms, drives day-to-day performance, forces prioritization of resources, tests the Company's business models, and drives new product and services innovation. 2. Portfolio Management is focused on optimizing the Company’s business portfolio in higher growth markets with leadership positions while ensuring its financial capital and human resources are effectively and 18 Table of Contents efficiently deployed to deliver sustainable, profitable growth while increasing its relevance with customers and shaping its markets. In 2022, the Company acquired Quality Aluminum Products ("QAP") in the Residential segment and made the decision to divest its non-core Processing business within the Agtech segment to help achieve these objectives. 3. Organization Development drives the Company’s continuous focus on ensuring it has the right design and structure to scale the organization in order to execute the Company’s plans and meet commitments. The Company aspires to make its place of work the "Best Place to Work", where focus is on creating an environment for our people to have the best opportunity for success, continue to develop, grow and learn. At core of this pillar is the Company’s development process focused on helping employees reach their potential, improve performance, develop career roadmaps, identify ongoing education requirements, and respective succession plans. The Company believes doing so helps it attract and retain the best people to execute its business plans. The Company believes the key elements of the Company's strategy have, and will continue to, enable the Company to respond timely to changes in the end markets the Company serves, including the broader market dynamics experienced over the past two years. The Company has and expects to continue to examine the need for restructuring of the Company's operations, including consolidation of facilities, reducing overhead costs, curtailing investments in working capital, and managing the Company's business to generate incremental cash. The Company believes its strategy enables the Company to respond to volatility in commodity and other input costs and fluctuations in customer demand, along with striving to maintain and improve margins. The Company has used cash flows generated by these initiatives to minimize debt, improve the Company's liquidity position, invest in growth initiatives and return capital to the Company's shareholders through share repurchases. Overall, the Company continues to strive to achieve stronger financial results, make more efficient use of capital, and deliver higher stockholder returns. Recent Developments On December 8, 2022, the Company entered into a Credit Agreement (the "Credit Agreement"), and concurrently with entering into the Credit Agreement, the Company paid off all amounts owed under the Sixth Amended and Restated Credit Agreement dated as of January 24, 2019, which was terminated with no prepayment penalties. The Credit Agreement provides for a revolving credit facility and letters of credit in an aggregate amount equal to $400 million. The Company can request additional financing to increase the revolving credit facility to $700 million or enter into a term loan of up to $300 million subject to conditions set forth in the Credit Agreement. The Credit Agreement contains two financial covenants. As of March 31, 2023, the Company was in compliance with both financial covenants. The Credit Agreement terminates on December 8, 2027. On August 22, 2022, the Company purchased all the issued and outstanding membership interests of Quality Aluminum Products ("QAP"), a manufacturer of soffit, fascia, trim coil, rain carrying products and aluminum siding for an aggregate purchase price of $52.1 million. The acquisition of QAP was financed primarily through borrowings under the Company's revolving credit facility. The results of operations of QAP have been included in the Residential segment of the Company's consolidated financial statements from the date of acquisition. In May 2022, the Company's Board of Directors authorized a share repurchase program of up to $200 million of the Company's issued and outstanding common stock. The program has a duration of three years, ending May 2, 2025. Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations. Any such repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The repurchase program may be suspended or discontinued at any time at the Company's discretion. As of March 31, 2023, the Company has repurchased 2,150,903 shares for an aggregate price of $93.2 million under this repurchase program. 19 Table of Contents Results of Operations Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022 The following table sets forth selected results of operations data and its percentage of net sales for the three months ended March 31 (in thousands): 2023 2022 Net sales $ 293,267 100.0 % $ 317,865 100.0 % Cost of sales 216,338 73.8 % 253,021 79.6 % Gross profit 76,929 26.2 % 64,844 20.4 % Selling, general, and administrative expense 47,559 16.2 % 43,649 13.7 % Income from operations 29,370 10.0 % 21,195 6.7 % Interest expense 1,491 0.5 % 485 0.2 % Other (income) expense (397) (0.1) % 153 0.0 % Income before taxes 28,276 9.6 % 20,557 6.5 % Provision for income taxes 7,177 2.4 % 5,101 1.6 % Net income $ 21,099 7.2 % $ 15,456 4.9 % The following table sets forth the Company’s net sales by reportable segment for the three months ended March 31, (in thousands): Impact of 2023 2022 Total Change Acquisitions Portfolio Management Ongoing Operations Net sales: Renewables $ 59,205 $ 78,783 $ (19,578) $ — $ — $ (19,578) Residential 179,495 179,485 10 14,266 — (14,256) Agtech 35,852 42,428 (6,576) — 691 (7,267) Infrastructure 18,715 17,169 1,546 — — 1,546 Consolidated $ 293,267 $ 317,865 $ (24,598) $ 14,266 $ 691 $ (39,555) Consolidated net sales decreased by $24.6 million, or 7.7%, to $293.3 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. The 7.7% decrease in revenue was driven by a $39.6 million or 12.4% decrease in organic revenue, largely the result of a 14% volume decline, partially offset by a 1% increase in pricing to customers. Partially offsetting the year over year decrease were $14.3 million of revenues generated by QAP, which was acquired during the third quarter of 2022 and reported as part of the Company's Residential segment. Consolidated backlog decreased 18% to $360 million down from $437 million at the end of the prior year quarter. Net sales in the Company's Renewables segment decreased $19.6 million, or 24.9%, to $59.2 million for the three months ended March 31, 2023 compared to $78.8 million for the three months ended March 31, 2022. Revenue declined as the demand for solar panel installation continues to be impacted by panel importation challenges resulting from the UFLPA, which was implemented in June 2022. Additionally, adverse winter weather conditions experienced in the current year quarter impacted the scheduling of projects. As a result, backlog decreased 20% from the prior year, however, the Company expects backlog to improve once there is better understanding of documentary compliance requirements relative to the UFLPA. Net sales in the Company's Residential segment were flat at $179.5 million for both the three months ended March 31, 2023 and 2022, respectively. The positive impact of participation gains along with $14.3 million of sales generated by QAP, acquired in the third quarter of 2022, offset headwinds of channel inventory correction, the market's return to normal seasonal demand, and adverse winter weather in key regions of the U.S. Net sales in the Company's Agtech segment decreased 15.3%, or $6.6 million, to $35.9 million for the three months ended March 31, 2023 compared to $42.4 million for the three months ended March 31, 2022. Revenue declined in 20 Table of Contents the Company's produce businesses as customers re-scope and re-prioritize project launch of fruit and vegetable growing facilities. While the active project pipeline continues to grow, backlog decreased 32% year over year. Net sales in the Company's Infrastructure segment increased 8.7%, or $1.5 million, to $18.7 million for the three months ended March 31, 2023 compared to $17.2 million for the three months ended March 31, 2022. The increase in revenue was due to continued solid market demand, which also resulted in an 38% increase in backlog year over year. Management expects continued positive momentum from increased infrastructure spending related to the Infrastructure Investment and Jobs Act, and ongoing efforts to increase market participation. The Company's consolidated gross margin increased to 26.2% for the three months ended March 31, 2023 compared to 20.4% for the three months ended March 31, 2022. The increase was driven by business mix, field operations productivity and improvement in supply chain management and efficiencies along with continuing progress in the Company's business operating system. Selling, general, and administrative ("SG&A") expenses increased by $3.9 million, or 9.0% to $47.6 million for the three months ended March 31, 2023 compared to $43.6 million for the three months ended March 31, 2022. The $3.9 million increase was the combined result of higher performance-based compensation expense as compared to the prior year, largely the result of equity-based awards in the Company's deferred compensation plan that are valued based on its 200-day average stock price, along with incremental SG&A expenses incurred by QAP, acquired in the third quarter of 2022. SG&A expenses as a percentage of net sales increased to 16.2% for the three months ended March 31, 2023 compared to 13.7% for the three months ended March 31, 2022. The following table sets forth the Company’s income from operations and income from operations as a percentage of net sales by reportable segment for the three months ended March 31, (in thousands): Impact of 2023 2022 Total Change Portfolio Management Ongoing Operations Income from operations: Renewables $ 2,269 3.8 % $ (6,984) (8.9) % $ 9,253 $ — $ 9,253 Residential 29,509 16.4 % 33,435 18.6 % (3,926) — (3,926) Agtech 2,330 6.5 % 31 0.1 % 2,299 1,890 409 Infrastructure 2,714 14.5 % 1,181 6.9 % 1,533 — 1,533 Unallocated Corporate Expenses (7,452) (2.5) % (6,468) (2.0) % (984) — (984) Consolidated income from operations $ 29,370 10.0 % $ 21,195 6.7 % $ 8,175 $ 1,890 $ 6,285 The Renewables segment generated an operating margin of 3.8% in the current year quarter compared to (8.9)% in the prior year quarter. The increase in operating margin was driven by field operations productivity and improved supply chain management that offset lower volumes, along with restructuring costs recorded in the prior year quarter. The Residential segment generated an operating margin of 16.4% in the current year quarter compared to 18.6% in the prior year quarter. The decrease in operating margin was the result of expected compression in price to material cost alignment and the anticipated lower margins from the Company's recent acquisition of QAP. The Company expects margins to improve as seasonal volume accelerates, price / material cost are better aligned, and QAP integration benefits are realized. The Agtech segment generated an operating margin of 6.5% in the current year quarter compared to 0.1% in the prior year quarter. Operating margin improved year over year, the result of business mix, improvement in its business operating system, along with supply chain productivity and efficiency improvement. The Infrastructure segment generated an operating margin of 14.5% during the three months ended March 31, 2023 compared to 6.9% during the three months ended March 31, 2022. The margin improved year over year driven by strong operating execution, volume leverage, and supply chain productivity. Unallocated corporate expenses increased $1.0 million from $6.5 million during the three months ended March 31, 2022 to $7.5 million during the three months ended March 31, 2023. The increase in expense was primarily the 21 Table of Contents result of higher performance-based compensation expense for equity-based awards in the Company's deferred compensation plan that are valued based on its 200-day average stock price as compared to the prior year quarter. Interest expense increased year over year with $1.5 million for the three months ended March 31, 2023 compared to $0.5 million for the three months ended March 31, 2022. The increase in expense was due to both higher interest rates compared to the prior year quarter along with higher outstanding balances on the Company's revolving credit facility during the quarter. The outstanding balances on the Company's revolving credit facility were $49.9 million and $42.4 million as of March 31, 2023, and 2022, respectively. The Company recorded other income of $0.4 million for the three months ended March 31, 2023, compared to other expense of $0.2 million recorded for the three months ended March 31, 2022. The change year over year is primarily the result of foreign currency translation fluctuations. The Company recognized a provision for income taxes of $7.2 million and $5.1 million, with effective tax rates of 25.4% and 24.8% for the three months ended March 31, 2023, and 2022, respectively. The effective tax rate for the three months ended March 31, 2023, and 2022, respectively, was greater than the U.S. federal statutory rate of 21% due to state taxes and nondeductible permanent differences partially offset by favorable discrete items. Liquidity and Capital Resources The following table sets forth the Company's liquidity position as of (in thousands): March 31, 2023 December 31, 2022 Cash and cash equivalents $ 7,497 $ 17,608 Availability on revolving credit facility 343,655 304,505 $ 351,152 $ 322,113 Sources of Liquidity The Company's sources of liquidity are comprised of cash on hand and available borrowing capacity provided under the Company's Credit Agreement (the "Credit Agreement"), entered into on December 8, 2022. This Credit Agreement replaced and paid off all amounts owed under the Sixth Amended and Restated Credit Agreement dated as of January 24, 2019. The Credit Agreement maintains similar capacity as the prior agreement in which it 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 Company believes that these sources provide the Company with ample liquidity and capital resources to invest in operational excellence, growth initiatives and the development of the organization. The Company has been able to weather the economic impacts of the broader market dynamics, including the inflationary cost environment, while continuing to make investments that support the Company's strategy. The Company continues to remain focused on managing its working capital, closely monitoring customer credit and collection activities, and working to extend payment terms with its vendors. The Company believes its liquidity, together with the cash expected to be generated from operations, should be sufficient to fund working capital needs and growth initiatives for the foreseeable future. The Company uses the Credit Agreement to provide liquidity and capital resources primarily for the Company's U.S. operations. Generally, the Company's foreign operations have generated cash flow from operations sufficient to invest in working capital and fund their capital improvements. As of March 31, 2023 and December 31, 2022, the Company's foreign subsidiaries held $7.5 million and $15.2 million of cash, respectively. Outstanding balances on the Company's revolving credit facility under the Company's Credit Agreement accrue interest at a rate, at the Company's option, equal to the applicable margin plus (a) a base rate, (b) a daily simple secured overnight financing rate ("SOFR"), (c) a term SOFR rate, or (d) for certain foreign currencies, a foreign currency rate. See Note 8 to the Company's consolidated financial statements in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for further information on the Company’s Credit Agreement. Uses of Cash / Cash Requirements The Company's material short-term cash requirements primarily include accounts payable, certain employee and retiree benefit-related obligations, operating lease obligations, interest payments on outstanding debt, repayments 22 Table of Contents of borrowing on its revolving credit facility, capital expenditures, and other purchase obligations originating in the normal course of business for inventory purchase orders and contractual service agreements. The Company's principal capital requirements are to fund its operations' working capital and capital improvements, as well as provide capital for acquisitions and to strategically allocate capital through repurchases of Company stock. The Company will continue to invest in growth opportunities as appropriate while focusing on working capital efficiency and profit improvement opportunities to minimize the cash invested to operate its business. The Company intends to fund its cash requirements through cash generated from operations and, as necessary, from the availability on its revolving credit facility. In May 2022, the Company's Board of Directors authorized a share repurchase program of up to $200 million of the Company's issued and outstanding common stock. The program has a duration of three years, ending May 2, 2025. Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations. Any such repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The repurchase program may be suspended or discontinued at any time at the Company's discretion. As of March 31, 2023, the Company has repurchased 2,150,903 shares for an aggregate price of $93.2 million under this repurchase program, including 153,537 shares repurchased for an aggregate price of $7.4 million during the three months ended March 31, 2023. Over the long-term, the Company expects that future investments, including strategic business opportunities such as acquisitions, may be financed through a number of sources, including internally available cash, availability under the Credit Agreement, new debt financing, the issuance of equity securities, or any combination of the aforementioned. All potential acquisitions are evaluated based on the Company's acquisition strategy, which includes the enhancement of the Company's existing products, operations, and/or capabilities, as well as expanding the Company's access to new products, markets, and customers, with the goal of creating compounding and sustainable stockholder value. These expectations are forward-looking statements based upon currently available information and may change if conditions in the credit and equity markets deteriorate or other circumstances change. To the extent that operating cash flows are lower than current levels, or sources of financing are not available or not available at acceptable terms, the Company's future liquidity may be adversely affected. Except as disclosed above, there have been no material changes in the Company's cash requirements since December 31, 2022, the end of fiscal year 2022. See Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Cash Flows The following table sets forth selected cash flow data for the three months ended March 31, (in thousands): 2023 2022 Cash provided by (used in): Operating activities $ 38,045 $ (7,754) Investing activities (1,636) (4,402) Financing activities (46,509) 15,039 Effect of foreign exchange rate changes (11) (159) Net (decrease) increase in cash and cash equivalents $ (10,111) $ 2,724 Operating Activities Net cash provided by operating activities for the three months ended March 31, 2023 of $38.0 million consisted of net income of $21.1 million, non-cash net charges totaling $9.3 million, which include depreciation, amortization, stock-based compensation, exit activity recoveries and other non-cash charges, and $7.6 million of cash generated from working capital and other net assets. The cash generated from working capital and other net assets was due to an increase in accounts payable as a result of the timing of purchases and vendor payments, offset by an increase in accounts receivable as revenues increased in the latter part of the quarter. Net cash used in operating activities for the three months ended March 31, 2022 of $7.7 million consisted of income from continuing operations of $15.5 million and non-cash net charges totaling $10.3 million, which include 23 Table of Contents depreciation, amortization, stock compensation, exit activity costs and other non-cash charges, offset by a $33.5 million investment in working capital and other net assets. The investment in working capital and other net assets was due to increases in inventory as a result of provisioning for potential supply chain disruptions and raw material and freight costs, along with an increase in accounts receivable as the result of seasonal increases in demand and a decrease in accounts payable as the result of timing of vendor payments. This was offset by an increase in accrued expenses and other non-current liabilities due to an increase in unbilled project revenues. Investing Activities Net cash used in investing activities for the three months ended March 31, 2023 of $1.6 million was primarily due to capital expenditures of $2.2 million, offset by receipt of the $0.6 million final working capital settlement resulting from the 2022 acquisition of QAP. Net cash used in investing activities for the three months ended March 31, 2022 of $4.4 million was primarily due to capital expenditures of $4.4 million. Financing Activities Net cash used in financing activities for the three months ended March 31, 2022 of $46.5 million consisted of net long-term debt payments of $39.0 million and $7.5 million of common stock repurchases. Net long-term debt payments consisted of $50.0 million in long-term debt payments, offset by $11.0 million in proceeds from borrowing on the Company's long-term debt credit facility. The Company repurchased 153,537 shares under the Company's authorized share repurchase program which totaled $5.6 million paid during the three months ended March 31, 2023 with the balance repurchased common stock of $1.9 million related to the net settlement of tax obligations for participants in the Company's equity incentive plans. Net cash provided by financing activities for the three months ended March 31, 2022 of $15.0 million was the result of $47.5 million in proceeds from borrowing on the Company's long-term credit facility, offset by $29.0 million in payments on long-term debt and $3.5 million of common stock repurchases related to the net settlement of tax obligations for participants in the Company's equity incentive plans. Critical Accounting Estimates There have been no material changes to the Company's critical accounting estimates during the three months ended March 31, 2023 from those disclosed in the consolidated financial statements and accompanying notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Recent Accounting Pronouncements See Note 2 to the Company's consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on recent accounting pronouncements.