GIBRALTAR INDUSTRIES, INC. 10-Q

Item 1. Financial Statements GIBRALTAR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net sales $ 361,196 $ 390,744 $ 1,006,707 $ 1,048,925 Cost of sales 267,670 285,360 732,920 769,873 Gross profit 93,526 105,384 273,787 279,052 Selling, general, and administrative expense 49,528 52,194 155,584 153,415 Income from operations 43,998 53,190 118,203 125,637 Interest (income) expense ( 1,931 ) 417 ( 4,176 ) 3,216 Other expense (income) 455 ( 1,040 ) ( 219 ) ( 1,946 ) Income before taxes 45,474 53,813 122,598 124,367 Provision for income taxes 11,435 14,536 31,415 33,268 Net income $ 34,039 $ 39,277 $ 91,183 $ 91,099 Net earnings per share: Basic $ 1.11 $ 1.29 $ 2.98 $ 2.97 Diluted $ 1.11 $ 1.28 $ 2.96 $ 2.96 Weighted average shares outstanding: Basic 30,530 30,485 30,564 30,638 Diluted 30,750 30,715 30,788 30,808 See accompanying notes to consolidated financial statements. 3 Table of Contents GIBRALTAR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net income $ 34,039 $ 39,277 $ 91,183 $ 91,099 Other comprehensive income (loss): Foreign currency translation adjustment 703 ( 1,368 ) ( 679 ) ( 2,051 ) Total comprehensive income $ 34,742 $ 37,909 $ 90,504 $ 89,048 See accompanying notes to consolidated financial statements. 4 Table of Contents GIBRALTAR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) September 30, 2024 December 31, 2023 (unaudited) Assets Current assets: Cash and cash equivalents $ 228,879 $ 99,426 Trade receivables, net of allowance of $ 5,418 and $ 5,351 , respectively 206,842 172,736 Costs in excess of billings, net 41,603 51,814 Inventories, net 138,171 120,503 Prepaid expenses and other current assets 26,796 17,772 Total current assets 642,291 462,251 Property, plant, and equipment, net 109,811 107,603 Operating lease assets 39,153 44,918 Goodwill 511,941 513,383 Acquired intangibles 118,983 125,980 Other assets 2,411 2,316 $ 1,424,590 $ 1,256,451 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 163,295 $ 92,124 Accrued expenses 89,510 88,719 Billings in excess of cost 53,788 44,735 Total current liabilities 306,593 225,578 Deferred income taxes 56,497 57,103 Non-current operating lease liabilities 30,990 35,989 Other non-current liabilities 27,277 22,783 Stockholders’ equity: Preferred stock, $ 0.01 par value; authorized 10,000 shares; none outstanding — — Common stock, $ 0.01 par value; authorized 100,000 shares; 34,298 and 34,219 shares issued and outstanding in 2024 and 2023 343 342 Additional paid-in capital 341,306 332,621 Retained earnings 829,694 738,511 Accumulated other comprehensive loss ( 2,793 ) ( 2,114 ) Cost of 3,944 and 3,778 common shares held in treasury in 2024 and 2023 ( 165,317 ) ( 154,362 ) Total stockholders’ equity 1,003,233 914,998 $ 1,424,590 $ 1,256,451 See accompanying notes to consolidated financial statements. 5 Table of Contents GIBRALTAR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended September 30, 2024 2023 Cash Flows from Operating Activities Net income $ 91,183 $ 91,099 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,237 20,574 Stock compensation expense 8,686 7,257 Exit activity costs, non-cash 163 572 (Benefit of) provision for deferred income taxes ( 615 ) 179 Other, net 4,160 2,945 Changes in operating assets and liabilities net of effects from acquisitions: Trade receivables and costs in excess of billings ( 23,995 ) ( 44,331 ) Inventories ( 18,131 ) 30,431 Other current assets and other assets ( 11,781 ) ( 1,426 ) Accounts payable 70,867 53,198 Accrued expenses and other non-current liabilities 13,561 46,158 Net cash provided by operating activities 154,335 206,656 Cash Flows from Investing Activities Purchases of property, plant, and equipment, net ( 14,326 ) ( 7,976 ) Acquisitions, net of cash acquired — ( 9,863 ) Net proceeds from sale of business 350 — Net cash used in investing activities ( 13,976 ) ( 17,839 ) Cash Flows from Financing Activities Long-term debt payments — ( 141,000 ) Proceeds from long-term debt — 50,000 Purchase of common stock at market prices ( 10,940 ) ( 29,182 ) Net cash used in financing activities ( 10,940 ) ( 120,182 ) Effect of exchange rate changes on cash 34 ( 778 ) Net increase in cash and cash equivalents 129,453 67,857 Cash and cash equivalents at beginning of year 99,426 17,608 Cash and cash equivalents at end of period $ 228,879 $ 85,465 See accompanying notes to consolidated financial statements. 6 Table of Contents GIBRALTAR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (unaudited) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders’ Equity Shares Amount Shares Amount Balance at June 30, 2024 34,274 $ 343 $ 338,978 $ 795,655 $ ( 3,496 ) 3,797 $ ( 155,809 ) $ 975,671 Net income — — — 34,039 — — — 34,039 Foreign currency translation adjustment — — — — 703 — — 703 Stock compensation expense — — 2,328 — — — — 2,328 Net settlement of restricted stock units 24 — — — — 8 ( 506 ) ( 506 ) Excise tax on repurchase of common stock — — — — — — ( 15 ) ( 15 ) Common stock repurchased under stock repurchase program — — — — — 139 ( 8,987 ) ( 8,987 ) Balance at September 30, 2024 34,298 $ 343 $ 341,306 $ 829,694 $ ( 2,793 ) 3,944 $ ( 165,317 ) $ 1,003,233 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 — — — — ( 1,368 ) — — ( 1,368 ) 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 See accompanying notes to consolidated financial statements. 7 Table of Contents GIBRALTAR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (unaudited) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders’ Equity Shares Amount Shares Amount Balance at December 31, 2023 34,219 $ 342 $ 332,621 $ 738,511 $ ( 2,114 ) 3,778 $ ( 154,362 ) $ 914,998 Net income — — — 91,183 — — — 91,183 Foreign currency translation adjustment — — — — ( 679 ) — — ( 679 ) Stock compensation expense — — 8,686 — — — — 8,686 Net settlement of restricted stock units 72 1 ( 1 ) — — 27 ( 1,953 ) ( 1,953 ) Awards of common stock 7 — — — — — — — Excise tax on repurchase of common stock — — — — — — ( 15 ) ( 15 ) Common stock repurchased under stock repurchase program — — — — — 139 ( 8,987 ) ( 8,987 ) Balance at September 30, 2024 34,298 $ 343 $ 341,306 $ 829,694 $ ( 2,793 ) 3,944 $ ( 165,317 ) $ 1,003,233 Balance at December 31, 2022 34,060 $ 340 $ 322,873 $ 627,978 $ ( 3,432 ) 3,199 $ ( 125,660 ) $ 822,099 Net income — — — 91,099 — — — 91,099 Foreign currency translation adjustment — — — — ( 2,051 ) — — ( 2,051 ) Stock compensation expense — — 7,257 — — — — 7,257 Net settlement of restricted stock units 144 2 ( 2 ) — — 56 ( 3,215 ) ( 3,215 ) 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 See accompanying notes to consolidated financial statements. 8 Table of Contents GIBRALTAR INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (1) BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Gibraltar Industries, Inc. (the "Company") have been prepared by management in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for the fair presentation of results for the interim period have been included. The Company's operations are seasonal; for this and other reasons financial results for any interim period are not necessarily indicative of the results expected for any subsequent interim period or for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2023. The consolidated balance sheet at December 31, 2023 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The Company has presented net costs in excess of billings separately on its consolidated balance sheet as of December 31, 2023 to conform with current year presentation. Recent Accounting Pronouncements 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) TRADE RECEIVABLES, NET The following table provides a roll-forward of the allowance for credit losses, for the nine month period ended September 30, 2024, that is deducted from the amortized cost basis of trade receivables to present the net amount expected to be collected (in thousands): Beginning balance as of January 1, 2024 $ 5,351 Bad debt expense, net of recoveries 693 Accounts written off against allowance and other adjustments ( 626 ) Ending balance as of September 30, 2024 $ 5,418 (3) REVENUE Sales includes revenue from contracts with customers for roof and foundation ventilation products, centralized mail systems, rain dispersion products, trims and flashings and other accessories, retractable awnings and gutter guards; designing, engineering, manufacturing and installation of solar racking systems and electrical balance of systems; designing, engineering, manufacturing and installation of greenhouses; structural bearings, expansion joints, pavement sealant, elastomeric concrete and bridge cable protection systems. 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, 2024, the Company's remaining performance obligations are part of contracts that have an original expected duration of one year or less. For the three and nine months ended September 30, 2024 and 2023, respectively, there were no changes to estimated total costs to be incurred related to any individual contract that materially impacted the Company's consolidated financial statements. Contract assets consist of net costs in excess of billings, classified as current assets 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 9 Table of Contents as of September 30, 2024 and December 31, 2023 was $ 4.3 million and $ 3.9 million, respectively. The Company recognized revenue of $ 41.7 million and $ 32.2 million during the nine months ended September 30, 2024 and 2023, respectively, that was included in the contract liabilities balance of $ 48.7 million and $ 39.6 million at December 31, 2023 and 2022, respectively. (4) INVENTORIES, NET Inventories consisted of the following (in thousands): September 30, 2024 December 31, 2023 Raw material $ 93,645 $ 77,489 Work-in-process 14,205 9,508 Finished goods 35,926 42,942 Gross inventory 143,776 129,939 Less reserves ( 5,605 ) ( 9,436 ) Total inventories, net $ 138,171 $ 120,503 (5) ACQUISITION On July 5, 2023, the Company acquired the assets of a privately held Utah-based company that manufactures and distributes roof flashing and accessory products, and sells direct to roofing wholesalers. 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 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 excess consideration was recorded as goodwill and approximated $ 3.0 million, all of which is deductible for tax purposes. Goodwill represents future economic benefits arising from other assets acquired that could not be individually identified including workforce additions, growth opportunities, and increased presence in the domestic building products markets. The allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed is as follows as of the date of the acquisition (in thousands): Working capital $ 827 Property, plant and equipment 195 Acquired intangible assets 6,310 Other assets 134 Other liabilities ( 72 ) Goodwill 3,023 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 $ 250 3 years Customer relationships 6,060 12 years Total $ 6,310 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. 10 Table of Contents 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 Goodwill The changes in the carrying amount of goodwill for the nine months ended September 30, 2024 are as follows (in thousands): Residential Renewables Agtech Infrastructure Total Balance at December 31, 2023 $ 213,576 $ 184,230 $ 83,899 $ 31,678 $ 513,383 Adjustments to prior year acquisitions ( 1,110 ) — — — ( 1,110 ) Foreign currency translation — — ( 332 ) — ( 332 ) Balance at September 30, 2024 $ 212,466 $ 184,230 $ 83,567 $ 31,678 $ 511,941 Goodwill is recognized net of accumulated impairment losses of $ 133.2 million as of September 30, 2024 and December 31, 2023. 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, 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, 2024 December 31, 2023 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Indefinite-lived intangible assets: Trademarks $ 52,300 $ — $ 52,300 $ — Finite-lived intangible assets: Trademarks 2,550 1,719 5,773 4,714 Unpatented technology 31,818 23,730 34,133 24,295 Customer relationships 101,051 43,399 110,649 48,088 Non-compete agreements 722 610 2,376 2,154 136,141 69,458 152,931 79,251 Total acquired intangible assets $ 188,441 $ 69,458 $ 205,231 $ 79,251 The following table summarizes the acquired intangible asset amortization expense (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Amortization expense $ 2,679 $ 2,893 $ 8,036 $ 8,419 Amortization expense related to acquired intangible assets for the remainder of fiscal 2024 and the next five years thereafter is estimated as follows (in thousands): 2024 2025 2026 2027 2028 2029 Amortization expense $ 2,640 $ 10,486 $ 9,453 $ 8,070 $ 7,275 $ 7,226 11 Table of Contents (7) LONG-TERM DEBT The Company had no outstanding debt as of September 30, 2024 and December 31, 2023. Unamortized debt issuance costs, included in other assets on the consolidated balance sheets, as of September 30, 2024 and December 31, 2023 were $ 1.4 million and $ 1.7 million, respectively. Revolving Credit Facility 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, 2024, the Company was in compliance with all financial covenants. The Credit Agreement terminates on December 8, 2027. Borrowings under the Credit Agreement bear interest, at the Company’s option, at a rate equal to the applicable margin plus (a) a base rate, (b) a daily simple secured overnight financing rate ("SOFR") rate, (c) a term SOFR rate or (d) for certain foreign currencies, a foreign currency rate, in each case subject to a 0 % floor. Through March 31, 2023, the Credit Agreement had an initial applicable margin of 0.125 % for base rate loans and 1.125 % for SOFR and alternative currency loans. Thereafter, the applicable margin ranges from 0.125 % to 1.00 % for base rate loans and from 1.125 % to 2.00 % for SOFR and alternative currency loans based on the Company’s Total Net Leverage Ratio, as defined in the Credit Agreement. In addition, the Credit Agreement is subject to an annual commitment fee, payable quarterly, which was 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. Standby letters of credit of $ 4.9 million have been issued under the Credit Agreement to third parties on behalf of the Company as of September 30, 2024. These letters of credit reduce the amount otherwise available under the revolving credit facility. The Company had $ 395.1 million and $ 396.1 million of availability under the revolving credit facility as of September 30, 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 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. 12 Table of Contents Equity-Based Awards - Settled in Stock The following table provides the number of stock units granted during the nine months ended September 30, along with the weighted-average grant-date fair value of each award: 2024 2023 Awards Number of Awards Weighted- Average Grant-Date Fair Value Number of Awards (2) Weighted- Average Grant-Date Fair Value Performance stock units (1) 60,765 $ 77.28 85,323 $ 53.22 Restricted stock units 75,171 $ 72.22 89,713 $ 61.21 Deferred stock units 3,340 $ 68.86 6,351 $ 54.33 Common shares 6,680 $ 68.86 8,468 $ 54.33 (1) The Company’s performance stock units (“PSUs”) represent shares granted for which the final number of shares earned depends on financial performance. The number of shares to be issued may vary between 0 % and 200 % of the number of PSUs granted depending on the relative achievement to targeted thresholds. The Company's PSUs with a financial performance condition are based on the Company’s return on invested capital (“ROIC”) over a one-year performance period. (2) PSUs granted in the first quarter of 2023 include 7,825 units that were forfeited in the third quarter of 2023 and 154,996 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 The Company's equity-based awards that are settled in cash are the awards under the Management Stock Purchase Plan (the “MSPP”) which is authorized under the Company's equity incentive plans. The MSPP provides participants the ability to defer a portion of their compensation, convertible to unrestricted investments, restricted stock units, or a combination of both, or defer a portion of their directors’ fees, convertible to restricted stock units. Employees eligible to defer a portion of their compensation also receive a company-matching award in restricted stock units equal to a percentage of their 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, 2024 were $ 24.8 million, of which $ 2.7 million was included in current accrued expenses and $ 22.1 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 $ 19.3 million and $ 17.3 million at September 30, 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 nine months ended September 30,: 2024 2023 Restricted stock units credited 42,476 46,843 MSPP liabilities paid (in thousands) $ 2,053 $ 2,392 (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. 13 Table of Contents 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Beginning balance $ 13,235 $ 7,382 $ 9,139 $ 6,251 Provisions for product warranties, net of reductions 3,867 1,652 7,963 2,783 Ending balance $ 17,102 $ 9,034 $ 17,102 $ 9,034 (10) EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS The Company has incurred exit activity costs and asset impairment charges as a result of its 80/20 simplification and portfolio management initiatives. These initiatives have resulted in the identification of low-volume, low margin, internally-produced products which have been or will be outsourced or discontinued, the simplification of processes, the sale and exiting of less profitable businesses or product lines, and a reduction in the Company's manufacturing footprint. 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 costs (recoveries) related to the write-down of inventory and other charges such as warranty costs 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 nine months ended September 30, 2023. The following tables set forth the exit activity costs and asset impairment charges (recoveries) incurred by segment related to the restructuring activities described above (in thousands): Three Months Ended September 30, 2024 2023 Exit Activity Asset Impairment Total Exit Activity Asset Impairment Total Residential $ 106 $ — $ 106 $ 22 $ 654 $ 676 Renewables 4,641 — 4,641 4,389 ( 59 ) 4,330 Agtech 328 — 328 5 — 5 Infrastructure — — — — — — Corporate 31 — 31 ( 33 ) — ( 33 ) Total $ 5,106 $ — $ 5,106 $ 4,383 $ 595 $ 4,978 Nine Months Ended September 30, 2024 2023 Exit Activity Asset Impairment Total Exit Activity Asset Impairment Total Residential $ 251 $ ( 72 ) $ 179 $ 136 $ 654 $ 790 Renewables 9,124 235 9,359 7,298 ( 82 ) 7,216 Agtech 477 — 477 722 — 722 Infrastructure — — — — — — Corporate 35 — 35 ( 33 ) — ( 33 ) Total $ 9,887 $ 163 $ 10,050 $ 8,123 $ 572 $ 8,695 14 Table of Contents The following table provides a summary of where the exit activity costs and asset impairments were recorded in the consolidated statements of income (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Cost of sales $ 4,289 $ 4,544 $ 8,388 $ 8,155 Selling, general, and administrative expense 817 434 1,662 540 Total exit activity and asset impairment charges $ 5,106 $ 4,978 $ 10,050 $ 8,695 The following table reconciles the beginning and ending liability for exit activity costs recorded in current accrued expenses on the consolidated balance sheet relating to the Company’s restructuring efforts (in thousands): 2024 2023 Balance at January 1 $ 6,725 $ 2,417 Exit activity costs recognized 9,887 8,123 Cash payments ( 3,650 ) ( 3,254 ) Balance at September 30 $ 12,962 $ 7,286 (11) INCOME TAXES The following table summarizes the provision for income taxes for continuing operations and the applicable effective tax rates: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Provision for income taxes (in thousands) $ 11,435 $ 14,536 $ 31,415 $ 33,268 Effective tax rate 25.1 % 27.0 % 25.6 % 26.7 % The effective tax rate for the three and nine months ended September 30, 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 Weighted average shares outstanding for basic and diluted earnings were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Numerator: Net income available to common stockholders $ 34,039 $ 39,277 $ 91,183 $ 91,099 Denominator for basic earnings per share: Weighted average shares outstanding 30,530 30,485 30,564 30,638 Denominator for diluted earnings per share: Weighted average shares outstanding 30,530 30,485 30,564 30,638 Common stock options and stock units 220 230 224 170 Weighted average shares and conversions 30,750 30,715 30,788 30,808 15 Table of Contents The following table provides the potential anti-dilutive common stock units not included in the diluted weighted average shares calculations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Common stock units 20 17 — 19 (13) SEGMENT INFORMATION The Company is organized into four reportable segments on the basis of the production processes, products and services provided by each segment, identified as follows: (i) Residential, which primarily includes roof and foundation ventilation products, centralized mail systems and electronic package solutions, retractable awnings and gutter guards, rain dispersion products, trims and flashings and other accessories; (ii) Renewables, which primarily includes designing, engineering, manufacturing and installation of solar racking and electrical balance of systems; (iii) Agtech, which provides growing solutions including the designing, engineering, manufacturing and installation of greenhouses; and (iv) Infrastructure, which primarily includes structural bearings, expansion joints and pavement sealant for bridges, airport runways and roadways, elastomeric concrete and bridge cable protection systems. When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics. The following table illustrates certain measurements used by management to assess performance of the segments described above (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net sales: Residential $ 212,363 $ 227,747 $ 611,790 $ 635,476 Renewables 84,064 106,362 214,941 243,026 Agtech 41,527 31,666 110,062 102,546 Infrastructure 23,242 24,969 69,914 67,877 Total net sales $ 361,196 $ 390,744 $ 1,006,707 $ 1,048,925 Income from operations: Residential $ 42,055 $ 42,158 $ 119,714 $ 115,626 Renewables 825 12,907 4,116 21,084 Agtech 3,853 2,136 8,743 3,349 Infrastructure 6,494 6,386 17,605 14,928 Unallocated corporate expenses ( 9,229 ) ( 10,397 ) ( 31,975 ) ( 29,350 ) Total income from operations $ 43,998 $ 53,190 $ 118,203 $ 125,637 16 Table of Contents The following table illustrates the total assets of the Company's reportable segments and unallocated corporate assets as of (in thousands): September 30, 2024 December 31, 2023 Residential $ 531,021 $ 515,739 Renewables 400,996 377,694 Agtech 168,645 168,213 Infrastructure 83,783 77,518 Unallocated corporate assets 240,145 117,287 Total assets $ 1,424,590 $ 1,256,451 The following tables illustrate segment revenue disaggregated by timing of transfer of control to the customer for the (in thousands): Three Months Ended September 30, 2024 Residential Renewables Agtech Infrastructure Total Point in Time $ 210,530 $ 8,220 $ 135 $ 10,657 $ 229,542 Over Time 1,833 75,844 41,392 12,585 131,654 Total net sales $ 212,363 $ 84,064 $ 41,527 $ 23,242 $ 361,196 Three Months Ended September 30, 2023 Residential Renewables Agtech Infrastructure Total Point in Time $ 225,985 $ 15,903 $ 777 $ 9,922 $ 252,587 Over Time 1,762 90,459 30,889 15,047 138,157 Total net sales $ 227,747 $ 106,362 $ 31,666 $ 24,969 $ 390,744 Nine Months Ended September 30, 2024 Residential Renewables Agtech Infrastructure Total Point in Time $ 606,386 $ 23,235 $ 2,663 $ 27,806 $ 660,090 Over Time 5,404 191,706 107,399 42,108 346,617 Total net sales $ 611,790 $ 214,941 $ 110,062 $ 69,914 $ 1,006,707 Nine Months Ended September 30, 2023 Residential Renewables Agtech Infrastructure Total Point in Time $ 630,545 $ 35,630 $ 5,580 $ 24,831 $ 696,586 Over Time 4,931 207,396 96,966 43,046 352,339 Total net sales $ 635,476 $ 243,026 $ 102,546 $ 67,877 $ 1,048,925 17 Table of Contents