What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-30 compared with 2024-10-30 · 90 added, 151 removed, 99 unchanged (71% of the section changed)

15 unchanged sentences

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") is a leading manufacturer and provider of products and services for the residential, agtech, renewable energy and infrastructure markets.

The Company operates and reports its results in the following four reporting segments:

1 unchanged sentence

• 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 serves customers primarily in North America including home improvement retailers, wholesalers, distributors, contractors, institutional and commercial growers of fruits, vegetables, flowers and other plants, convenience store, travel centers, food retailers, and quick-serve restaurants, and renewable energy (solar) developers.

At March 31, 2025, the Company operated forty facilities, comprised of thirty-two manufacturing facilities, two distribution centers, and six offices, which are located in nineteen 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.

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;

• 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.

Impacts of Macroeconomic Conditions on our Business

The Company is closely monitoring the fluid nature of the current macroeconomic conditions as it could be adversely impacted by the potential expansion of tariffs for imports of raw materials, primarily steel and aluminum, used in its manufacturing processes, and to a lesser extent, logistics and imported products used by the Company's customers, such as solar modules, as well as responsive or related policies enacted in other countries.

The global and regional economic conditions may cause volatility in demand for our products as well as cost of materials and logistics, and transportation delays.

These conditions may result in impacts to the pricing of the Company's products, product availability and its results of operations, for which such impact is uncertain at this time.

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.

The Company is innovating to reshape critical markets in comfortable living, productive growing, and sustainable power 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.

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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.

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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.

The Company has used cash flows generated by these initiatives to improve the Company's liquidity position, invest in growth initiatives, including most recently the acquisition of three businesses in separate transactions all of which were funded with cash on hand, and return capital to the Company's shareholders through share repurchases.

Overall, the Company continues to strive to achieve stronger financial results, make more efficient use of capital, and deliver higher stockholder returns.

Recent Developments

On December 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.

In April 2025, the Company's Board of Directors authorized a new share repurchase program of up to $200 million of the Company's issued and outstanding common stock.

The new program has a duration of three years, ending April 30, 2028.

Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations.

Any such repurchases may be executed using open market purchases, privately negotiated agreements or other transactions.

The repurchase program may be suspended or discontinued at any time at the Company's discretion.

The Company has not made repurchases under the new repurchase program as of April 30, 2025.

On March 31, 2025, the Company acquired two privately held businesses that primarily specialize in the manufacturing of metal roofing systems.

The Company purchased all the outstanding stock of one of the businesses and substantially all of the assets of the other business for a combined preliminary purchase consideration of $90 million in an all cash transaction.

These businesses are reported as part of the Company's Residential segment.

On February 11, 2025, the Company purchased all the outstanding stock of Lane Supply, a privately held company that designs, manufactures and installs structural canopies serving the convenience store, travel center, food retail, and quick serve restaurant markets, for $117 million in an all cash transaction.

Lane Supply is reported as part of the Company's Agtech segment.

On December 17, 2024, the Company sold its electronic locker business within its Residential segment to a third party and received net proceeds of $28 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):

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

The following table sets forth selected results of operations data and its percentage of net sales for the three months ended March 31 (in thousands):

Net sales $ 290,015 100.0 % $ 292,506 100.0 %

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Income from operations 25,510 8.8 % 31,736 10.8 %

Interest (income) expense (1,931) (0.5) % 417 0.1 %

Interest income (1,637) (0.5) % (750) (0.3) %

Other expense (income) 94 0.0 % (1,021) (0.4) %

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Net income $ 21,119 7.3 % $ 24,946 8.5 %

The following table sets forth the Company’s net sales by reportable segment for the three months ended September 30, (in thousands):

The following table sets forth the Company’s net sales by reportable segment for the three months ended March 31, (in thousands):

2025 2024 Total

Change Portfolio Management Ongoing Operations

Change Acquisitions Portfolio Management Ongoing Operations

Residential $ 179,994 $ 185,111 $ (5,117) $ — $ (2,745) $ (2,372)

Renewables 84,064 106,362 (22,298) (4,760) (17,538)

Agtech 45,040 34,027 11,013 15,284 — (4,271)

Renewables 43,658 51,496 (7,838) — — (7,838)

Infrastructure 21,323 21,872 (549) — — (549)

Consolidated $ 290,015 $ 292,506 $ (2,491) $ 15,284 $ (2,745) $ (15,030)

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

granted through the two-year Presidential Proclamation from June 2022.

Consolidated net sales decreased by $2.5 million, or 0.9%, to $290.0 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

A 5% decrease in organic revenue, primarily the result of market softness in the Renewables segment, and portfolio management activities in the prior year related to the sale of the Company's residential electronic locker business, were nearly offset by $15.3 million of net sales generated from the current quarter acquisition of Lane Supply in the Residential segment.

Consolidated backlog increased 30% to $434 million, as compared to prior year.

Net sales in the Company's Residential segment decreased $5.1 million, or 2.8%, to $180.0 million for the three months ended March 31, 2025 compared to $185.1 million for the three months ended March 31, 2024.

The decrease was due in part to portfolio management activities in the prior year related to the sale of the Company's residential electronic locker business.

Market softness in retail end market point-of-sale revenue along with mail and

package product sales was nearly offset by participation gains and new product penetration in our building accessories product sales.

Net sales in the Company's Agtech segment increased 32.4%, or $11.0 million, to $45.0 million for the three months ended March 31, 2025 compared to $34.0 million for the three months ended March 31, 2024.

The revenue increase was largely due to $15.3 million generated from the current quarter acquisition of Lane Supply, which more than offset a 12.6% decrease in organic sales related to project start delays for two produce projects waiting on permit approval.

The Company expects to have permits finalized and start construction around the end of the second quarter.

Backlog increased 226% year over year in this segment, driven by both organic orders and with the acquisition of Lane Supply.

Net sales in the Company's Renewables segment decreased $7.8 million, or 15.1%, to $43.7 million for the three months ended March 31, 2025 compared to $51.5 million for the three months ended March 31, 2024.

The decrease was in line with expectations given the slower bookings realized in the second half of 2024 due to headwinds associated with the December 2024 panel installation deadline related to the expiration of the 2022 Presidential Proclamation tariff moratorium.

Order backlog decreased 23% 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.

Net sales in the Company's Infrastructure segment decreased 2.7%, or $0.5 million, to $21.3 million for the three months ended March 31, 2025 compared to $21.9 million for the three months ended March 31, 2024.

The decrease in revenue was a result of project delays pushing shipments into the second quarter.

Backlog increased 11% 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 Company's consolidated gross margin decreased to 26.8% for the three months ended March 31, 2025 compared to 28.9% for the three months ended March 31, 2024.

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.

Selling, general, and administrative ("SG&A") expense decreased by $0.5 million, or 0.9% to $52.2 million for the three months ended March 31, 2025 compared to $52.7 million for the three months ended March 31, 2024.

The $0.5 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):

SG&A expense as a percentage of net sales was relatively flat at 18.0% for the three months ended March 31, 2025 compared to 18.1% for the three months ended March 31, 2024.

The following table sets forth the Company’s income from operations and income from operations as a percentage of net sales by reportable segment for the three months ended March 31, (in thousands):

2025 2024 Total

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Residential $ 31,260 17.4 % $ 34,346 18.6 % $ (3,086)

Renewables 825 1.0 % 12,907 12.1 % (12,082)

Agtech 3,385 7.5 % 2,608 7.7 % 777

Renewables (3,145) (7.2) % 1,644 3.2 % (4,789)

Infrastructure 5,258 24.7 % 4,896 22.4 % 362

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The Residential segment generated an operating margin of 17.4% in the current year quarter compared to 18.6% 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.

Operating margin declined year over year, primarily as a result of product mix and lower volume during the current year quarter.

The Agtech segment generated an operating margin of 7.5% in the current year quarter compared to 7.7% 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.

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):

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):

2024 2023 Total

Change Acquisitions Portfolio Management Ongoing Operations

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.

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.

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

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

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.

Operating margin declined year over year due to product mix shift along with costs related to the acquisition of Lane Supply.

The Renewables segment generated an operating margin of (7.2)% in the current year quarter compared to 3.2% in the prior year quarter.

The decrease in operating margin was impacted by lower volume and field inefficiencies related to the launch and ramp of the 1P tracker technology introduced in 2024.

In addition, margin was impacted

by restructuring charges incurred during the current quarter to optimize operations for the 1P tracker technology along with costs related to the discontinued legacy solar tracker solutions.

The Infrastructure segment generated an operating margin of 24.7% during the three months ended March 31, 2025 compared to 22.4% during the three months ended March 31, 2024.

The margin improved year over year driven by strong execution, supply chain management and product line mix.

Unallocated corporate expenses decreased $0.5 million from $11.8 million during the three months ended March 31, 2024 to $11.2 million during the three months ended March 31, 2025.

The decrease was largely the result of lower performance-based compensation expense partially offset by higher acquisition-related expense as compared to the prior year quarter..

The Company recorded interest income of $1.6 million for the three months ended March 31, 2025, compared to $0.8 million for the three months ended March 31, 2024.

Increase in interest income during the current year quarter was the result of earnings on certain interest-bearing cash accounts.

No amounts were outstanding on the Company's revolving credit facility during the three months ended March 31, 2025 and 2024, respectively.

The Company recorded other expense of $0.1 million for the three months ended March 31, 2025, compared to other income of $1.0 million recorded for the three months ended March 31, 2024.

The change year over year is the combined result of $1.0 million for the final working capital settlement recorded in the prior year quarter related to the sale of the Company's Japan-based solar racking business within its Renewables segment along with foreign currency translation fluctuations.

The Company recognized a provision for income taxes of $5.9 million and $8.6 million, with effective tax rates of 21.9% and 25.6% for the three months ended March 31, 2025, and 2024, respectively.

The effective tax rate for the three months ended March 31, 2025 was greater than the U.S.

federal statutory rate of 21% due to state taxes and nondeductible permanent differences partially offset by benefits related to tax credit generation or utilization and favorable discrete items due to an excess tax benefit on stock-based compensation.

The effective tax rate for the three months ended March 31, 2024 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.

1 unchanged sentence

The following table sets forth the Company's liquidity position as of (in thousands):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash and cash equivalents $ 25,114 $ 269,480

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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 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 provides for a revolving credit facility and letters of credit in an aggregate amount equal to $400 million and terminates on December 8, 2027.

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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.

As of March 31, 2025 and December 31, 2024, the Company's foreign subsidiaries held $6.7 million and $8.9 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 both its short-term and long-term cash requirements and to continue to invest in operational excellence, growth initiatives, share repurchases and the development of the organization.

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.

In April 2025, the Company's Board of Directors authorized a new share repurchase program of up to $200 million of the Company's issued and outstanding common stock.

The new program has a duration of three years, ending April 30, 2028.

Any such repurchases may be executed using open market purchases, privately negotiated agreements or other transactions.

The repurchase program may be suspended or discontinued at any time at the Company's discretion.

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.

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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, 2024.

The following table sets forth selected cash flow data for the nine months ended September 30, (in thousands):

The following table sets forth selected cash flow data for the three months ended March 31, (in thousands):

Cash provided by (used in):

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Effect of foreign exchange rate changes 8 (142)

Net increase in cash and cash equivalents $ 129,453 $ 67,857

Net (decrease) increase in cash and cash equivalents $ (244,366) $ 47,239

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.

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.

Net cash provided by operating activities for the three months ended March 31, 2025 of $13.7 million consisted of net income of $21.1 million, non-cash net charges totaling $12.4 million, which include depreciation, amortization, stock-based compensation and other non-cash charges, and $19.8 million of cash invested in working capital and other net operating assets.

The cash invested in working capital and other net operating assets was primarily the result of payments made for prior year-end accruals of performance based incentive plans, deferred compensation, and settlements of customer rebates.

Net cash provided by operating activities for the three months ended March 31, 2024 of $53.2 million consisted of net income of $24.9 million, non-cash net charges totaling $11.0 million, which include depreciation, amortization, stock-based compensation and other non-cash charges, and $17.3 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, partially offset by investment in inventory to align with anticipated seasonal sales volumes increases.

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.

Net cash used in investing activities for the three months ended March 31, 2025 of $195.7 million was primarily due to the acquisitions of Lane Supply and the two metal roofing related businesses of $184.6 million.

To a lesser extent, net capital expenditures of $11.4 million, offset by receipt of the $0.3 million final working capital settlement resulting from the sale of the Company's electronic locker business within the Company's Residential segment in the fourth quarter of 2024, also contributed to the net investment of cash.

Net cash used in investing activities for the three months ended March 31, 2024 of $4.4 million consisted of net capital expenditures.

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.

Net cash used in financing activities for the three months ended March 31, 2025 of $62.4 million consisted of common stock repurchases.

The Company paid $60.0 million during the three months ended March 31, 2025 related to repurchase of 914,679 shares under the Company's authorized share repurchase program.

The remainder of the repurchased common stock of $2.4 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 three months ended March 31, 2024 of $1.4 million consisted of common stock repurchases related to the net settlement of tax obligations for participants in the Company's equity incentive plans.

Critical Accounting Estimates

There have been no material changes to the Company's critical accounting estimates during the 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.

There have been no material changes to the Company's critical accounting estimates during the three months ended March 31, 2025 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, 2024.

Recent Accounting Pronouncements

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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 2. Management’s Discussion and Analysis