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, consolidated operating margin, and operating margin by segment 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 residential, renewable energy, agtech and infrastructure markets. The Company operates and reports its results in the following four reporting segments: • Residential • Renewables • Agtech • Infrastructure The Company serves customers primarily in North America including home improvement retailers, wholesalers, distributors, contractors, renewable energy (solar) developers, and institutional and commercial growers of fruits, vegetables, flowers and other plants. At September 30, 2024, the Company operated twenty-eight facilities, comprised of twenty-one manufacturing facilities, two distribution centers, and five offices, which are located in fifteen states, Canada, and China. The Company's operational infrastructure provides the necessary scale to support local, regional, and national customers in each of the Company's markets. 18 Table of Contents Recent Trends The Company's customers in the Renewables business continue to be impacted by regulatory, trade and tax policy changes, uncertainty primarily due to investigations and pending finalization of governmental guidance. These include but are not limited to: • In May 2024, a second independent anti-dumping and countervailing duties ("AD/CVD") investigation was initiated by the U.S. Department of Commerce claiming potentially illegal trade practices with Cambodia, Malaysia, Thailand and Vietnam, the same four countries named in the 2022 AD/CVD case, for which resolution is anticipated in 2025; • Expiration in 2024 of the Presidential Executive Order that paused tariffs on imports of solar modules for two years. Modules procured during this pause could be subject to significant tariffs if not installed and operating prior to the December 3, 2024 expiration of the tariff moratorium; and • The Department of Treasury has not yet published final guidance relative to rules under the Inflation Reduction Act in order to maximize tax incentives. As this uncertainty continues, a portion of our customers paused signing new contracts as they work through trade and/or regulatory issues specific to their projects, including gathering documents to satisfy solar module import tracking requirements. 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 efficiently deployed to deliver sustainable, profitable growth while increasing its relevance with customers and shaping its markets. 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's 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 enable the Company to respond timely to changes in the end markets the Company serves, including the broader market dynamics experienced over the past few years. The Company continues 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 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. 19 Table of Contents Recent Developments On December 1, 2023, the Company sold its Japan-based solar racking business within its Renewables segment to a third party and received net proceeds of $8.0 million. Results of Operations Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023 The following table sets forth selected results of operations data and its percentage of net sales for the three months ended September 30 (in thousands): 2024 2023 Net sales $ 361,196 100.0 % $ 390,744 100.0 % Cost of sales 267,670 74.1 % 285,360 73.0 % Gross profit 93,526 25.9 % 105,384 27.0 % Selling, general, and administrative expense 49,528 13.7 % 52,194 13.4 % Income from operations 43,998 12.2 % 53,190 13.6 % Interest (income) expense (1,931) (0.5) % 417 0.1 % Other expense (income) 455 0.1 % (1,040) (0.3) % Income before taxes 45,474 12.6 % 53,813 13.8 % Provision for income taxes 11,435 3.2 % 14,536 3.7 % Net income $ 34,039 9.4 % $ 39,277 10.1 % The following table sets forth the Company’s net sales by reportable segment for the three months ended September 30, (in thousands): Impact of 2024 2023 Total Change Portfolio Management Ongoing Operations Net sales: Residential $ 212,363 $ 227,747 $ (15,384) $ — $ (15,384) Renewables 84,064 106,362 (22,298) (4,760) (17,538) Agtech 41,527 31,666 9,861 (780) 10,641 Infrastructure 23,242 24,969 (1,727) — (1,727) Consolidated $ 361,196 $ 390,744 $ (29,548) $ (5,540) $ (24,008) Consolidated net sales decreased by $29.5 million, or 7.6%, to $361.2 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The net sales decrease was largely due to a 6% decrease in organic revenue, the result of a 7% volume decline partially offset by a 1% increase in pricing to customers, along with portfolio management activities in the prior year quarter. Growth in the Company's Agtech segment was more than offset by a $5.5 million decrease in net sales related to portfolio management along with a decline in revenue in the Company's Residential, Renewables and Infrastructure segments. Consolidated backlog decreased 15% to $319 million, as compared to prior year. Net sales in the Company's Residential segment decreased $15.4 million, or 6.7%, to $212.4 million for the three months ended September 30, 2024 compared to $227.7 million for the three months ended September 30, 2023. The sales decline was driven by a slowdown in the residential market, including the repair and remodel sector, which is impeding the timing and benefit of participation gains as customers take longer to flush inventory from incumbent suppliers. Net sales in the Company's Renewables segment decreased $22.3 million, or 21.0%, to $84.1 million for the three months ended September 30, 2024 compared to $106.4 million for the three months ended September 30, 2023. The decrease was largely driven by trade and regulatory headwinds associated with the two independent AD/CVD investigations which are compelling the industry to significantly focus on completing panel installations and the administrative reporting requirements ahead of the December 3, 2024 expiration of the tariff moratorium for panels 20 Table of Contents granted through the two-year Presidential Proclamation from June 2022. Order backlog decreased 24% from the prior year as a result of the aforementioned challenges. Order backlog decreased 24% from the prior year as a result of these aforementioned challenges. Net sales in the Company's Agtech segment increased 30.9%, or $9.9 million, to $41.5 million for the three months ended September 30, 2024 compared to $31.7 million for the three months ended September 30, 2023. The revenue increase was primarily driven by projects starting to accelerate in our produce division. Although backlog decreased 3% year over year in this segment, we anticipate the addition of new projects in both the produce and commercial markets as we complete design work and finalize projects for launch. Net sales in the Company's Infrastructure segment decreased 7.2%, or $1.7 million, to $23.2 million for the three months ended September 30, 2024 compared to $25.0 million for the three months ended September 30, 2023. The decrease in revenue was a result of timing on a large project in the prior year. Backlog increased 3% from the prior year. Demand and quoting remain strong, supported by continued investment at the federal and state levels. The Company's consolidated gross margin decreased to 25.9% for the three months ended September 30, 2024 compared to 27.0% for the three months ended September 30, 2023. The decrease was driven by product line mix and volume leverage in the Renewables segment, partially offset by overall continued operational efficiencies along with 80/20 initiatives. Selling, general, and administrative ("SG&A") expenses decreased by $2.7 million, or 5.1% to $49.5 million for the three months ended September 30, 2024 compared to $52.2 million for the three months ended September 30, 2023. The $2.7 million decrease was primarily due to lower performance-based compensation expense as compared to the prior year quarter. SG&A expenses as a percentage of net sales increased to 13.7% for the three months ended September 30, 2024 compared to 13.4% for the three months ended September 30, 2023. 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 September 30, (in thousands): 2024 2023 Total Change Income from operations: Residential $ 42,055 19.8 % $ 42,158 18.5 % $ (103) Renewables 825 1.0 % 12,907 12.1 % (12,082) Agtech 3,853 9.3 % 2,136 6.7 % 1,717 Infrastructure 6,494 27.9 % 6,386 25.6 % 108 Unallocated Corporate Expenses (9,229) (2.6) % (10,397) (2.7) % 1,168 Consolidated income from operations $ 43,998 12.2 % $ 53,190 13.6 % $ (9,192) The Residential segment generated an operating margin of 19.8% in the current year quarter compared to 18.5% in the prior year quarter. Operating margin improved year over year, driven by solid execution, effective price/cost management and 80/20 initiatives. The Renewables segment generated an operating margin of 1.0% in the current year quarter compared to 12.1% in the prior year quarter. The decrease in operating margin was impacted by lower volume resulting from the aforementioned trade and regulatory challenges in this segment along with product mix associated with the launch and learning curve of the new tracker product line in the current year quarter. Furthermore, margin was impacted by restructuring charges incurred during the quarter related to addressing customer issues arising from discontinued legacy solar tracker solutions. The Agtech segment generated an operating margin of 9.3% in the current year quarter compared to 6.7% in the prior year quarter. Operating margin improved year over year due to volume leverage, product mix shift, 80/20 initiatives and solid field execution. The Infrastructure segment generated an operating margin of 27.9% during the three months ended September 30, 2024 compared to 25.6% during the three months ended September 30, 2023. The margin improved year over year due to product line mix, 80/20 initiatives and strong execution. 21 Table of Contents Unallocated corporate expenses decreased $1.2 million from $10.4 million during the three months ended September 30, 2023 to $9.2 million during the three months ended September 30, 2024. The decrease in expense was largely the result of lower performance-based compensation expense as compared to the prior year quarter. The Company recorded interest income of $1.9 million for the three months ended September 30, 2024, compared to interest expense of $0.4 million for the three months ended September 30, 2023. Income during the current year quarter was the result of earnings on certain interest-bearing cash accounts. Expense in the prior year quarter was the result of an outstanding balance on the Company's revolving credit facility during the three months ended September 30, 2023, while no amounts were outstanding during the three months ended September 30, 2024. The Company recorded other expense of $0.5 million for the three months ended September 30, 2024, compared to other income of $1.0 million recorded for the three months ended September 30, 2023. The change year over year is the result of costs related to the liquidation of the processing business. The Company recognized a provision for income taxes of $11.4 million and $14.5 million, with effective tax rates of 25.1% and 27.0% for the three months ended September 30, 2024, and 2023, respectively. The effective tax rate for the three 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 items due to an excess tax benefit on stock-based compensation. Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023 The following table sets forth selected results of operations data and its percentage of net sales for the nine months ended September 30, (in thousands): 2024 2023 Net sales $ 1,006,707 100.0 % $ 1,048,925 100.0 % Cost of sales 732,920 72.8 % 769,873 73.4 % Gross profit 273,787 27.2 % 279,052 26.6 % Selling, general, and administrative expense 155,584 15.5 % 153,415 14.6 % Income from operations 118,203 11.7 % 125,637 12.0 % Interest (income) expense (4,176) (0.5) % 3,216 0.3 % Other income (219) 0.0 % (1,946) (0.2) % Income before taxes 122,598 12.2 % 124,367 11.9 % Provision for income taxes 31,415 3.1 % 33,268 3.2 % Net income $ 91,183 9.1 % $ 91,099 8.7 % The following table sets forth the Company’s net sales by reportable segment for the nine months ended September 30, (in thousands): Impact of 2024 2023 Total Change Acquisitions Portfolio Management Ongoing Operations Net sales: Residential $ 611,790 $ 635,476 $ (23,686) $ 3,480 $ — $ (27,166) Renewables 214,941 243,026 (28,085) — (10,791) (17,294) Agtech 110,062 102,546 7,516 — (4,059) 11,575 Infrastructure 69,914 67,877 2,037 — — 2,037 Consolidated $ 1,006,707 $ 1,048,925 $ (42,218) $ 3,480 $ (14,850) $ (30,848) Consolidated net sales decreased by $42.2 million, or 4.0%, to $1.0 billion for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The net sales decrease was the combined result of volume decline in the Company's Residential and Renewables segments along with portfolio management activities in the prior year. This decrease was partially offset by growth in the Company's Agtech and Infrastructure segments, along with revenue of $3.5 million generated from a recent acquisition. Consolidated backlog decreased 15% to $319 million, as compared to the end of the prior year period. 22 Table of Contents Net sales in the Company's Residential segment decreased $23.7 million, or 3.7%, to $611.8 million for the nine months ended September 30, 2024 compared to $635.5 million for the nine months ended September 30, 2023. Organic decline of 4.3% was driven by a slower than expected residential market, including the repair and remodel sector, which is impeding the timing and benefit of participation gains as customers take longer to flush inventory from incumbent suppliers. This decrease was partially offset by $3.5 million of revenue generated by the recent acquisition. Net sales in the Company's Renewables segment decreased $28.1 million, or 11.6%, to $214.9 million for the nine months ended September 30, 2024 compared to $243.0 million for the nine months ended September 30, 2023. The decrease was driven by trade and regulatory headwinds associate with the two independent AD/CVD investigations which are compelling the industry to significantly focus on completing panel installations and the administrative reporting requirements of the December 3, 2024 expiration of the tariff moratorium on panels granted through the two-year Presidential Proclamation from June 2022. Order backlog decreased 24% from the prior year as a result of these aforementioned challenges. Net sales in the Company's Agtech segment increased 7.3%, or $7.5 million, to $110.1 million for the nine months ended September 30, 2024 compared to $102.5 million for the nine months ended September 30, 2023. The revenue increase was primarily driven by projects starting to accelerate in our produce division, partially offset by $4.1 million of revenues recorded in the prior year related to portfolio management actions. Although backlog decreased 3% year over year in this segment, we anticipate the addition of new projects in both the produce and commercial markets as we complete design work and finalize projects for launch. Net sales in the Company's Infrastructure segment increased 2.9%, or $2.0 million, to $69.9 million for the nine months ended September 30, 2024 compared to $67.9 million for the nine months ended September 30, 2023. The increase in revenue was driven by continued strong execution and market participation gains. Backlog increased 3% over the prior year. Demand and quoting remain strong, supported by continued investment at the federal and state levels. The Company's consolidated gross margin increased to 27.2% for the nine months ended September 30, 2024 compared to 26.6% for the nine months ended September 30, 2023. The increase was driven by improved price to material cost alignment, and continued operational efficiencies, along with 80/20 initiatives and favorable business and product mix. SG&A expenses increased by $2.2 million, or 1.4% to $155.6 million for the nine months ended September 30, 2024 compared to $153.4 million for the nine months ended September 30, 2023. The $2.2 million increase was largely due to higher performance-based compensation expense as compared to the prior year. SG&A expenses as a percentage of net sales increased to 15.5% for the nine months ended September 30, 2024 compared to 14.6% for the nine months ended September 30, 2023. 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 nine months ended September 30, (in thousands): 2024 2023 Total Change Income from operations: Residential $ 119,714 19.6 % $ 115,626 18.2 % $ 4,088 Renewables 4,116 1.9 % 21,084 8.7 % (16,968) Agtech 8,743 7.9 % 3,349 3.3 % 5,394 Infrastructure 17,605 25.2 % 14,928 22.0 % 2,677 Unallocated Corporate Expenses (31,975) (3.2) % (29,350) (2.8) % (2,625) Consolidated income from operations $ 118,203 11.7 % $ 125,637 12.0 % $ (7,434) The Residential segment generated an operating margin of 19.6% in the current year compared to 18.2% in the prior year. Operating margin improved year over year, driven by solid execution, effective price/cost management and 80/20 productivity. The Renewables segment generated an operating margin of 1.9% in the current year compared to 8.7% in the prior year. The decrease in operating margin was impacted by lower volume resulting from the aforementioned trade and 23 Table of Contents regulatory challenges in this segment along with product line mix associated with the launch and learning curve of the new tracker product line in the current year. Furthermore, margin was impacted by restructuring activities related to addressing customer issues arising from discontinued solar tracker solutions and prior year portfolio management actions. The Agtech segment generated an operating margin of 7.9% in the current year compared to 3.3% in the prior year. Operating margin improved year over year due to the impact of restructuring costs incurred in the prior year, along with product mix shift, field efficiencies and stronger volume. The Infrastructure segment generated an operating margin of 25.2% during the nine months ended September 30, 2024 compared to 22.0% during the nine months ended September 30, 2023. The margin improved year over year driven by favorable product line mix, 80/20 initiative and strong operating execution. Unallocated corporate expenses increased $2.6 million from $29.4 million during the nine months ended September 30, 2023 to $32.0 million during the nine months ended September 30, 2024. The increase in expense was primarily the result of higher performance-based compensation expense as compared to the prior year. The Company recorded interest income of $4.2 million for the nine months ended September 30, 2024, compared to interest expense of $3.2 million for the nine months ended September 30, 2023. Income in the current year was the result of earnings on certain interest-bearing cash accounts. Expense in the prior year was the result of an outstanding balance on the Company's revolving credit facility during the nine months ended September 30, 2023, while no amounts were outstanding during the nine months ended September 30, 2024. Other income decreased year over year with $0.2 million recorded for the nine months ended September 30, 2024, compared to $1.9 million recorded for the nine months ended September 30, 2023. The change year over year is the combined result of $1.0 million of working capital adjustments recorded in the current year related to the sale of the Company's Japan-based solar racking business within its Renewables segment, along with costs related to the liquidation of the processing business. The Company recognized a provision for income taxes of $31.4 million and $33.3 million, with effective tax rates of 25.6% and 26.7% for the nine months ended September 30, 2024, and 2023, respectively. The effective tax rate for the 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 items due to an excess tax benefit on stock-based compensation. Liquidity and Capital Resources The following table sets forth the Company's liquidity position as of (in thousands): September 30, 2024 December 31, 2023 Cash and cash equivalents $ 228,879 $ 99,426 Availability on revolving credit facility 395,055 396,056 $ 623,934 $ 495,482 Sources of Liquidity The Company's primary sources of liquidity are comprised of cash on hand and its available borrowing capacity provided under the Company's Credit Agreement (the "Credit Agreement"). The Credit Agreement provides for a revolving credit facility and letters of credit in an aggregate amount equal to $400 million and terminates on December 8, 2027. 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. See Note 7 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 Credit Agreement. 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 September 30, 2024 and December 31, 2023, the Company's foreign subsidiaries held $14.3 million and $6.9 million of cash, respectively. The Company believes that these sources, together with cash expected to be generated from operations, should provide the Company with ample liquidity and capital resources to meet its cash requirements and to continue to invest in operational excellence, growth initiatives and the development of the organization. 24 Table of Contents 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, 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 under the Company's current authorized program ending May 2, 2025. 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. Over the long-term, the Company expects that future investments, including strategic business 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. 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, 2023. 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, 2023. Cash Flows The following table sets forth selected cash flow data for the nine months ended September 30, (in thousands): 2024 2023 Cash provided by (used in): Operating activities $ 154,335 $ 206,656 Investing activities (13,976) (17,839) Financing activities (10,940) (120,182) Effect of foreign exchange rate changes 34 (778) Net increase in cash and cash equivalents $ 129,453 $ 67,857 Operating Activities Net cash provided by operating activities for the nine months ended September 30, 2024 of $154.3 million consisted of net income of $91.2 million, non-cash net charges totaling $32.6 million, which include depreciation, amortization, stock-based compensation, exit activity costs and other non-cash charges, and $30.5 million of cash generated from working capital and other net operating assets. The cash generated from working capital and other net operating assets was largely due to increases in accounts payable, the result of the timing of purchases and vendor payments, and billings in excess of costs, the result of increased advance payments from and billings to customers on projects. These activities were partially offset by increases in accounts receivable and inventory, largely the result of seasonal demand. Net cash provided by operating activities for the nine months ended September 30, 2023 of $206.7 million consisted of net income of $91.1 million, non-cash net charges totaling $31.5 million, which include depreciation, amortization, stock-based compensation, exit activity recoveries and other non-cash charges, and $84.1 million of cash generated from working capital and other net operating assets. The cash generated from working capital and other net operating assets was largely due to increases in accounts payable, the result of the timing of purchases and vendor payments, and billings in excess of costs, the result of increased advance payments from and billings to customers on projects. In addition, cash was generated due to the Company's focus on reducing its investment in inventory to better align with lower sales volumes while still meeting customer demand. These activities were partially offset by an increase in accounts receivable largely the result of seasonal increases in demand. 25 Table of Contents Investing Activities Net cash used in investing activities for the nine months ended September 30, 2024 of $14.0 million was primarily due to net capital expenditures of $14.3 million, offset by receipt of the $0.3 million final working capital settlement resulting from the sale of the Company's Japan-based solar racking business in the Company's Renewables segment in the fourth quarter of 2023. Net cash used in investing activities for the nine months ended September 30, 2023 of $17.8 million consisted of cash paid of $10.4 million for the acquisition of a privately held Utah-based company, offset by receipt of the $0.6 million final working capital settlement resulting from the 2022 acquisition of QAP and net capital expenditures of $8.0 million. Financing Activities Net cash used in financing activities for the nine months ended September 30, 2024 of $10.9 million consisted of common stock repurchases. The Company paid $9.0 million during the nine months ended September 30, 2023 related to repurchase of 139,427 shares under the Company's authorized share repurchase program. The remainder of the 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 used in financing activities for the nine months ended September 30, 2023 of $120.2 million consisted of net long-term debt payments of $91.0 million and $29.2 million of common stock repurchases. Net long-term debt payments consisted of $141.0 million in long-term debt payments, offset by $50.0 million in proceeds from borrowing on the Company's long-term debt credit facility. The Company paid $26.0 million during the nine months ended September 30, 2023 related to repurchase of 538,575 shares under the Company's authorized share repurchase program. The remainder of the repurchased common stock of $3.2 million 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 nine months ended September 30, 2024 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, 2023. Recent Accounting Pronouncements See Note 1 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.