What changed in this filing

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Item 1. Financial Statements

2024-05-01 compared with 2023-11-02 · 78 added, 233 removed, 299 unchanged (51% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net sales $ 292,506 $ 293,267

3 unchanged sentences

Income from operations 31,736 29,370

Interest expense 417 1,048 3,216 2,189

Other (income) expense ( 1,040 ) 363 ( 1,946 ) 797

Interest (income) expense ( 750 ) 1,491

Other income ( 1,021 ) ( 397 )

Income before taxes 33,507 28,276

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income $ 24,946 $ 21,099

Other comprehensive (loss) income:

Foreign currency translation adjustment ( 1,376 ) ( 3,568 ) ( 2,075 ) ( 6,993 )

Postretirement benefit plan adjustments, net of tax 8 12 24 37

Other comprehensive loss:

Foreign currency translation adjustment ( 964 ) ( 107 )

Total comprehensive income $ 23,982 $ 20,992

3 unchanged sentences

(in thousands, except per share data)

September 30,

2024 December 31,

18 unchanged sentences

Total current liabilities 263,599 225,578

Long-term debt — 88,762

Deferred income taxes 57,106 57,103

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(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash Flows from Operating Activities

3 unchanged sentences

Stock compensation expense 2,639 1,594

Exit activity costs, non-cash 572 1,427

Provision for deferred income taxes 179 181

Exit activity recoveries, non-cash ( 72 ) ( 63 )

Provision for (benefit of) deferred income taxes — ( 51 )

Other, net 1,691 1,023

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Cash Flows from Investing Activities

Acquisitions, net of cash acquired ( 9,863 ) ( 51,621 )

Purchases of property, plant, and equipment, net ( 4,366 ) ( 2,190 )

Acquisitions, net of cash acquired — 554

Net cash used in investing activities ( 4,366 ) ( 1,636 )

3 unchanged sentences

Purchase of common stock at market prices ( 1,434 ) ( 7,509 )

Net cash (used in) provided by financing activities ( 120,182 ) 39,675

Net cash used in financing activities ( 1,434 ) ( 46,509 )

Effect of exchange rate changes on cash ( 142 ) ( 11 )

Net increase in cash and cash equivalents 67,857 9,070

Net increase (decrease) in cash and cash equivalents 47,239 ( 10,111 )

Cash and cash equivalents at beginning of year 99,426 17,608

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Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury Stock Total

Stockholders’

Shares Amount Shares Amount

Balance at June 30, 2023 34,194 $ 342 $ 327,927 $ 679,800 $ ( 4,115 ) 3,770 $ ( 153,644 ) $ 850,310

Net income — — — 39,277 — — — 39,277

Foreign currency translation adjustment — — — — ( 1,376 ) — — ( 1,376 )

Postretirement benefit plan adjustments, net of taxes of $ 3

— — — — 8 — — 8

Stock compensation expense — — 2,201 — — — — 2,201

Net settlement of restricted stock units 18 — — — — 6 ( 412 ) ( 412 )

Excise tax on repurchase of common stock — — — — — — ( 159 ) ( 159 )

Balance at September 30, 2023 34,212 $ 342 $ 330,128 $ 719,077 $ ( 5,483 ) 3,776 $ ( 154,215 ) $ 889,849

Balance at June 30, 2022 33,989 $ 340 $ 318,664 $ 590,335 $ ( 3,213 ) 2,374 $ ( 88,848 ) $ 817,278

Net income — — — 34,295 — — — 34,295

Foreign currency translation adjustment — — — — ( 3,568 ) — — ( 3,568 )

Postretirement benefit plan adjustments, net of taxes of $ 5

— — — — 12 — — 12

Stock compensation expense — — 1,764 — — — — 1,764

Net settlement of restricted stock units 45 — — — — 18 ( 749 ) ( 749 )

Common stock repurchased under stock repurchase program — — — — — 138 ( 5,541 ) ( 5,541 )

Balance at September 30, 2022 34,034 $ 340 $ 320,428 $ 624,630 $ ( 6,769 ) 2,530 $ ( 95,138 ) $ 843,491

See accompanying notes to consolidated financial statements.

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

Common Stock Additional

Paid-In Capital Retained Earnings Accumulated

Comprehensive (Loss) Income Treasury Stock Total

Comprehensive Loss Treasury Stock Total

Stockholders’ Equity

3 unchanged sentences

Foreign currency translation adjustment — — — — ( 964 ) — — ( 964 )

Postretirement benefit plan adjustments, net of taxes of $ 9

— — — — 24 — — 24

Stock compensation expense — — 2,639 — — — — 2,639

Net settlement of restricted stock units 47 1 ( 1 ) — — 19 ( 1,434 ) ( 1,434 )

Awards of common stock 8 — — — — — — —

Excise tax on repurchase of common stock — — — — — — ( 159 ) ( 159 )

Common stock repurchased under stock repurchase program — — — — — 521 ( 25,181 ) ( 25,181 )

Balance at September 30, 2023 34,212 $ 342 $ 330,128 $ 719,077 $ ( 5,483 ) 3,776 $ ( 154,215 ) $ 889,849

Balance at March 31, 2024 34,266 $ 343 $ 335,259 $ 763,457 $ ( 3,078 ) 3,797 $ ( 155,796 ) $ 940,185

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

1 unchanged sentence

Foreign currency translation adjustment — — — — ( 107 ) — — ( 107 )

Postretirement benefit plan adjustments, net of taxes of $ 15

— — — — 37 — — 37

Stock compensation expense — — 1,594 — — — — 1,594

Net settlement of restricted stock units 88 1 ( 1 ) — — 36 ( 1,929 ) ( 1,929 )

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

Common stock repurchased under stock repurchase program — — — — — 154 ( 7,369 ) ( 7,369 )

Balance at September 30, 2022 34,034 $ 340 $ 320,428 $ 624,630 $ ( 6,769 ) 2,530 $ ( 95,138 ) $ 843,491

Balance at March 31, 2023 34,148 $ 341 $ 324,466 $ 649,077 $ ( 3,539 ) 3,389 $ ( 134,958 ) $ 835,387

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Gibraltar Industries, Inc.

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Recent Accounting Pronouncements

The Company considers the applicability and impact of Accounting Standards Updates ("ASUs"), and ASUs effective in or after 2023, respectively, which were assessed and determined to be either not applicable, or had or are expected to have minimal impact on the Company's consolidated financial statements and related disclosures.

The Company evaluated all recent Accounting Standard Updates, including those that are currently effective in or after 2024, and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company.

There have been no material changes from the recent accounting pronouncements previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

(2) ACCOUNTS RECEIVABLE, NET

Accounts receivable consisted of the following (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Trade accounts receivable $ 194,343 $ 178,087

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Refer to Note 3 "Revenue" concerning the Company's costs in excess of billings.

The following table provides a roll-forward of the allowance for credit losses, for the nine month period ended September 30, 2023, that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected (in thousands):

The following table provides a roll-forward of the allowance for credit losses, for the three month period ended March 31, 2024, that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected (in thousands):

Beginning balance as of January 1, 2024 $ 5,572

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Accounts written off against allowance and other adjustments ( 14 )

Ending balance as of September 30, 2023 $ 4,069

Ending balance as of March 31, 2024 $ 5,578

Sales includes revenue from contracts with customers for designing, engineering, manufacturing and installation of solar racking systems;

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centralized mail systems and electronic package solutions;

retractable awnings;

gutter guards;

rain dispersion products;

trims and flashings and other accessories;

retractable awnings;

gutter guards;

designing, engineering, manufacturing and installation of greenhouses;

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Refer to Note 13 "Segment Information" for additional information related to revenue recognized by timing of transfer of control by reportable segment.

As of September 30, 2023, the Company's remaining performance obligations are part of contracts that have an original expected duration of one year or less.

As of March 31, 2024, the Company's remaining performance obligations are part of contracts that have an original expected duration of one year or less.

Contract assets consist of costs in excess of billings presented within accounts receivable in the Company's consolidated balance sheets.

Contract liabilities consist of billings in excess of cost, classified as current liabilities, and unearned revenue, presented within accrued expenses, in the Company's consolidated balance sheets.

Unearned revenue as of September 30, 2023 and December 31, 2022 was $ 7.2 million and $ 4.6 million, respectively.

Revenue recognized during the nine months ended September 30, 2023 and 2022 that was in contract liabilities at the beginning of the respective periods was $ 32.2 million and $ 41.2 million, respectively.

(5) INVENTORIES

Unearned revenue as of March 31, 2024 and December 31, 2023 was $ 7.7 million and $ 3.9 million, respectively.

Revenue recognized during the three months ended March 31, 2024 and 2023 that was in contract liabilities at the beginning of the respective periods was $ 27.7 million and $ 18.7 million, respectively.

(4) INVENTORIES, NET

Inventories consisted of the following (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Raw material $ 84,524 $ 77,489

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The results of this company 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 this acquisition was $ 10.4 million, which includes a preliminary working capital adjustment and certain other adjustments provided for in the asset 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 $ 4.1 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 2024.

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 $ 889

Property, plant and equipment 195

Acquired intangible assets 5,200

Goodwill 4,133

Fair value of purchase consideration $ 10,417

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

Fair Value Weighted-Average Amortization Period

Trademarks $ 300 2 years

Customer relationships 4,900 12 years

Total $ 5,200

On August 22, 2022, the Company purchased all the issued and outstanding membership interests of Quality Aluminum Products ("QAP"), a manufacturer of aluminum and steel products including soffit, fascia, trim coil, rain carrying products and aluminum siding.

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

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

The purchase consideration for this acquisition was $ 10.4 million, which includes a working capital adjustment and certain other adjustments provided for in the asset purchase agreement.

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

The Company has completed the process to confirm the existence, condition, and completeness of the assets acquired and liabilities assumed to establish fair value of such assets and liabilities and to determine the amount of goodwill to be recognized as of the date of acquisition.

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

The excess consideration was recorded as goodwill and approximated $ 3.0 million, all of which is deductible for tax purposes.

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Fair Value Weighted-Average Amortization Period

Trademarks $ 2,800 Indefinite

Trademarks $ 250 3 years

Customer relationships 6,060 12 years

1 unchanged sentence

In determining the allocation of the purchase price to the assets acquired and liabilities assumed, the Company uses all available information to make fair value determinations using Level 3 unobservable inputs in which little or no market data exists, and therefore, engages independent valuation specialists to assist in the fair value determination of the acquired long-lived assets.

The acquisition of the privately held Utah-based company and the acquisition of QAP were financed primarily through borrowings under the Company's revolving credit facility.

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.

The Company also incurred certain acquisition-related costs comprised of legal and consulting fees within selling, general, and administrative ("SG&A") expense.

The acquisition-related costs consisted of the following for the three and nine months ended September 30 (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Cost of sales $ 12 $ 476 $ 12 $ 476

Selling, general and administrative costs 224 522 245 529

Total acquisition related costs $ 236 $ 998 $ 257 $ 1,005

The acquisition of the privately held Utah-based company was financed primarily through borrowings under the Company's revolving credit facility.

(6) GOODWILL AND RELATED INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the nine months ended September 30, 2023 are as follows (in thousands):

The changes in the carrying amount of goodwill for the three months ended March 31, 2024 are as follows (in thousands):

Renewables Residential Agtech Infrastructure Total

Balance at December 31, 2023 $ 184,230 $ 213,576 $ 83,899 $ 31,678 $ 513,383

Acquired goodwill — 4,133 — — 4,133

Adjustments to prior year acquisitions — ( 1,110 ) — — ( 1,110 )

Foreign currency translation — — ( 476 ) — ( 476 )

Balance at September 30, 2023 $ 186,757 $ 213,576 $ 83,333 $ 31,678 $ 515,344

Goodwill is recognized net of accumulated impairment losses of $ 133.2 million as of September 30, 2023 and December 31, 2022, respectively.

Balance at March 31, 2024 $ 184,230 $ 212,466 $ 83,423 $ 31,678 $ 511,797

Goodwill is recognized net of accumulated impairment losses of $ 133.2 million as of March 31, 2024 and December 31, 2023, respectively.

The Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing.

The Company determined that no triggering event had occurred as of September 30, 2023 which would require an interim impairment test to be performed.

The Company determined that no triggering event had occurred as of March 31, 2024 which would require an interim impairment test to be performed.

Acquired Intangible Assets

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Amount Accumulated

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Total acquired intangible assets $ 188,427 $ 64,170 $ 205,231 $ 79,251

The following table summarizes the acquired intangible asset amortization expense for the three and nine months ended September 30, (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

The following table summarizes the acquired intangible asset amortization expense for the three months ended March 31, (in thousands):

Amortization expense $ 2,718 $ 2,766

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(7) LONG-TERM DEBT

The Company had no outstanding debt as of September 30, 2023 and unamortized debt issuance costs, included in other assets on the consolidated balance sheet, were $ 1.9 million.

As of December 31, 2022, the Company's total outstanding debt was $ 88.8 million, which included $ 91.0 million on the Company's revolving credit facility net of $ 2.2 million in unamortized debt issuance costs.

The Company had no outstanding debt as of March 31, 2024 and December 31, 2023, respectively.

Unamortized debt issuance costs, included in other assets on the consolidated balance sheets, as of March 31, 2024 and December 31, 2023 were $ 1.7 million and $ 1.7 million, respectively.

Revolving Credit Facility

On December 8, 2022, the Company entered into a Credit Agreement (the "Credit Agreement"), and concurrently with entering into the Credit Agreement, the Company paid off all amounts owed under the Sixth Amended and Restated Credit Agreement dated as of January 24, 2019.

The Credit Agreement provides for a revolving credit facility and letters of credit in an aggregate amount equal to $ 400 million.

On December 8, 2022, the Company entered into a Credit Agreement (the "Credit Agreement") which 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 September 30, 2023, the Company was in compliance with all financial covenants.

As of March 31, 2024, the Company was in compliance with all financial covenants.

The Credit Agreement terminates on December 8, 2027.

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Capital distributions are subject to certain Total Net Leverage Ratio requirements and capped by an annual aggregate limit under the Credit Agreement.

For the three and nine months ended September 30, 2022, interest rates on the revolving credit facility under the Sixth Amended and Restated Credit Agreement were based on LIBOR plus an additional margin that ranged from 1.125 % to 2.00 %.

In addition, the revolving credit facility under the Sixth Amended and Restated Credit Agreement was subject to an undrawn commitment fee ranging between 0.15 % and 0.25 % based on the Total Leverage Ratio and the daily average undrawn balance.

Standby letters of credit of $ 3.9 million have been issued under the Credit Agreement to third parties on behalf of the Company as of September 30, 2023.

Standby letters of credit of $ 3.7 million have been issued under the Credit Agreement to third parties on behalf of the Company as of March 31, 2024.

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

The Company had $ 396.1 million and $ 304.5 million of availability under the revolving credit facility as of September 30, 2023 and December 31, 2022, respectively.

(9) ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following tables summarize the cumulative balance of each component of accumulated other comprehensive loss, net of tax, for the three months ended September 30, (in thousands):

Adjustment Postretirement

Adjustments Total

Expense Accumulated

Comprehensive

Balance at June 30, 2023 $ ( 4,081 ) $ ( 373 ) $ ( 4,454 ) $ ( 339 ) $ ( 4,115 )

Postretirement health care plan adjustments — 11 11 3 8

Foreign currency translation adjustment ( 1,376 ) — ( 1,376 ) — ( 1,376 )

Balance at September 30, 2023 $ ( 5,457 ) $ ( 362 ) $ ( 5,819 ) $ ( 336 ) $ ( 5,483 )

Balance at June 30, 2022 $ ( 1,785 ) $ ( 2,212 ) $ ( 3,997 ) $ ( 784 ) $ ( 3,213 )

Postretirement health care plan adjustments — 17 17 5 12

Foreign currency translation adjustment ( 3,568 ) — ( 3,568 ) — ( 3,568 )

Balance at September 30, 2022 $ ( 5,353 ) $ ( 2,195 ) $ ( 7,548 ) $ ( 779 ) $ ( 6,769 )

The following tables summarize the cumulative balance of each component of accumulated other comprehensive (loss) income, net of tax, for the nine months ended September 30, (in thousands):

Adjustment Postretirement

Adjustments Total

Expense Accumulated Other

Comprehensive

(Loss) Income

Balance at December 31, 2022 $ ( 3,382 ) $ ( 395 ) $ ( 3,777 ) $ ( 345 ) $ ( 3,432 )

Postretirement health care plan adjustments — 33 33 9 24

Foreign currency translation adjustment ( 2,075 ) — ( 2,075 ) — ( 2,075 )

Balance at September 30, 2023 $ ( 5,457 ) $ ( 362 ) $ ( 5,819 ) $ ( 336 ) $ ( 5,483 )

Balance at December 31, 2021 $ 1,640 $ ( 2,247 ) $ ( 607 ) $ ( 794 ) $ 187

Postretirement health care plan adjustments — 52 52 15 37

Foreign currency translation adjustment ( 6,993 ) — ( 6,993 ) — ( 6,993 )

Balance at September 30, 2022 $ ( 5,353 ) $ ( 2,195 ) $ ( 7,548 ) $ ( 779 ) $ ( 6,769 )

The realized adjustments relating to the Company’s postretirement health care costs were reclassified from accumulated other comprehensive loss and included in other expense in the consolidated statements of income.

The Company had $ 396.3 million and $ 396.1 million of availability under the revolving credit facility as of March 31, 2024 and December 31, 2023, respectively.

(8) EQUITY-BASED COMPENSATION

On May 3, 2023, the stockholders of the Company approved the adoption of the Gibraltar Industries, Inc.

Amended and Restated 2018 Equity Incentive Plan (the "Amended 2018 Plan") which increases the total number of shares available for issuance by the Company from 1,000,000 shares to 1,550,000 shares.

In addition, 81,707 shares that were unissued and available for grant under the Gibraltar Industries, Inc.

2015 Equity Incentive Plan (the "2015 Plan") were consolidated with the Amended 2018 Plan.

No further grants will be made under the 2015 Plan.

Consistent with the Gibraltar Industries, Inc.

2018 Equity Incentive Plan and the 2015 Plan, the Amended 2018 Plan allows 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.

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.

Amended and Restated 2018 Equity Incentive Plan (the "Amended 2018 Plan") which includes a total of 1,631,707 shares available for issuance.

The Amended 2018 Plan allows 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.

The Gibraltar Industries, Inc.

Amended and Restated 2016 Stock Plan for Non-Employee Directors ("Non-Employee Directors Plan") which includes 200,000 shares available for issuance, 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.

Equity-Based Awards - Settled in Stock

The following table sets forth the number of equity-based awards granted during the nine months ended September 30, which will convert to shares upon vesting, along with the weighted average grant date fair values:

The following table provides the number of stock units granted during the three months ended March 31, along with the weighted-average grant-date fair value of each award:

Awards Number of

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Restricted stock units 29,671 $ 77.70 46,646 $ 53.44

Deferred stock units 6,351 $ 54.33 2,460 $ 42.69

Common shares 8,468 $ 54.33 15,652 $ 42.49

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

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The Company's PSUs with a financial performance condition are based on the Company’s return on invested capital (“ROIC”) over a one-year performance period.

(2) PSUs granted in the first quarter of 2022 includes 5,653 units that were forfeited in the first quarter of 2023 and 62,201 units that will be converted to shares and issued to recipients in the first quarter of 2025 at 60.5 % of the target amount granted, based on the Company's actual ROIC compared to ROIC target for the performance period ended December 31, 2022.

(2) PSUs granted in the first quarter of 2023 includes 7,825 units that were forfeited in the third quarter of 2023 and 147,572 units that will be converted to shares and issued to recipients in the first quarter of 2026, representing 200.0 % of the target amount granted and not subsequently forfeited, based on the Company's actual ROIC compared to ROIC target for the performance period ended December 31, 2023.

Equity-Based Awards - Settled in Cash

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The MSPP provides participants the ability to defer a portion of their compensation, convertible to unrestricted investments, restricted stock units, or a combination of both, or defer a portion of their directors’ fees, convertible to restricted stock units.

Employees eligible to defer a portion of their compensation also receive a company-matching award in restricted stock units equal to a percentage of their compensation.

The deferrals and related company match are credited to an account that represents a share-based liability.

Employees eligible to defer a portion of their compensation also receive a company-matching award in restricted stock units equal to a percentage of their deferred compensation.

The deferrals and related company match are credited to an account that contains a share-based liability.

The portion of the account deferred to unrestricted investments is measured at fair market value of the unrestricted investments, and the portion of the account deferred to restricted stock units and company-matching restricted stock units is measured at a 200 -day average of the Company’s stock price.

The account will be converted to and settled in cash payable to participants upon retirement or a termination of their service to the Company.

Total MSPP liabilities recorded on the consolidated balance sheet as of September 30, 2023 were $ 18.3 million, of which $ 2.0 million was included in current accrued expenses and $ 16.3 million was included in non-current liabilities.

Total MSPP liabilities recorded on the consolidated balance sheet as of March 31, 2024 were $ 23.0 million, of which $ 2.6 million was included in current accrued expenses and $ 20.4 million was included in non-current liabilities.

Total MSPP liabilities recorded on the consolidated balance sheet as of December 31, 2023 were $ 20.0 million, of which $ 2.0 million was included in current accrued expenses and $ 18.0 million was included in non-current liabilities.

The value of the restricted stock units within the MSPP liabilities was $ 15.9 million and $ 13.4 million at September 30, 2023 and December 31, 2022, respectively.

The following table provides the number of restricted stock units credited to active participant accounts and the payments made with respect to MSPP liabilities during the nine months ended September 30,:

The value of the restricted stock units within the MSPP liabilities was $ 20.0 million and $ 17.3 million at March 31, 2024 and December 31, 2023, respectively.

The following table provides the number of restricted stock units credited to active participant accounts and the payments made with respect to MSPP liabilities during the three months ended March 31,:

Restricted stock units credited 40,538 41,743

MSPP liabilities paid (in thousands) $ 2,023 $ 2,147

(9) PRODUCT WARRANTIES

The Company generally warrants that its products will be free from material defects in workmanship and materials.

Warranty reserve estimates are based on management’s judgment, considering such factors as historical experience, anticipated rates of claims, and other available information.

Management reviews and adjusts these estimates, if necessary, based on the differences between actual experience and historical estimates.

The reserve for product warranties is presented within accrued expenses on the Company’s consolidated balance sheets.

Activity in the product warranties is summarized as follows (in thousands):

Three Months Ended

Beginning balance $ 9,139 $ 6,251

Provisions for product warranties, net of reductions 929 ( 88 )

Ending balance $ 10,068 $ 6,163

(10) EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS

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These initiatives have resulted in the identification of low-volume, low margin, internally-produced products which have been or will be outsourced or discontinued, the simplification of processes, the sale and exiting of less profitable businesses or product lines, and a reduction in the Company's manufacturing footprint.

Exit activity costs (recoveries) were incurred during the nine months ended September 30, 2023 and 2022 which related to moving and closing costs, severance, and contract terminations, along with asset impairment charges (recoveries) related to the write-down of inventory and other charges associated with discontinued product lines, as a result of process simplification initiatives.

In conjunction with these initiatives, the Company recorded costs during the nine months ended September 30, 2023 associated with the final closure and sale of a facility closed during the fourth quarter of 2022.

During the nine months ended September 30, 2022, the Company exited a facility, relocating to a new one , and separately, closed one other facility as a result of these initiatives.

The following tables set forth the exit activity costs (recoveries) and asset impairment charges (recoveries) incurred by segment during the three and nine months ended September 30, related to the restructuring activities described above (in thousands):

Three Months Ended September 30,

Exit Activity Asset Impairment Total Exit Activity Asset Impairment Total

Renewables $ 4,389 $ ( 59 ) $ 4,330 $ ( 44 ) $ — $ ( 44 )

Residential 22 654 676 — 12 12

Agtech 5 — 5 15 217 232

Infrastructure — — — — — —

Corporate ( 33 ) — ( 33 ) 11 — 11

Total $ 4,383 $ 595 $ 4,978 $ ( 18 ) $ 229 $ 211

Nine Months Ended September 30,

As a result of process simplification initiatives, the Company has incurred exit activity costs related to moving and closing costs and severance, along with asset impairment recoveries related to the write-down of inventory and other charges associated with discontinued product lines.

Additionally, the Company has incurred the aforementioned costs resulting from the sale and/or closure of facilities including costs recorded during the three months ended March 31, 2023.

The following tables set forth the exit activity costs and asset impairment recoveries incurred by segment during the three months ended March 31, related to the restructuring activities described above (in thousands):

Three Months Ended March 31,

Exit Activity Asset Impairment Total Exit Activity Asset Impairment Total

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Total $ 407 $ ( 72 ) $ 335 $ 675 $ ( 63 ) $ 612

The following table provides a summary of where the exit activity costs and asset impairment charges were recorded in the consolidated statements of income for the three and nine months ended September 30, (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

The following table provides a summary of where the exit activity costs and asset impairment recoveries were recorded in the consolidated statements of income for the three months ended March 31, (in thousands):

Cost of sales $ ( 72 ) $ 513

1 unchanged sentence

Total exit activity and asset impairment charges $ 335 $ 612

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

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

Balance at January 1 $ 6,725 $ 2,417

1 unchanged sentence

Cash payments ( 553 ) ( 1,321 )

Balance at September 30 $ 7,286 $ 280

Balance at March 31 $ 6,579 $ 1,771

(11) INCOME TAXES

The following table summarizes the provision for income taxes for continuing operations (in thousands) for the three and nine months ended September 30, and the applicable effective tax rates:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

The following table summarizes the provision for income taxes for continuing operations (in thousands) for the three months ended March 31, and the applicable effective tax rates:

Provision for income taxes $ 8,561 $ 7,177

Effective tax rate 25.6 % 25.4 %

The effective tax rate for the three and nine months ended September 30, 2023 and 2022, respectively, was greater than the U.S.

The effective tax rate for the three months ended March 31, 2024 and 2023, 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 item s due to an excess tax benefit on stock-based compensation.

(12) EARNINGS PER SHARE

Earnings per share and the weighted average shares outstanding used in calculating basic and diluted earnings per share are as follows for the three and nine months ended September 30, (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Weighted average shares outstanding for basic and diluted earnings were as follows for the three months ended March 31, (in thousands):

Net income available to common stockholders $ 24,946 $ 21,099

3 unchanged sentences

Weighted average shares outstanding 30,572 30,897

Common stock units 230 105 170 107

Common stock options and stock units 221 127

Weighted average shares and conversions 30,793 31,024

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

The following table provides the potential anti-dilutive common stock units for the three and nine months ended September 30, (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

The following table provides the potential anti-dilutive common stock units not included in the diluted weighted average shares calculations for the three months ended March 31, (in thousands):

Common stock units 4 64

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When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics.

The following table illustrates certain measurements used by management to assess performance of the segments described above for the three and nine months ended September 30, (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

The following table illustrates certain measurements used by management to assess performance of the segments described above for the three months ended March 31, (in thousands):

Renewables $ 51,496 $ 59,205

10 unchanged sentences

Total income from operations $ 31,736 $ 29,370

September 30,

The following table illustrates the total assets of the Company's reportable segments and unallocated corporate assets as of (in thousands):

2024 December 31,

6 unchanged sentences

$ 1,319,857 $ 1,256,451

The following tables illustrate segment revenue disaggregated by timing of transfer of control to the customer for the three and nine months ended September 30 (in thousands):

Three Months Ended September 30, 2023

Renewables Residential Agtech Infrastructure Total

Point in Time $ 15,903 $ 225,985 $ 777 $ 9,922 $ 252,587

Over Time 90,459 1,762 30,889 15,047 138,157

Total net sales $ 106,362 $ 227,747 $ 31,666 $ 24,969 $ 390,744

Three Months Ended September 30, 2022

Renewables Residential Agtech Infrastructure Total

Point in Time $ 7,660 $ 214,175 $ 3,510 $ 9,938 $ 235,283

Over Time 103,459 1,417 40,707 10,425 156,008

Total net sales $ 111,119 $ 215,592 $ 44,217 $ 20,363 $ 391,291

Nine Months Ended September 30, 2023

The following tables illustrate segment revenue disaggregated by timing of transfer of control to the customer for the (in thousands):

Three Months Ended March 31, 2024

Renewables Residential Agtech Infrastructure Total

2 unchanged sentences

Total net sales $ 51,496 $ 185,111 $ 34,027 $ 21,872 $ 292,506

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Renewables Residential Agtech Infrastructure Total

3 unchanged sentences

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-Q

Item 1. Financial Statements