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, agtech, and infrastructure markets. The Company operates and reports its results in the following three reporting segments: • Residential • Agtech • Infrastructure The Company's continuing operations serve 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. At June 30, 2025, the Company's continuing operations operated in thirty-six facilities, comprised of thirty-one manufacturing facilities and five 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. 22 Table of Contents Recent Trends 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, 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 comfortable 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 the 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 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, 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 July 31, 2025, the Company purchased substantially all of the assets of a privately held business that primarily specializes in the manufacturing of metal roofing systems for $16.0 million in an all cash transaction, subject to customary working capital and other adjustments. This business will be reported as part of the Company's Residential segment. 23 Table of Contents In June 2025, the Company committed to a plan to sell its Renewables business, which represents a strategic shift in operations. The decision was driven by a change in the Company's long-term strategy to focus its asset portfolio and resources on its Residential, Agtech and Infrastructure segments. The Renewables business was classified as held for sale as of June 30, 2025, and met the criteria for discontinued operations. 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. 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 June 30, 2025 Compared to the Three Months Ended June 30, 2024 The following table sets forth selected results of operations data and percentage of net sales for the three months ended June 30 (in thousands): 2025 2024 Net sales $ 309,517 100.0 % $ 273,624 100.0 % Cost of sales 221,682 71.6 % 190,296 69.5 % Gross profit 87,835 28.4 % 83,328 30.5 % Selling, general, and administrative expense 48,329 15.6 % 42,506 15.6 % Income from operations 39,506 12.8 % 40,822 14.9 % Interest expense (income) 354 0.1 % (1,495) (0.6) % Other (income) expense (105) 0.0 % 186 0.1 % Income before taxes 39,257 12.7 % 42,131 15.4 % Provision for income taxes 9,819 3.2 % 11,147 4.1 % Income from continuing operations 29,438 9.5 % 30,984 11.3 % (Loss) income from discontinued operations (3,434) (1.1) % 1,214 0.5 % Net income $ 26,004 8.4 % $ 32,198 11.8 % 24 Table of Contents The following table sets forth the Company’s net sales by reportable segment for the three months ended June 30, (in thousands): Impact of 2025 2024 Total Change Acquisitions Portfolio Management Ongoing Operations Net sales: Residential $ 230,258 $ 214,316 $ 15,942 $ 20,624 $ (2,808) $ (1,874) Agtech 54,092 34,508 19,584 29,364 — (9,780) Infrastructure 25,167 24,800 367 — — 367 Consolidated $ 309,517 $ 273,624 $ 35,893 $ 49,988 $ (2,808) $ (11,287) Consolidated net sales increased by $35.9 million, or 13.1%, to $309.5 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase in revenue was driven by $50.0 million of net sales generated from the first quarter 2025 acquisitions of Lane Supply in the Agtech segment and the two metal roofing manufacturers in the Residential segment. This increase was partially offset by a 4% decrease in organic revenue, primarily the result of delayed project starts in the Agtech segment, along with revenues from the prior year related to the Company's portfolio management action in which the residential electronic locker business was sold at the end of 2024. Consolidated backlog increased 43% to $278 million, as compared to the end of the prior year quarter. Net sales in the Company's Residential segment increased $15.9 million, or 7.5%, to $230.3 million for the three months ended June 30, 2025 compared to $214.3 million for the three months ended June 30, 2024. The revenue increase was largely due to $20.6 million generated from the first quarter 2025 acquisition of the two metal roofing manufacturers, which more than offset portfolio management activities in the prior year related to the sale of the Company's residential electronic locker business. Continued slowness in mail and package product sales, which are driven mainly by new construction starts from the previous year, was offset by participation gains from local market expansion and recently launched building accessories products. Net sales in the Company's Agtech segment increased 56.8%, or $19.6 million, to $54.1 million for the three months ended June 30, 2025 compared to $34.5 million for the three months ended June 30, 2024. The revenue increase was largely due to $29.4 million generated from the first quarter 2025 acquisition of Lane Supply, which more than offset a 28.3% decrease in organic sales related to shifts in large new project starts into the second half of the year. Backlog increased 71% year over year in this segment, driven by both the acquisition of Lane Supply and organic orders. Net sales in the Company's Infrastructure segment increased 1.6%, or $0.4 million, to $25.2 million for the three months ended June 30, 2025 compared to $24.8 million for the three months ended June 30, 2024. The increase in revenue was a result of continued strong execution and demand. Backlog increased 3% from the prior year. The Company's consolidated gross margin decreased to 28.4% for the three months ended June 30, 2025 compared to 30.5% for the three months ended June 30, 2024. The decrease was driven by product line mix, partially offset by overall continued operational efficiencies along with 80/20 initiatives. Selling, general, and administrative ("SG&A") expense increased by $5.8 million, or 13.7% to $48.3 million for the three months ended June 30, 2025 compared to $42.5 million for the three months ended June 30, 2024. The $5.8 million increase was primarily due to incremental SG&A expense incurred by recent acquisitions, partially offset by lower performance-based compensation expense as compared to the prior year quarter. SG&A expense as a percentage of net sales was flat at 15.6% for the three months ended June 30, 2025 and 2024, respectively. 25 Table of Contents 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 June 30, (in thousands): 2025 2024 Total Change Income from operations: Residential $ 43,611 18.9 % $ 43,313 20.2 % $ 298 Agtech (494) (0.9) % 2,282 6.6 % (2,776) Infrastructure 7,083 28.1 % 6,215 25.1 % 868 Unallocated Corporate Expenses (10,694) (3.5) % (10,988) (4.0) % 294 Consolidated income from operations $ 39,506 12.8 % $ 40,822 14.9 % $ (1,316) The Residential segment generated an operating margin of 18.9% in the current year quarter compared to 20.2% in the prior year quarter. 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 (0.9)% in the current year quarter compared to 6.6% in the prior year quarter. Operating margin declined year over year due to costs related to the acquisition of Lane Supply along with the impact from shift in timing of large projects into the second half of the year. The Infrastructure segment generated an operating margin of 28.1% during the three months ended June 30, 2025 compared to 25.1% during the three months ended June 30, 2024. The margin improved year over year driven by strong execution, supply chain management and product line mix. Unallocated corporate expenses decreased $0.3 million from $11.0 million during the three months ended June 30, 2024 to $10.7 million during the three months ended June 30, 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 expense of $0.4 million for the three months ended June 30, 2025, compared to interest income of $1.5 million for the three months ended June 30, 2024. Expense during the current year quarter was the result of maintenance fees associated with the revolving credit facility nearly offset by earnings on certain interest-bearing cash accounts during the three months ended June 30, 2025. Interest income during the prior year quarter was the result of earnings on certain interest-bearing cash accounts. The Company recorded other income of $0.1 million for the three months ended June 30, 2025, compared to other expense of $0.2 million for the three months ended June 30, 2024. The Company recognized a provision for income taxes of $9.8 million and $11.1 million, with effective tax rates of 25.0% and 26.5% for the three months ended June 30, 2025, and 2024, respectively. The effective tax rate for the three months ended June 30, 2025 and 2024, 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. 26 Table of Contents Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024 The following table sets forth selected results of operations data and percentage of net sales for the six months ended June 30 (in thousands): 2025 2024 Net sales $ 555,874 100.0 % $ 514,634 100.0 % Cost of sales 398,186 71.6 % 359,219 69.8 % Gross profit 157,688 28.4 % 155,415 30.2 % Selling, general, and administrative expense 89,527 16.1 % 84,501 16.4 % Income from operations 68,161 12.3 % 70,914 13.8 % Interest income (1,283) (0.2) % (2,245) (0.4) % Other income (29) 0.0 % (166) 0.0 % Income before taxes 69,473 12.5 % 73,325 14.2 % Provision for income taxes 16,920 3.0 % 19,387 3.7 % Income from continuing operations 52,553 9.5 % 53,938 10.5 % (Loss) income from discontinued operations (5,430) (1.0) % 3,206 0.6 % Net income $ 47,123 8.5 % $ 57,144 11.1 % The following table sets forth the Company’s net sales by reportable segment for the six months ended June 30, (in thousands): Impact of 2025 2024 Total Change Acquisitions Portfolio Management Ongoing Operations Net sales: Residential $ 410,252 $ 399,427 $ 10,825 $ 20,624 $ (5,553) $ (4,246) Agtech 99,132 68,535 30,597 44,648 — (14,051) Infrastructure 46,490 46,672 (182) — — (182) Consolidated $ 555,874 $ 514,634 $ 41,240 $ 65,272 $ (5,553) $ (18,479) Consolidated net sales increased by $41.2 million, or 8.0%, to $555.9 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase in revenue was driven by $65.3 million of net sales generated from the current year acquisitions of Lane Supply in the Agtech segment and the two metal roofing manufacturers in the Residential segment. This increase was partially offset by a 3.6% decrease in organic revenue, the result of delayed project starts in the Agtech segment and revenues from the prior year related to the Company's portfolio management action in which the residential electronic locker business was sold at the end of 2024. Consolidated backlog increased 43% to $278 million, as compared to prior year. Net sales in the Company's Residential segment increased $10.8 million, or 2.7%, to $410.3 million for the six months ended June 30, 2025 compared to $399.4 million for the six months ended June 30, 2024. The increase was largely due to $20.6 million generated from the current year acquisition of the two metal roofing manufacturers, which more than offset portfolio management activities in the prior year related to the sale of the Company's residential electronic locker business and a decrease in organic revenue. Continued slowness in mail and package product sales, which are driven mainly by new construction starts from the previous year, was offset by participation gains from local market expansion and recently launched building accessories products. Net sales in the Company's Agtech segment increased 44.6%, or $30.6 million, to $99.1 million for the six months ended June 30, 2025 compared to $68.5 million for the six months ended June 30, 2024. The revenue increase was largely due to $44.6 million generated from the current year acquisition of Lane Supply, which more than offset a 20.5% decrease in organic sales related to shifts in large new project starts into the second half of the year. Backlog increased 71% year over year in this segment, driven by both the acquisition of Lane Supply and organic orders. Net sales in the Company's Infrastructure segment were essentially flat for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. Backlog increased 3% from the prior year. 27 Table of Contents The Company's consolidated gross margin decreased to 28.4% for the six months ended June 30, 2025 compared to 30.2% for the six months ended June 30, 2024. The decrease was driven by product line mix, partially offset by overall continued operational efficiencies along with 80/20 initiatives. Selling, general, and administrative ("SG&A") expense increased by $5.0 million, or 5.9% to $89.5 million for the six months ended June 30, 2025 compared to $84.5 million for the six months ended June 30, 2024. The $5.0 million increase was primarily due to incremental SG&A expense incurred by recent acquisitions, partially offset by lower performance-based compensation expense as compared to the prior year. SG&A expense as a percentage of net sales decreased to 16.1% for the six months ended June 30, 2025 compared to 16.4% for the six months ended June 30, 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 six months ended June 30, (in thousands): 2025 2024 Total Change Income from operations: Residential $ 74,871 18.3 % $ 77,659 19.4 % $ (2,788) Agtech 2,891 2.9 % 4,890 7.1 % (1,999) Infrastructure 12,341 26.5 % 11,111 23.8 % 1,230 Unallocated Corporate Expenses (21,942) (3.9) % (22,746) (4.4) % 804 Consolidated income from operations $ 68,161 12.3 % $ 70,914 13.8 % $ (2,753) The Residential segment generated an operating margin of 18.3% in the current year compared to 19.4% in the prior year. Operating margin declined year over year, primarily as a result of product mix and lower volume during the current year. The Agtech segment generated an operating margin of 2.9% in the current year compared to 7.1% in the prior year. Operating margin declined year over year due to costs related to the acquisition of Lane Supply along with the impact from the shift in timing of large projects into the second half of the year. The Infrastructure segment generated an operating margin of 26.5% during the six months ended June 30, 2025 compared to 23.8% during the six months ended June 30, 2024. The margin improved year over year driven by strong execution, supply chain management and product line mix. Unallocated corporate expenses decreased $0.8 million from $22.7 million during the six months ended June 30, 2024 to $21.9 million during the six months ended June 30, 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. The Company recorded interest income of $1.3 million for the six months ended June 30, 2025, compared to $2.2 million for the six months ended June 30, 2024. The decrease in interest income during the current year was the result of earnings on lower average balances on certain interest-bearing cash accounts during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Other income for the six months ended June 30, 2025, was essentially flat as compared to the six months ended June 30, 2024. The Company recognized a provision for income taxes of $16.9 million and $19.4 million, with effective tax rates of 24.4% and 26.4% for the six months ended June 30, 2025, and 2024, respectively. The effective tax rate for the six months ended June 30, 2025 and 2024, 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. 28 Table of Contents Liquidity and Capital Resources The following table sets forth the Company's liquidity position as of (in thousands): June 30, 2025 December 31, 2024 Cash and cash equivalents $ 43,291 $ 269,480 Availability on revolving credit facility 394,946 395,069 $ 438,237 $ 664,549 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 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 June 30, 2025 and December 31, 2024, the Company's foreign subsidiaries held $6.9 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 new authorized program as further detailed below. 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. 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. 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, 2024. 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. 29 Table of Contents Cash Flows The following table sets forth selected cash flow data for the six months ended June 30, (in thousands): 2025 2024 Net cash provided by (used in): Operating activities of continuing operations $ 48,630 $ 90,411 Investing activities of continuing operations (221,554) (7,326) Financing activities (62,499) (1,447) Discontinued operations 8,954 (1,789) Effect of foreign exchange rate changes 280 (173) Net (decrease) increase in cash and cash equivalents $ (226,189) $ 79,676 Operating Activities Net cash provided by operating activities of continuing operations for the six months ended June 30, 2025 of $48.6 million consisted of income from continuing operations of $52.6 million, non-cash net charges totaling $22.7 million, which include depreciation, amortization, stock-based compensation and other non-cash charges, and $26.7 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 increases in accounts receivable and inventory, partially offset by increases in accounts payable, largely the result of seasonal demand. Net cash provided by operating activities of continuing operations for the six months ended June 30, 2024 of $90.4 million consisted of income from continuing operations of $53.9 million, non-cash net charges totaling $18.5 million, which include depreciation, amortization, stock-based compensation and other non-cash charges, and $18.0 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. Investing Activities Net cash used in investing activities of continuing operations for the six months ended June 30, 2025 was $221.6 million, primarily due to the acquisitions of Lane Supply and the two metal roofing related businesses of $192.9 million, and net capital expenditures of $29.0 million largely related to the purchases of two facilities. These investments were partially offset by a receipt of the $0.3 million final working capital settlement received in connection with the sale of the Company's electronic locker business within the Company's Residential segment in the fourth quarter of 2024. Net cash used in investing activities of continuing operations for the six months ended June 30, 2024 of $7.3 million was due to net capital expenditures. Financing Activities Net cash used in financing activities for the six months ended June 30, 2025 of $62.5 million consisted of common stock repurchases. The Company paid $60.0 million during the six months ended June 30, 2025 related to the repurchase of 914,679 shares under the Company's authorized share repurchase program. The remainder of the repurchased common stock of $2.5 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 six months ended June 30, 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. 30 Table of Contents Critical Accounting Estimates As a result of the three separate businesses acquired in 2025, the Company has reinstated critical accounting estimates related to measuring and recognizing the fair value of assets acquired and liabilities assumed in significant business combination transactions. Additionally, there have been no other material changes to the Company's critical accounting estimates during the three and six months ended June 30, 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. Measuring and Recognizing the Fair Value of Assets Acquired and Liabilities Assumed in a Significant Business Combination When the Company acquires a business, the Company allocates the purchase price to the assets acquired and liabilities assumed in the transaction at their respective estimated fair values. The Company records any premium over the fair value of net assets acquired as goodwill. Significant judgment is necessary to determine the fair value of the purchase price. The allocation of the purchase price involves judgments and estimates both in characterizing the assets and in determining their fair value. The way the Company characterizes the assets has important implications, as long-lived assets with definitive lives, for example, are depreciated or amortized, whereas goodwill is tested annually for impairment, as explained above. With respect to determining the fair value of assets acquired in a significant business combination, the most subjective estimates involve valuations of long-lived assets, such as identified intangible assets and property, plant, and equipment. The Company uses all available information to make these fair value determinations and engage independent valuation specialists to assist in the fair value determination of the acquired long-lived assets. The fair values of long-lived assets are determined using valuation techniques that use discounted cash flow methods, independent market appraisals, and other acceptable valuation techniques. The significant assumptions used to estimate the value of the intangible assets included discount rates, customer attrition, and certain assumptions that form the basis of the forecasted results (e.g., revenue growth rates and operating profit margin). The significant assumptions related to estimating the fair value of the intangible assets above are forward looking and could be affected by future economic market conditions. 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.