Cuộc họp công bố kết quả kinh doanh Q3/2026 của Gibraltar Industries (ROCK): Điều chỉnh định hướng và hiệu quả cộng hưởng từ OmniMax

Điểm nhấn chính

• Gibraltar Industries công bố lợi nhuận hoạt động điều chỉnh quý 3/2026 đạt 59 triệu USD, EBITDA điều chỉnh đạt 84 triệu USD và EPS điều chỉnh đạt 1,01 USD. EBITDA điều chỉnh tăng 62,3% so với cùng kỳ năm trước.
• Doanh thu mảng Nhà ở tăng 73% lên 399 triệu USD, chủ yếu phản ánh 161 triệu USD đóng góp từ OmniMax. Tăng trưởng hữu cơ đạt 3,1%, trong khi mảng Sản phẩm Xây dựng tăng 4,1% trên cơ sở pro forma bất chấp lượng xuất xưởng tấm lợp shingle giảm 13%.
• Chi phí tiết kiệm được từ việc tích hợp OmniMax đạt 7,8 triệu USD trong quý 3 và khoảng 14,5 triệu USD từ đầu năm đến nay. Tỷ suất tiết kiệm hàng năm quy đổi tăng lên 36,5 triệu USD, vượt mục tiêu hiệp lực 3 năm ban đầu là 35 triệu USD.
• Ban lãnh đạo đã hạ triển vọng năm 2026 sau khi giả định thị trường tiêu thụ cuối của mảng nhà ở sẽ giảm 15% trong nửa cuối năm và chuyển hơn 40 triệu USD doanh thu mảng AgTech sang năm 2027.
• Gibraltar đã đồng ý bán DS Brown cho Saint-Gobain với giá 208 triệu USD, tương đương khoảng 10 lần EBITDA trượt 12 tháng. Ban lãnh đạo kỳ vọng giao dịch sẽ hoàn tất trước cuối năm 2026 và dự kiến dùng số tiền thu được để giảm nợ.
• Giám đốc Tài chính (CFO) Joseph Lovechio sẽ rời Gibraltar vào cuối tháng 11. Phó Chủ tịch kiêm Thủ quỹ Jeff Retorek sẽ đảm nhiệm vị trí CFO tạm thời, có hiệu lực từ ngày 20 tháng 11.

Dữ liệu tài chính quan trọng

Kết quả theo chuẩn GAAP bao gồm 9,9 triệu USD chi phí trước thuế cho hoạt động thâu tóm, tích hợp và tái cấu trúc, tương đương 0,32 USD trên mỗi cổ phiếu. Tổng các khoản chi phí đặc thù từ đầu năm đến nay là 51 triệu USD.

Hiệu quả kinh doanh và vận hành

Mảng Nhà ở và Sản phẩm Xây dựng

Mảng Nhà ở đóng góp khoảng 80% doanh thu của Gibraltar. Doanh thu phân khúc này giảm 6,3% so với quý trước, trong khi doanh thu mảng Sản phẩm Xây dựng giảm 7,9%, so với mức giảm 22% của lượng xuất xưởng tấm lợp shingle so với quý trước.

Nhu cầu suy yếu mạnh từ tháng 8. Lượng xuất xưởng tấm lợp shingle giảm 13% so với cùng kỳ năm trước trong quý 3 và giảm 7,3% từ đầu năm đến nay. Ban lãnh đạo cho biết nhu cầu đặc biệt yếu tại Florida và Texas, trong khi khu vực Trung Tây tăng trưởng ở mức hai chữ số và khu vực miền Tây tăng nhẹ.

Gibraltar ghi nhận mức tăng trưởng doanh thu 8,2% tại khu vực Đông Bắc và 23,2% tại khu vực Trung Tây. Doanh thu đi ngang tại vùng Tây Nam, giảm 21,7% tại vùng Đông Nam và giảm 10,3% tại vùng miền Tây. Ban lãnh đạo cho biết công ty đã đạt kết quả vượt trội hơn thị trường tại 4 trong số 5 khu vực.

Việc tích hợp OmniMax đã giúp bù đắp cho sự sụt giảm sản lượng và tình trạng lạm phát giá thép, nhiên liệu diesel cũng như chi phí logistics. Gibraltar đang hợp nhất hai cơ sở tại khu vực Tây Bắc Thái Bình Dương và cắt giảm các mã sản phẩm (SKU) liên quan từ 1.100 xuống còn 620, tương đương mức giảm 44%.

AgTech

Doanh thu mảng AgTech tăng 3%, nhưng sự chậm trễ trong việc cấp phép xây dựng và việc khách hàng thay đổi tiến độ xây dựng cửa hàng đã khiến hơn 40 triệu USD doanh thu nửa cuối năm bị chuyển sang năm 2027.

Lượng đơn hàng tồn đọng cuối quý đạt 45,6 triệu USD, giảm 55%. Sau khi kết thúc quý, Gibraltar đã nhận được gói thầu dự án nông nghiệp môi trường được kiểm soát trị giá 75 triệu USD. Ban lãnh đạo cũng kỳ vọng sẽ có thêm các gói thầu dự án mới và các phê duyệt giấy phép trong quý 4.

Biên lợi nhuận hoạt động điều chỉnh đã cải thiện 420 điểm cơ bản, trong khi biên EBITDA điều chỉnh tăng 380 điểm cơ bản, nhờ sự hỗ trợ từ sản lượng, cơ cấu kinh doanh và các sáng kiến vận hành 80/20.

Cơ sở hạ tầng

Doanh thu mảng Cơ sở hạ tầng giảm 7,8% so với cùng kỳ năm trước và giảm 14% so với quý trước, một phần do các chương trình thí điểm cấp đô thị cho công nghệ gioăng niêm phong cáp quang mới đã làm trì hoãn các đơn đặt hàng sản xuất sang năm 2027.

Lượng đơn hàng tồn đọng tăng 10% trong quý. Gibraltar cũng nhận được gói thầu dự án cầu trị giá hơn 7 triệu USD sau khi kết thúc quý, với kế hoạch bắt đầu bàn giao vào năm 2027.

Mảng kinh doanh này sẽ được phân loại là hoạt động kinh doanh đã chấm dứt trong quý 4 sau thỏa thuận thoái vốn khỏi DS Brown.

Triển vọng kinh doanh từ Ban lãnh đạo

Đối với các hoạt động tiếp tục trong năm 2026, loại trừ mảng Cơ sở hạ tầng, ban lãnh đạo hiện dự kiến:

Trước khi phân loại lại mảng Cơ sở hạ tầng thành hoạt động kinh doanh đã chấm dứt, triển vọng điều chỉnh dự phóng doanh thu thuần đạt từ 1,73 tỷ đến 1,75 tỷ USD, biên EBITDA điều chỉnh đạt 15,2%–15,5% và EPS điều chỉnh đạt 2,70–2,85 USD.

Triển vọng từ các hoạt động tiếp tục giả định khoảng 80 triệu USD chi phí khấu hao, phân bổ và thù lao dựa trên cổ phiếu; 60 triệu USD chi phí đặc thù; hơn 70 triệu USD chi phí lãi vay, phí tài trợ và phí cam kết; thuế suất điều chỉnh 26%; và thuế suất theo chuẩn GAAP là 35%.

Ban lãnh đạo dự kiến sử dụng hơn 200 triệu USD thu được từ việc bán mảng Cơ sở hạ tầng để giảm nợ, qua đó đưa nợ ròng xuống dưới 1 tỷ USD. Công ty cũng đặt mục tiêu giảm nợ ròng xuống dưới 800 triệu USD vào cuối quý 1/2028.

Rủi ro và các yếu tố cần theo dõi

• Triển vọng điều chỉnh của ban lãnh đạo giả định thị trường tiêu thụ cuối của mảng nhà ở sẽ giảm 15% trong nửa cuối năm 2026, so với mức giả định khoảng 5% trước đó.
• Lãi suất thế chấp tăng, chi phí nhiên liệu cùng áp lực về khả năng chi trả nhà ở đã làm suy yếu doanh số bán nhà hiện hữu, hoạt động xây dựng mới và nhu cầu tấm lợp mái.
• Ban lãnh đạo cho rằng sự chững lại của mảng tấm lợp mái xuất phát từ cả hai nguyên nhân: nhu cầu tiêu thụ cuối suy yếu và việc khách hàng cắt giảm hàng tồn kho, kèm theo sự phân hóa đáng kể giữa các khu vực.
• Tình trạng lạm phát giá thép, nhiên liệu diesel và chi phí logistics đã gây áp lực lên biên lợi nhuận mảng Nhà ở. Công ty không kỳ vọng sẽ bù đắp được toàn bộ các chi phí phát sinh tăng thêm thông qua việc điều chỉnh giá bán vào đầu quý 4.
• Doanh thu và dòng tiền của mảng AgTech vẫn rất nhạy cảm với việc phê duyệt giấy phép, tiến độ triển khai dự án và các khoản tiền đặt cọc của khách hàng.
• Tỷ lệ đòn bẩy ròng đứng ở mức 3,9 lần vào cuối quý, khiến việc hoàn thành mục tiêu EBITDA, hiện thực hóa các hiệp lực, cải thiện vốn lưu động và nguồn tiền thu được từ việc bán tài sản trở nên quan trọng đối với kế hoạch giảm đòn bẩy tài chính.

Điểm nhấn phần Hỏi & Đáp với chuyên viên phân tích

Ban lãnh đạo cho biết sự suy giảm của mảng tấm lợp mái phản ánh sự kết hợp giữa sự suy yếu thực tế của thị trường tiêu thụ cuối và việc cắt giảm hàng tồn kho. Lãi suất cao hơn, hoạt động bão lụt hạn chế, lượng nhà khởi công yếu và tốc độ quay vòng giao dịch nhà hiện hữu chậm hơn được xem là những yếu tố kìm hãm nhu cầu.

Về việc bảo vệ biên lợi nhuận, ban lãnh đạo nhấn mạnh vào chính sách giá, tiết giảm thêm chi phí, tối ưu hóa mạng lưới nhà máy và chuyển dịch sang các sản phẩm có biên lợi nhuận cao hơn. Các hiệp lực chi phí ít phụ thuộc vào sản lượng bán hàng hơn, trong khi các hiệp lực thương mại chịu ảnh hưởng nhiều hơn từ nhu cầu thị trường.

Ban lãnh đạo cho biết các dự án AgTech bị trì hoãn từ năm 2026 vẫn đang được triển khai và có thể đóng góp vào kế hoạch năm 2027 khi các giấy phép được phê duyệt. Tuy nhiên, sự dịch chuyển về thời điểm này tạo ra tình trạng đòn bẩy hoạt động tiêu cực đáng kể trong ngắn hạn do các chi phí kỹ thuật, dự toán và quản lý thi công vẫn giữ nguyên.

Về chiến lược danh mục đầu tư, ban lãnh đạo tái khẳng định định hướng gia tăng sự tập trung của Gibraltar vào mảng Sản phẩm Xây dựng. Công ty tiếp tục đánh giá các tài sản không cốt lõi, bao gồm AgTech, đồng thời ưu tiên hiệu quả hoạt động và giảm nợ.

Toàn văn biên bản cuộc họp công bố kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Greetings, and welcome to the Gibraltar Industries Third Quarter 2026 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I would now like to turn the conference over to your host, Carolyn Capaccio of Alliance Advisors IR. Thank you. You may begin.

Carolyn Capaccio

Thanks, Operator, and 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 Lavecchio, 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 Investor's section of the company's website, GibraltarOne.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. Please note that the acquisition of OmniMax International closed on February 2, 2026, and the results of OmniMax are included in continuing operations as of that date. Also as noted on slide two 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.

Unknown Speaker

Bill. Hey, good morning everyone. Thanks for joining today's call. We have a lot to discuss today. We're going to review our portfolio simplification initiative, our third quarter results, our progress with the integration of OmniMax, our revised guidance, and an important organization announcement to our leadership team that we've announced this morning. Then we'll open the call up for questions. So let's start with the organization change to our leadership team, Joe Levecchio, our Chief Financial Officer, will be leaving Gibraltar later this month. is pursuing a new opportunity with a large global private company. You know, Joe joined us at a pivotal time and has played a really important role in advancing our portfolio simplification, which we'll talk about shortly, but also our M&A and integration initiatives. And I think these initiatives uh and these efforts have significantly streamlined our business and strengthened our leadership positions in each of these core markets.

In connection with Joe's departure, our board of directors has appointed Jeff Retorek, our vice president and treasurer since 2017, to serve as interim chief financial officer. That will be effective November 20th. Jeff brings more than 18 years of experience with the company and has a deep understanding of our business together with extensive experience in treasury and M&A, FP&A and tax. Jeff has also played a key role in our recent portfolio work and M&A initiatives. And I think that really positions them well to provide the continuity we need in our financial leadership as we conduct a search for jobs. Joe's permanent successor. Joe will also be supported by Lori Rizzo, our Vice President and Corporate Controller who has been with Gibraltar over 18 years. She will continue to lead the finance and accounting functions and report to Jeff.

And together with John Krause, our Chief Executive Officer, and Mary Cullen, our Chief Financial Officer who lead our combined building products business, we really have a strong experienced leadership team in place to maintain our momentum and execute on our priorities throughout the transition. I really want to thank Joe for his leadership and his contributions. It's been a lot. It's been very helpful for us. He's been an important partner during a really significant transformation that we are currently in, and I'm grateful for his dedication and the role he's played in positioning our business for continued success. I wish he and his family all the best in his next chapter. I know he'll do very well. So with that, let's turn to slide three and I'll give you an update on our portfolio simplification We've been committed to simplifying our portfolio and I believe the work we executed over the last 12 months reflects this.

Since February we executed two transactions in the divestiture of the renewables business, the sale of E-Boss in February, the sale of Rackin in July. We also closed the acquisition of OmniMax on February 2nd and have accelerated our integration integration synergy plans, and after just eight months, we've surpassed our original three-year, $35 million synergy target. On October 15th, we announced the sale of DS Brown to Saint-Gobain for 208 million, or approximately 10 times trailing 12-month EBITDA. and we expect to close the transaction before the end of 2026. And as we committed, proceeds will be used to reduce debt to ensure we deliver our leverage target commitment by the end of 2027. I think to execute each of these transactions while simultaneously accelerating the integration of OmniMax has been a great challenge for our team. And our organization has responded incredibly well. And although we have more work to do, I like our portfolio focus, our current building products strength and position, and our ability to outperform in today's current residential market, which we'll talk about here shortly.

So with that, now let's turn to slide four and let's start talking about the third quarter. We'll start with our revenue results in the residential segment, which accounts for approximately 80% of Gibraltar's total revenue. Versus prior year, the segment posted organic growth of 3.1%, and our building products business, the largest business in the residential segment, and the one most closely aligned with the roofing and shingle market, posted growth of 4.1%, assuming we owned OmniMax in Q3 of 2025. We did that while shingle shipments were down 13% in the quarter. Versus the second quarter, or sequentially, segment sales were down 6.3% and building product sales were down 7.9%, while shingle shipments were down 22% as the market quickly decelerated in August through quarter end. In AgTech versus prior year, sales were up 3% despite more than 40 million of revenue moving out of the second half related to customers dealing with permit delays and or reprioritizing store build schedules. The delay created a short-term revenue issue for us and the impact will be similar to the third and fourth quarters.

This change in revenue was impactful to margin, EPS, and cash expectations for continuing operations in the quarter. And in infrastructure versus prior year, sales were down 7.8 percent and down 14 percent sequentially, partially driven by installation pilot delays with different municipalities testing our new fiber optic seal technology, which moved production orders into 2027. The market remains robust as evidenced by good backlog growth of 10% in quarter in a post quarter end award of 7 million of a $7 million bridge project which will start delivery in 2027. So with this context on our revenue in the quarter, let's move to slide five to review income margin and cash performance. Adjusted operating income reached 59 million, adjusted EBITDA increased 62.3% to 84 million, and we delivered adjusted EPS of $1.01, which included a net interest impact of 21.5 million. GAAP results include pre-tax expenses of 9.9 million, or 32 cents per share, related to Dominex acquisition, integration, and restructuring costs. Specific to our segments in residential, we absorbed the impact of lower volume, accelerating inflation in steel, fuel, and logistics, and additional investment to accelerate 80-20 in plant network initiatives in the Pacific Northwest.

And we delivered adjusted EBITDA margin of 18.9%, which was solid performance but less than our expectations. going into the quarter. The change in revenue timing impacting ag tech and infrastructure and a product mix impact in infrastructure also impacted EPS in the quarter. Given the residential market environment and revenue timing issues in ag tech and infrastructure, each segment came in lower than our expectations for continuing operations. We generated 9 million in cash from our continuing operations during the quarter. Cash performance was driven by lower EBITDA as well as working capital timing, and Joe will provide a detailed review prior to sharing our revised full-year guide for 2026. So, based on third quarter results and our expectations with the residential market going forward, we use the following assumptions in the revision of our full year 2026 guide. We assume the residential and market will be down 15 percent in the second half and the market will adjust for seasonality normal to the fourth quarter as well.

I'll get into the market in a little bit more detail when we review the residential segment. We also factored in the move of 40 million of ag tech revenue out of the second half of the year. As it relates to cash, we factored in lower EBITDA and the timing impact of working capital related to ag tech deposits and expected tax benefits. Thank you. Now let's review the residential segment end market in a little bit more detail, and Joe's going to get us started.

Joseph Lovechio

Thanks Bill and good morning everyone. I first want to just personally thank Bill for the opportunity to serve over the past two and a half years. It's really been a true honor and a privilege to work with Bill and the team, and I'm very proud of our shared accomplishments to transform the business. Although excited about my next opportunity, I'm confident in the direction of the company and look forward to its continued success. Now let's start with residential on slide six. Segment net sales increased 168.7 million to 399 million, up 73%, driven by the inclusion of OmniMax results of operations, which contributed 161 million, and segment organic growth of 3.1%, while the building products business grew organically 4.1% if you assume we owned OmniMax in Q3 2025. We drove growth through price and participation gains, which helped overcome a slow end market.

Adjusted EBITDA margins were essentially flat compared to second quarter of 2026 at 18.9% as our acceleration of integration actions preserved profitability despite lower sequential volumes and incremental cost inflation in steel, logistics, and diesel fuel. Our Cost and commercial synergies generated by the OmniMax integration realized 7.8 million in Q3 for a year-to-date total of 14.5 million, and we expect those to continue to ramp going forward.

Unknown Speaker

So guys, let's move to slide 11. Let's talk a little bit more about the US roofing market. I mentioned earlier, shingle shipments were down 13% versus prior year and 22% sequentially. Shipments are down 7.3% on a year-to-date basis, and over the last two years, shipments in the third quarter are down 22%. And demand continues to vary significantly by region, with the Northeast down mid-single digits, and the Southeast and Southwest down much more, with the large markets of Florida and Texas experiencing the most softness in these respective regions. On a positive note, the Midwest was up double digits and the West was up slightly. So coming into the third quarter, we expected the market to be down approximately 5% due to pull ahead purchases in Q2, ahead of price increases, and soft point of sale results in the retail channel, which were down 8 to 10% in Q2.

I think our industry was a bit surprised by the swift deceleration in demand starting early August, which correlated with rising interest rates and fuel prices further slowing of existing and new home sales and new construction starts and general affordability becoming more challenging for existing and potential new homeowners. Retail POS sales were also down 5.1% in the quarter and retail POS results varied by region as well. If you compare our building products growth to the overall market and regional markets, our team performed very well. By region, our sales in the Northeast were up 8.2%, the Midwest up 23.2%, flat in the Southwest, the Southeast was down 21.7%, and the West was down 10.3%. Effectively, we outperformed the market in four of the five regions indicated by the positive spread between Gibraltar growth rates and market growth rates. In today's market, commercial strategy remains unchanged. We have to win more with customers.

We have to execute our recent participation gains well, and we have to drive more value-added solutions lowering the cost of business for our customers. At the same time, we must continue to optimize the structure of the business for this market environment and execute more synergy and productivity initiatives. And with that, I want to turn to slide eight, and we'll give you an update on that. data on our 2026 energy savings and the additional initiatives started and are completed in the First, we increased our 2026 annualized run rate savings 7.3 million to 36.5 million, which drives 19.5 million of realized savings by the end of 2026. We have effectively surpassed our year three synergy target in the first eight months of integration and we know there's more opportunity to pursue. In Q3, we realized 7.8 million of savings bringing our total realized to 14.6 million. 5 million since February. The additional 7.3 million added during the quarter is related to SG&A productivity and 80-20 and plant network initiatives, specifically recent initiatives in the Northwest and in Florida. So let's turn to slide nine and I'll highlight some of the results in three of our 11 integration work streams, one of which ties to the 80-20 and Plant Network Initiative in the Northwest that is contributing to the 7.3 million increase in annualized run rate savings added during the quarter.

This initiative really had two objectives. First, optimizing our plant network to improve service and cost with the consolidation of two facilities, and second, simplifying our product line to reduce SKU complexity and the cost of doing business for us and our customers. We're consolidating SKUs from 1,100 to 620 across existing product lines at the 44% reduction. We have recently exited the product line and we are starting to consolidate brands across the region. This is a good step in piloting what we believe can turn into strong value propositions for our customers. We also have another win in our commercial go-to-market work stream where we recently were recognized by Lowe's as their building products vendor partner of the year. Obviously, we're very grateful to Lowe's for the, well, really, we're grateful to the Lowe's team for their trust in us, their support, and of course the recognition, and we really look forward to serving and supporting them even more in the future.

And finally, from our information technology work stream, really good work since February in advancing ERP consolidations and implementations with two conversions completed and four remaining and work in process with common analytics CRM systems and network infrastructure optimization. Now let's move to slide 10 and we'll talk ag tech.

Joseph Lovechio

So on slide 10, net sales grew 3%, but were lower than expected as a result of CEA and Structures customers experiencing construction permit delays and reprioritizing store build schedules. For our CEA projects, permits are starting to receive approval with one of our larger projects now scheduled to begin later this month, and we anticipate more project permit approvals in Q4. Backlog at quarter end was 45.6 million, down 55%, but post-quarter end we were awarded a $75 million CEA project and we expect additional CEA project awards in Q4 as well. Our design and engineering backlog remains very robust as customers are expanding capacity to support accelerating demand for indoor grown fruits and vegetables. Adjusted operating and EBITDA margin improved by 420 and 380 basis points, respectively, driven by volume, business mix, and 80-20 operating initiatives. Our in-house powder coating capability is now in place and expected to drive cost productivity to support higher margin for lettuce and berry CEA projects going forward. Now let's move to infrastructure on slide 11.

Net sales were down 7.8%, partially driven by lower volume of fiber optic seal products, as our partner customer has pilots still in process. with various municipalities. Order backlog increased 10% in the quarter, and post-quarter end, we were awarded another bridge project valued at over $7 million, further building backlog in the fourth quarter. Margin was impacted by lower volume and product mix. As noted earlier, we entered into an agreement in October to sell our infrastructure business and will reclassify its results of operations as discontinued in the fourth quarter, 2026. We expect the sale to close in Q4, subject to customary closing conditions, including receipt of required regulatory approval. Given our remaining capital loss carry forward of 80.8 million entering this year, as well as the expected net ordinary loss of approximately 130 million from the two renewables transactions this year, we expect this to be a highly tax-efficient transaction, maximizing the gross proceeds from the sale to reduce debt. Let's now move to slide 12 to touch on our balance sheet and cash flow.

Gibraltar's policy with respect to cash allocation during the debt pay down period will be to keep a minimum amount of cash on hand. the revolver is needed to fund working capital and pay down debt with excess cash flow. During the quarter, Gibraltar generated 9 million in operating cash flow from continuing operations. We used 8 million from discontinued operations. We generated free cash flow from continuing operations of 8 million, or about 2% of sales. We used 32 million for working capital, primarily impacted by two items – First, about 25 million due to the timing impact of AgTech deposits with revenue shifting out. Second, we had expected tax refund benefits of approximately 30 million in the quarter, and the timing of that benefit has been pushed out. The company's U.S. federal consolidated income tax return is under examination for 2024.

As we focused on that work, the filing of tax returns was later than originally expected, pushing out the expected receipt of those tax refund benefits. Capital expenditures were 1.4 million or less than 1% of sales. And at quarter end we had borrowing on our revolver of 40 million and our cash on hand was 35 million. At quarter end, net debt on the balance sheet was 1.2 billion, and our net leverage, which includes anticipated synergies, as allowed in our credit agreement in the pro forma adjusted EBITDA, was 3.9 times. The availability on our revolving credit facility was 451 million, and total available liquidity was 486 million. Thank you. Let's review our deleveraging roadmap on slide 13. Our priority and focus remains to deleverage our balance sheet as quickly as possible through EBITDA delivery, synergy realization, working capital optimization, and utilization of cash tax benefits, as well as the application of asset portfolio simplification proceeds to debt reduction.

Planned uses of cash include capital expenditures of approximately 1% of sales, interest payments on our long-term debt, and special charges related to acquisition, transaction, integration, and restructuring related costs. The special charges we reported today for the third quarter were 9.9 million. Year to date we have recorded 51 million of special charges. As a result of our acceleration of certain integration activities, we now expect special charges to total 60 million in 2026, of which we have incurred approximately 85% to date. We expect to apply over 200 million of the proceeds from the closure on the sale of the infrastructure business, which is expected to occur before the end of the year, which would bring our expected net debt below 1 billion, which is lower than our previous expectation of 1.1 billion for year one net debt post the close of the OmniMax acquisition. During the second year post-transaction close, we continue to expect strong solid cash flow generation from expanding EBITDA, the realization of implemented synergies, benefits from working capital optimization, cash taxes, lower interest payments from reduced debt, as well as lower special charges. as well as the benefit of timing items that have now moved from this year to next year. As a result, our net debt level is expected to be below 800 million in 24 months ended first quarter of 2028.

Again, during this two-year period, our capital allocations will be focused on funding the growth of our business through capital expenditures and on debt reduction. In line with our long-term strategic plan, we continue to evaluate our mix of assets, including executable divestitures. divestitures of non-core assets that are in the best interest of shareholders, which could create additional liquidity for debt reduction. Let's now move to slide 14, which walks through the changes to our 2026 guidance, including the effect of lower than expected third quarter results, a lower fourth quarter outlook, as well as the reclassification of infrastructure as a discontinued operation. Our revised outlook for 2026 before adjusting for infrastructure has now consolidated net sales between 1.73 billion and 1.75 billion compared to 1.14 billion in 2025. adjusted operating margin between 10.4% and 10.6% compared to 13.3%. adjusted EBITDA margin between 15.2% and 15.5% compared to 16.3% for 2025. between $1.12 and $1.27 compared to $3.25 in 2025, including the expected impact of special charges related to acquisition, transaction, integration, and restructuring related costs. Adjusted EPS between $2.70 and $2.85 compared to $3.92 in 2025. Free cash flow, percentage of sales of 2% compared to 8% in 2025. This revision assumes the lower EBITDA guidance, as well as the timing change of expected tax refund benefits now assumes in early 27, as well as the timing impact of AgTech benefits moving to 2027 with the shift of revenue out of the second half of 26.

Again, we expect to deliver on our debt reduction schedule due to the pay down with expected proceeds from the sale of infrastructure. Now, adjusting for infrastructure being reclassified as a discontinued operation in the fourth quarter due to the signing of the agreement in October, our revised guidance for 2026 continuing operations is as follows. Consolidated net sales between 1.64 billion and 1.66 billion. Adjusted operating margin between 9.7% and 10%. Adjusted EBITDA margin between 14.7% and 15%. GAAP EPS between 64 cents and 79 cents. Adjusted EPS between 225 and 240.

And free cash flow, approximately 1% of sales. Key assumptions in this revised 26 guidance for continuing operations include total depreciation, amortization, and stock comp expense of approximately 80 million, 60 million in special charges related to acquisition, transaction, integration, and restructuring costs, higher than our previous estimate as we accelerated synergy cost reduction, initiatives and building products, including facility consolidations, over 70 million in interest expense, financing, and commitment fees, which will be dependent on the timing of our debt repayments and interest rates, and finally, a 26% adjusted tax rate and a 35% GAAP tax rate assumption. Now,.

Unknown Speaker

Now let me turn it over to Bill. Thanks, Joe. Just to summarize, guys, I think our overall transformation is making the progress we expected. We're well ahead of our original plan. As I mentioned earlier today, we're doing the things we said we would do, and we are not letting the current residential market environment, which has slowed significantly, slow us down in getting to where we need to be. I think the current residential market creates an opportunity for us because we have the right leadership and experience to execute intensely with the current environment. We are really focused on what we can control, the right priorities and initiatives, and we are significantly better positioned in combination with OmniMax to execute. Our ag tech business is also gaining momentum as key customers are entering an investment cycle where more capacity is needed to support growing consumer demand.

This end market is more positive and is experiencing a substitution effect related to outdoor farming. We are in the process of building our 2027 plan, as you might expect, developing scenarios around market assumptions for the residential segment, and we are doing the same for AgTech. We look forward to finishing 26 and sharing our 2027 plan early next year. We appreciate your support, the support of our customers and the entire Gibraltar team as we continue our transformation. Let's open the call up and we'll take your questions.

Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Daniel Moore with CJS Securities.

Please proceed with your question. Thank you.

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Dan Moore

Thank you. Good morning. Thanks for the color and taking the questions. I know this is a bit of a guess, but look at the 13 percent decline in shingle shipments and the outlook for the year. How much of that reflects inventory management at big box retailers, distributors, versus true end market demand? And to the best of your knowledge, where would you describe customer inventory levels today compared to historic averages? Yes.

Unknown Speaker

Yes, Dan, good question. I think it's been interesting to see the first half of the year we saw retail not be as positive as we saw revenue running or sales running through distribution in the second half of the year so far. It's been the exact opposite. So I think when you think about inventory management, it probably varies a little bit different by channel. The other thing I would say is we have other products outside of the kind of core roofing industry or like rainwear management that mainly runs more through retail. So if you take that out and just look at the roofing product, I'd say that What's been happening right now is a combination of end demand, not being there as robust as we would like. I think there's also some destocking going on at the same time. I think the demand side of this is driven off of if you go back to early August, that's when you started to see the rise again. and the conflict in the Middle East kind of took another turn. That's where you started seeing rates go up.

We're up 120 basis points since February in the 30-year. But you saw that go up, you saw fuel go up, and so forth. And then that kind of wiped out some of the affordability opportunities that we started to see materialize as price of the existing homes started to come down. So as those prices started to come down initially on existing homes, then they were offset by the higher rates, and that's where I think we saw a decline. a change in demand. So I think end demand is real. Coupled with that, I think you'll hear from the industry that there just wasn't the type of weather events that we normally get. When you hear you can see all the rain that you're seeing now.

We benefit from that from our rainwear products, but from a pure roofing perspective, I think you'll hear from the industry that those events just didn't occur this year in the magnitude, whether it be in Florida or anywhere else where they're used to. So I think there's a little bit of that. And then, of course, you had – You know, housing starts continue to be somewhat anemic, and new construction be slow on top of that. So if you think of the three elements, 20% of the business driven off of new construction down, and that shifted down further. Existing home sales from February to now shifted down further when rates went back up. That's... that churn's important in the business for roofing as well. And then you just didn't have the weather that a lot of people are accustomed to.

So I think it's a combination of demand, real-end demand, and I think it's destocking at the same time is the way we think about it. And feedback from customers, I would say, is pretty consistent with that. And it does vary a bit by region. Southeast, southwest, as I mentioned, is down significantly more than other parts of the country. And that's been now two years in a row that that's been the case, and that's where you've had a lot of migration over the last few years and a lot of homes being built and or just population shift. That's how I'd answer that. Sorry for the long answer, but that's kind of how we see the market acting today.

Dan Moore

No, understood. The demand is, you know, the lower demand is clear, obviously. Just looking at the revised guidance. including infrastructure revenue, about 5% lower, EBITDA 16% lower. I know you're looking for the market or shingle shipments down 15% for the year. Remind us what that outlook was previously. And second, how much of the revision reflects the continued push out of larger projects at AgTech?.

Unknown Speaker

Yes, a couple things. So we came in the second half thinking on the residential side the market would be down around 5% for the second half of the year. We said at that time our participation gains would help us offset that. market as we had seen in the first half. Well, the market has now shifted to down 3x that. in the second half is what is currently uh currently in the plan. So that's kind of the residential piece. And you saw that start to happen sequentially. Q3 is normally your strongest quarter, and we saw sequential sales and sequential market shift down. And the... AgTech side of things, those projects that have shifted out are good projects.

It's just the timing of them getting started. So as those permits get locked in, which one has here recently and we expect more this quarter, you'll start to see that flow into next year and be a nice contribution to what.

Dan Moore

our 27 plan will end up being. And then just in terms of higher raw material input costs, inflationary pressures, you know, how much the revision reflects, you know, those pressures which we're not able to recoup, but we might get in in 27 if things plateau.

Unknown Speaker

Good question. So on the ag tech side, you shift that much out, we delever pretty heavy there because we're We're COGS driven in the type of expertise we have. You don't take out of the business. It's not like you're running a manufacturing product. we've got construction management, engineering, estimating, all that stuff, that stays in there. So we deliver pretty heavy and that's part of what you see. The second thing, and it's really in the residential world, the second half of this year we saw, as I mentioned earlier in August, we saw steel go up again and then we saw a lot of inflation with fuel. fuel in particular, diesel. And I think everyone has seen that. So we've been chasing that. to try to recover that and we've got a pretty big chunk of price costs that we've got to overcome.

And we didn't assume in our fourth quarter that we're going to get all that back. You can imagine when the market falls the way it has, discussions with customers get a little bit more challenging with how and when you can pull it off. We're confident we'll get the pricing, but we didn't assume that we would get all that back early in the quarter and it's going to take us some time so that will come back to us, but we've assumed in our worst case scenario that we have to absorb more of that in the fourth quarter than we did than we would like. So those are the two big elements around the deleverage that you would see off of the sales decline that we have. in the current guide. So it's either one of those. If either one of those would change relative to timing, then great, but right now it's our best view of when we think those things will, how those things are actually impacting our deleveraging in the fourth quarter, which for us is much higher than we would normally see, and we get that, and you know, We're doing the right things to offset as much of that as we can, and we'll continue that. But I think we'll flush through that as we get into 27.

Dan Moore

Got it. Last for me, I know it's several, but a lot of moving parts. The infrastructure deal announced – I know you mentioned a strong outlook for ag tech. The stock indicated this morning clearly not getting much credit for that business from where we're trading. So how are you thinking, you know, ag tech a bit lumpier, more volatile than your resi business? How are you thinking about portfolio management, whether that's still core to the board? portfolio or more likely a divestment candidate over the next year or two. Thanks again for the question.

Unknown Speaker

I think we've been pretty open with everybody around continuing to optimize the portfolio and we'll continue to look at that. It's an interesting time right now for that business as a lot of our customers are entering this investment cycle. Without that being said, And yes, we're not getting credit for that, I suspect from the market. Nothing's changed relative to our broad strategy of how do we wanna move, moving more towards building products and becoming more focused there and we'll continue to do that. So from a timing perspective, if we do something there, it's a little different set of processes, if you will, than what we've... had with say infrastructure, but we'll cross that bridge when we get to it, but as of right We're going to continue to do what we said we've been doing, optimize portfolio and get these businesses performing as well as they can. And then that gives you optionality in terms of what you do next and when. Does that complete your question?.

Dan Moore

Alright, yep, I'll jump back with any follow-up. Thank you.

Operator

Our next question comes from the line of David McGregor with Longbow Research.

David S. MacGregor

Good morning, everyone, and thanks for taking my questions. I wonder if we could just start by looking at the residential EBITDA margins and bridge for us the 140 basis points, just trying to get a sense of pricing versus mix, cost inflation, volume leverage, synergies, just the parts there would be really helpful. Dave, are you referring specifically to Q3? Yes, the 140 basis points of a residential segment EBITDA margin.

Unknown Speaker

The 140, hold on, I'm sorry, I just want to make sure I'm going to answer your question accurately here. Oh, got you. Yes, so if you look at Q2, we ran right at 19. So we kind of held flat. But we held flat in the world of that rental Sequential volume came down versus Q2, 6.3%. So we had the volume come down, we got hit with this incremental inflation we talked about around steel, specifically diesel, and overall logistics costs. And then to counterpunch that, obviously driving synergy and productivity that we talked about, I think we did about 7.3 million a quarter, was helpful in holding those margins. Clearly, going into the quarter, wanted to perform better than that, but offsetting the deleverage from the volume, the incremental inflation we got really in the second half of the quarter when I mentioned earlier things started to accelerate.

We were able to offset that as best we could with the synergy and the cost actions that we had been taking and continue to take.

David S. MacGregor

Got it. Okay, thanks for that. I guess just given the cost inflation you're facing in the second half, likely to be an issue again in 2027, I think we'd probably all agree. I guess maybe you could talk just about your available options for protecting margins into 2027, and maybe excluding the synergy benefit, which is obviously substantial. But just looking at the continuing ops, the way it's been going. Yes, well, yes, I think.

Unknown Speaker

If I were to have predicted the last six weeks on some things that have moved in the commodities, they're all kind of bouncing around a little bit. Aluminum's going one direction, steel's going another. fuel and transportation are bouncing around but staying very high. As we think about what the assumptions are to build a plan around for each of those three, there are projections out there for each of those that will build into the plan. That will then drive how we think about projects. price and then all the other offsets if a all the other contributors, which will be mainly around the synergies we expect to roll through from this year's implementation and anything incremental we do next year. relative to additional restructuring or synergy type of thing. So I think it's pretty straightforward in terms of – There's three buckets on the commodity side, two that make up the bulk of it for us, that And there's working hard to continue to drive more synergies to whether whatever comes your way to offset that. Then I think there's a third element here that helps us with some of the new product launches that have come out recently and that will come out next year as we try to migrate more towards higher margin opportunities. So we've got some things in ventilation as an example we bring into market that I think would be helpful.

So trying to mix up that way, continue to invest in getting the structure of the company right. getting all our systems in place so we can coordinate analytics and run the business even that much better. All those things are going to matter, but it's really going to come down to what assumptions and what do we see over the next 60 days happening. with some of these commodities. The answer to that is going to be somewhat related to some of these macro geopolitical things as they have been the last year or two. So the good news is we know how to deal with all that. We're just going to have to be nimble on our toes and continue to be agile associated with whatever happens. But we're running scenarios on... really those commodities moving and some of the other things that I mentioned as well.

David S. MacGregor

Right. And Bill, how dependent are the synergy targets on unit sales? And maybe are there actions you can take in a slower demand environment like the facilities consolidations in the third quarter that accelerate the integration of the synergies program?.

Unknown Speaker

Yes, so really the one bucket of synergies that would be more related to volume is associated with the commercial synergies because you win a certain amount of business on an annualized basis and if that market falls 10% or just making that as an example, then theoretically that would be less than you would have thought. otherwise. But if you look at the cost synergies, the structural things that we've done, whether it's been around SG&A or plants or Other types of things, I'd say less so dependent on volume.

David S. MacGregor

Okay, good. And then last question for me, just the competitive environment. I guess this ties back to the commercial synergies discussion a moment ago. As difficult as this is for a company with your scale, it must be even more difficult for the smaller players. What's changing in terms of competitive behavior in the marketplace right now?.

Unknown Speaker

Yes, I think any time you see this type of drop, there's short-term decision making. So whether that's being aggressive to get a piece of whatever the pie actually is, but I think, What I would anticipate happening is you'll get a little bit of that and you've got to kind of weather that storm and you'll navigate through and make good decisions not just for the short term but medium and long. There'll be potential for consolidation in an industry like this if it continues to be where it is over time. Our focus right now is, as Joe mentioned, we're going to continue to deleverage. But there'll be some opportunities down the road here, 12, 18 months where there could be some bolt-ons that might become available. So you're going to see some dynamics around that. So you'll see some short-term things, you'll see some dynamics around some consolidation opportunities.

I think customers are going to come out and want to have discussions. We're already having those. But that really tends to rely more around what's going on with commodity movement as it does anything else. So nothing that we haven't seen before. Our first rodeo, as everyone knows in that regard, but one thing I would say to everybody is, I'm really excited the fact that we're together now with OmniMax versus dealing with this environment independent of each other, like we were a year and a half ago. So our inherent strength to battle through this is a lot different than it would have been otherwise, particularly with the synergies that now we were able to generate to offset any headwinds that kind of come in our face going forward. So I feel good about that. But, yes, it's a pretty interesting dynamic right now on all fronts.

But, you know, I think we're in a good position. and fight through it. Thanks very much, Bill. Yep.

Operator

As a reminder, if you would like to ask a question, press star 1 on your telephone keypad. Our next question comes from the line of Julio Ramirez. with Sidoti. Please proceed with your question.

Unknown Speaker

Great. Thanks. Good morning. Bill, can you help us understand how the legacy Gibraltar residential segment is performing relative to OmniMax from a margin standpoint? Are you seeing similar margin pressures across both, or are the margin pressures more weighted to one toward the other?.

Unknown Speaker

versus the other? No, I think they're very similar. You know, we run the business now as one anyway, and we've got products that are... being now shared across facilities and into regions where we can cross sell. I don't think margins are associated with one company or the other because we run as one. I think they're around core product lines, they're around regions, and that is really how the business works. So if you happen to have a Gibraltar or an OmniMax facility in a certain region, we don't refer to that as an OmniMax business versus a Gibraltar business. We have a set of customers that make up our six core customers and we have margin profiles with them across our product lines that we sell collectively now and I think really don't look a whole lot different between the two. There are some different product lines that OmniMax had that Gibraltar didn't have, like Rainwater Management, but that's not one versus the other, that's just an incremental product line that we now have in the portfolio combined.

Other than that, the common product lines, don't look a whole lot different on the margin front. And they shouldn't, to be honest, because you're working those deals with those customers and you're managing a common footprint around your manufacturing and engineering, etc. So supply chain, all that is now one team flowing material into wherever we're producing and whatever brand we're selling. Okay.

Unknown Speaker

Okay. That's helpful. And then if Joe is still on the line, you know, best wishes and quick question on the free cashflow profile. Just, Given the focus on deleveraging, if this underlying residential market remains depressed to the 27th, how do we think about the potential for free cash flow conversion and you guys generating cash to delever further? Yes.

Joseph Lovechio

Yes, thanks, Lily. Yes, I think, again, we still feel good about that trajectory based on the fact that, as we talked about, a lot of the one-time costs are kind of behind us as you think about kind of this year. Two, we've got the Renewables sold, so we would expect less of a drag from a disc op standpoint. We've got the proceeds from infrastructure. And then as we kind of cycle into next year, we'll continue to have kind of the EBITDA, we'll continue to kind of have the working capital. You'll have less of these things that impacted us this year. And our intent would be to prioritize debt pay down and focus on deleveraging and so as that free cash flow changes and becomes available we'll apply that to debt reduction Great, I'll pass it on. Thanks very much.

Operator

We have reached the end of the question and answer session. Mr. Bosway, I'd like to turn the floor back over to you for closing comments.

Unknown Speaker

Yes, thanks again everyone for calling in today. There's a lot of moving parts with this residential market that we're dealing with, but I feel like we're in a, you know, we've been outperforming in a significant way in this residential space. We continue to expect to do that. relative to others that maybe you follow and we're going to keep our heads down and keep moving forward. I do want to let everyone know that we'll be at the three-part ideas conference later this month. And as we finish up our planning for 2027, finish up 2026, we're looking forward to updating you on the fourth quarter and our fourth quarter report, but also then sharing with you the plans for 2027. So. So with that, I want to thank everyone for joining us and thanks for your support.

Operator

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.

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