Gibraltar Industries, Inc. Aktie

Good morning, ladies and gentlemen, and welcome to the Gibraltar Industries First Quarter 2026 Financial Results Conference Call. [Operator Instructions] This call is being recorded on Thursday, May 7, 2026.

I would now like to turn the conference over to Carolyn Capaccio. Please go ahead.

Thanks, Joanna. Good morning, everyone, and thank you for joining us today. With me on the call is Bill Bosway, Gibraltar Industries Chairman, President and Chief Executive Officer; and Joe Lovechio, Gibraltar's Chief Financial Officer. The earnings press release that was issued this morning as well as the slide presentation that management will use during the call are both available in the Investors section of the company's website, gibraltar1.com.

Gibraltar's earnings press release and remarks contain non-GAAP financial measures. Tables of reconciliation of GAAP to adjusted financial measures can be found in the earnings press release that was issued today. Further, please note that continuing operations exclude net sales and operating results of the renewables business, which was classified as held for sale and as a discontinued operation with second quarter 2025 results. the eBOS portion of which was subsequently sold on February 20, 2026. The acquisition of OmniMax International closed on February 2, 2026.

Also, as noted on Slide 2 of the presentation, the earnings press release and slide presentation contain forward-looking statements with respect to future financial results. These statements are not guarantees of future performance and the company's actual results may differ materially from the anticipated events, performance or results expressed or implied by these forward-looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can also be accessed through the company's website.

Now I'll turn the call over to Bill Bosway. Bill?

Thanks, Carolyn. Good morning, everybody, and thanks for joining us for today's call. A lot of interesting and exciting things to talk about. We'll take you through our Q1 results, which include OmniMax operations for the last 2 months. And then we'll update you on our integration and synergy initiatives, our deleveraging progress and our 2026 guidance, which we are reaffirming today. And I'll talk about some positive trends we have seen in April and early May. And then we'll open the call for questions.

So let's start by turning to Slide 3, and we'll talk about the first quarter. So the first quarter is very dynamic and busy with the closing of the OmniMax acquisition in the middle of the quarter on February 2. The subsequent launch of our integration efforts, managing through some additional inflation of aluminum in February and March and incremental commodity inflation in March post the start of the Middle East conflict. All being said, I'm very pleased with how our team responded and executed in the quarter. And I was excited to see good operating performance in March as we exited the quarter and head into Q2.

So starting with the quarter. For the quarter, adjusted net sales were $356 million, up 44.6% driven by 2 months of having OmniMax as part of Gibraltar and our metal roofing and structures acquisitions. From a market perspective, residential remains soft, and we'll talk more about that today. And despite the start of the Middle East conflict in late February, we actually started to see customer order activity improve and become more consistent in March. Agtech and infrastructure markets remain solid with good backlog, but both businesses had some volume move into the second quarter, which we'll talk about. This is really related to some project schedules and timing of some shipments.

Adjusted EBITDA increased 16.1% and adjusted EPS was down 50%, driven by a net interest impact of $14.6 million and unfavorable price material economics from a 16% increase in aluminum market prices during the quarter, which really impacted mainly residential, but we also had increases in steel resin and fuel prices in March at the start of Middle East conflict. Despite the inflation in the lower volume and absorbing some inefficiencies with the OmniMax close in the middle of the quarter, we did perform very well in March with adjusted EBITDA accelerating to high teens, which is supportive of our plan going into the second quarter.

We used $35 million of operating cash flow, which included payments related to closing of the OmniMax transaction, and we applied the $70 million of the proceeds to eBOS divestiture to debt reduction. We ended the quarter with net debt of $1.2 billion. And finally, we continue to make progress with the sale of the renewables racking business, which are still targeting completion in Q2.

So with that now, let's dig into the business segments, and we'll have Joe start with residential.

Thanks, Bill. Let's start with residential on Slide 4. Net sales increased just over $100 million to $281 million, which is up 56%, driven by the inclusion of 2 months of OmniMax results of operations, which contributed $89 million and our metal roofing acquisitions, which contributed $18 million. Organic growth for the segment decreased 3% with building products down 3.8% and mail and package down 1.5% as the overall residential market continued to remain soft. Our metal roofing acquisitions, which we acquired at the end of Q1 2025 performed well. And overall, we are seeing a good start to Q2 in our residential segment.

Adjusted operating EBITDA margins were down due to lower volume and inflation in the quarter, particularly with aluminum increasing 16% and other commodity inflation ramping up in March post the start of the conflict in the Middle East. Early in the quarter, we implemented price increases to help offset 14% aluminum price inflation in Q4 2025. And subsequently, we executed price increases in March and April across 14 of our brands and operating units to counter the additional aluminum inflation in Q1. The timing of our price increases and therefore, our price realization is governed by a well-defined approval process that takes 30 to 60 days, depending on the customer, the amount requested and the justification. Our teams did a good job addressing Q1 inflation in a timely manner, but we were not able to offset the full impact during the quarter.

With these increases now in place, we expect price material economics to be positive in Q2. As well, there was no incremental tariff impact in the quarter. And as it relates to the recent changes to Section 232 of the Trade Expansion Act, we are proactively managing any potential impact. Adjusted EBITDA margin for the quarter came in at 15.6%. But as Bill mentioned, we performed well in March with adjusted EBITDA accelerating to high teens, which is supportive of our plan going into the second quarter.

Let's move to Slide 5, we'll talk a little bit about the U.S. residential roofing market. The market remains soft in Q1 with ARMA reporting shingle shipments down 10% versus prior year, with results bearing quite widely by region and/or state. When we see big changes or swings in a particular quarter, specifically related to a weather event that occurred in an earlier period in a region or a state. And you can see, for instance, Florida down pretty significantly in Q1.

General customer feedback remains consistent around affordability and interest rates. Limited weather impact in '25 helping create demand in '26. A lot of focus on inventory optimization while waiting for the season to start. And then, of course, most recently, the conflict in the Middle East and the timing when that may be resolved. We believe we outperformed the market in Q1. Our retail sales and units were down 6% to 8%, where our sales dollars were down to flat, and our sales to distribution were also down roughly the same.

In contrast to year-over-year ARMA shipments, Q1 shipments were up 41% sequentially. It's an increase of approximately 3x the average Q4 to Q1 increase we have seen during the last 4 years and likely driven by a correction to the market over-indexing on inventory correction in Q4 2025, some pull ahead related to upcoming OEM and shingle price increases, and I also believe some better end market demand with some green shoots in certain markets and regions. And although it's early in the season, we have started to see positive activity -- we started to see positive activity in April which is really reflected in our actual April shipments and bookings, which were on plan and ahead of 2025 levels. We'll see how the market evolves. And once the conflict in the Middle East is resolved, I expect the market to have tailwinds as oil and gas prices improve, I think mortgage rates move back to pre-conflict levels, which, if you recall, the 30-year mortgage rate went below 6% back in February, and existing home sales activity starts to improve.

Until then, we're going to focus on winning more of the market. And our team sees there is quite a bit of opportunity given the U.S. has an installed base of over 80 million existing aging homes at an average age of 40-plus years. And a significant multifamily market, which is hard to pick up that today or in the future will require obviously new roofs or roof maintenance and repair.

Let's move to Slide 6. I want to discuss some of the commercial synergies and what we're doing to expand our participation in the market and what we've done in a relatively short period of time. When we announced the OmniMax deal, we emphasize the importance of being able to shape the future of our industry versus having someone shape it for us. And over the last 24 months, with customer consolidation happening across the industry and new ownership in the industry, we believe then and we believe even more now that we are and will be an important partner for our customers moving forward.

The combination of Gibraltar and OmniMax creates the local presence on a national basis to do things for this industry's others cannot. So we now have 39 locations serving most of the U.S. And by itself, this footprint and our local presence doesn't necessarily guarantee success, what matters is our ability to provide consistent high-level performance through obviously great service and speed and flexibility that has the right products and obviously, great quality from each of our locations. So we have a good foundation with which we're going to further involve. But there are really 3 core initiatives that you're going to see us start to focus more on as we go forward to help our customers even more.

Number one, it's become very obvious that we've had conversations with our customers about this that we can help streamline their supply base, particularly with customers that currently between 50 and 100 suppliers, making products similar to what we make. And this is a tremendous 80/20 opportunity where we simplify a supply chain, we think will drive substantial productivity and efficiency for customer supply chain. And being local on a national basis gives us a chance to do that better than anyone else can.

Secondly, there's a lot of emphasis around what kind of digital solutions are going to be needed to connect more seamlessly with customers to increase service levels while also reducing cost and reducing the cost of doing business with us. So this takes investment in technology, and we are in a position to support this effort going forward again, both on a local and national basis.

And third, and I think this is our biggest 80/20 opportunity we have that we can bring to the industry but also bring to our business. And that's our ability to better optimize codes and specs and material selection. And that's going to be done by working through local municipalities, working with our contractors as well as distributors and retailers and really focus on SKU and product harmonization. And we'll do that, which is a lot of heavy work, but pretty exciting stuff as well as bringing in new products. And again, the result is taking an 80/20 approach to an entire quote-to-cash process that our industry has grown up with. And we're again in a position to do that.

If you step away and say, well, today, we actually do believe we bring the broadest product and service offering to the market. And that has, in a very short period of time, enabled us more geographic expansion, some cross-selling opportunities and private label programs I'm going to talk about now. Now in a short period of time, we've made good progress with each of these 3 initiatives. First, we expanded our presence geographically. We established new business in over 40 branch locations across 9 different customers located in Texas, Florida, the Midwest, Northeast, Southeast and Mid-Atlantic regions. These are branches we were not serving before when Gibraltar and OmniMax were independent of each other. Secondly, we are now -- we now have over 60 locations where existing customers are buying a new product categories from the combined business, and there are over 1,700 branch locations in the U.S. So a lot of opportunity in front of us to do more and more cross-selling. Our ventilation family of products is a great example, but there are others as well where we've had some success. And then thirdly, we have manufacturers with adjacent and complementary product lines that are starting to source private label product from us or grow their private label business with us.

So I believe some of this work, not all of it, it's starting to create new business and/or opening new doors for us. These commercial synergies also represent participation gains. And we will realize $4.3 million in our 2026 EBITDA as a result of these initiatives. As I mentioned earlier, we started to see positive results in April with our shipments and orders on plan and [indiscernible] 2025 levels. I think these initiatives are contributing accordingly to some of the trends that we're currently seeing.

Now let's turn to Slide 7, and I'm going to give you an update on integration and what we've been doing over the last 90 days with really a lot of effort over the last 75 days. First, the combined business has evolved from an organization transition when we started to integration discipline focused on building and executing synergy capture, inventory optimization, network rationalization opportunities and further optimizing procurement. The integration management office and our 22 integration teams have delivered 500-plus milestones and organizationally, we've accomplished quite a bit as well. We've completed Phase 1 of the organization structural work, with Phase 2 to be completed in May and in June. We have integrated and consolidated Gibraltar's corporate supply chain team and are leveraging this team to support other businesses, including the mail and package business. And we've combined and communicated a single 2026 financial plan and goal set of goals for the new team.

Let's turn to Slide 8, and I'm going to discuss a little bit on how the integration management office is now pitting. In February, in our paper earnings call, I shared our leadership team, the role integration management office structure and the process to drive integration across the combined business in the first 100 days. The first 100 days focused primarily on organization transition to build one culture, ensuring we get our internal structure right and build an ownership mindset across the team. Our teams have done excellent work to create and execute charters and work plans for effectively every function in the business. We now have a good foundation in place as we move into our next phase, post-100 days, where we'll narrow focus to 11 high-value work streams with key synergies, continue to execute the 2026 work plans and start working on plans for 2027 and finalize all our business cases for the remaining work streams. It's an important step as we move from integration to transformation, which means moving into a way that we expect the organization to execute the business going forward.

Now we'll move to Slide 9, I'll give you a quick update on our 2026 synergy savings. As our team digs in, we continue to identify additional cost and commercial synergy opportunities. And we have raised our synergy commitment an additional $2 million to $26 million with $16.3 million realized in our full year 2026 adjusted EBITDA. Over 50% of our 2026 commitment has been executed and realized savings will ramp up in the second quarter and accelerate further in the second half of the year. We have also created a corporate synergy category where we are identifying structural and spend reduction opportunities across Gibraltar we continue to develop the portfolio and further leverage shared service capabilities. Recently we identified $600,000 in insurance premium savings based on a rate differential with the same provider, which will be realized on renewal of the policy. Looking at every cost line item, you find things like the example of insurance premium where we think there'll be more and more opportunity. And as I mentioned earlier, we have already consolidated, integrated our corporate supply chain team.

Finally, I want to recognize our commercial team. It's really coming together. This is -- we've had the right leadership. We've got with great experience and a very good reputation and really focused on execution. We also have very strong leaders dedicated specifically to business development and sales enablement. This is really foundational for us as we drive more wins and participation gains.

So with that, we'll move on to Agtech, Slide 10. Okay. So Agtech net sales grew about $10 million or 23.6%, driven by the Lane Supply acquisition, which continues to perform as expected with solid demand. This offset organic volume decreasing approximately 3% in the quarter, with project movement during the year. Total backlog of $84 million supports the full year plan, but is down 13% in Q1 and with the removal of the Arizona CEA project. Adjusted operating and EBITDA margin decreased mainly due to lower volume and the impact of a full quarter results of the Lane acquisition in 2026 which included January and February, which are the lowest margin months of the year.

Now let's move to infrastructure on Slide 11. Net sales decreased $2.1 million or 10% as 2 separate weather events occurred in March that resulted in our factory losing power and impacted our production schedules. One event caused the entire community where we operate to lose power and the second event was the lightning strike to the plant's key power source. As a result, some customer shipments were pushed into April. Backlog decreased 3%, driven by the timing of project awards, while quoting and bid activity remains strong. Segment adjusted operating EBITDA margins declined due to the lower volume as well as business mix.

Let's move to Slide 12 to touch on our balance sheet and cash flow. The company's current position with respect to cash allocation will be to keep a minimum of $20 million to $25 million of cash on hand, use the revolver is needed to fund seasonal needs and pay down debt with excess cash flow. During the quarter for continuing operations, Gibraltar used $35 million in cash from operations and used $41 million of free cash flow or 11% of sales. Of the $35 million in special charges that occurred in Q1 related to the close and initial integration efforts of OmniMax, $25 million of those were cash. Also, we used $43 million for working capital, including the use related to OmniMax as is typical given the seasonality of the business.

Capital expenditures were $6 million or 1.6% of sales in the quarter. At quarter end, the drawn balance on the revolver was $25 million and our cash on hand was $20 million. Debt repayment was $75 million, including the proceeds from the eBOS renewables sale, so as a result, at quarter end, our net debt on the balance sheet was $1.2 billion, and our net leverage ratio as defined by our credit agreement, which includes $35 million of anticipated cost synergies and the pro forma adjusted EBITDA was 3.9x. The availability on our revolving credit facility was $467 million and total available liquidity was $487 million.

Let's talk now on Slide 13 about our deleveraging road map. As we noted on our last call, our priority and focus is to deleverage as quickly as possible over the next 2 years through as shown on the left side, a plan of strong EBITDA delivery and synergy realization, working capital optimization and utilization of cash tax benefits, planned uses of cash include capital expenditures of 2% to 3% of sales, interest payments on our debt and special charges related to the acquisition transaction, integration and restructuring-related costs. The special charges we reported today represent approximately 2/3 of the charges we expect to record this year.

During the second year post transaction close, we expect continued strong EBITDA margin, the realization of additional synergies, benefits from continued working capital optimization and cash taxes, lower interest payments as our debt level is reduced and a reduced amount of special charges. We expect these factors to drive additional free cash flow and our net debt down even further. We may also create additional liquidity from other noncore asset divestitures. Our deleverage path targets a leverage ratio of approximately 2.5x adjusted EBITDA in 24 months ended first quarter of 2028. Again, during this 2-year period, our capital allocations will be focused on funding the growth of our business through capital expenditures and on debt reduction.

Also during the quarter, the renewables business, which has been reclassified as discontinued operations, reached a settlement agreement regarding unresolved warranty claims related to projects with certain discontinued products installed dating back as far as 2017. This settlement in the amount of approximately $25 million is expected to be paid in Q2 and has been factored into our deleveraging plan.

Let's now move to Slide 14 to talk about our key assumptions for 2026 for continuing operations. First, given OmniMax closed on February 2, we will recognize 11 months of ownership in 2026. The expected contribution from OmniMax plus synergy realization, which will occur both within legacy OmniMax and the legacy Gibraltar business is approximately $570 million to adjusted net sales and approximately $70 million to adjusted operating income and $120 million to adjusted EBITDA. As we execute our integration efforts across the combined business, we expect synergies to start to flow through in Q2 and accelerate in Q3 and Q4. More broadly, in residential, we see a continued soft market as we already fixed.

In Agtech, we have removed the Arizona project from our plan and will continue to monitor the funding status supporting. Within infrastructure, engineering backlog and quoting activity remains strong. In regard to free cash flow for continuing operations, given the seasonality of earnings in the business, the ramp up in synergies and working capital initiatives starting in Q2 and the cash outlays of the special charges related to the close and initial integration of OmniMax that already occurred in Q1, we would expect free cash flow generation throughout the rest of the year. We continue to expect CapEx to be 2% to 3% of sales, free cash flow of approximately 8% of sales, and we will be focused on debt paydown.

Lastly, some additional assumptions to factor in. With the combined company, we expect depreciation, amortization and stock compensation expense to be approximately $90 million for the year, which includes approximately $40 million annual assumption for noncash amortization related to intangibles due to the Omnimax acquisition. We anticipate approximately $50 million in special charges related to the acquisition, transaction, integration and restructuring costs, of which 2/3 already occurred in Q1. We expect greater than $70 million in interest expense, financing and commitment fees, which will be dependent on the timing of our debt repayments and interest rates. And lastly, we are assuming a 26% tax rate.

Now let's move to Slide 15, where we are reconfirming our 2026 full year guidance. For continuing operations, we still expect consolidated net sales between $1.76 billion and $1.83 billion compared to $1.14 billion in 2025. Adjusted operating income between $222 million and $238 million compared to $151 million. Adjusted EBITDA between $310 million and $326 million compared to $185 million for 2025. GAAP EPS between $2.40 and $2.80 compared to $3.25 in 2025, including the expected impact of special charges. And adjusted EPS between $3.65 and $4.05 compared to $3.92 in 2025.

Now let me turn it over to Bill.

Just to summarize for today, a lot to unpack and a lot of heavy lifting, as I mentioned. We have accomplished a lot of the heavy lifting and made good progress in the quarter, and we continue as we move into Q2. And the entire team has contributed, obviously, over the last 90 days to make that happen. We are transforming the business, as we said, going into the year, and we're going to continue to do that.

In residential, and I would say in regards to the near-term market situation, we're going to stay really focused on winning more with our customers. We're going to continue to expand as we showed earlier geographically. We're going to continue to do more cross-selling initiatives as well as support our private label programs. And if the market remains soft throughout the year, for whatever reason, I'd say we're already working on all the right integration costs and commercial synergy capture and price management initiatives to deliver our plan.

In our Building Products, leadership team and IMO teams will maintain their intensity and discipline and focus on executing our plan while improving safety, service levels, productivity, 20 initiatives and winning more business. In Agtech, the business is in a position to deliver a solid year with $84 million of backlog at the end of Q1 with robust design and bid activity across North America in process. We also expect infrastructure to deliver another good year and transition some key projects in engineering backlog to order backlog over the next 2 quarters.

So with that, let's open the call up and we'll take some questions.

[Operator Instructions] The first question comes from Daniel Moore with CJS Securities.

Start with resi. Obviously, good to hear the progress you're making thus far in Q2. Just has the inventory drawdown at retailers, I know it's seasonal, has that largely run its course? Where would you say customer inventories are now kind of on a historic basis? And maybe just talk about the monthly cadence of volume growth both at legacy Gibraltar and OmniMax through Q1 and thus far into Q2?

Yes. Thanks, Dan. The -- we think inventory levels are much better aligned than than they have been in the last 2 or 3 years within demand. We've talked about that in the last quarter. And I think it differs a little bit by -- between channels. So distribution versus retail. And I think the retail guys seem to be a little bit more cautious with how the trying to manage inventory as they wait to see the season evolve. And I would say on the distribution side, probably less so there. But remember, contractors source about 80% of their needs through distribution. So distribution may see a little bit -- may see sooner or a little bit more of that demand neutralizing in the in the marketplace than maybe the big box guys do, that may be part of it.

But I would say right now, the general feedback from customers is the inventory is in a decent position. It probably varies a little bit by product line, which I don't have stats on that. But as we think about our POS results and we see -- it gives us some visibility of how inventory is positioned we can see it's in a better position than it was last year. I would also say it really -- the other aspect of this is the regional piece. So as you get into the season, you see the weather patterns start to kick in through the the spring season. You'll start to see orders move based on some of those events in different regions. And so wherever folks are a little bit short inventory. We've seen them make corrections pretty quickly as they've had some sustained weather, and we'll continue to see that as we go forward.

As it relates to our situation. It's been a good pleasant surprise to see how we got off to a start in April with the demand profile that we've seen as well as the first 4, 5 days in May has been pretty consistent as well. And I think a piece of that is there are some green shoots out there. We're a much broader company now where we have access to more of U.S. than we did 6 months ago. So we're seeing more opportunities. Some of the work that we've talked about with cross-selling is starting to kick in, some of the participation gains as we pick up more branches are starting to kick in.

I don't think the end market is highly different than it was before. I just think we're taking opportunities to participate more in it than we were before. And I do think inventory is in a better position right now. So you add all that up, for us, it's been a decent start to the second quarter. I'm a little bit surprised that we're ahead of last year's levels. And it's good to see that. I'd like to see that continue, and we'll watch that closely.

I think, as I mentioned earlier, also, people are waiting to see what happens with the Middle East. Is that going to be prolonged? Because if people think back to late February, we had 30-year mortgage rates go under 6%. We had existing home sales really start to pick up. And then boom, conflict happens and rates go back to 6.5%, existing home sales start to fall. So I do think there's going to be some tailwinds that could occur. I think the other thing with the Middle East conflict, which I know this is common sense for everybody, but it brings an overhang to everybody. Just kind of thinking about what this could mean and it causes consumer sentiment challenges.

So between interest rates correcting a bit, gas prices coming down, I think it makes people feel a little bit better. Mortgage rates starting to get back in line as this conflict comes to an end, hopefully sooner than later. That should help as we move into the year. So anyway, that was kind of off the bat path of your question, but inventory seems to be better aligned with demand and our demand, I think, is benefiting from that, but also some of the other activities I mentioned.

That's helpful. And you mentioned if the market doesn't pick up, obviously, you'll just keep focusing on participation, but is there sort of a market growth rate or band for the back half of the year that you have in mind that kind of underpins the fiscal '26 guidance?

I don't think our -- when we went into the year, I think we had growth in 4%, 5% was built into the base plan for the residential business, if you're talking specifically about that. And so we still feel good about that as we go into the season based on what we're seeing so far. But I tell people also internally, this is kind of our mantra. If the market doesn't improve or if it stays soft, it gets a little bit softer, whatever be the case, we're doing all the right things because everything that we're doing to integrate the business to get the right cost structure in place, with the right people, the right seats on the bus, the synergies that we're executing, we're not doing that because the market is soft. We're not reacting to that. We're doing that because we're building an organization that we think is the right way to approach to this industry and serve it over the next 5, 10 years.

So at the end of the day, things got a little more challenge in the market, I would say we're proactively ahead of the game relative to making sure that we put ourselves in a position to operate in whatever market situation does come. So I'm not anticipating the market to be to be bad or to be worse than it is right now with what we have in our plan. But what I am making sure people understand is we are taking and executing all the things that you would do, assuming that the market would be bad because of the way we're trying to build out the business. So we're kind of accomplishing 2 things at one time, so to speak, if you think about it that way.

Okay. And then one more and I'll jump back. But on the cost and margin side. You've always been pretty adept at passing along input costs, rising steel, aluminum. And I appreciate the color, Joe, on the pricing mechanisms. Is the same generally true for OmniMax, I guess, could the integration cause any incremental delays in how you're sort of passing those through? Or just talk about how they have handled and your expectations for the cadence of margins as we get into Q2 and beyond?

Yes. Well, first of all, I would say, OmniMax historically probably is better than we have been relative to discipline and centralization of how they manage price. We were a little bit more decentralized in the way we ran our business. They're more centralized. And in the world of pricing in an inflationary environment that's played well for them, and they're very good at that. And that ties all way from the commercial organization I mentioned earlier, which is really coming together, tying in directly to the financial leadership and having a centralized control. And now we are one company with that approach. And that's really helped us, I think, accelerate some of the price actions we've taken in a short period of time utilizing their process and their systems and their discipline associated with doing that. So actually, that was a great pickup for Gibraltar of having that approach, which I think is going to serve us even better going forward than what we've been able to do in the past, which has been pretty good ourselves.

The thing that I'll point out for the quarter that was kind of interesting. I mentioned in Q4 that -- we had a late price increase in legacy Gibraltar business that came in in January, trying to catch up with the aluminum inflation of 14% in Q4. And so that inflation continued in January and the first part of well throughout the quarter, but we had to overcome that in our legacy business. And we subsequently, through the price increases that Joe mentioned in March, we brought that into the the system that we use now as a combined company and that enabled us to catch up to get the -- to overcome the first quarter incremental inflation, not offset it all, but at least get the price in place. So as we go into Q2, our price cost alignment is much better in total for the business than it would have been otherwise.

So yes, I'm quite pleased with the way OmniMax has always approached pricing, their system, the centralization thereof and the connection within the business, and we are now using that same approach under one team for the total business, so that's going to be helpful.

And those are price increases, not surcharges, so presumably get some benefit when...

I'm sorry?

No, go ahead. I apologize.

No, I was going to say, yes, we tried to stay away from surcharges for that very reason. Increases kind of stick a little bit better and stick a little bit longer, but yes, everything that we've done are actually price increases, whether it's aluminum, steel, resin, vinyl and even fuel. So that's our mentality. I'm not saying it's 100% there, but we have very little surcharge type approach across the entire business in our residential business whatsoever. So it's really about price increases.

The next question comes from Walt Liptak with Seaport Research.

So just a follow-on to the last question first. I guess the price cost drag that happened on aluminum in the first quarter, how much was that, like in dollars? And how much of a profit benefit you think you'll pick up as you catch up on that price cost?

Yes. When you look at the amount aluminum we bought in the quarter, and you look at the delta on the increase from January 1 to end of the quarter, it's a $9 million to $10 million headwind that you would -- that came our way. Now obviously, that assumes that headwind in total would assume we had no inventory and so on and so forth, which is not the case. So we're able to offset a chunk of that because we had aluminum on hand at a lower cost.

But we didn't have enough to cover everything. So we were able to chip away at that as best we could. We did get some pricing in March, you don't get a whole lot in the quarter that affect to go after that. But we -- that helped offset that. We did, obviously, more 80/20, we tried to accelerate more of our synergies sooner than we could, but those are time constrained. We were relatively new into the process of bringing the business together. So -- but that was what we dealt with, and we tried to minimize that. And I think we did a pretty good job in minimizing that a headwind to a much lower level. We probably end up netting out a couple of million dollars worth of incremental costs in the quarter associated with that. That will recover as we go into next -- that we go into next quarter as we go into Q2, I would say.

Okay. Great. And I'd like to try one on the integration cost out. I wonder if you could maybe give us a feel for how you're feeling about the integration, it sounds like it's good. But I mean maybe get a little bit granular. It looks like logistics that's more of a headwind, like where are you feeling better about things? And are there any planned or things that you could sell to help generate cash in the first year and increase some of your cash inflow?

Well, first on the integration. I see 2 questions here, Walt, I think, one is how we do on integration and the third is are you asking about the portfolio?

Right. If there's assets you can sell, if there's duplicate real estate in some areas, some regions or...

Yes, sorry. Yes. So we kind of just walk down the list, if you will, which we've been working pretty hard in -- let me pull my list up in front of me so I can just answer your question a little bit more succinctly. So supply chain, we've got -- originally had $6 million in plan. We've taken it up to $7 million. We're going to get about $3.7 million of that. That's going to flow through that both direct and indirect spend. That is mainly driven by contracts that we have to have expire before we can actually get more implemented, if you will. That's not -- that doesn't surprise us so much, but steel aluminum contracts tend to be signed in October, November in the previous year that turn you through the year. So as we get towards October, November of this year, those contracts will come up for renewal, and we'll have an opportunity to then negotiate and will help us as we finish up the year and get into next year.

On the indirect side, we're working on that as we speak, that those tend not to have long-term contracts. So that's where you see a lot of savings this year. And that's everything for MRO and packaging. We're looking at all our leases, everything we lease, whether it's buildings or forklifts or what have you. And so the team is doing a pretty good job. That tends to be -- there's some of that across the entire footprint, and there's some that's very specific to operations. And so we're going to continue to work that pretty hard. I mentioned earlier, we've had a really -- a lot of progress on pulling the supply chain team together. That supply chain team is working their tails off on this, but we're also identifying some other opportunities to support other parts of Gibraltar as well. So supply chain, I think feel really good about not just for what we do this year, but as we roll into next year.

On the SG&A side, people think about organization mainly. We talked about Phase 1 being implemented. Phase 2 will come here this month and next, and we will have our organization work done. So the second half of the year, you get that full run rate effect of that as we move into that. But the other SG&A buckets are kind of interesting as well. I mentioned one example of in line items like the insurance premium, $0.06 -- $600,000 is a $0.01 in EPS for us. So as you go through each of those hundreds of line items, whether it's COGS or SG&A we're just attacking every one of those to see what the opportunities are. And so that's how we're able, I think, each month and kind of keep adding to our list of things that we think will be helpful.

80/20, and this kind of gets at what you're talking about, 2 things going on there. Yes, we have is around the facility optimization front that we're starting to recognize that could be opportunities for us. And that is kind of on the map, if you will. And we're working that as we speak. And that's twofold. That's one, do you need all those locations. And we're not talking about a bunch here, Walt, and we lease most of this anyway. But it's really more about are we optimized in those facilities to support distribution and retail accordingly. But a lot of work going on relative to 80/20 on the facility optimization aspect.

And as I alluded to, we have our new leader of product innovation that is starting next Monday, one of our big efforts is really going to be around our biggest initiative, which is product line simplification. And if I break that down a little bit further. That's really harmonization around SKUs. What we're really trying to do there is simplify from raw material purchase all the way through to finished product, how we can change the supply chain, how we can drive cost out of that supply chain by simplifying what the industry actually should be using versus what it has always grown up with. And we think that's going to actually start with work internally, gathering data, what we're doing to each of our 39 facilities, but it's also sitting down with core municipalities and talking about why they had what they have.

And so it's big 80/20 effort. We're researching that accordingly, but it's one of our biggest strategy initiatives that we'll have. And you'll see that start to kick off this year, but really in earnest start to read through next year. It has a lot of positive implications for us that we're excited about. We are doing other types of PLS work as we speak, and we'll continue to do that. So 80/20 becomes a pretty big bucket for us going forward.

I talked about commercial, so I won't be repetitive here, but I think what surprised us here is how quickly we were able to actually win incremental business, line up new branches and doing more cross-selling in a short period of time. If you think about it, we closed on February 2. It's not like February 3, the sales team was together, and we figured this out. It takes a while to get the teams together. But really in the last 60 days, I'd say we've done a pretty good job working with customers on some of these opportunities. And I just think there's a lot more there. We have work to do, and we're working on it. But I think we're off to a pretty good start on that front.

Logistics is actually related to the 80/20 initiative on harmonization. As we harmonize SKUs and product lines, it has a huge impact on how we drive our logistics. And that's why those 2 are linked, as I referenced that, I think, in our last call. We're not saying there's not logistics opportunities that we're working on with negotiating freight rates and all that. We're doing that. What I'm referring to here is more the broader strategy of logistics and as it ties to our product portfolio going forward that we're producing out of these 39 locations to support customers.

And then finally, corporate. We added this bucket which we didn't have last quarter. What we start to recognize a little bit is skating where the puck is going to be as the portfolio evolves. But in the short term or the near term, I mentioned earlier, we've consolidated our supply chain team. While that is pretty meaningful in a lot of ways, if you think about residential being over 80% of what we do, it made sense to actually combine forces and build the right structure around what we need to support that business. And so we went ahead and proactively said, well, let's figure out how to integrate some of these corporate teams now and the corporate supply chain team was one of those that kind of came into the fold. So we're doing more of that. There will be other things across the board as the portfolio continues to simplify and the majority of what we're doing becomes more residential focused. So sorry for the long answer, but hopefully, that gives you a little bit more perspective on what the teams are focused on every day.

Yes. Yes, thanks for the detailed answer, and it's great to hear that 80/20 is such a big focus of these integrations.

Walt, it will be -- the single biggest thing that we'll do in the next couple of years is attacking the harmonization and simplification of the product lines that we have. Absolutely. That's a big piece of what we're doing.

Okay. And then one for Joe around the free cash flow. I wonder if you could help us and get a little bit more granular around second quarter free cash flow? And then how -- what that number might look like and then the back half of the year. Is this going to be a hockey stick as we go into the year? Or is it loaded to the fourth quarter?

Yes. No, I think from a continuing ops perspective, we've talked about the fact that you kind of had 2/3 of these special charges in Q1, that had a cash impact. That won't recur to the same level as you kind of go through Q2, 3 and 4. Because we've got 1/3 left to go of those between now and the end of the year. I would probably think about those as probably fairly even by quarter from here on out. So more a little bit each quarter, not all in Q2 or back-half weighted.

Then on the working capital side, I talked about a use in Q1. We obviously, as we bring the teams together, we'll now start in earnest the working capital initiatives in Q2, and we'll expect those to drive benefits as we go into the back half of the year. And then the third piece is just kind of the earnings seasonality. And obviously, Q2 and Q3 are kind of more of the earnings season, particularly as it relates to residential. So those are probably the pieces kind of think through in terms of how the seasonality will unfold. So that would imply that it's not anticipated to be a hockey stick or back half weighted into Q4.

[Operator Instructions] Next question comes from Julio Romero from Sidoti & Company.

Following up on some of the residential commentary. You mentioned the uplift in distribution was a little bit better than what was in retail in April. As I understand, you guys are about 2/3 distribution, 1/3 retail and residential. So I think that dynamic would be helpful to you guys. How much more pronounced was that uplift in distribution versus retail? Did that surprise you? And curious if that factors into your confidence in passing through price across the segment?

Yes. Well, yes, I think it's -- I don't think it's changed. We saw more uplift, I think, in distribution in the last 60 days. And I think part of it, Julio, honestly, is the branches are that much closer to the contractor. So they see demand in a real-time way differently than probably a walk-in big box kind of situation. I think that plays a lot into it. And that's partly, again, you have such a large portion of your contractor needs are being served by the branches.

So when you have weather starts to evolve like we saw in March and in April, those branches, I think, racked a little bit quicker. And I think that's part of why the uplift was sooner for them. I think the DIY guys, as you think about it, Home Depot would probably say something like at a Home Depot stores are -- maybe the uplift is not as strong as what SRS is. So they see both sides because they own both. And I think that's a big piece of it is you just have your branches at the ground level that are seeing real-time demand that they can act on. And so they're closer to some of those things that maybe drive things in a different way.

But I think the relationship between the channels in terms of how much will drive through both isn't going to change dramatically this year. I just think in the last 6 weeks, that's what we've seen. We've just seen distro grow at a faster rate. Now we are picking up branches, as I mentioned earlier, which is good. The cross-selling, we talked about really at the distro level, and it's easier to go prime branches or win branches and do cross-selling in a shorter period of time than it is to go incremental business in a short period of time with retail. Retail tends to go through a product line review or a very lengthy process.

So really in a short period of time, we were able to go win some things with quite a few branches through distro. And that's just a different DNA than dealing with retail when you're thinking about winning new stuff as well. So you got that. But I think the feedback I mentioned earlier with retail seems to be more cautious on inventory. I think partly coming off of that destocking and having to do that, I think we have seen probably just a little bit more cautious approach to managing how they're on to optimize inventory until they start -- season start. So I don't know if that kind of gets your questions, but hopefully it does, but that's my perspective.

It's good comps for sure. Thank you, Bill. Joe, that the factory in Agtech that lost power in the first quarter in March, how much of an impact was that in the first quarter? And I think you mentioned the customer shipments were pushed out. Has that been fully caught up and realized in the second quarter?

I'll take that just because I was involved. We lost about 7 days of production, yes, all in March at a different time. So as Joe has mentioned, if you guys recall, Illinois, Ohio, Indiana got -- we've gotten hammered with tornadoes and big storms. And so the town where we're located lost power substations, et cetera, got knocked out, that hurt. And then we actually had a strike on our transformer feeding into the factory at a separate storm.

What caused the issue isn't so much that the power was out for a long period of time is you're running all your machines and then bone your power goes out, those machines lock down. And so if you have 1 or 2, it's not that big of a deal and your maintenance crews can go -- your maintenance team can go fix that. When all of your equipment goes down simultaneously, that's what caused the delay in bringing an extra expenses and costs to help us reset all the machines, check all the tooling and ramp them back up. That's where it gets hit.

Large companies would tend to think of this as business interruption insurance that you go after. It's not something we've ever actually done. We've never had this kind of a set of events happen in a particular location. But the team is able to work through that and make those shipments up in April. And so we think we're back on track in that regard. But -- and then we had some mix effect as well that hit the quarter, but that's the impact of those 2 weather events. I don't like to use weather. I just feel those are pretty extraordinarily interesting to have a small town and a factor into small town get it twice in a 3-week period.

Yes. Makes sense for sure. It sounds like the integration is going well according to plan, first 100 days. You up your synergy target and your realization target. I think the realization was up by a little more than $1 million, I believe. Does that -- is that incremental $1.3 million all fourth quarter weighted? Would you expect it a little bit earlier? And where does that take the '27 kind of run rate and realization figure?

Yes. So $16.3 million is what we realized. The incremental we add is $1.2 million, that will start flowing in actually in Q2 and Q3 and Q4. So all of our -- so I mentioned earlier, so if you think about $26.2 million of annual run rate, we've implemented or executed over half of that. And now of that, that we've executed, you'll start to see that flowing now into the rest of the year. So I mentioned earlier, we have Phase 2 that we will implement in our organization structure in May and June. So you get a half year full year benefit, if you will, because that will be done in the second quarter. So Q3, Q4, we'll see a full year run rate of that, if you will.

And so that's how a lot of our things are timed that way. Again, not to use an example again, but the insurance premium, when that policy renews is when we'll get the $600,000 will start to flow through. And that's time -- every one of these things is time down to when we think it's going to flow into each month. And that's how we get the realization associated with when we've actually implemented or agreed or negotiated whatever it is we negotiated to get to the $26 million to start with. Does that make sense?

It does. That's all for me. Thanks very much.

We have no further questions. I will turn the call back over to Bill Bosway for closing comments.

Yes. So again, thanks, everyone, for joining today. I know there's a lot to unpack. There's a lot of heavy lifting going on in the quarter. Not so easy to follow, if you will, in some respects. But we're in the middle of the transformation. It's going as we had expected. We're excited about what we've seen so far and how we enter Q2. I do want to thank everyone for taking the time with us today. We will be at the Seaport Annual Growth Discovery Conference and the CJS Annual Conference in May and also the Wells Fargo 16th Industrials and Materials Conference in June, and really look forward to connecting back with you to talk about Q2 when the quarter is done. So thanks again. Appreciate it.

Ladies and gentlemen, that concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Greetings, and welcome to the Gibraltar Industries Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Carolyn Capaccio of Alliance Advisors IR. Thank you. You may begin.

Thanks, Christine. Good morning, everyone, and thank you for joining us today. With me on the call is Bill Bosway, Gibraltar Industries' Chairman, President and Chief Executive Officer; and Joe Lovechio, Gibraltar's Chief Financial Officer.

The earnings press release that was issued this morning as well as the slide presentation that management will use during the call are both available in the Investors section of the company's website, gibraltar1.com. Gibraltar's earnings press release and remarks contain non-GAAP financial measures. Tables of reconciliation of GAAP to adjusted financial measures can be found in the earnings press release that was issued today.

Further, please note that continuing operations exclude net sales and operating results of the renewables business, which was classified as held for sale and as a discontinued operation with the second quarter 2025 results, the eBOS portion of which was subsequently sold on February 20, 2026.

Adjusted results also exclude the net sales and operating results of the residential electronic business -- sorry, electronic locker business, which was sold on December 17, 2024. The acquisition of OmniMax International closed subsequent to quarter end on February 2, 2026.

Also, as noted on Slide 2 of the presentation, the earnings press release and slide presentation contain forward-looking statements with respect to future financial results. These statements are not guarantees of future performance, and the company's actual results may differ materially from the anticipated events, performance or results expressed or implied by these forward-looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can also be accessed through the company's website.

Now I'll turn the call over to Bill Bosway. Bill?

Thanks, Carolyn, and good morning, everyone, and thank you for joining us today. We have a lot to discuss today. First, we're going to take you through our fourth quarter results, which are in line with our previously announced range. And then we're going to spend quite a bit of time on the OmniMax acquisition, which closed on February 2, how we're actually executing our integration plan, our core assumptions that we have built into our 2026 plan, and then we'll take you through our 2026 guidance.

I think you'll hear me say this more than once today, how excited we are about the acquisition as it really does accelerate our strategy to be a strong leader serving the building products market. In fact, with OmniMax, our Residential segment will represent over 80% of Gibraltar's total business in 2026. So the segment and hence, the acquisition played an important role in our 2026 guidance. So we'll get through that, and then we'll open up the call for questions and discussion.

So let's get started with Slide 3, and we'll talk a little bit about 2025. Fourth quarter results were in line with our previously announced top and bottom line ranges. We delivered 17% adjusted net sales growth driven by our metal roofing and structured acquisitions, offset by a soft residential end market, significant channel inventory rightsizing and timing of price cost alignment actions in the building accessories business. Lower new construction starts impacted the mail and package business, and we had Agtech project volume shift into 2026.

Consolidated bookings continue to be strong in the quarter with backlog up over 102% over prior year. We delivered operating -- I'm sorry, we delivered adjusted operating margin of 10.8% and EBITDA margin of 13.6%, resulting in adjusted EPS of $0.76. We generated $32 million in operating cash flow and free cash flow as a rate to sales of 9%.

For the year, we delivered 12% adjusted growth to $1.14 billion, operating and EBITDA margins of 13.3% and 16.3%, respectively, resulting in adjusted EPS of $3.92. We generated $137 million of operating cash flow, ending with $116 million in cash for the full year and free cash flow of 8%.

As I mentioned, we closed on the OmniMax International acquisition, and just last week, we completed the sale of Terrasmart's eBOS business for $70 million. The sale process of our renewables racking and foundations business is ongoing, and we anticipate completing the process in early Q2. Proceeds from both transactions will be applied to debt reduction.

So for 2025, to summarize, it was a year of solid growth despite some persistent end market challenges, particularly in our residential market. We remain focused on evolving our portfolio with investments in metal roofing and building accessories as well as the recent divestiture of our renewables eBOS business.

Now we'll go into each of the business segments, and Joe is going to start with Residential.

Thanks, Bill, and good morning, everyone. Let's start with Residential on Slide 4. Our adjusted net sales for our Residential segment increased by $15 million or 8.9%, driven by our metal roofing businesses, which were acquired last year and continue to perform well, driving overall segment growth.

Total segment organic growth decreased 4%. Our buildings accessories business was down 2.7% in a soft market, coupled with channel inventory rightsizing. And the mail and package business was down driven by ongoing slowness in single and multifamily new construction starts.

Turning to operating margins. Adjusted operating and EBITDA margins decreased 320 and 280 basis points, respectively, as we experienced cost deleveraging on lower volumes in building accessories, and mail and package as well as business and product mix, timing of price cost alignment actions as well as integration investments across the metal roofing businesses.

So if you will, I just want to give a quick update on the U.S. roofing market on Slide 5. So if we can turn there. The residential market, including the roofing market was softer than expected for the entire second half of 2025, and we experienced a further downshift during the fourth quarter. General affordability, interest rate levels and I'd say the limited number of weather events relative to 2024 were the main headwinds during the year.

And as a result, we saw a significant effort across our channels to further reduce inventory in the fourth quarter. To put things in perspective, our building accessories business posted 2.5% growth through the first 3 quarters of the year, but experienced down revenue of 2.7% in the fourth quarter. Although we're disappointed with our revenue in Q4, I believe we outperformed the market, whether measured against our shingle shipment data or retailer POS results.

And as we move into 2026, I think affordability and interest rate headwinds remain. And although channel inventory seems to be better aligned with end demand, we expect customers to continue closely managing inventory and restock less than normal in the first quarter. As well, the snowstorm that hit in late January, early February that blanketed a very large portion of the U.S. has contributed to an inconsistent demand pattern so far in the first quarter, and we'll talk more about this when we discuss our 2026 guidance.

One other point, just a brief comment on the recent IEEPA tariff ruling. We do not expect any incremental impact with the ruling as steel and aluminum, our core commodities are governed by Section 232 and 301 tariffs, which remain in place as is. But we'll continue to monitor the situation and respond to any changes going forward accordingly.

Let's move on to Agtech. So turning to Slide 6. Agtech net sales grew approximately $20 million or 46.6%, driven by the Lane Supply acquisition, which is performing as expected with solid demand. This continued strength offset an ongoing funding delay of a large produce project in the U.S. as we have previously discussed.

Organic volume decreased, while total backlog at quarter end increased 239% with organic backlog growing 187%. Adjusted operating margin decreased 12 percentage points due to lower volume in the quarter in the organic business and a prior year benefit of a past due customer payment of approximately $2 million.

Adjusted EBITDA margin decreased 11 percentage points as it excludes the impact of higher amortization resulting from the acquisition of Lane and its related intangible assets.

Now let's cover infrastructure on Slide 7. Infrastructure net sales grew $4.4 million or 24.3%. Backlog decreased 4%, driven by the timing of project awards, while quoting and bid activity remained strong. Expansion in both segments adjusted operating and EBITDA margin was driven by 80/20 initiatives, volume mix and the accelerating ramp up of the new steel shape supplier.

Now let's move to Slide 8 to touch on our balance sheet and cash flow at year end and wrap up fourth quarter reporting. At December 31, we had cash on hand of approximately $116 million and $394 million available on our revolver. During the year, we generated $137 million in cash from operations and $91 million of free cash flow or approximately 8% of sales. We did not repurchase shares in the fourth quarter. Our debt free balance sheet and undrawn revolver at the end of the year put us in a strong position to finance and close the acquisition of OmniMax on February 2 of this year.

So now I'll turn the call back to Bill.

So now we're going to turn our attention to talk about the integration of OmniMax and how it feeds into our 2026 guidance. So if we can go to Slide 10. I just want to have a quick recap of the rationale for the acquisition of OmniMax.

I said earlier, we're excited to have OmniMax join us. If you think about it, it really helps further strengthen our leadership position in the building products market. And both us and OmniMax have really transformed our Residential businesses over the last 5 years, and our brands and our product lines and our footprints are very complementary. I think in being able to join forces today accelerates our building products strategy by at least 2 years.

Fundamentally, as the leader in our market, I think we're in a much better position today to help shape the future of the industry rather than have someone else shape it for us. And there really were 4 key tenets around supporting the acquisition.

Number one, OmniMax is a leading manufacturer of roofing accessories and rainware management products, and they have great contractor recognized brands and a very strong reputation for service and quality. OmniMax is strategically aligned with our core competencies and offers significant value creation with our residential business, and we'll talk about that a little bit later. It significantly enhances our scale in the Residential segment and helps us collectively deepen our presence with customers and channels as well as across a number of geographies.

OmniMax also brings a complementary footprint and product offering, which I'll share in just a bit that puts us in a great position to serve more MSAs and also serve unique local, regional and national requirements.

And finally, the combination creates an attractive financial profile with a lot of synergy opportunity, both at the commercial and cost level, which we will also go into here shortly.

So let's move to Slide 11. And I just want to show our combined presence. In the U.S., we have between 80 million and 85 million single-family homes, and we have another 40 million of multifamily residential units, and each one of these structures obviously has a roof. And we make the products which are integral to the roof, and they're designed with the intent of making sure your roof doesn't leak and also make sure you have the correct airflow in your attic.

Collectively, now that we're together, we now serve over 70% of the 80 -- top 80 MSAs in the U.S. and had a huge -- or have a unique footprint with capability to support local customer product and service requirements. Our collective footprints fill in geographic gaps for each other. And together with our complementary product lines, we really believe we're going to unlock new opportunities in existing channels at the local, regional and national level, and we're already starting to see that just 2.5, 3 weeks in.

Now I want to dig into our approach and how we're integrating the business and how we're going to create value with the combined business. So let's turn to Slide 12. And I'd say since February 2, which isn't that long ago, our leadership team has been really busy implementing foundational building blocks and finalizing the roadmap for 2026.

As you know, with any integration, the first step is to make sure the organization is stabilized as it's a lot to take in for everybody in the business. So, stabilization ultimately at the end of the day is effectively building a common culture for the new organization. And to do this, I think it's important to know the starting point for the entire team. And so the leadership team in just our second week together asked the combined organization to participate in a survey focused on understanding the different ways that we work. It's interesting the data, the results revealed more similarities across the team than not, particularly around strong customer orientation, collaboration and a one team mindset as well as empowerment. I think a lot of this may have to do with the fact that we're in the same swim lanes, that we're in the same industry, and we have a lot of good experience.

Secondly, it's been important for the team to establish integration governance, which we have done through the existing OmniMax integration management office. And third, once you start this journey, you have to have disciplined execution on a daily basis to get some wins and to build some momentum. As an example of a small, but I think a really important win in the last 3 weeks is we can now see daily order entry and shipments and delivery performance for each of our 39 locations across the combined company. It's a great first step in being able to track, measure and address opportunities across the entire network.

So now over the next 100 days, we are focused on a few things. Number one, organization transition, getting the structure right and building an ownership mindset across the team. We are also building integration discipline as we execute synergy capture and frame additional synergy opportunities. With that, we expect performance lift in our service reliability, our commercial excellence upgrades and participation gains and margin expansion. And later in the year, you -- we will turn our attention to optimizing our product portfolio using our 80/20 toolbox.

Now to dig into a little bit more detail of the first 100 days, let's move to Slide 13. Prior to the close, we actually had about 4 weeks to prepare for the Day 1 launch while simultaneously putting some of our foundational building blocks I just mentioned in place.

Fundamentally, we had to establish the leadership team and name our business leader, which we'll review here on the next slide. We had to prepare an integration office and integration governance to support the IMO and workstream teams for this effort. We also finalized our 20 workstreams and identified the team leads and sponsors for each.

We developed a financial baseline and synergy targets for the organization. And obviously, we had to create and execute our Day 1 plan, which effectively went very well. We had internal communication plans launched simultaneously across 39 locations where we had representatives from both Gibraltar and OmniMax present for 2 days to answer questions and support the local team. We also launched external communications with suppliers and customers, all which went well.

We are now just a few weeks into our 100-day plan, and we are very active. We have established a leadership team, as I mentioned, and we will soon be finalizing and implementing the structure and roles for Level 2 and Level 3 managers in the organization. We have also established 2026 performance targets, finalized the highest priority synergy initiatives and aligned goals and incentives for the team. Our functional teams are also very focused on their highest priority initiatives within their functions and across other functions as well.

After a successful first 100 days, we'll start to transition from an integration focus to more of a transformation focus as we move from integrating the 2 businesses to further transforming the way the combined business will operate going forward.

Let's move to Slide 14, and I want to share with you the Building Products structure and the team. This is an excellent leadership team. It's led by John Krause, who is the CEO of Gibraltar's Building Products business. John's team is built with strong leaders from both companies, and we are very fortunate to have great and experienced leaders overseeing each function of the business. The team has a broad experience in building products that understands the market, customer and competitive landscape.

The integration and transformation office you see has been a critical part of the OmniMax operating structure and culture for the last 3 years, and it will continue. We have supplemented the IMO with an experienced third-party advisory team that has also worked with OmniMax over the last 3 years and has familiarity with the team and the business.

And finally, we are investing in product innovation by adding a leadership position, which we will hire from outside the organization. New product development, optimizing our product portfolio and driving 80/20 initiatives are important for our business, and this new position is going to help drive much of that.

Now I want to switch gears and turn to Slide 15 and drill into a little bit more detail how we're actually integrating the companies. And I think this is important for everyone to understand.

First thing I want to say though, I do want to recognize our IMO and our integration planning teams as well as the leaders and sponsors that are driving them. And I know many of them are listening to the call. So I do want to say thank you to everyone for your leadership and tenacity this process. I know it's hard work, takes a lot of time, and I appreciate this group of leaders being the hub of the integration wheel, and I know all our teams do as well.

But I want to start first with why centralized IMO is so important to integration success. And because every organization faces some set of challenges with integration. Typically, it's things like enabling teams to own plans and execute beginning Day 1. It's doing it all in a way that preserves the best of both companies' businesses as well as the teams and cultures.

And then working with enough speed and practicality to achieve necessary targets and making sure that we're following through and not letting things fall through the cracks and making sure that we track implementation of everything we're doing day in, day out.

It's important, IMO creates clear guidelines and has authority to keep the organization aligned with the strategy to set the company up for success, but also to manage change management and communication plans and keep everyone informed about how things are progressing each and every day.

So OmniMax created an IMO 3 years ago, and we're going to continue to leverage its success and build on it as well. This team is made up of 5 full-time resources and frankly, all very talented and high-potential individuals. I'm really excited with the group, just tremendous. And 2 of which have recently joined the group from the Gibraltar Building Accessories leadership team, and both of these folks have good backgrounds in operations, sales, product management integration. So a very strong team.

Our IMO oversees and works with 15 functional integration planning teams, we call IPTs. These teams have sponsors and leaders, which are responsible for developing work plans around the top integration priorities for their respective functions. The functional IPTs also have support from the third-party advisory team, which often helps with things like integration processes, scheduling, resource management and oftentimes data analytics.

The IMO and IPTs meet daily and weekly to review progress and make sure we stay on track. And the IMO is also responsible for managing 4 subteams focused on communications, culture, organization and talent and then synergies. As well, the IMO is governed by the steering committee, which is comprised of my corporate team, my leadership team, John Krause and his leadership team, the IMO itself and the third-party advisory team.

Our committee work meets weekly and/or biweekly. We review progress, and we really try to address as many existing or potential hurdles or roadblocks for the teams. I'd say overall, the IMO is working very well in bringing the necessary rigor and process and governance and operating discipline required to make this integration successful.

So with that, now let's turn to Slide 16. I want to talk about our 2026 synergies. Again, as a reminder, being at this now for 2.5 weeks, 3 weeks, we came into '26 with an original plan for synergies of $20 million, which are really focused on cost synergies alone, generated through 80/20 initiatives, SG&A initiatives, logistics initiatives and supply chain initiatives.

Our current plan has actually improved, and we expect to execute $24 million, which will include both cost and commercial synergies. And our commercial synergies mainly involve executing cross-selling, which is happening a little -- which will happen a little bit sooner than we originally anticipated. So that's really good news.

Also, we have moved our logistics initiatives to start '27 versus '26, given the work needed to complete -- to be completed prior to starting execution. Effectively, this effort is tied to our 80/20 product and SKU harmonization initiative, which will make it easier to optimize logistics and shipping from each facility in the future.

Now of the $24 million implemented in '26, we'll realize just over $15 million of that in our full year EBITDA results, and that is in our guide. And we'll carry over the remaining $9 million into 2027. Now the difference in the run rate implementation of $24 million and the realized synergies of $15 million is just simply implementation timing.

So I'll give you an example. With our supply chain initiatives, negotiated savings we have will be realized when existing supplier contracts are up for renewal, and many of those happen to turn over later in the year.

So there's been a lot of great work over the last 3 weeks on our synergies. And frankly, it's exciting to see we are finding more opportunities. And I suspect and expect our teams will find even more over the next 100 days.

Now with that, I'm going to turn it back over to Joe and he will take you through the financing of the transaction.

So let's move to Slide 17 to review financing for the OmniMax transaction. We entered into 2 new equal sized senior secured term loan facilities in an aggregate principal amount of $1.3 billion and a new upsized $500 million revolving credit facility and used the proceeds from the financing together with cash on hand to fund the acquisition and pay related transaction fees and expenses.

We received ratings from the agencies of Ba3 and BB-, and our key covenants include a total net leverage ratio of 5.25x, which steps down to 4.25x over time and a minimum interest coverage ratio of 3:1, both of which we feel very comfortable with. This flexible debt structure also facilitates an efficient debt paydown.

So then moving to Slide 18, I kind of want to go through our deleveraging roadmap here. So our priority and focus is to deleverage as quickly as possible. The drivers of our plan are shown on the left side of this slide. In year 1, we expect strong EBITDA margin percent and synergy realization. We are beginning to execute our working capital optimization opportunities and expect to start utilizing our cash tax benefits.

We planned capital expenditures of 2% to 3% of sales, interest payments on our debt and special charges related to acquisition, transaction, integration and restructuring-related costs, with all of these assumptions driving our free cash flow guidance of approximately 8% of sales this year. Following the recent sale last week of our Renewables eBOS business for $70 million, we used those proceeds to pay down debt, and we expect to be below $1.1 billion of net debt at the end of the year.

In year 2, we expect similar drivers, including the realization of additional synergies as well as interest payments at a lower amount as our debt level is reduced. In addition, we do not expect the same level of special charges, all of which we would expect to drive free cash flow of approximately 10% of sales and our net debt to below $900 million. We also have possible liquidity from additional noncore asset divestitures.

In terms of the timing of deleveraging, the graph on the right shows our planned path, and we're targeting a leverage ratio of approximately 2.5x adjusted EBITDA in 24 months of close or first quarter of 2028. During this period, our capital allocations will be focused on funding the growth of our business through capital expenditures and on debt reduction.

So now let's move to Slide 19 to talk about 2026. Given all the moving parts with the acquisition of OmniMax, we thought it was important to provide some 2026 key assumptions upfront and provide the right context as well as highlight some important considerations.

So first, OmniMax delivered good full year 2025 results in both revenue and adjusted EBITDA. As a reminder, OmniMax made 2 acquisitions last year, one early in the year and one later in the year. So the reported revenue for 2025 was approximately $518 million, but adjusting to include the full year benefit of those acquisitions in '25 and to exclude special charges related to acquisition transaction, integration, restructuring and other related costs, OmniMax's 2025 revenue was approximately $566 million and adjusted EBITDA was approximately $109 million.

More broadly, within Residential, we see a continued soft market in the first half, improving in the second half. In Agtech, we have removed the Arizona project from our plan, and we'll continue to monitor the funding status accordingly. And within Infrastructure, engineering backlog and quoting activity remains strong.

So as we think about Q1 earnings, there are a few things to keep in mind. Given the continued soft market, plus only realizing 2 months of OmniMax results based on the closing date, the ramp up of synergies later in the year and the impact of interest expense of the initial elevated debt balance, we would expect less than 20% of our adjusted EPS in Q1. From a GAAP EPS perspective, we would expect approximately 2/3 of the special charges to occur in Q1 as most relate to the closing of the transaction.

Now in regards to free cash flow, given the lower Q1 earnings profile, the initial cash outlays for expenses related to the closing of the acquisition in February and the fact that synergies and working capital optimization benefits are expected to ramp throughout the year, we would expect limited free cash flow generation in Q1 with a ramp up throughout the rest of the year. Overall, we feel really good about our plan to deliver double-digit operating cash flow as a percentage of sales and free cash flow of 8% of sales for the year.

Lastly, some additional assumptions to highlight. With the combined company, we expect depreciation, amortization and stock comp expense to be approximately $90 million for the year, which currently includes an approximately $40 million annual estimate for noncash amortization related to intangibles due to the OmniMax acquisition.

We anticipate approximately $50 million in special charges related to acquisition, transaction, integration and restructuring costs, and we expect greater than $70 million in interest expense, financing and commitment fees, which will be dependent on the timing of our debt repayments and interest rates. And lastly, we are assuming a 26% tax rate.

So having covered some of the key assumptions and consideration, let's move to our 2026 guidance on Slide 20. For continuing operations, we expect consolidated net sales between $1.76 billion and $1.83 billion compared to $1.14 billion in 2025. We estimate the benefit of OmniMax in 2026 of approximately $570 million of revenue for the year, which would help drive approximately 57% growth at the midpoint and approximately 5% organic growth.

Adjusted operating margin between 12.6% and 13% compared to 13.3%. Adjusted EBITDA margin between 17.6% and 17.8% compared to 16.3% for 2025 or 140 basis points expansion. The expected contribution from OmniMax plus synergy realization, which will occur both within the legacy OmniMax and the legacy Gibraltar businesses is approximately $70 million for adjusted operating income, which includes the estimated noncash impact of the intangibles amortization that I previously mentioned and $120 million for adjusted EBITDA.

GAAP EPS between $2.40 and $2.80 compared to $3.25 in 2025, including the expected impact of special charges related to the acquisition, transaction integration and restructuring-related costs. OmniMax remains on track to be accretive to adjusted EPS in 2027, the first fiscal full year post close. Given the contributions of OmniMax and synergies and the expected interest expense and finance fees, OmniMax is slightly dilutive in 2026 of about $0.09 per share. So our adjusted full year EPS guidance is between $3.65 and $4.05 compared to $3.92 in 2025, and our free cash flow guidance is approximately 8% of sales.

So now let me turn it back over to Bill.

So wrapping things up, just want to reiterate a few key takeaways from our discussion. Number one, first, we are conservative in our plan given the Residential will represent 80% of Gibraltar in 2026 and our assumption that the residential market will remain soft, particularly in the first quarter, maybe the first half.

Q1 will be our lowest earnings quarter given our highest debt balance immediately post close and acquisition charges absorbed in the quarter. Q1 free cash flow will be limited, but given the lower earnings profile, our transaction closing expenses and the timing of working capital benefits, we do expect double-digit operating cash flow for the year as a percent of sales.

I think fourth, integration is very organized and active with much accomplished in our first 24 days. The leadership team is in place. The IMO is up and running and the 20 IPTs are in full swing with leaders and sponsors. Five, we're ahead on synergies, $24 million of run rate synergies, 4 more than the original plan will be implemented with $15 million flowing through to EBITDA starting in Q2 and accelerating sequentially through Q4.

And finally, we maintain a clear path to 2.5x leverage by the end of 2027. So a lot to take in there with the change in the business and the acquisition of OmniMax.

But with that, let's open up the call for questions and discussion.

[Operator Instructions] Our first question comes from the line of Daniel Moore with CJS Securities.

So just to elaborate on the Residential outlook, softer in H1, some recovery in H2. Overall, you're expecting the market to be roughly flat, up a little. Just any details there? And how should we think about your ability to increase participation year 1 as you put these 2 businesses together?

Yes. Thanks, Dan. So yes, I'd say we came in -- we built a plan around the marketplace that is described as you said. I think volumes are going to be down a little bit in Q1 and Q2. And then there are some green shoots that are happening out there. It's been a little bit challenging in the first quarter. I had referenced this. We don't like to talk about weather as an excuse. So I'm not suggesting that. But we saw order patterns in the first 60 days swing wildly because of that snowstorm that blanketed such a large portion of the U.S. I think NOAA had said at one point that 25% or close -- between 25% and 30% of the roof tops in the U.S. were covered with snow.

The point there isn't that we couldn't get people to work. The point there is contractors couldn't get on the roof. So we saw big swings with order entry in a 2-week or 3-week period. So it's been a little bit challenging to try to get a consistent demand cadence. But I would suggest that coming out of Q4, which is pretty big of a downshift, we think Q1 is also going to be a little bit soft, not because there's more inventory coming out. There's probably just less restocking going into the channel as we get closer to the start of the season, which, as you know, really starts in earnest in March. I think we'll get a better idea how things evolve in the next few weeks. But -- so we've been conservative with our assumption of how that volume is going to pick up as we get out of -- as we go through Q1 and into Q2.

From a participation gains perspective, I mentioned earlier that some of our commercial synergies that are coming earlier than we thought, part of that is associated with what you just suggested. And so yes, cross-selling as a synergy is great, but it often means, in this case, it's participation gains. So we'll start to see that flow into the year as well. And I used some examples earlier prior to this call where we have product lines from both businesses that now are accessible for different parts of the country that weren't before.

So you'll see some of that start to kick in a little bit sooner than we originally anticipated, which is good news. And we have a number of initiatives to drive that this year, and that's where the participation gains will come. So that's how we're setting up.

And the last thing I'd say, sorry for the long answer, but with a soft market, I'm probably even more grateful now that you have the 2 leaders coming together to be able to do some things that you maybe not be able to do on your own. And being in a soft market, that gives us even a better shot to drive more participation as we go through the year. So that's how we see things evolving from an end market perspective.

Helpful. Joe, as it relates to the cadence, I really appreciate the color, adjusted earnings less than 20% in Q1. How are you thinking about kind of H1 versus H2 on that same metric this year relative to what would be a more normal or balanced year?

Yes. So you wouldn't see -- we wouldn't expect to see as much of that difference from Q1. We wouldn't expect to see as much of that difference in Q2, but some difference is probably the way I would characterize it, again, as we talked about kind of that softer market in H1. And so then you'll have basically the balance of that more in the second half, probably ramping up through Q3 and Q4 is probably the way to think about that.

Okay. And one more, I'll jump back in queue. But the decision to split the sale of Renewables, just how did you think about fair value for the eBOS business and perhaps more importantly, the remaining racking business, just by magnitude, obviously, a lot bigger, but lower margin. How should we think about kind of what fair value could look like for that piece?

Yes, Dan, let me start with -- people were asking us why we didn't close when we thought we originally closed. And part of the answer to that, which we, at the time, really couldn't talk much about openly is you have 2 different companies that are buying these pieces for different reasons. The strategic fits for them are different. And so that's kind of item number one. That's what delayed us getting this done for eBOS business where it is.

So -- but I'd also say that eBOS is more oriented towards the utility space than our racking and foundations business, which is more [ DG ] space. And so margin profile of the eBOS business is pretty strong. And to your point, the racking business lower than that. And so as you think about as we've gone into Disc Ops and you can see over time, as we've tracked and taken writedowns quarterly, you'll get an idea of what the overall valuation of the 2 is. And as we get closer to closing the deal, we'll have a better feel for where we're going to land. But that's how I would think about this going forward.

Got it. And then just lastly, Joe, the free cash flow, 8% of sales, is that inclusive of the $50 million integration expense and any other kind of nonrecurring charges this year?

Yes.

Our next question comes from the line of Walt Liptak with Seaport Global.

Congratulations on the finding of or the extra synergies, the $24 million that's positive. I wonder if you could talk about that a little bit. And secondly, more kind of holistically, I think part of the confidence that a lot of investors have in the integration of these 2 businesses is the 80/20 process. So it was good that that was front and center. And I'm wondering why -- or if or why you wouldn't bring that forward a little bit more because you had a comment in there that you're waiting until the fourth quarter to do the data analysis, but it sounds like you're doing some 80/20 now. Wouldn't 80/20 kind of starting as you want to proceed, make the integration less risky and maybe, frankly, a little bit more fun because of the simplicity and the disciplines around the 80/20 process?

Yes. Good point, Walt. So a, we do have 80/20 synergies in the plan and probably a little more than originally thought. My comment about the logistics -- the specific logistics work that we're embarking on -- it is going to be more 80/20 based, but it's going to take some time because what you have effectively is we need to go through and what we're learning now that we're -- the team -- the workstream is working on this.

The first step is we need to harmonize around product and SKUs, which are being produced across 39 different locations. So getting that data, first and foremost, is the first step. But the harmonization of that is just not simply harmonizing the data. It's actually making some engineering changes. It's getting specs more commonized and a host of other things. That's the heavy lifting. It's going to take a little more time than originally planned for the logistics savings.

So I think now we're just getting a better feel for what it means to get that done. It doesn't mean that the work is not in the flight. It just means the timing of the savings is coming later because of the magnitude of what we're realizing we need to be done. So it is fundamentally around the 80/20 backbone of how you get started, right. It's -- first and foremost, you got to gather the data. We're doing it across a much larger footprint with a lot of SKUs that we now then need to do some harmonization, get them on the same system. And once you do the harmonization, a lot of that's engineering work that has to be done. That makes it much easier for us to than to think about how to optimize shipping of each of these remaining SKUs, you're talking about a lot of them from 39 different locations across the country to all our customers. So I don't want to get an impression that we're not willing to pull it forward. Just it's a bigger squeeze to get the juice relative to the work that has to be done.

Secondly, we found some other things, whether it be 80/20, SG&A, supply chain, et cetera, we put forward because we can get those done quicker as well. So there's only so much that capacity we have. We're trying to get as much as we can as quick as we can, but the foundational things are in play and those are the types of things that we're working to get specifically to the logistics synergy that we're pushing into 2027. So it's not an issue of wanting to do it earlier, but the timing of that is more related to as I described.

Okay. Makes sense. And just switching gears to that market outlook question that was asked just now. The -- because the different -- there are differences between OmniMax and the Gibraltar Residential businesses, are the sales growth rates similar between the 2 businesses? Or like are you expecting the same growth? Or is one expected to grow faster than the other, realizing that probably after this year or at some point this year, you're going to have a combined entity all on the same systems and all the same organization. But is there a difference either regionally or product or something that changes the sales growth trajectory for the business?

Well, I think in total, the way that we look at it, I mentioned earlier in the call that we now have the ability to see what's happening with order entry shipments and actual service delivery for every location now. And so that's a good first step. And my point there is we'll get a better idea of how the regional markets are evolving during the course of the year.

But I wouldn't characterize a plan where one is growing faster than the other. We don't think of it that way now. I mean we're quickly moving to -- we have 39 locations blanketing the U.S. market and all these different MSAs. And so it comes down to every one of those regions, markets and MSAs and how we're doing in that. But it's not a Gibraltar versus OmniMax thing, if that makes any sense. We have so many complementary product lines, and we -- same with our footprint and so forth that we're kind of moving away from that thought process.

Now we'll be able to say at the end of the year, this is what we did organically in both businesses? Sure. We can go back and do the math. But our combined teams don't think that way or not thinking that way going forward. It's about customers in any channel across any part of the U.S. and how we're driving our business with them and how do we utilize all our things at our disposal to make that happen. And we don't really care if it's a Gibraltar or OmniMax product or a facility or otherwise that's serving that customer.

What you're going to see more of is customers being served from both. And it's going to get a little bit blurry over time. And that's what you want to have happen as you get into next year, in particular, in terms of how we serve customers and grow the business. So I don't think the businesses are going to grow at a different rate. I think that's more of a market question and how well we're positioned in each region where we're operating.

Okay. Great. And then the last one for me for Joe. I might have missed it, but did you have a debt ratio for what the first quarter, I guess, LTM debt ratio will be?

No, I didn't have that in there. But basically, as we closed on the eBOS sale, we used those proceeds to pay down the debt. So at that point in time, we were probably sitting -- if you take a TTM reported, we were probably sitting around 4.1.

[Operator Instructions] Our next question comes from the line of Julio Romero with Sidoti.

This is Justin on for Julio. So maybe starting on OmniMax, with the geographic overlap in the Pacific Northwest between legacy Gibraltar and OmniMax, is this a key area where you see commercial synergy opportunities?

Well, actually, Justin, we see it in a number of areas. But yes, that's one area. We also see it in the Northeast, and we see it in parts of Texas. And so Kurt Stinson, who runs the overall commercial group is -- and his team, which is frankly awesome, is going through that now. So what we thought going into prior to close is what could be the commercial synergies. We didn't talk a lot about them because it's one of those things once you get in it, we couldn't talk pre-close about customers. We couldn't talk about what we're doing specifically with any customers, et cetera. And now that we're opening that up and have an opportunity to do that, we're finding, I'd say, a number of product lines and geographies where we're going to be driving some of the cross-selling and commercial synergies.

Frankly, I was pretty excited to see what the team has come up with the last 3 or 4 weeks and what they're already working on. But it's not in one location, I would say. I think it's more broad spread than that. I would tell you a little bit more detail about it, but I don't want to give our competition any insight as to what we may or may not be doing here in the relatively near term. But I think of it much broader than a particular region.

Great. And I appreciate all the color on the OmniMax integration. But maybe talking about that a little further, can you talk about the investments you've made on digitization and how they can help with accelerating the integration?

Yes. So again, another workstream that is in flight. So there's a couple of elements of this. One, if you recall, from the Gibraltar side, we were -- we've been finishing up our SAP implementations at the same time as OmniMax has brought folks on, they've been doing Oracle implementation. So think of that in a broad ERP kind of perspective. But being able to quickly stitch together data from both of these systems feeding in is where there's been some effort. And that was a reference I gave you earlier about -- it's refreshing to see after just 2 weeks, 2.5 weeks in, we can see our order intake, we can see our sales and we can see our plant performance, delivery performance for each of the 39 locations.

So we're -- the team has listed a priority of where they'd like to stitch together things first, so we can actually run the business that much better. John and his team have a very laser focus on where we want to elevate our performance. When you go into these things, first and foremost, you assume everybody is operating perfectly. And that's just not the case. We both have opportunities to get better as individual businesses and collectively now getting that performance lift that I referenced earlier is a lot of what John and team are focused on now. Part of that is just getting some of that common data stitched together now so we can start having those discussions about how we improve service delivery, how our sales are flowing in, where Kurt and team are focusing on the next commercial opportunity and so on and so forth.

So we'll -- our immediate focus is there. And then as we move into the year, you'll see a broader effort on what's next. But that's what I would say is the immediate focus for the IT -- the combined IT organization.

On top of that, I'd say one other thing, we want to make sure that in the process of doing this, you don't have any disruption, right? So no cyber events, you want to make sure systems are reliable and up and running. So there's a -- if you look at these different workstreams, it's what do you stitch together now so we can improve operating performance and have visibility across the entire network sooner than later. And then what are the core foundational things you want to make sure stay intact and how do we make sure that we have all those supporting processes working well.

Little things I don't bore you with, but I'll just give you some examples, getting everybody on Teams. So we can effectively have Teams meetings across 2 organizations versus 1 is a good example, getting everyone on a common e-mail system. So a lot of, I'll call, day-to-day tactical stuff, really important to stitching the organization together as well as pulling some data together in a short time period so we can actually see the business and run the business, and that's what John and team have really been spending a lot of time on as well.

So again, each one of these 20 workstreams have a very focused plan that they have put together that they've submitted, that they're tracking day in, day out. IT is no different, but there's a lot of opportunity there. And I do think over time, as we get our feet on the ground, we will accelerate even more there. So there's a nice roadmap on the IT side, but I'd say what we're doing now is a little stitching and making sure that the foundation stays strong, and we don't have any disruptions to the business, serving customers or otherwise.

Our next question is a follow-up from Daniel Moore with CJS.

Yes. Just touching base on Agtech. I guess any color on the Arizona project? Obviously, you kind of took that out of backlog, number one. Number two, what's the range of growth and margin profile embedded in your guide? And when would you expect to get back toward a more kind of longer-term mid-teens margin goals in that business?

Yes. So first, Dan, on the Arizona project, I think we've all been frustrated with the timing of the financing and the USDA loan guarantee for it and so forth. And so we just made a decision let's pull that out. Let's go replace it. Joe had mentioned, if you took out that of the backlog, the backlog was still up 43%. We didn't actually get the Arizona project until March. We -- if you kind of do the math, you'll see the backlog grew quite nicely without it.

So effectively, we're replacing that with other things in the year. We'll be double-digit margin this year. We feel good about that. That's how we built the plan based on the projects we have in our CEA business to put things in perspective, every project we have right now is -- that's booked is in flight. And so it's kind of taken some of that variability out of the plan, if you will.

And so -- and then on the traditional commercial side of the business, there's a tremendous amount of activity and projects coming through. So we expect a good year out of -- from the group. We said it would make sense to pull out Arizona. We'll replace that with other things. We've done a pretty good job of doing that as we've built the plan for this year. So -- and I think the margin profile will improve this year, and that's how we've built the plan as well. And we'll be double-digit margin in that business.

We have no further questions at this time. Mr. Bosway, I'd like to turn the floor back over to you for closing comments.

Yes. Thank you. Just to reiterate, this is a time where I know it's tough to understand the business because of the acquisition, the major transformation and trying to compare that to history and so forth. But we -- hopefully, people appreciate the transparency, understanding more of the assumptions, how the plan is built, and that helps you with modeling and having a better idea of where we're going.

Super excited about the start of the last 2.5 weeks, really excited about the team that's in place, our leadership. And so looking forward to that. We are -- in March, we're going to be at the ROTH 38th Annual Conference, and we're also going to be participating in the Sidoti Small-Cap Conference. So pretty active in March. And we're really looking forward to updating you again at the end of the first quarter.

So thanks again for joining us and as well as your support, and have a good rest of the week.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Greetings, and welcome to the Gibraltar Industries' Acquisition of OmniMax International Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Carolyn Capaccio of Alliance Advisors IR. Please go ahead.

Thanks, operator, and good morning, everyone, and thank you for joining us today for this call. With me on the call are Bill Bosway, Gibraltar's Chairman and Chief Executive Officer; and Joe Lovechio, Gibraltar's Chief Financial Officer. Earlier this morning, Gibraltar issued a press release regarding Gibraltar's acquisition of OmniMax International. The release, along with our presentation slides are both available in the Investors section of the company's website, and the slides can also be viewed through the webcast link.

Before we begin, please note that certain statements made during this call may be forward-looking and are subject to risks and uncertainties. These forward-looking statements are made in reliance on the safe harbor provisions of the federal securities laws and are subject to known and unknown risks, uncertainties and other factors that may cause Gibraltar's actual operating results, financial position or performance to be materially different from those expressed or implied in forward-looking statements. You are cautioned not to place undue reliance on such forward-looking statements. Gibraltar disclaims any obligation to update such forward-looking statements. For additional information concerning factors that could affect Gibraltar's financial results or cause actual results to differ materially from these forward-looking statements, please refer to Gibraltar's filings with the SEC, including Risk Factors section of the Form 10-K and most recent 10-Q filed with the SEC as well as the forward-looking statements section of the press release and investor presentation.

In addition, please note that on today's call and in the press release and investor presentation that was issued this morning, Gibraltar may refer to certain non-GAAP financial measures. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

With that, I'll turn the call over to Bill Bosway. Bill?

Thanks, Carolyn, and good morning, everyone. We have some very exciting and important news to share, and I really do appreciate you joining us on such short notice. This morning, we announced Gibraltar has entered into an agreement to acquire OmniMax International, an industry leader in roofing accessories and rainwear management for $1.335 billion in cash. The purchase price -- the purchase base price represents an effective multiple of 8.4x based on OmniMax's expected 2025 adjusted EBITDA contribution, cost synergies planned to be achieved over the next 2 to 3 years and cash tax benefits arising from the transaction.

Now let's turn to Slide 3. I'd like to review kind of 5 key elements for this transaction and how it will provide significant value creation for all our stakeholders. First, this deal further optimizes our asset portfolio and expands our presence in our largest and highly profitable Residential segment, drawing upon the combined core competencies of the Gibraltar and OmniMax teams.

Second, it effectively doubles our Building Products revenue and creates a more optimal platform for this segment's future performance.

Third, it unlocks new opportunities in our existing swim lanes, serving key core product categories in attractive end markets within Building Products, driven by an excellent management team, an extensive product portfolio and complementary operating footprints to support the industry.

Fourth, the deal is expected to be immediately accretive to adjusted EBITDA margin and to adjusted EPS in the first fiscal year post close.

And lastly, five, it will deliver strong cash flow with a clear path to deleveraging the business within 24 months as we execute a target of $35 million of cost synergies, drive strong EBITDA margin performance, optimize working capital and realize tax benefits.

So with that, I'm going to turn it over to Joe, and he'll take us through the key deal financials.

Thanks, Bill, and good morning, everyone. We're really excited about today's announcement. So here on Slide 4, I'll touch on the main points of the transaction. So to begin with, the purchase price of the acquisition is $1.335 billion in cash, which represents an effective multiple of 8.4x based on OmniMax's expected 2025 adjusted EBITDA, total target cost synergies of $35 million and expected cash tax benefits of approximately $100 million. We expect adjusted consolidated revenue of the combined company to be over $1.7 billion for 2025.

As Bill said, we expect the transaction to be immediately accretive to EBITDA margin and cash flow. The transaction is also expected to be accretive to Gibraltar's adjusted EPS in the first fiscal year post close as adjusted EPS excludes the cash savings from the expected tax benefits of the transaction and is expected to include noncash amortization charges.

With respect to synergies, we expect to generate $35 million of cost synergies by the end of year 3 post close, predominantly from a combination of logistics, supply chain, SG&A and 80/20 savings.

To finance the transaction, Gibraltar has in place committed financing from notable lenders, of which we expect market terms consisting of up to $1.3 billion of senior secured term loan facilities comprised of a $650 million Term Loan A facility and a $650 million Term Loan B facility as well as a $500 million senior secured revolving credit facility. And this debt structure is built to facilitate debt paydown. We expect the transaction to deliver significant cost synergies and generate strong cash flow, including the cash tax benefits, which all support deleveraging from a leverage level of 3.7x at the time of closing, calculated based on underwritten closing date EBITDA of approximately $345 million to 2.0 to 2.5x within 24 months of closing.

And finally, closing is anticipated in the first half of 2026, subject to the satisfaction of customary closing conditions, including required regulatory approvals.

With that, I'll pass it back to Bill.

Thanks, Joe. Let's turn to Slide 5. I do want to talk a little bit about the industry and our inherent excitement about it. Let's start with the 3 product categories we support today, trims, flashing, ventilation, rainware management and metal roofing, which collectively represent over $9 billion of addressable demand in 80-plus MSAs in regions throughout the U.S. and Canada. Approximately 80% to 85% of demand is driven by repair of a roof or a component attached to or near the roof, and this tends to be driven by aging homes and/or weather events. The remaining 15% to 20% of demand is driven by new construction starts for both single and multifamily housing.

What really makes this industry interesting to us is its inherent fragmentation, driven by highly localized building codes and the role that thousands of independent contractors play in serving homeowners. And we believe to effectively support contractors and homeowners, it is important to be local while also being able to support broader geographic needs in an efficient manner. This means having a broader product portfolio for the roof while also supplying products that are easy and efficient to install, products that meet local codes and specifications like material type, dimensions, colors, design and ongoing education and training on the application of products and how to optimize the operating envelope for the roofing system for the homeowner.

Now let's turn to Slide 6 -- I'm sorry, let's stay here one more point. I think about our inherent local knowledge and ability to adapt quickly and effectively to serve through various channels is exactly why Gibraltar excels in this industry. And to now have OmniMax, in combination with our expertise is an opportunity to bring additional capabilities to support the industry even more efficiently going forward.

Now let's turn to Slide 6. This view just illustrates just how many products are part of the roof, near the roof or attached to the roof, all of which the combined company will serve. It is a very broad basket. And depending on what part of the country you're in, can look very different across each product category from region to region. So when servicing -- serving customers, the industry depends on suppliers that have both the breadth and the depth of products to meet local requirements as well as the capability to deliver high-quality product on time within the project schedule. Gibraltar's strategy has been to continue to broaden our presence and product portfolio with the addition of new products while simultaneously investing in our customer relationships and go-to-market infrastructure. With the addition of OmniMax, this strategy has accelerated, allowing us to leapfrog our efforts forward accordingly.

So let's move to Slide 7. Let's talk a little bit about OmniMax. First, the OmniMax organization and its leadership team are very, very capable and highly respected in the industry, and I'm really looking forward to welcoming them to Gibraltar. OmniMax was founded in 1996 and is a leading supplier of residential roofing accessories and rainwear management, and it operates primarily North American residential repair segment. For 2025, it is expected to generate adjusted net sales of $565 million and adjusted EBITDA of $110 million. Roofing accessories represent approximately 60% of OmniMax's revenue and 40% is represented by rainwear management, a product category where Gibraltar has little participation. OmniMax has also built a well-known portfolio of reputable trusted brands, some of which were started over 150 years ago, and they serve as partners to home centers and distributors in various parts of the U.S. and Canada.

Let's move to Slide 8. As I've shared over the past year, we have been working to simplify our portfolio while also organically -- while also investing organically and through M&A to expand our Residential business. Today, with the addition of OmniMax, we are taking a major step forward. In 2025, we expect the combined business to surpass $1.7 billion in total adjusted revenue and $300 million in adjusted EBITDA, with our Residential segment representing over 80% of both revenue and EBITDA for Gibraltar, a clear demonstration of our commitment to growing the reach of our Residential portfolio. The addition of OmniMax helps us serve MSAs in regions where we don't today. And OmniMax's strong position in the rainwear management product category provides us a complementary $3 billion addressable opportunity I shared on the previous slide.

And then moving to Slide 9. Here's a simplified illustration of how complementary our products can be for the industry and how the collective product lines can bring more options and solutions to the industry as well. Having this breadth of products and the ability to provide them to more MSAs and regions will better support the needs of our channels, contractors and homeowners.

Now let me turn it back over to Joe, so he can discuss a bit about our synergy plan and our path to deleveraging over the next 24 months.

Thanks, Bill. As you can see on the left side of Slide 10, we have a plan ready to be put in place to generate $35 million of cost synergies by the end of year 3 post close. The major components of this plan are logistics, supply chain, SG&A and 80/20 savings. We expect to achieve approximately 50% of our cost synergies in year 1 post close, building from there to realize the remaining by the end of year 3. As Bill just mentioned, we also identified commercial synergies that we expect to execute that are not currently captured in this $35 million target.

Moving to the graph on the right side, we are prioritizing and see a clear path to deleveraging as rapidly as possible. The components of this planned deleveraging are the significant cost synergies that I just discussed, optimized working capital management, lengthening our history of strong cash flow generation and approximately $100 million, which is the present value in cash tax benefits arising from the transaction. These all support deleveraging from a leverage level of 3.7x at the time of closing, calculated based on underwritten closing date EBITDA of approximately $345 million to 2.0 to 2.5x within 24 months of closing. We are excited about this next phase and confident in our ability to deliver the results we have outlined from this transaction.

I will now pass it back to Bill for a quick summary of today's discussion.

Okay. So let's turn to Slide 11 and recap. I just -- let me start with our strategy remains very clear. We want to stay in our core swim lanes where we have deep expertise and strong competencies and build our presence where we can deliver with skill for our customers. When we invest in business and channels we know well, returns are more attractive and synergy opportunities become clear and achievable with high confidence.

And as I opened today's call, I communicated 5 important reasons for this transaction and just to quickly recap. Number one, the deal further optimizes our portfolio and expands our presence in our largest and highly profitable Residential segment. Secondly, it effectively doubles our Building Products revenue and creates a more optimal platform for future performance. Third, as you've seen, it unlocks new opportunities in our existing swim lanes, driven by an excellent management team and a complementary business footprint. Four, the deal is expected to be immediately accretive to adjusted EBITDA margin and to adjusted EPS in the first year post close. And finally, five, it is designed to deliver strong cash flow with a clear path to deleveraging the business within 24 months. And of course, we will execute our $35 million of cost synergies, many of which will come in year 1. We will drive strong EBITDA performance. We will optimize our working capital, and we will realize the tax benefits mentioned earlier.

And with that, let's open the call for questions.

[Operator Instructions] Our first question comes from the line of Dan Moore with CJS Securities.

This is Will on for Dan. Can you speak or add any more color to the customer overlap between legacy Gibraltar and OmniMax and how you think about the potential for cross-sell or revenue synergies?

Yes. I think -- yes, there's a lot of opportunity there. Just when we look at investments, we tend not to factor them into the return profile because cost synergies are what you can control. But clearly, the fact that OmniMax and Gibraltar operate where each other doesn't today is a very nice complement to things that we can do to support additional customers around the country. So that's one aspect.

Secondly, there are product families that each of us have that we may be able to support and supply each other for existing customers in various parts of the country as well. As I mentioned right upfront, the complexity of what's required for a roof does vary a lot by region. So if we can take advantage of having more presence across the country with the right designs, then we can leverage, I think, some cross-selling opportunities and support customers in various regions better than we could today on our own, and that's really important to us. So I do think there's going to be a lot of opportunity there going forward, but we haven't quantified those for today's call.

That's helpful. And then just one more. Can you talk to the historical growth over the past 5 years at OmniMax, both organic and through their own M&A?

Yes. So OmniMax has done a really interesting job in the last 4 years. They've been transforming the portfolio themselves. So on an organic basis, relatively flat, but that's been more related to, a, there's market; b, it's been a transition of the portfolio where they've gotten out of businesses that were poor performing and actually acquired businesses that were much better performing, which shows up in the type of performance they're delivering today. So now that the portfolio has evolved to, I'd say, better assets and better performance, we expect, along with us to see growth opportunities there that are not reflective of what we've seen here in the recent past.

But again, I also want to remind everybody, we've been living in the world in the last 3 years of a relatively slow market. So to be flat in that range is not exactly poor when the market has been somewhat down. So we're excited to have both of us together on that front as well.

Our next question comes from the line of Julio Romero with Sidoti & Company.

Bill and Joe, congratulations on the deal. So I wanted to ask about how does this strategy -- how does this affect -- how does the acquisition affect your strategy of leaning into the direct-to-contractor sales channel? Is that still intact? And how does this kind of change the mousetrap you're kind of building there?

Yes. So no, it doesn't change that. If on the one slide, I referenced the 3 product categories. So there's trims, flashings, ventilation that we're both in, there's rainwear management, which we used to be in years ago that runs the same channels and customers that OmniMax is a clear leader, and then there's metal roofing, which OmniMax is not in, but we are in the way that we've described to you before.

So I look at those $3 billion TAMs as now an opportunity for us to accelerate them. And I think what you'll see from us over time as we bring these companies together, it allow us to even focus more on things like metal roofing as we have a combined business to really focus on trims, flashings, ventilation and rainwear management.

Got you. So I guess the thought process would be selling more of those rainwear management and non-metal roofing accessories through that direct-to-contractor line as well as the metal roofing?

No, I think -- yes, we'll continue to support our channels as we always have. That I don't see changing a whole lot. I just want to point out that there are -- there's a $3 billion metal roofing market out there that doesn't change for us because of the deal. So it basically makes us look at all 3 pieces simultaneously.

But what I will say is as you get more into metal roofing like we're already experiencing, there are opportunities for us to pull through some of the trims, flashings and ventilation and potentially rainwear management projects through the metal roofing locations. We are seeing that, for instance, in the Carolinas as we speak.

And so we're going to have a broader footprint where we have flexibility, and this may get back to the first question we got around commercial synergies. But the more dots on the map that you eventually put in the right places, the more opportunities you'll be able to support customers in a broader way. And -- but metal roofing is going to stay laser-focused on what it's doing, supporting the contractor direct, and then we'll support opportunities across trims, flashings, ventilation, et cetera, when the opportunity exists.

Okay. Got it. And you mentioned this adds -- OmniMax has about 20 local regions that you're not in at the moment. Can you talk a little bit about those particular regions and how your kind of geographic map combined looks like today?

Yes. When you think about where we're not, we've never really been in the Northeast, which is a highly populated area and Gibraltar has never been there. And that's a region that OmniMax has done quite well with and have very strong brands like i.e., Berger, but also Amerimax. And so Northeast is a great example. When you get to the -- go over towards the West, you think Arizona, Nevada, Southwest, New Mexico, we've never really participated there either, and they're strong there. We do some things in the West Coast that they don't. There's pockets in other parts of the U.S. as well where we can support each other. But it's really a very complementary geographic play, if you will, relative to serving a broader group of customers, us coming together. So we're excited about that.

Perfect. And then last one for me would just be if you could talk a little bit about your path to deleveraging within 24 months. I know you called out the strong cash flow profile, but does that also incorporate, one, the closing of Renewables and using those funds for deleveraging? And then secondly, is there any other kind of areas around the portfolio that's kind of considered there?

Yes. First of all, no, it does not include the funds from the sale of Renewables. So that would be incremental relative to firepower to delever. So that's good news. As it relates to the rest of the portfolio, we're continuing to simplify, and we will -- we're always assessing that. Our main focus in the next 12 months is get off to a good start, try to get half of those synergies done in year 1 post close, and we feel pretty confident in doing that because our businesses are similar in so many ways in terms of how we operate.

So yes, in those 4 buckets we talked about, logistics, supply chain, SG&A and 80/20, there will be a lot of effort going on day 1 from that, and we want to get off to a really good start. So that's how we're going to proceed. We will also have a full-time integration office that will be responsible for driving this. So very disciplined and very much resourced accordingly to execute in the time period that we just talked about.

Our next question comes from the line of Walt Liptak with Seaport Research.

Good to see you guys transforming a little bit more and focusing around your swim lane. I wanted to ask about the EPS accretion. And just if you can maybe ballpark it for us maybe on a percentage basis or somehow quantify that year 1 number just to help us with our modeling.

And then sort of like a follow-on to that, on the cost synergies, how much tax benefit do you get in year 1? And then how much -- what's the timing, I guess, on that tax benefit?

Yes. So maybe on the first question, Walt, that's really going to depend on when we close. And we're not sure yet on when the closing, we expect it to close in the first half of next year. So we'll be able to come out with better clarity on that once we have a sense of closing.

In terms of the accretion, though, on the adjusted, 2 things to keep in mind. One, the cash tax benefits, we don't expect that to run through the P&L. So that's predominantly related to net operating loss carryforwards. And so we'll be able to utilize those pretty quickly up to the annual limit, but those won't run through the P&L. And then we do expect there to be some noncash amortization charges. And again, those will also be finalized as part of the closing process as well. So once we have better clarity on that, we'll be able to come back as we provide more guidance going into next year.

And then the second question on the utilization of the cash tax benefits. Again, we expect to utilize those pretty quickly. I'd say right now, we probably expect about $20 million benefit next year. That's -- and again, the $100 million total that I referenced, that's the present value of those cash tax benefits. So we'll go after those pretty aggressively.

Okay. Great. And on the timing of the deal, I wonder if you could just talk to us about like why is the timing now? Why wouldn't you wait until after the solar deal closes and then move towards something larger like this?

Well, I think a couple of things. Well, we don't necessarily dictate when someone wants to sell in the process with that. Secondly, we didn't really need the sale of the Renewables to be completed to pull -- to move forward with this. The banks were pretty excited about what we're doing and had great support on that. So I think it's both those things that drive the timing of getting this done.

But it all comes down. We've been working on it probably since April. So it's been a lengthy process that we just came to the finish line over the weekend.

Okay. Yes. Congratulations on that. And maybe the last one on the -- as you look at those year 1, the $20 million, a couple of things. Which of those do you think are easiest to go get and which are more difficult? And then on 80/20, I know your company is being very strong as a cultural 80/20 company. Was this -- is OmniMax -- are they already doing some sort of 80/20? When do you start doing the process with them?

Yes. So first question, I think all 4 of those will be done in parallel, and they'll have work streams associated with them. And what we put out there, I think we feel good about pulling that off. They're all -- when you get inside the 80/20 bucket, it has -- it could have a lot of different things associated with it. But the things that we have loaded in for the first year, I think, are very much achievable and things that we are comfortable dealing with or doing.

I would say this about OmniMax. They, first of all, have a full-time transformation office, which they've deployed. And I think as they've changed their portfolio, they've done an excellent job of attacking those opportunities from day 1. So inherently, they know how to do the things that we're talking about. They may not call it 80/20, but they're very much focused on lean and have put in place what I think a very good operating model. And so we will merge the lean 80/20 mentality, which I think is going to be awesome to take the best of what they've been doing and things that we've been doing and get after it pretty quickly.

But back to your first question, I think those things are not sequential. They need to be done in parallel.

Okay. And maybe -- I'm sorry for taking up so much time, but are you expecting any PLS that would happen in year 1?

No, I don't think so much in the PLS. They've done a nice job of that themselves. We've done a nice job of that. But there's a lot of other things that we'll be doing on business systems. We will look at -- markets will look at PLS again. We're not closed yet. So there's only so much that we can drill into. But right now, it's a very complementary business for us. And they've done a nice job of doing PLS over the last 3 or 4 years, either from getting out of a business or getting out of product lines. And I think that's why the margin profile has been good on top of the lean work they've done.

So yes, there's more to come. People always ask us when is 80/20 over, it's never over, and this is just going to be rich with all kinds of gold nuggets on the ground, whether it's working capital optimization, using 80/20 to drive that to commercial -- potential commercial synergies to other things that we know are going to be important for the systems.

[Operator Instructions] Our next question comes from the line of Kathryn Thompson with Thompson Research Group.

We've had the opportunity to know OmniMax fairly well under the SVP umbrella and appreciate a lot of the work they've done to clean up the portfolio, really wrapping that up by mid-2024. But since then, they've made 2 different acquisitions, one in December, one in February. But it's still a journey for them when you look at the channel. So my understanding, they've been #1 in home centers, but still had to work on professional distribution end market. What do you bring to the table to help improve that? And what are your thoughts just from a channel standpoint, what you bring to the table?

Yes. Actually, Kathryn, it's a good question. I think it goes in both directions. They do some things with the home center channel that I think are really interesting and very positive. And I think collectively, we can find ways to make that much more efficient for a lot of those channel partners.

And on the distribution side, I think we do some things there that are pretty interesting, and we've worked really hard the last 5 years to make that a bigger piece of our business. It's roughly 70% of what we do today, if not a little bit more.

So again, I'll go back to this compliment of if everyone was perfect in these 2 companies, there would be no opportunity for upside. There'd be no synergies. There'd be no cost synergies, no commercial synergies. So yes, we have opportunities to get better, both of us in some respect to various. I think they can help us on the retail side. We can help on distribution side, product development, launching new products. There's a whole host of things that are going to go into this company that I think are going to be pretty cool.

The other thing that I remind people of is think about how the industry has been evolving in the last couple of years where you have new ownership around channels and whether it's -- particularly in distribution and how do you actually become a better solution set for those new owners as they evolve what they want to do. And so combining what we do well, I think, matters. The fact that one of those owners of SRS is also a retailer that gives us probably a better chance to sit down and figure out how to support them in a better way.

So I'm really looking forward to taking the strengths of each and dealing with some of the opportunities that we have in front of us because we're not perfect on each side, that's what makes it attractive.

Okay. Helpful. You spent -- you gave a lot of good color on synergies, cost synergies and with the combination of the companies. In fairness, OmniMax has done a lot of heavy lifting over the past, say, 5 years. Knowing also that they have a new COO in the mix, I know you outlined on today's call the different drivers for the synergies. But in broader buckets, how much of it is going to be true just cutting overhead when the combination you have with any companies versus more of the revenue synergies that can come from a combination?

Yes. Well, we haven't -- like I said, we didn't plan on any revenue synergies. So whatever happens there, that's awesome. We get that, but that's not in the plan that you've seen today. Those cost synergies referenced that we showed, those are real numbers that we think that we will button up over the next few months. We're not closed yet, so it's kind of hard to give an exact number, but we feel very good based on what we've known or what we've learned in diligence. So when we talk about logistics and supply chain, those are real cost synergies that we feel very good about and 80/20 in the same way.

So the fact that, yes, there's been a lot of work done on the organization for them and us in the last 5 or 7 years. We're much different than we were before. But when you look at our organizations today, there's a lot of talent, and we'll figure out what that right structure looks like, putting the right seats in the -- right people in the right seats. But if you look at that graph we showed of that 20, 3/4 of it comes from non-overhead stuff. And that's what makes this rich for us is because those are operating things that we control and we know of and we've identified.

So yes, I'm very confident in our $35 million. And yes, I do think there will be commercial. And frankly, there may be even more cost synergies as we get into this a little bit more. You learn a lot as you get into 80/20 and the lean side of this. As good as I think both companies are, we're not great relative to our operational performance. We both recognize where we can actually get much better. So we will do that. And we have -- I think we'll have the right team to pull that off. But this is not about [indiscernible].

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Bosway for any final comments.

Just lastly, guys, thank you again for joining the call and learning more about this. We think it will be very exciting news for Gibraltar and for OmniMax. I'm sure you may have or will have additional questions about the acquisition. And of course, we look forward to having more conversations with you about it. So with that, I hope everyone has a good rest of the week, and thank you again for joining.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the Gibraltar Industries Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Carolyn Capaccio of Alliance Advisors IR. You may begin.

Thanks, Kate. Good morning, everyone, and thank you for joining us today. With me on the call is Bill Bosway, Gibraltar Industries' Chairman, President and Chief Executive Officer; and Joe Lovechio, Gibraltar's Chief Financial Officer.

The earnings press release that was issued this morning as well as a slide presentation that management will use during the call are both available in the Investors section of the company's website, gibraltar1.com.

Gibraltar's earnings press release and remarks contain non-GAAP financial measures. Tables of reconciliation of GAAP to adjusted financial measures can be found in the earnings press release that was issued today. Further, please note that continuing operations exclude net sales and operating results of the renewables business, which was classified as held for sale and as a discontinued operation with second quarter 2025 results, and that adjusted results exclude net sales and operating results of the Residential Electronic Locker business, which was sold on December 17, 2024.

Also, as noted on Slide 2 of the presentation, the earnings press release and slide presentation contain forward-looking statements with respect to future financial results. These statements are not guarantees of future performance, and the company's actual results may differ materially from the anticipated events, performance or results expressed or implied by these forward-looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can also be accessed through the company's website.

Now I'll turn the call over to Bill Bosway. Bill?

Good morning, everyone, and thanks for joining our call today. We're going to take you through third quarter results, and then we'll review our guidance for continuing ops, and then we'll open the call for questions.

So let's turn to Slide 3 titled Third Quarter 2025 Review. I'd say in a relatively dynamic business environment, we've continued to deliver solid performance and stay on track to deliver good revenue margin and cash flow performance from continuing ops for the full year.

In the quarter, we delivered 13% adjusted net sales growth, first and foremost, with our Building Accessories business delivering 2% growth in a soft residential roofing market, which is down between 5% and 10% depending on the channel. And secondly, from our Acquired Metal Roofing and Structures businesses delivering revenue per their plan.

That being said, the ongoing delay of a large CEA project in Arizona and lower demand in our Mail and Package business caused revenue for the third quarter to come in below plan. And we'll discuss each of these in more detail as we review the results for each of the segments.

The impact of lower sales in Agtech and Mail and Package created a bit of a business and product mix effect during the quarter. And as a result, adjusted EPS and operating income came in slightly below prior year, down less than 1% and adjusted EBITDA was flat to prior year.

We did deliver strong cash performance, generating $57 million in cash from operations, an increase of 39%, and $49 million in free cash flow, achieving 16% of sales. With respect to portfolio management, the sale process for our renewables business is progressing, and we continue to target its completion by year-end.

And our newer acquisitions in structures and metal roofing are performing as planned and accelerating through their integration initiatives. And finally, our pipeline of potential additional M&A remains very active, particularly in the Building Products segment.

So let's jump into the business segments, and Joe will get us started with Residential.

Thanks, Bill, and good morning, everyone. Let's start with Residential on Slide 4. Adjusted net sales for our Residential segment increased by $20.5 million or 9.8%, driven by our Metal Roofing businesses, which were acquired at the end of Q1, as well as growth in our Building Accessories business. We continue to gain participation in the U.S. residential roofing market as we grow with customers, expand in more local markets and benefit from new products recently introduced.

We did experience lower demand in our Mail and Package business, specifically for our centralized mail solutions, which were down 8% in the quarter. Historically, given a centralized mail system is one of the last things installed in a multifamily property, we tend to see revenue materialize approximately 1 year after a new build has been started.

So to put this in perspective, in 2024, starts for multifamily new construction were reported down over 35%, which resulted in less demand and revenue for us in 2025. Given our sales were down 8% in a market down over 35%, demonstrates our team's ability to drive significant participation gains in challenging market conditions. Overall, Residential segment organic revenue was down 1%.

Now turning to margins. Adjusted operating and EBITDA margins decreased 200 basis points and 130 basis points, respectively, driven by business and product mix and accelerating system, supply chain and customer integration initiatives across our Metal Roofing businesses. We also remain on track to complete business system conversions to a single system across the Residential segment by the end of 2026.

I thought we'd take a little time and talk about the U.S. roofing market. So let's turn to Slide 5 for an update. What you see on the left is data from ARMA. So according to shingle shipments reported by ARMA, Q3 shipments were down 10% in the quarter and are down 5.4% year-to-date, as well the top 10 states for shingle shipments, which represent 54% of the total shipments in the U.S., were down 12.1% in Q3 and 3.3% year-to-date. Interestingly enough, Texas, the largest market for shingles, was down 25.2% in the quarter and 12.5% for the year.

Another data point to think about is retailer point-of-sale results were also down in the quarter by approximately 4.5%. In general, there seems to be a few reasons for -- a few reasons driving the market today. First, we do see inventory rightsizing happening in both the wholesale and retail channels, which we expect to continue in Q4 and maybe into early Q1 2026.

Secondly, I think weather events in 2024, like California rains and Texas hailstorms, et cetera, really haven't occurred at the same level of frequency in 2025, specifically in the third quarter. And third, labor availability may be becoming a challenge for general contractors operating in certain states like Texas, California, Arizona and Florida.

So as the roofing market continues to be less active than we prefer, our Building Accessories team has found ways to outperform the market and deliver organic growth, which we did in the quarter, up 2%, and have done for the first 9 months of 2025, up 2.5%. And despite today's market situation, we still believe there is more opportunity to grow, and we will maintain our playbook going forward.

Now I want to move to Slide 6, and I'll give you an update on our expansion initiatives that we executed in the quarter. First, we added capability in both Denver and Boise to support local retailers in these areas. And in an effort to provide better service and support for retailers in the Greater Salt Lake City area, we redeployed manufacturing capability from our other facilities to our Salt Lake City operation.

In late July, we also acquired Gideon Steel supply -- panel supply based in Oklahoma City. Gideon's last 12 months of revenue are about $10 million with EBITDA margins of approximately 20%, and Gideon is a leading provider of metal roofing systems and roofing accessories in the OKC market. So in 2025, we entered 9 MSAs through either organic or M&A investment, and we expect to expand further with additional operations coming soon in the Western region.

So let's switch gears and let's move to Agtech.

So turning to Slide 7. Agtech net sales grew $16.1 million or 38.8%, driven by the acquisition of Lane Supply, which continues to see solid demand. The strength at Lane helped offset the impact of the delay of a larger CAA project, which we highlighted in our Q2 earnings call. Demand remains strong with bookings and backlog continuing to grow substantially.

Adjusted operating margin decreased 440 basis points, driven by the lower volume in the quarter and the impact of accelerating integration activities for Lane Supply. Adjusted EBITDA margin decreased 280 basis points as it excludes the impact of higher amortization resulting from the acquisition of Lane and its related intangible assets.

So if we move to Slide 8, I want to give you an update on a couple of the CEA projects we shared with you in our Q2 earnings call, Houwelings Arizona, which we've already referenced once and, Pomas Farms.

So on the left, let's start with the Houwelings project. Phase 1 of the project, the design, engineering work, has been completed and maintenance services continues to support existing growing operations and product shipments for retail customers. Phase 2 of the project, the retrofit portion of the project, remains on hold as the team awaits final approval of its USDA loan. And this phase of the project is currently expected to start in December, effectively a 6-month delay from its original schedule.

For Pomas Farms, on the right, there were 2 projects representing approximately $14 million in contract value. The Greenhouse Lift project is nearing completion and the Phase 2 18-acre Bell Pepper expansion project has recently been started. Both projects experienced initial delays related to water rights permitting, but we are pleased they are now active and moving forward.

Now I want to move to Slide 9. Let's talk a little bit about bookings and backlog acceleration. Bookings and backlog continue to accelerate and grow as we expand our customer base and increase our win rate with customers. Total bookings on a year-to-date basis are up 121% with organic bookings up 44%.

Our average backlog is up 110% over prior year with our organic backlog up 70%. Our effort to broaden our customer base over the last 12 to 18 months is also gaining traction as we have secured business with 15 new CEA growers, 24 commercial classic growers and 20 customers focused on institutional operations like ag research and botanical gardens.

We have also been rebalancing the business across end markets and between new construction and retrofit and service, and all of which will provide positive impact for the business going forward.

Now finally, let's move to Slide 10. I just want to share a couple of customer wins in the commercial, institutional business. We were recently awarded a design and build contract to retrofit the Franklin Park Conservatory and Botanical Gardens in Columbus, Ohio, which we expect to begin in Q1 2026. And we are equally excited with our recent win for the Kaplan Orchid Conservatory and research facility, a design, build contract to build a new conservatory and also a separate research facility in Norfolk, Virginia. These projects are expected to begin in Q2 2026.

So I'd say a lot of positive customer and demand activity happening across the Agtech business. And as more projects come into the pipeline and our operations cadence smoothens as a result, we are looking forward to generating more consistent predictable performance accordingly.

So let's now move on to Infrastructure.

So let's move to Slide 11. So Infrastructure net sales decreased $0.1 million or less than 1% as a result of a now resolved supplier transition that shifted revenue from September into the fourth quarter. Backlog decreased 2% in the quarter, but strong order inflows are being booked in October. Both segment adjusted operating and EBITDA margins decreased 740 basis points, driven by lower volume and inefficiency related to the now resolved supplier transition.

Let's now move to Slide 12. As we are excited to share a new patented technology that D.S. Brown recently launched to protect telecom fiber optic cables installed in shallow depth trenches in asphalt pavement and roadways. Shallow depth trenching for fiber optic insulation with our seal provides significant benefits in the expansion of fiber optic networks.

It improves installation speed, minimizes roadway closures, creates less traffic disruption while providing a more durable seal solution. Since late Q2 2024, we have sold 350 miles of seal to support fiber optic installation projects in 13 different states, and we are excited to see this product solution ramp and grow as cities, states in the U.S. continue to build and strengthen fiber optic infrastructure.

So now let's move to Slide 13 to discuss our balance sheet and cash flow. At September 30, we had cash on hand of $89 million and $394 million available on our revolver. During the quarter, we generated approximately $57 million in cash from operations from net income and cash generated from working capital.

Free cash flow generation again expanded on a sequential basis to about 16% of sales as expected, and we are on track to hit our 2025 target of approximately 10% of sales. Our revolving credit facility remains untapped and we remain debt free. We expect to continue to generate strong cash flow in 2025 and in the coming years.

Our capital allocation priorities for 2025 are to continue to invest in our organic growth and operating systems for scale with capital expenditures at approximately 3% to 4% of sales for the year. We continue to explore inorganic growth opportunities with a focus in our current residential end markets and have an active pipeline of high-quality M&A. Our strong balance sheet supports this effort and provides optionality and flexibility.

Lastly, we plan to continue to deploy capital for value creation through opportunistic share repurchases and have $200 million remaining under our stock purchase authorization.

Now I'll turn the call back to Bill.

So now let's move to Slide 14, and we will review our guidance for the rest of the year. Let's start with our assumptions for end markets.

In Residential, we expect current market conditions to persist and adjust for normal seasonality in Q4. We assume interest rates will become a bit more attractive, affordability will improve slightly in certain regions and inventory rightsizing will continue in the channel. We will continue to drive participation opportunities in both our Building Accessories and Mail and Package businesses.

In Agtech, we have solid backlog and expect to add more bookings in Q4 with some impact from these projects in the fourth quarter while also setting us up for a good start in 2026. We also expect demand in our Lane Supply business to continue as the team supports new store and retrofit initiatives across its core customer base. And finally, we expect Infrastructure margins to return to normal levels in Q4, accelerate bookings in the quarter and build backlog as we exit the year.

So with that, let's review our 2025 guidance from continuing ops. We expect net sales to range between $1.15 billion and $1.175 billion, up approximately 15%, adjusted operating margin to range between 14.1% and 14.2%, adjusted EBITDA margin to range between 17.1% and 17.2%, GAAP EPS to be in the range of $3.67 to $3.77, down from last year, but driven primarily by the gain on sale from the company's Electronic Locker business that we executed at the end of 2024. Adjusted EPS to be in the range of $4.20 to $4.30, up approximately 10% to 12%, and free cash flow as a percent to net sales of 10%.

So in summary, we're on track to deliver a solid year in 2025. We will continue to navigate through a sluggish residential market, execute on growing bookings and backlog in Agtech and stay on course to complete the sale of Renewables business by year-end.

Transforming our portfolio and focusing more on residential and structures businesses will drive improved performance for our shareholders and customers. I'm really proud of the work our team is doing to execute in this environment each day while simultaneously transforming the company for the future.

So with that, let's open the call up, and we'll take some questions.

[Operator Instructions] Our first question comes from the line of Walt Liptak with Seaport Research.

I wanted to ask first about the guidance for this year and the lower EBITDA margin that you're forecasting. Is it related largely to the lower margin this quarter? And if it is, it's largely probably in the Agtech segment. And then kind of the same thing for the fourth quarter. Is the fourth quarter -- is the margin overall coming down because of the Agtech outlook?

Yes, Walter, I think there's probably 2 things there. One, we referenced the lower volume in Agtech. And so you saw that particularly in the third quarter. And then the second part is kind of the impact of the business and product mix, particularly in the residential segment. So I'd say those are the 2 drivers that you're seeing impact the margins for the balance of this year.

Okay. Great. And just to drill into the Agtech segment. You referenced some new customer wins, and that's great. I wonder if you can provide us with some details about the sizes of these new projects, sort of the implied margins and what the future margins for Agtech could look like?

Yes, it's a –- no, it's a variety of customers. As I mentioned, whether it's CEA, so the things that you've seen, Walt, in person, or institutional, commercial. It's been a pretty broad increase. But in CEA, as an example, we've really broadened out, and it's a combination of new and retrofit type projects in the U.S. as well as in Canada. And the margin profiles vary a little bit depending on the scope and size of the project itself. But we still feel really good about moving this business towards 15% operating income, maybe a little bit higher EBITDA margins in the relatively near term.

Our U.S. -- when you get into commercial and institutional, the reason that's important is because those margins are even a little bit higher for us because of the uniqueness and the customization around some of the things we do there. So the more we can mix our business between types of business, individual channels or markets, geographic markets, and then scope range, makes a difference in how we drive our margins up. So broadening the base is great from the standpoint of getting the cadence around operating cadence. And secondly, mixing our business is also really important.

And the one thing about construction that we all know and the frustration about it sometimes, when you depend on 1 or 2 large projects and they move, your costs don't -- they're not as variable as you like them to be like in a manufacturing build and ship type environment.

So we're trying to emphasize to everybody and –- and in broadening your customer base and broadening the number of projects we have, it does smooth out that, but it also helps keep your costs more in line as you go through the course of the year and the course of various projects.

So I'm excited about the fact that we're adding more because that's the balance that I think will give us more predictability, not just for you, but for us and everybody else that's interested in the business. But I'm pretty excited about how that's evolving. That's why I wanted to share with you guys what's happening in the bookings and the backlog and the customer expansion. It matters a lot going forward with margins.

Okay. Is there a change now in the sizes of these projects? Are there -- is it more diverse smaller projects that inherently have less risk? Is that what you're commenting on?

Yes, I think so. If you -- in our organic business, yes, commercial and institutional inherently are smaller than they are the largest CEA. They're smaller in scope, and therefore, take less time. So you stack up more of those. And we inherently do more of those in a given year than we would CEA just because of the size of CEA.

And then Lane is a little bit different in the sense that their average project is 7 to 10 -- maybe a week to 2 weeks depending on how intricate it is. So the cadence they bring to the segment is helpful on that front as well. So think of Lane as probably your fastest flip and turn on projects, size and turn. Commercial, institutional in the middle and CEA is your bigger and larger and longer projects. And so mixing that is important to us relative to driving the cadence.

Okay. Great. And then I think you called out that Lane Supply had some onetime costs this quarter. I wonder if you could quantify those for us?

Yes. Well, a reference there is we're trying to accelerate a little bit faster on the integration. So we're doing incremental systems work to pull that up faster than we had originally thought. So getting them on the Gibraltar systems, not just for financial reporting, but other systems like our HRS system, supply chain and things of that nature. And so we're just putting a lot of effort to accelerate that at a faster pace than we originally planned. And that's the bulk of it. In terms of quantifying that in the quarter, I don't have a solid number for you, but it's -- that's a decent amount of effort.

Our next question comes from the line of Daniel Moore with CJS Securities.

Maybe talk about just backlog up 50%. What was that -- was that organic? I know you referenced 70% organic growth in Agtech. Just wanted to parse that out a little bit better.

Right. Well, the backlog I showed you on the one page is all Agtech. And so the organic was up -- average backlog up 70% year-over-year. You got to do an average because it's -- every quarter changes your backlog. But the bookings is probably more indicative. That was up 44%. That's all organic, just flat year-over-year. And that's just a combination of adding more customers and winning more projects are having a better win rate.

So we've had a concerted effort in the last couple of years to work that hard, not just in CEA, but also in commercial, institutional, and it's exciting to see it's starting to happen. And I didn't reference a whole lot of what's in front of us, the projects we're working on, but there's a lot of interesting activity in front of us as well. So yes, it's starting to pay off for us.

And that's part of that whole intent of how do you drive more cadence, consistency quarter-to-quarter. You got to stack the projects and you need more of them. And we're starting to see that build for us. So excited about what that's going to do in Q4, but also as we go into 2026.

That's helpful. Can you remind us kind of roughly what percent of your Agtech revenue runs through backlog? Just trying to get a sense for how meaningful -- I mean, that's a very significant step-up in order rates. How meaningful that is in terms of translating to growth next year? And in terms of lead times, when we should start to see that translate to faster revenue growth?

Yes. So a very high percentage of our revenue comes from our backlog, if you will, in Agtech. There's a little bit where we'll do some repair and maintenance type stuff that turns and flips that doesn't really go into the backlog, but the bulk of what we do goes into backlog and then translates into sales. So I'd say probably 90% of our revenue comes from and is driven by the backlog that is in front of it.

And so as we stack these projects, as I mentioned in the call, we'll start to see impact of some of that in Q4. And then those projects depending on the mix between commercial, institutional and CEA and Lane, all have a different time element around it. So if you look -- if you -- the 2 I showed you guys in commercial and institutional, those will start in Q1 and Q2 as an example.

We'll turn and flip those in 3 to 4 months. CEA projects can be up to a year. Lane will be 10 days to 2 weeks. And so it's that mix that we think will get us off to a good start in the first quarter, but it's going to be helpful in Q4 as well. So what I probably need to provide you a better view of, Dan, honestly, is breaking the backlog down into those various groups so you get an idea of churn, which I didn't do for today, but we can follow up with you on that as well.

Makes sense. Appreciate it. We don't talk as frequently these days about Mail and Packaging. It's been a few years of obviously slow housing turnover. What's your updated outlook for growth for that business and margin profile and opportunity over the next few years?

Yes. Well, the one thing about -- Mail and Package is different than our Building Accessories. So Building Accessories is 80% repair. And so that's a different -- a little bit different world than obviously new start construction, which is what Mail and Package is typically driven off of. And so as starts have been down in the last 2 years, the business has been navigating through that. So we've worked really hard to outperform a down market. But it really is starts driven.

So as you start to see interest rates and affordability kind of come in line a little bit better than it has been, then you'll start to see starts pick up. You'll start to see then that drive into our business. So there's a lot of activity out there where our dealers are quoting on developments, but those developments are the things that need to actually start kicking in.

So we see a lot where civil has been done, but the new construction guys are holding off on that. And I'm talking about the larger neighborhoods, whether it's multifamily or single-family because we put them in both. But that -- we need to start seeing that activity move forward for that to translate into business for us. We're the leader in that space. We're not -- we haven't fallen down as much as everyone else has. It doesn't make us feel any better, but it really is a start thing.

And I would say a lot of our dealers are -- they're pretty optimistic. But we need those starts to start picking up for the business to start picking up. I don't think we'll see a dramatic fall going forward per se. I think we're bottoming out. But I think we're going to mirror what you see in the new construction from the builders. That's traditionally what's gone on in the business, particularly in our centralized mail.

Got it. And margins pretty steady state kind of on a run rate basis, not necessarily this quarter, but fiscal '24?

Yes. Yes, I think so. Yes, the –- particularly, in Mail and Package. But I'd say in residential, we've done a pretty good job of -- you think about a sluggish market, whether it's repair or new. Some of the tariffs we've all been dealing with, we've made it somewhat of a nonissue, but you still got to go execute things like pricing, cost reduction, 80/20 initiatives.

And I think the team has done a pretty good job of neutralizing as much as they can in that macro environment and delivered pretty solid performance relative to the rest of the world. But again, it doesn't make us feel great. It just gives us some confidence that we can plow through what's in front of us. And as the market recovers, then we should be in a good position to accelerate maybe a little bit quicker than everybody else.

Helpful. Last for me. Adjusted -- looking at the tweaked guidance, adjusted pro forma operating margins kind of 14%-ish for the overall business implied by your fiscal '25 guidance. And we just talked about some of the pieces here. But in terms of opportunity for '26 and beyond, not looking at guidance per se, but where do you see the biggest opportunities to improve that? And what should that look like given the new portfolio of businesses if we look out, say, 2 to 3 years?

Yes. No, good question. So believe it or not, we're starting our budgeting process and our 3D look process next week. But I'd say, in general, from the 20,000-foot view, we would expect things in the residential space to get better from an end market perspective. We're in our third, maybe fourth year of a depressed market. At some point in time, that's going to turn back.

And I think from a growth top and bottom line, that's going to contribute nicely. And as we get bigger in that space, either Building Accessories, Metal Roofing, Mail and Package, all of those things, I think, are going to -- we're in a good position to drive better performance.

The other big one for us is obviously Agtech. So this backlog and the bookings rate that we've been demonstrating here recently, I think it's going to matter a lot relative to contribution over the next couple of years. That business is going to contribute a lot more in the top line. But as we get the cadence going, the mix of projects, as I described, you're going to see a margin improvement that's going to be a nice contribution to overall Gibraltar.

And lastly, although it's a relatively small business, what's interesting about the new technology Joe referenced, that's an interesting technology that's patented and unique. And we're just getting started, but that will be a nice growth engine for us if it continues to accelerate and, at a minimum, support the margin profile of the business today and maybe help us a little bit more on that front, too, going forward.

So we got -- I think we have a lot of good things in front of us. I think we're doing a pretty good job right now in this environment. But as some of these markets turn for us, some of these new products really take off for us, we're pretty excited about what we can do in the next 2 to 3 years for sure.

And let's not forget, we're going to continue to put our balance sheet to work, whether it's through opportunistic buybacks, but there's some really interesting M&A opportunities that I think are going to help us position in our existing swim lanes to be even in a stronger position than we are today.

So we're working that pretty hard, more to come on that. So we got, I'd say, 3 or 4 cylinders kind of clicking. They're just not showing up as well as we'd like just yet, but they will. And they're starting to -- we're starting to see that.

Very helpful. Maybe last one, and I'll jump out. It sounds like you still expect the sale to go through between now and year-end. Anything that might be delaying that? Just maybe -- I guess the question is your confidence around that timing relative to where we stood maybe 90 days ago.

Yes, I'd say pretty good. No, we're moving forward. So these processes have stages. And I'll use my baseball analogy. If it's a 9-inning game, we're in the later innings, not the early innings. So we still feel good about that and like to get that done. That's important to us for a lot of reasons as well. So good progress.

Our next question comes from the line of Julio Romero with Sidoti & Company.

On residential, you talked about some of the trends in that segment across the different business units, outperforming some of the end markets in building accessories and also in centralized mail, talked about retail point of sale down 4.5%. I was hoping you could talk about trends by geography a bit and just call out any areas of strength and weakness that you saw in the quarter and heading into fourth quarter.

Well, from a market perspective, that army of data is kind of interesting because you think about the largest markets between Texas, Florida, California all being down, that's where you've had in the recent years a lot of migration and/or build happen or just sheer size of those respective states.

I think Texas is -- which is important to us, but I wouldn't say that's a place that we're incredibly well positioned. We've been making strides there. But I think that's a location or I'd say a region that -- and generally the Southeast is probably going to see some recovery in the next year or so. And the reason I think that is, a, Florida is coming off -- came off of a very strong set of series of storms. We saw a big reduction last year in year-over-year type of performance. And I think it's now normalized and what now you're starting to see is -- I think they're positive for the year or year-to-date so far.

I think you'll start to see that settle in and be a little bit more positive growth. We're pretty well positioned there, but we are coming off of a year or 2 where it was -- once you get past the hurricanes, it was really depressed. So we'll see how that evolves. I think the Southeast in general -- states like Georgia are still pretty strong, Alabama and that whole area. The Carolinas are pretty strong.

We've been expanding into the Carolinas, if you saw the dots on the map, through metal roofing, but now we're actually running some of our building accessories through those metal roofing locations because those are areas -- those -- that region is -- that Mid-Atlantic or Carolina region is underserved. So we're seeing some opportunity there.

So it really is somewhat surgical for us, but I would say how do you continue to do well in Florida, how do you expand in the Southeast, get the Carolinas going. And we'll continue to expand our presence in Texas. We've been doing a lot in the Rocky Mountain region as you see with Colorado, Idaho, Montana area, and we still think that has got some pockets out. Salt Lake has been pretty good for us. We've done some things in Boise, which seem to be a pretty decent market.

So yes, really, the places we've gone, Julio, are places we think, a, are underserved, and b, have decent markets. And I can't tell you specifically what every MSA is going to do in the next 2 years, but I feel like our coverage today is better than it was 2 years ago and we're in more places than we would have been otherwise. And so as these regions return, I think that's important.

And I think the other thing to think about is it's not just the region, it's being with the right channel in the region. And so part of our localization effort is to be stronger with wholesalers where 80% of what contractors need, they typically buy through. But there's also cases where we want to be in certain regions where we're doing really well with retailers and wholesalers.

So there's a lot more under the curtain, if you will, in terms of how we're trying to drive our participation. But I think all of that is kind of working for us right now. We have more work to do. But that's a long answer to your question. But we're trying to skate to where the puck is going to be. Right now with the market, it's a little challenging to figure out exactly where the puck is going to be.

But we think about it more than just the next year or the next quarter. We're trying to figure out migration patterns, where investments are going, where the new construction guys are going, as well as the inventory stock that's out there. So it's a combination of a lot of things. But sorry for the long answer. Hopefully, that helped a little bit.

Yes, very helpful. And just thinking about the Residential segment adjusted operating margin and Residential EBITDA margin trended down a bit year-over-year and sequentially here. Can you kind of help us unpack the drivers of the decline? And just help us think about is that primarily from the increased noise from the acquisitions in metal roofing? Or is the noise -- or is there some noise in there from inventory rightsizing and less weather-related, et cetera, activity, et cetera?

Yes, I think it's -- we talked earlier about our revenue being less than planned in the quarter. There's a little bit of that in our -- outside of Mail and Packaging and our core Building Accessories, yes, we were up 2%, but we went into it thinking that we would grow a little bit more. We did not anticipate the rightsizing.

And I think after Labor Day, that's when we started to see it. And we're hearing that consistently from wholesalers and the big box guys trying to get that right. You think about going into the third quarter, that's usually the biggest quarter. It didn't materialize as people thought.

So I don't think the market is down -- inherently structurally down 10% to 12%. I think it's more like the 4%, 5% that I referenced, because that's the point of sale that reflects what's actually being sold. But I do think that created some noise for us in the Building Accessories that contributed to a little bit of the margins impact. Mail and Package, obviously, being down impacted the margin compression.

Metal Roofing is really more of a short-term issue as we're trying to accelerate faster than we planned. So we are making investments in that now to get things integrated at a faster pace than we originally thought. And that's really around systems. It's the supply chain things that we're doing. And I think that's all good stuff, but those investments need to be made, and we're making those as we go. So we're in a stronger position as we go forward in 2026.

And the reason we're doing that now -- you might say, well, why? Well, if you have other ones that you want to bolt-on, having that system structure in place makes a difference on bringing the next 1 or 2 or 3 into the family a little bit more efficiently than you would have otherwise. So we've got to get that going, and that's part of the investments we're making.

Perfect. And that kind of segues into my follow-up here, is just -- and this is kind of a piggyback to what Dan was asking earlier, but more focused on residential in particular. As you continue these expansion initiatives and you invest near term into systems and integration here in the near term, how should we think about how residential margins on an operating margin and EBITDA margin basis trend over the next few quarters and into '26 to the extent that you can talk about that at a high level?

Yes. We expect them to improve. I mean we -- like I said, we're offsetting some business and product mix simultaneously while we're integrating the things we just bought all in the same space, and we're dealing with a relatively sluggish market. So if we can get the market to cooperate just a little bit more than it has in the last 3 years, I think that's a big deal so we're not chasing a falling sword for all of 2026.

And we can't control that I get it, but I think there's some movement that we've been tracking that -- have we hit the bottom? I can't tell you for sure or not. But I feel like getting that piece a little bit more stable makes a difference as we execute our base plan. What we can control, yes, things like how we drive participation, our 80/20 product mix, new products. Things that we've been doing, I think, will all matter towards contribution.

And I think as you think about some of these new locations and our strategy around getting closer to wholesalers and serve on a local basis, those inherently are higher-margin operations than what we traditionally would have done trying to serve them from distances.

So there's a lot of things I think that will contribute to margin improvement in the space going forward. The addition of metal roofing is going to matter. That's why we got into it in the first place. But I think there's a lot of things that will start contributing as we get into '26 and '27.

The thing that we haven't talked a lot about, and I won't be able to quantify it for you yet today, but this systems integration -- inherently there's a lot of frictional costs when you don't have any of those systems in place for the respective teams to leverage. And we've been working on this for quite a while. But by the end of '26, we'll have the entire residential business on a system, one system.

So we've got a few more locations to do. But that's going to matter as we think about scaling up using technology of leveraging our cost structure in a much different way than we have in the past. So we still have things like that, that I think are going to make a difference for us going forward on margin as we move forward.

Very exciting. The last one for me here would just be if you could talk a little bit about the M&A pipeline for residential in regards to your expansion initiatives and kind of where M&A multiples are going for in the residential space.

Yes. And I'm not trying to avoid the -- I'd say all over the map on the multiples. But what's -- as we've talked before, the thing that we're trying to do is stay in our swim lane when you think about residential. So we swim in certain lanes. Our M&A focus is on staying in those and building out our presence, because the synergy opportunities around that tend to be better, and secondly, the return profile on the investment you make and something that you do every day tends to be better and less risky than if you're doing something on an adjacency basis or something that's adjacent to your core.

So I'd say the pipeline, number one, is pretty robust right now in our swim lanes, whether that's core building accessories type stuff. Metal roofing is quite interesting right now as well. And those are the 2 areas that we're, I'd say, effectively 100% focused on right now relative to M&A for all of Gibraltar. And so we'll continue to drive that. But yes, we are engaged and involved in a couple of interesting things, and we'll see how those things play out here in the relatively near term.

This now concludes our question-and-answer session. I would now like to turn the floor back over to Mr. Bosway for closing comments.

Well, guys, thanks again for joining us today, and I appreciate the support. I appreciate all the questions. It's an interesting time. I think we're doing a pretty good job of navigating through some things. And looking forward to catching back up with you guys next quarter. And we know we'll do some one-on-ones here shortly as well. So thanks again, and hope you have a good day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

Good morning, ladies and gentlemen, and welcome to the Gibraltar Industries Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] This call is being recorded on Wednesday, August 6, 2025.

I would now like to turn the conference over to Carolyn Capaccio of Alliance Advisors' IR. Please go ahead.

Thank you, Joanna. Good morning, everyone, and thank you for joining us today. With me on the call is Bill Bosway, Gibraltar Industries' Chairman, President and Chief Executive Officer; and Joe Lovechio, Gibraltar's Chief Financial Officer. The earnings press release was issued this morning as well as the slide presentation that management will use during the call are both available in the Investors' section of the company's website, gibraltar1.com. Gibraltar's earnings press release and remarks contain non-GAAP financial measures. Tables of reconciliation of GAAP to adjusted financial measures can be found in the earnings press release that was issued today.

Further, please note that continuing operations exclude net sales and operating results of the Renewables business, which has been classified as held-for-sale and as a discontinued operation, and that adjusted results exclude the net sales and operating results of the residential electronics locker business, which was sold on December 17, 2024.

Also, as noted on Slide 2 of the presentation, the earnings press release and slide presentation contain forward-looking statements with respect to future financial results. These statements are not guarantees of future performance, and the company's actual results may differ materially from the anticipated events, performance or results expressed or implied by these forward-looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can also be accessed through the company's website.

Now I'll turn the call over to Bill Bosway. Bill?

Thanks, Carolyn. Good morning, everyone, and thank you for joining today's call. We're going to take you through our second quarter results, and we're going to review our guidance for continuing operations, which we are establishing today, and then we'll open the call for questions.

Before we review second quarter results, I would like to discuss our recent announcement to strategically shift more focus to our Building Products and Structures businesses. So let's turn to Slide 3. As part of our ongoing strategic assessment and portfolio evaluation process, we continuously assess the overall attractiveness and key drivers of the end markets we are participating in as well as our ability to extract value and generate returns in each of these end markets.

As in previous years, our business units kicked off their annual market assessments, and in parallel, we asked 2 separate advisory firms to also conduct assessments of each of our end markets and our respective businesses. We reviewed our findings and recommendations with the Board in early 2025 and received approval to move forward with our -- with executing overall plan. So on June 30, we announced our plan to simplify the portfolio and focus on Building Products, which really covers our Residential business and focus on Structures markets, which really covers our both Agtech and Infrastructure businesses.

And as part of the overall plan, the Renewables segment has been classified as discontinued operations and held-for-sale. We do anticipate a simpler portfolio with the right resources and capital focused on these markets will yield stronger growth, margin expansion and cash flow performance, which will drive higher returns for our shareholders.

For example, since 2023, when excluding Renewables, our continuing operations have delivered solid and steady adjusted operating and EBITDA margin improvement despite a slower residential Building Products end market, which now represents just over 70% of Gibraltar's total revenue. That being said, we are very excited to focus more on the Building Products and Structures end markets.

Markets we find attractive, where we can build a leading position and participate across the broader value chain, markets which also have attractive revenue and profit pools with multiple avenues for growth and markets driven by core fundamental demand drivers with opportunity to satisfy basic needs and solve big problems. And finally, markets that have long runways for value creation.

We are making this transition. And we are currently outpacing our end markets via participation gains through localized expansion initiatives and new products serving both existing and new customers. To date, in 2025, we have invested $208 million in selective M&A to build presence and scale our core competencies in these end markets with more to come.

Now let's turn to Slide 4, and we'll talk about our second quarter results. We executed well in the second quarter and delivered 14% adjusted sales growth, which reflects strong contributions from our acquired metal roofing and structures businesses, additional participation gains in building accessories and growth in infrastructure. These gains collectively offset project start delays in Agtech and ongoing market softness impacting our residential Mail & Package business.

Overall, end market trends and demand remain consistent in Residential, and we continue to gain participation in both retail and wholesaler channels. As well in our project-based businesses, Agtech and Infrastructure, backlog increased 43% to $278 million. Adjusted operating income and EBITDA margin were 14.5% and 17.8%, respectively, and adjusted EPS increased 11% over last year. We generated $44 million in operating cash flow and $25 million in free cash flow as we funded key capital initiatives in each of our businesses.

With respect to portfolio management, we announced in June that our Board of Directors approved our plan to sell the Renewables business. The sale process is active and discussions are ongoing with various potential buyers, and we are targeting to complete the sale by year-end. As previously mentioned, we invested $208 million in selective M&A since January, and our pipeline of additional M&A opportunities is very active, particularly in the Building Products segment.

Now let's review the business segments, and Joe will start with Residential.

Thanks, Bill, and good morning, everyone. Let's start with Residential on Slide 5. Adjusted net sales for our Residential segment increased by $18.8 million or 8.9%, driven by our Metal Roofing business, which was acquired at the very end of Q1. Organic revenue was down less than 1%, driven by participation gains in building accessories as we continue to expand into more local markets and benefit from new products launched last year.

Strength in building accessories was offset by slowness in the Mail & Package end market, which is driven mainly by lower new construction starts in 2024. Now turning to margins. Adjusted operating and EBITDA margins decreased 90 basis points and 60 basis points, respectively, remaining at strong levels with improvement in contribution from building accessories and metal roofing, which offset the impact from lower volume in Mail & Package. We continue to execute well and drive profitability benefits from 80/20 initiatives, and we remain on track to complete all business system conversions in 2026.

So guys, let's move to Slide 6, and I'll give you an update on the residential market and some new activity in our expansion initiatives. So the residential market continues to be down versus 2024, both in the quarter and on a year-to-date basis. I think as everyone knows, housing affordability and interest rate levels continue to weigh on new and existing home sales in multiple regions. That being said, we are seeing home prices come down and inventory of homes increase in certain regions as well.

From a channel perspective, retailer point-of-sale results in the quarter reflect roofing accessories were down between 5% and 6%, with some states and regions down more than others. As well, ARMA reported shingle shipments to distribution for the quarter were down 4.3% and the Independent Distributor Alliance Corporation, the IDAC survey reflected sales from distribution to contractors down a similar amount. But for us, overall, building accessories, which correlates closely with the roofing accessories market was actually up 2.3% during the quarter, driven by participation gains and the impact of new products.

As we experienced in the first quarter, we believe we outpaced end market demand, and we will remain focused on driving more participation in the second half of the year. And when the end market returns to growth, we will be in an even better position to accelerate our business. Our Mail & Package product sales, specifically for our centralized mail solutions were down just over 7% in the quarter. Historically, given a centralized mail system is one of the last things installed in a multifamily property, we tend to see revenue about 1 year after a new build has been started. To put this in perspective, in 2024, starts for multifamily new construction reported down over 35%, which has resulted in less demand and revenue for us in 2025.

Given our sales were down 7% in a market down over 35% demonstrates our team's ability to drive significant participation gains in challenging market conditions. We also remain active in our local market expansion initiative and recently added another location in Oklahoma City through the acquisition of Gideon Steel Panel Supply. Gideon's last 12 months of revenue were approximately $10 million with EBITDA margins of 20%. Gideon is a leading provider of metal roofing systems and roofing accessories in the OKC market, and we are excited to have the leadership team stay on board and drive future growth and profitability. To date, in 2025, we have entered 9 new locations through either organic or M&A investment, and we expect to expand our location efforts with 3 to 4 additional operations before year-end to better support customers and also increase our participation.

Now let's move on to Agtech. So turning to Slide 7. Agtech net sales growth benefited from the acquisition of Lane Supply, which helped offset the effect of delays in start dates on 3 larger controlled environment agriculture projects. Despite these project delays, demand continued to accelerate with backlog increasing 71%. On an organic basis, excluding Lane Supply, backlog increased 33%, and we believe that backlog is the clearest indication of our future revenue trends. Segment adjusted operating margin decreased 100 basis points, driven by the impact of the delayed controlled environment agriculture projects and resulting lower volume, partially offset by project mix and Lane Supply's contribution. Adjusted EBITDA margin increased 20 basis points as it excludes the impact of higher amortization resulting from the acquisition of Lane and its related intangible assets.

Okay. Let's turn to Slide 8. I'll give you a little more color on the CEA initiatives. But during the quarter, I'd mentioned we had 3 larger CEA projects moved from the first half to the second half of the year. I'm going to discuss 2 of those 3 CEA projects on this slide. So on the left, the Houwelings retrofit project is a $90 million project funded by both the owners and through a USDA loan, which is relatively typical.

We started Phase 1 of the project in Q2 with design and engineering services and maintenance services. Phase 2, which starts the major retrofit and construction of the project was originally scheduled to start in Q2 and is now scheduled to begin on September 1 when funds from the USDA loan are now expected to be released. This project will have some benefit in Q3 and then accelerate in Q4 and also be impactful for most of 2026 as well. Shortly after quarter end, we were also awarded 2 new projects by Pomas Farms, totaling $13.6 million in contract value.

These 2 projects were originally scheduled to be signed in Q2, but each was delayed due to the water rights issue, which has since been resolved. The first project is what we refer to as a Greenhouse Lift project, where we are, in this case, raising the height of an existing 4.9-acre growing facility by over 6 feet.

The second project is an expansion of the existing Pomas bell pepper growing facility by 18 acres, which is shown as Phase 2 on the first picture on the right-hand side of the slide. These Pomas projects are not yet included in our backlog data shared earlier given the projects were signed after quarter end. This -- the project is funded. We are finalizing designs and the project is planned to start in October.

On Slide 9, I'd also like to highlight 2 other projects currently in process. The $4.8 million expansion of the Lewis-Ginter Botanical Conservatory in Richmond, Virginia, a partner of ours for many years from the inception of the conservatory through all the additions and expansions completed over the years. In this expansion, we are adding a 3,500 square foot Tropical greenhouse and a 3,500 square foot Butterfly greenhouse.

The TAP INS project on the right side of the slide represents a new innovative design created with our customer to utilize our greenhouse growing structures and systems knowledge to develop and build a $2.4 million, 3.5-acre, 30,000 square foot indoor temperature-controlled miniature cutting course, bar and restaurant, which is located in Overland Park, Kansas. I have to say it's pretty exciting to see yet another creative and end-use application for our structures. Given the new CEA starts planned for the second half, the performance of Lane Supply and its current backlog and our pipeline of new opportunities, we expect the Agtech business to deliver growth and solid operating margins in 2025. We also expect to continue to book additional projects in 2025 as demonstrated by the Pomas projects and further build our backlog for 2026.

Now let's move on. We'll discuss the Infrastructure business.

So turning to Slide 10. Our Infrastructure net sales increased $0.4 million or 1.6%, driven by continued strong execution. Demand remains solid with backlog increasing 3% and quoting activity remains robust, supported by ongoing investment in funding at both the federal and the state levels. Segment adjusted operating and EBITDA margins improved 300 basis points and 290 basis points, respectively, driven by strong execution, effective supply chain management and product line mix. We continue to expect sales growth and margin expansion in this business in 2025.

So now let's move to Slide 11 to discuss our balance sheet and cash flow. At June 30, we had cash on hand of $43 million and $395 million available on our revolver. During the quarter, we generated approximately $44 million in cash from operations from net income and management of working capital. During the quarter, we used $18.2 million or about 5.9% of sales for capital expenditures, including investments in our residential expansion initiatives and in our Agtech facility move. We expect CapEx for the year to be approximately 3% to 4% of sales.

Free cash flow generation expanded on a sequential basis to 8% of sales as expected, and we are on track to hit our 2025 target of 10% of sales. Our revolving credit facility remains untapped and we remain debt-free. We expect to continue to generate strong cash flow in 2025 and in the coming years. Our capital allocation priorities for 2025 are to continue to invest in our organic growth and operating systems for scale with capital expenditures of approximately 3% to 4% of sales for the year.

We continue to explore inorganic growth opportunities with a focus on our leadership positions in our current Residential and Agtech end markets and have an active pipeline of high-quality M&A. Our strong balance sheet supports this effort and provides optionality and flexibility.

Lastly, we plan to continue to deploy capital for value creation through opportunistic share repurchases and have $200 million remaining under our current stock repurchase authorization.

Now I'll turn the call back to Bill.

Let's move to Slide 12, and let's talk about the drivers that support our plan for 2025 guidance for continuing operations. First, we anticipate overall demand remain consistent with market conditions as well as with our internal expectations. In the residential market, we expect current conditions to persist, and as a result, we remain focused on driving participation gains, local market expansions and ramping and integrating our recent metal roofing acquisitions.

Our metal roofing acquisitions are performing as anticipated. Integration activities are in process, and we are excited to welcome Gideon to the team as well. In Agtech and Infrastructure, we have solid order backlog and expect additional bookings in the second half as well. Although we had some CEA project starts move out of the first half, these projects will be impactful in the second half of the year. Also, we expect demand in our Lane Supply business to continue at its existing pace as it supports new store and retrofit initiatives across its core customer base.

And lastly, with respect to tariffs, we continue to manage the dynamic tariff environment through similar initiatives we deployed during the incredibly high inflationary period we experienced in '21 and '22. To date, we have been able to minimize the impact of tariffs, and we expect to manage accordingly throughout the remainder of the year.

Now let's turn to Slide 13, and we'll review our 2025 guidance from continuing operations. We expect net sales to range between $1.15 billion and $1.2 billion, up approximately 16%, adjusted operating margin to range between 14.6% and 14.9%, adjusted EBITDA margin to range between 17.5% and 17.7%. GAAP EPS to be in the range of $3.67 and $3.91, that's down from last year, primarily due to the gain on sale from the company's electronic blocker business at the end of 2024. Adjusted EPS to be in the range of $4.20 and $4.45, up approximately 13%. And free cash flow as a percent of sales -- percent to net sales of 10%.

To finish, we will continue to monitor the macro environment. We'll make adjustments as necessary. Our team is prepared and we'll execute accordingly. At the same time, we are very excited to simplify our portfolio and be able to apply more focus and resources on our continuing operations. Obviously, I'm grateful to our teams across Gibraltar for their dedication and flexibility as we evolve our portfolio, execute our key initiatives and obviously deliver on our plans.

Now let's open the call up, and we'll take your questions.

[Operator Instructions] The first question comes from Daniel Moore at CJS Securities.

Maybe just start with a little housekeeping, just the revenue contribution in Q2 from metal roofing acquisitions. If I missed it, I apologize. Just trying to get a sense for what the true organic growth looked like.

Yes. Residential is down just -- was essentially flat, down less than 1% organically. So the [ fixed ] growth is driven by metal roofing.

Portfolio optimization -- go ahead. I apologize.

Yes. No, no, my bad. So the key pieces of that are the roofing accessories, our biggest piece of residential was actually up 2.3%. Metal roofing was up and then that offset Mail & Package, which was down 7% that I mentioned. That -- those are the kind of key components you think about residential overall.

That's really helpful. And obviously, the big news on the decision to divest the renewables piece, I guess, number one, probably not a lot, but anything you can say as it relates to the process there or expectations around timing, et cetera? And two, as we think about expansion from here, what are some examples of Structures businesses outside of the current Agtech, Canopy's, et cetera, that might be interesting adjacencies for you?

Yes. On the first question, yes, process is very active right now. We're in discussions with potential buyers. And our hope is that -- our plan is to try to close something -- close the sale by -- before the end of the year. So teams are going full steam ahead on that front, which is good. We've got a lot of interest, and that's where the process is as we know today. As it relates to additional Structures opportunity, I think of it a little bit differently. We have -- if you think about the last 3 years, we've added CEA as a segment, which is becoming bigger. And I think you're quite familiar with that. That's fruits and vegetables. We just added Canopy's, and we have our core commercial business, and I showed you a couple of examples of that today.

I think there's plenty of runway inside the segments we have versus adding more legs to that structural stool based on the end market sizes. And if you recall, maybe in our last call, someone had asked the size of the Canopy Structures market is close to $2 billion. So there's a lot of runway there. We think there's a lot of runway in CEA. And we also think there's plenty of opportunity to grow inside our core commercial business as well -- commercial and institutional. So we're going to stay focused on the ones that we have, Dan, versus try to add more. We're just going to build out a bigger presence in the existing spaces we're in.

Perfect. And then lastly, just confidence around the timing. I think you mentioned September 1 for Phase 2. Is the USDA funding in hand or expected to be? Just confidence around that timing of that project.

I think the confidence is pretty high, and we meet weekly with the owners. And so we're doing activity with them today and have been since the beginning of Q1, but it's been mainly around doing the day-to-day maintenance. We're maintaining the operations for them, and we've been doing design engineering stuff for them as they're going through this retrofit initiatives. So I think the USDA loan, which has been submitted and all the supporting documentation has been in for some time and people in general feel good about September having those funds released. And we've got our supply chain ready to roll. And I think that's where we're going to land. Whether it's September 1 or September 10, I can't give you a confidence level on that, but we feel pretty good about September being the time where we're going to kick things in the gear with that project.

The next question comes from Walt Liptak at Seaport Research.

I wanted to ask a couple of them on the renewables business as the discontinued op. And I wondered about any tax implications of the eventual sale.

Yes. So Walt, yes, we would expect that, that would be a pretty efficient tax from a tax perspective, that transaction. That's kind of how we kind of think about that just based on what we have that on for the book, but also the fact that we have some carryforwards as well. So we feel pretty good from a tax perspective, that will be pretty efficient.

Okay. Great. And then as you do the divestiture, are there any efficiencies that you can gain from the divestiture, any corporate expenses or things that might enhance the profits from the divestiture?

Nothing of great magnitude. We're -- the way we're structured today, we're a very small corporate group to start with. And so the businesses are pretty much stand-alone. So I think when you separate out, there's very little stranded cost. There's some -- and we'll manage some of that through transition services agreements. So we'll be efficient on that front. And then we'll redeploy particularly as we think about some of the M&A activity we have in front of us. So I think we're going to be -- it all towards -- it all move towards enhancing our profitability and productivity as we go through this reorganizing of the portfolio, but we're not expecting -- we do not anticipate much stranded cost at all in this process.

Okay. All right. Great. And just going back to the conversation about Residential. You talked about the operating margin declined a little bit on volume and the mix with mail and packaging. You didn't mention anything about tariffs or inflationary metals, anything like that. I wonder if you could talk a little bit about just the price/cost and how you're feeling about the positioning of inventory for the back half of the year.

Yes. Yes. So I mentioned it really hasn't been an impact for us this year, and we had the businesses together 1.5 weeks ago. We have a pretty robust model that cracks tariffs by HTS code, by any type of component or raw material coming from every country that we import from. So as tariffs change, which they seem to do that a little bit here and there, we get a real week-to-week idea of what, if any, impact it will have for our business, and therefore, that triggers what we need to do accordingly. And that's been pretty effective for us through the first 7 months, if you will. And we don't anticipate, based on what we know today, that changing in the rest of the year. So as you know, when you manage through these things, there's a confluence of variables that you're trying to pull and optimize. So whether it's existing inventory or price/cost management.

And as you know, in our residential business, which is now 70% of what we do, in many of our contracts, we have clauses in place with commodity indexes that automatically drive recovery on something that flows through. So we've got some built-in things, I think, that will help us navigate through it. And as I've said before as well, look, there's nothing today that's anywhere near the challenge that we saw in '21 and '22, trying to manage inflation, price/cost, supply chain, availability, et cetera, et cetera. This is nothing like that. So I feel pretty confident in our approach and our discipline. It is a week-to-week thing as we learn around tariffs and how they may evolve. But so far, we've been able to minimize it pretty well.

[Operator Instructions] Next question comes from Julio Romero at Sidoti & Company.

I had a high-level question about your strategy going forward with regards to the direct-to-contractor model and how you gain wallet share with the contractors. And just thinking about, if the strategy is predicated on brand loyalty with regards to the contractors favoring your product when they buy from the distributor? Or would the strategy be more predicated on better serving the distributors and gain loyalty from the distributors more so than the contractors, if you could speak to that?

Yes. So Julio, when you think about wholesale and the contractor, there's 2 distinct ways business are being done. There's the traditional building and accessories work that we do, which is all the roofing accessories, trims, flashings, ventilation. And that has historically gone through wholesalers and/or big box, right? And 80% of contractors buy -- our contractors buy about 80% of their needs through wholesale, 20% through big box, which is why I think you saw folks like Home Depot buy SRS. That being said, yes, there are certain products around that have brands that contractors like and they stay with.

Air Vent for us, as a good example, is probably the leading ventilation product in the industry. But that's in our core business. Now when you talk about metal roofing, it's a different -- there's 2 types of metal roofing business models, if you will. One, if you're just talking about panels that would go out on, say, a barn or some ag type application, those panels have traditionally been sold through wholesale and big box guys. There's very limited variety of what's available. So they're an inventory product, if you will. They're common size, common colors and there are very few colors that are offered. In fact, usually, it's a non-painted thing.

And so when people talk about metal roofing through that channel, that's what they're really talking about. When you think about metal roofing of the companies that we have acquired in the metal roofing initiative that we're going into, this is a direct sale to a contractor, but it centers around a custom solution set for a home or light commercial facility or light commercial building. And that's not inventory product. That's a product that is made either on site, which we can do or it's made in our shop, but it really stems from a set of architectural drawings that then a contractor brings to us that we make for that specific home or that specific building. And obviously, as you might expect, wholesalers and big box retailers don't necessarily create demand. They actually serve demand, right? They support demand, but they're not out proactively creating demand, whereas the contractor in this case is.

So this is a manufactured solution that a wholesaler or a big box retailer would not want to inventory because everything is unique to an individual site. And therefore, that's a direct-to-contractor engagement for us, which opens up a different profit and revenue opportunity being direct. So as you think about our broader strategy, we have transitioned from being heavily oriented towards wholesalers 7 years ago -- sorry, towards big box retail. We've rebalanced that to have a bigger portion of our sales going through wholesale versus retail, aligned with the way the contractor has historically bought our core product lines. And then we've added a new channel through metal roofing direct for specific homes and light commercial buildings. Those are the companies we bought.

So now we've added a third channel. And my point is that gives us access to multiple channels, multiple aspects of revenue and profit pools that exist in each of those respective channels. As it relates to why would a contractor come back to us in a metal roofing kind of scenario, as I described, it's all about service. It's all about making sure that, that contractor gets what they need. It's done right, it's done well and they make their money, they get up, they get down and there's no quality issues. So it's speed, it's service. And of course, you have to make things well. And so you've got to have some competency around taking architectural drawings and fitting out an exact solution for a home or light commercial building. So that's how those -- sorry for the long answer, but that's how those 3 channels actually stack up for us, and our strategy is to be in all 3 for the reasons I said.

And if you think about consolidation at the wholesale level with Home Depot buying what they bought with SRS and OXO buying Beacon, I would argue that, that channel has already been consolidated for years, but now you have 2 new owners. We want to be in a third channel as well, just so we have some sense of leverage of how do we serve this marketplace. It just so happens to be through metal roofing. But as you do more of that with a contractor direct, you become more -- they become more aware of you when they're doing a shingle roof as much as they are doing a metal roof. So they'll come direct to us for metal roof.

They'll go through a wholesaler for a shingle roof. We're still making the same accessories that go on that roof one way or the other. The biggest difference at the end of the day is when that metal roof happens for us, our basket goes from $400, $500 for that roof to $40,000 for that roof. And that's my point earlier about getting access to a bigger profit and revenue pool by getting into metal roofing and going direct to a contractor. So we're not disrupting the wholesaler or the big box guy because they're not in that business today. We're actually going very local, and that's how we're building out our metal roofing business. Hopefully, that makes some sense.

It's a fascinating answer. Thanks so much for the color. A couple of follow-ups there. What is the key brand you go to market within metal roofing? Is it DOT metals? Is it SEMCO?

It's all local. So this -- remember, we've talked about this localization effort. And the reason we're expanding into these MSAs is those contractors, those wholesalers know that local brand. They don't know Gibraltar. There's no value in trying to get people to think about Gibraltar. That contractor knows what he or she is most comfortable with what works. And so we think our local brands actually make sense. What we try to do is the flywheel in the back end of that, service speed, supply chain, et cetera, is Gibraltarized, if you will, but the front end is as local as it can be and the secret is keeping it as local as you can while you leverage the back end.

Understood. And then what is the turnaround time from when you receive an architectural drawing from these contractors to when they can expect delivery? And is that better than competitors -- or will it be better than competitors as you kind of become more localized?

Yes. You have to be able to perform in a 1- to 3-day period. It depends on the size of the home or the building, the iterations you might have on the drawings themselves with the architect. But effectively, when the drawings are done, that will be entered into a system, automatically rips through into our machines and we start producing, and that happens very quickly. Remember, I said there's 2 options here. Some contractors prefer we actually do it on site. So we have portable roll formers will take to the job site and we'll roll and make adjustments as we go based on the set of drawings they have. And some will want to have everything made in the shop. But it's either real time, meaning within hours or it may be within a 1- to 3-day period. You've got to be able to do both or you're going to alienate yourself from some portion of the market.

Great. I have one more here for you, and it's about the Structures business. Can you talk a bit about the fact that Structures encompasses Agtech and Infrastructure? Have those 2 segments cross-sold in the past? And what potential synergies do you see between the 2 of them going forward?

Yes. I would say we've characterized infrastructure in the structures business simply because of the -- it supports a grid structure as opposed to there's some synergy that connects those guys in the back end because it really hasn't in the past. And I don't want to mislead people think that there is something there. But it's a project-based business. It's a structure that we have to engineer to. It just has some similarities to the rest of our Agtech business or Agtech-type applications that I referenced in the slide. So that's the connection.

The next question is a follow-up from Daniel Moore at CJS Securities.

Two quick follow-ups. One, following along Julio's last question. Infrastructure, obviously, you've done a tremendous job on the margin front with that business. Just thinking longer term from a portfolio optimization perspective, does it necessarily fit into those 2 buckets that we're thinking about? And might there be thoughts or opportunities to monetize that?

Yes. And I think we've talked about this a little bit, Dan, and with others as well. Our strategy with infrastructure is to continue to get it better, and the team has done a great job getting us to where we are today. There is some new technology that has come out. But it really -- that we've launched. But it really is a -- it's a relatively niche business in the infrastructure world. In infrastructure, like building products is pretty fast when you think about the different categories. So our strategy has not been to build out around what we do into a bigger platform. We're one of the leaders in this space today. So I wouldn't suggest that, that's going to be our approach.

I do think there's some -- like I said, some new technology coming out that we think will be beneficial, doing a good job for Gibraltar right now. Is it something that could play a different role in the future? Yes, that's possible as well. But right now, we like what we're doing, and we're going to continue to hopefully drive the business. The second thing I would add, just as a general comment around infrastructure. And this, I don't think has been talked a lot about openly yet, at least publicly, but there's a lot of effort going on right now in D.C. in a bipartisan way for the next phase of the infrastructure bill. I think that would be great to see. And just from folks that we were connecting with, there is a lot of good activity there. And I think you're going to see additional funding going forward, which makes us happy to be in that space as well. So stay tuned on that as we all learn collectively what happens there.

Very helpful. Last one, is just the question on the sort of the cadence of growth or seasonality embedded in the revised guidance. Obviously, a lot of moving parts when you strip out renewables. You gave pro forma financials earlier this morning. As we look to Q3 and Q4, Joe, is there anything you can guide us to in terms of year-over-year revenue or EPS growth Q3 relative to Q4 off of those pro forma numbers? I'm just trying to avoid a modeling headache within the confines of your revised guidance?

Yes. I mean, I would say expect kind of the normal seasonality that we've seen in the past on kind of the residential side, particularly the building accessories. And then as we talked about some of these project pushouts on Agtech, you're going to see more of that in Q4 versus Q3.

Probably -- I would say that -- and that's kind of unique to this year on the Agtech side. Obviously, we -- you see build -- that base and that cadence becomes a little bit more predictable, just the size of the projects when they move, it matters. But if we have more of them actually active, then there's less of that seasonality issue. But ultimately, at the end of the day, if you fast forward and you're thinking about '26, '27, as building products becomes a bigger piece of who we are and we build the base on the Agtech side, I think the seasonality is going to be, in general, probably mainly reflective of the historical view you've seen in building products, which is slowest first quarter, you build in second, third. And Q4 is always depending on the weather, the third strongest quarter. So that's the way I think things will evolve over time as well.

We have no further questions. I will turn the call back over to Mr. Bosway for closing comments.

Well, thank you, everyone, again, for joining us today. Coming up, we do plan to present at the Seaport Summer Investor and Sidoti Small Cap Conferences as well as other events. Thank you again for your ongoing support of Gibraltar, and we look forward to speaking to you again after our third quarter report. Take care.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.