UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2018~~March 31, 2019



¨	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

Commission File Number 0-22462

GIBRALTAR INDUSTRIES, INC.

(Exact name of Registrant as specified in its charter)



Delaware		16-1445150
(State or incorporation )		(I.R.S. Employer Identification No.)

3556 Lake Shore Road, P.O. Box 2028 Buffalo, New York		14219-0228
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (716) 826-6500

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value per share	ROCK	NASDAQ Stock Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See ~~definition~~definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	x	Accelerated filer	¨	Non-accelerated filer	¨	Smaller reporting company	¨	Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~October 31, 2018,~~April 30, 2019, the number of common shares outstanding was: ~~32,064,809.~~32,202,885.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

INDEX



		PAGE NUMBER
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (unaudited)	3
	Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (unaudited)	4
	Consolidated Balance Sheets as of ~~September 30, 2018~~March 31, 2019 (unaudited) and December 31, ~~2017~~2018	5
	Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (unaudited)	6
	Consolidated Statement of Shareholders’ Equity for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4022
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4930
Item 4.	Controls and Procedures	4930
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	4930
Item 1A.	Risk Factors	5031
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5031
Item 3.	Defaults Upon Senior Securities	5031
Item 4.	Mine Safety Disclosures	5031
Item 5.	Other Information	5031
Item 6.	Exhibits	5132
	SIGNATURES	5233

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
Net Sales $ 280,086
$ 274,574
$ 761,459
$ 728,806
Cost of sales 209,807
205,839
572,359
548,991
Gross profit 70,279
68,735
189,100
179,815
Selling, general, and administrative expense 40,875
33,042
113,579
109,513
Income from operations 29,404
35,693
75,521
70,302
Interest expense 2,906
3,486
9,305
10,612
Other expense (income) 522
404
(50 ) 811
Income before taxes 25,976
31,803
66,266
58,879
Provision for income taxes 6,473
11,184
15,574
21,090
Income from continuing operations 19,503
20,619
50,692
37,789
Discontinued operations:
Loss before taxes —
—
—
(644 )
Benefit of income taxes —
—
—
(239 )
Loss from discontinued operations —
—
—
(405 )
Net income $ 19,503
$ 20,619
$ 50,692
$ 37,384
Net earnings per share – Basic:
Income from continuing operations $ 0.61
$ 0.65
$ 1.59
$ 1.19
Loss from discontinued operations —
—
—
(0.01 )
Net income $ 0.61
$ 0.65
$ 1.59
$ 1.18
Weighted average shares outstanding -- Basic 32,115
31,703
31,922
31,700
Net earnings per share – Diluted:
Income from continuing operations $ 0.60
$ 0.64
$ 1.56
$ 1.17
Loss from discontinued operations —
—
—
(0.01 )
Net income $ 0.60
$ 0.64
$ 1.56
$ 1.16
Weighted average shares outstanding -- Diluted 32,571
32,210
32,524
32,216



	Three Months Ended March 31,
	2019		2018
Net Sales	$	227,417	$	215,337
Cost of sales	183,517		167,019
Gross profit	43,900		48,318
Selling, general, and administrative expense	33,334		34,475
Income from operations	10,566		13,843
Interest expense	2,061		3,269
Other expense (income)	589		(585		)
Income before taxes	7,916		11,159
Provision for income taxes	1,571		2,807
Net income	$	6,345	$	8,352

Net earnings per share:
Basic	$	0.20	$	0.26
Diluted	$	0.19	$	0.26
Weighted average shares outstanding:
Basic	32,279		31,786
Diluted	32,617		32,444

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019		2018
Net income	$	19,503		$	20,619		$	50,692		$	37,384		$	6,345	$	8,352
Other comprehensive income (loss):
Foreign currency translation adjustment	139			1,581			(1,538		)	3,351			842		110
Cumulative effect of accounting change (see Note 2)	—			—			(350		)	—
Adjustment to retirement benefit liability, net of tax	(5		)	(2		)	(15		)	(8		)
Adjustment to post employment health care benefit liability, net of tax	32			29			95			88
Cumulative effect of accounting change													—		(350		)
Minimum pension and post retirement benefit plan adjustments													12		27
Other comprehensive income (loss)	166			1,608			(1,808		)	3,431			854		(213		)
Total comprehensive income	$	19,669		$	22,227		$	48,884		$	40,815		$	7,199	$	8,139

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)


	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
	(unaudited)						(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	245,413		$	222,280		$	43,509		$	297,006
Accounts receivable, net	180,875			145,385			167,201			140,283
Inventories	97,486			86,372			98,594			98,913
Other current assets	8,949			8,727			8,282			8,351
Total current assets	532,723			462,764			317,586			544,553
Property, plant, and equipment, net	93,718			97,098			95,856			95,830
Operating lease assets							31,823			—
Goodwill	323,321			321,074			323,573			323,671
Acquired intangibles	99,545			105,768			94,520			96,375
Other assets	4,480			4,681			2,900			1,216
	$	1,053,787		$	991,385		$	866,258		$	1,061,645
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	92,997		$	82,387		$	84,462		$	79,136
Accrued expenses	76,268			75,467			65,020			87,074
Billings in excess of cost	21,900			12,779			18,259			17,857
Current maturities of long-term debt	400			400			400			208,805
Total current liabilities	191,565			171,033			168,141			392,872
Long-term debt	209,809			209,621			1,600			1,600
Deferred income taxes	32,110			31,237			36,916			36,530
Non-current operating lease liabilities							22,751			—
Other non-current liabilities	37,428			47,775			31,017			33,950
Shareholders’ equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding	—			—			—			—
Common stock, $0.01 par value; authorized 50,000 shares; 32,842 shares and 32,332 shares issued and outstanding in 2018 and 2017	328			323
Common stock, $0.01 par value; authorized 50,000 shares; 33,026 shares and 32,887 shares issued and outstanding in 2019 and 2018							330			329
Additional paid-in capital	280,149			271,957			285,034			282,525
Retained earnings	325,878			274,562			346,922			338,995
Accumulated other comprehensive loss	(6,174		)	(4,366		)	(6,380		)	(7,234		)
Cost of 778 and 615 common shares held in treasury in 2018 and 2017	(17,306		)	(10,757		)
Cost of 855 and 796 common shares held in treasury in 2019 and 2018							(20,073		)	(17,922		)
Total shareholders’ equity	582,875			531,719			605,833			596,693
	$	1,053,787		$	991,385		$	866,258		$	1,061,645

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)(unaudited)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2019			2018
Cash Flows from Operating Activities
Net income	$	50,692		$	37,384		$	6,345		$	8,352
Loss from discontinued operations	—			(405		)
Income from continuing operations	50,692			37,789
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	15,449			16,427			4,941			5,189
Stock compensation expense	6,854			5,069			2,371			2,097
Net gain on sale of assets	(203		)	(139		)
Exit activity costs (recoveries), non-cash	1,088			(1,931		)
Benefit of deferred income taxes	—			(136		)
Exit activity recoveries, non-cash							—			(727		)
Provision for deferred income taxes							393			—
Other, net	1,317			1,411			2,456			353
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable	(30,534		)	(42,310		)	(27,623		)	4,947
Inventories	(16,263		)	2,016			35			(8,907		)
Other current assets and other assets	1,052			(2,002		)	165			1,498
Accounts payable	9,237			25,134			5,332			(1,694		)
Accrued expenses and other non-current liabilities	(479		)	7,503			(31,903		)	(33,314		)
Net cash provided by operating activities	38,210			48,831
Net cash used in operating activities							(37,488		)	(22,206		)
Cash Flows from Investing Activities
Cash paid for acquisitions, net of cash acquired	(5,241		)	(18,494		)
Acquisitions, net of cash acquired							(264		)	—
Net proceeds from sale of property and equipment	3,147			12,935			22			2,823
Purchases of property, plant, and equipment	(6,767		)	(5,152		)	(3,132		)	(1,033		)
Net cash used in investing activities	(8,861		)	(10,711		)
Net cash (used in) provided by investing activities							(3,374		)	1,790
Cash Flows from Financing Activities
Long-term debt payments	(400		)	(400		)	(210,000		)	—
Payment of debt issuance costs							(1,235		)	—
Purchase of treasury stock at market prices	(6,549		)	(1,982		)	(2,151		)	(850		)
Net proceeds from issuance of common stock	1,343			649			139			226
Net cash used in financing activities	(5,606		)	(1,733		)	(213,247		)	(624		)
Effect of exchange rate changes on cash	(610		)	1,468			612			(499		)
Net increase in cash and cash equivalents	23,133			37,855
Net decrease in cash and cash equivalents							(253,497		)	(21,539		)
Cash and cash equivalents at beginning of year	222,280			170,177			297,006			222,280
Cash and cash equivalents at end of period	$	245,413		$	208,032		$	43,509		$	200,741

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Common Stock			Additional Paid-In Capital				Retained Earnings		Accumulated Other Comprehensive Loss				Treasury Stock							Total Shareholders’ Equity			Common Stock				Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Loss				Treasury Stock						Total Shareholders’ Equity
	Shares	Amount					Shares			Accumulated Other Comprehensive Loss			Amount				Shares			Amount							Shares	Additional Paid-In Capital			Amount					Accumulated Other Comprehensive Loss										Total Shareholders’ Equity
Balance at December 31, 2017	32,332	$	323	Additional Paid-In Capital			$	Retained Earnings	271,957	$	274,562			$	(4,366	)		615			Total Shareholders’ Equity		$	(10,757	)	$	531,719
Balance at December 31, 2018																								32,887		$	329	$	282,525			Retained Earnings		$	338,995			$	(7,234	)	796			$	(17,922	)		$	596,693
Net income	—	—		—				8,352		—				—			—				8,352			—		—		—				6,345				—				—		—				6,345
Foreign currency translation adjustment	—	—		—				—		110				—			—				110			—		—		—				—				842				—		—				842
Adjustment to retirement benefit liability, net of taxes of $(2)	—	—		—				—		(5		)		—			—				(5		)
Adjustment to post employment health care benefit liability, net of taxes of $12	—	—		—				—		32				—			—				32
Minimum pension and post retirement benefit plan adjustments, net of taxes of $4																								—		—		—				—				12				—		—				12
Stock compensation expense	—	—		2,097				—		—				—			—				2,097			—		—		2,371				—				—				—		—				2,371
Cumulative effect of accounting change (see Note 2)	—	—		—				624		(350		)		—			—				274			—		—		—				1,582				—				—		—				1,582
Stock options exercised	13	—		226				—		—				—			—				226			12		—		139				—				—				—		—				139
Net settlement of restricted stock units	53	1		(1		)		—		—				24			(850		)		(850		)	127		1		(1		)		—				—				59		(2,151		)		(2,151		)
Balance at March 31, 2018	32,398	$	324	$	274,279			$	283,538	$	(4,579	)		639			$	(11,607	)		$	541,955
Net income	—	—		—				22,837		—				—			—				22,837
Foreign currency translation adjustment	—	—		—				—		(1,787		)		—			—				(1,787		)
Adjustment to retirement benefit liability, net of taxes of $(2)	—	—		—				—		(5		)		—			—				(5		)
Adjustment to post employment health care benefit liability, net of taxes of $13	—	—		—				—		31				—			—				31
Stock compensation expense	—	—		2,731				—		—				—			—				2,731
Stock options exercised	21	—		300				—		—				—			—				300
Issuance of restricted stock	2	—		—				—		—				—			—				—
Net settlement of restricted stock units	334	3		(3		)		—		—				128			(5,166		)		(5,166		)
Balance at June 30, 2018	32,755	$	327	$	277,307			$	306,375	$	(6,340	)		767			$	(16,773	)		$	560,896
Net income	—	—		—				19,503		—				—			—				19,503
Foreign currency translation adjustment	—	—		—				—		139				—			—				139
Adjustment to retirement benefit liability, net of taxes of $(2)	—	—		—				—		(5		)		—			—				(5		)
Adjustment to post employment health care benefit liability, net of taxes of $12	—	—		—				—		32				—			—				32
Stock compensation expense	—	—		2,026				—		—				—			—				2,026
Stock options exercised	50	1		816				—		—				—			—				817
Net settlement of restricted stock units	37	—		—				—		—				11			(533		)		(533		)
Balance at September 30, 2018	32,842	$	328	$	280,149			$	325,878	$	(6,174	)		778			$	(17,306	)		$	582,875
Balance at March 31, 2019																								33,026		$	330	$	285,034			$	346,922			$	(6,380	)		855		$	(20,073	)		$	605,833

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Common Stock			Additional Paid-In Capital				Retained Earnings		Accumulated Other Comprehensive Loss				Treasury Stock							Total Shareholders’ Equity			Common Stock				Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Loss				Treasury Stock						Total Shareholders’ Equity
	Shares	Amount					Shares			Accumulated Other Comprehensive Loss			Amount				Shares			Amount							Shares	Additional Paid-In Capital			Amount					Accumulated Other Comprehensive Loss										Total Shareholders’ Equity
Balance at December 31, 2016	32,085	$	320	Additional Paid-In Capital			$	Retained Earnings	264,418	$	211,748			$	(7,721	)		530			Total Shareholders’ Equity		$	(7,885	)	$	460,880
Balance at December 31, 2017																								32,332		$	323	$	271,957			Retained Earnings		$	274,562			$	(4,366	)	615			$	(10,757	)		$	531,719
Net income	—	—		—				3,996		—				—			—				3,996			—		—		—				8,352				—				—		—				8,352
Foreign currency translation adjustment	—	—		—				—		679				—			—				679			—		—		—				—				110				—		—				110
Adjustment to retirement benefit liability, net of taxes of $(2)	—	—		—				—		(3		)		—			—				(3		)
Adjustment to post employment health care benefit liability, net of taxes of $19	—	—		—				—		29				—			—				29
Minimum pension and post retirement benefit plan adjustments, net of taxes of $10																								—		—		—				—				27				—		—				27
Stock compensation expense	—	—		1,635				—		—				—			—				1,635			—		—		2,097				—				—				—		—				2,097
Cumulative effect of accounting change (see Note1)	—	—		(254		)		254		—				—			—				—
Cumulative effect of accounting change																								—		—		—				624				(350		)		—		—				274
Stock options exercised	1	—		11				—		—				—			—				11			13		—		226				—				—				—		—				226
Issuance of restricted stock	—	—		—				—		—				—			—				—
Net settlement of restricted stock units	47	1		(1		)		—		—				22			(922		)		(922		)	53		1		(1		)		—				—				24		(850		)		(850		)
Balance at March 31, 2017	32,133	$	321	$	265,809			$	215,998	$	(7,016	)		552			$	(8,807	)		$	466,305
Net income	—	—		—				12,769		—				—			—				12,769
Foreign currency translation adjustment	—	—		—				—		1,091				—			—				1,091
Adjustment to retirement benefit liability, net of taxes of $(1)	—	—		—				—		(3		)		—			—				(3		)
Adjustment to post employment health care benefit liability, net of taxes of $17	—	—		—				—		30				—			—				30
Stock compensation expense	—	—		1,556				—		—				—			—				1,556
Stock options exercised	15	—		236				—		—				—			—				236
Issuance of restricted stock	2	—		—				—		—				—			—				—
Net settlement of restricted stock units	5	—		—				—		—				2			(81		)		(81		)
Balance at June 30, 2017	32,155	$	321	$	267,601			$	228,767	$	(5,898	)		554			$	(8,888	)		$	481,903
Net income	—	—		—				20,619		—				—			—				20,619
Foreign currency translation adjustment	—	—		—				—		1,581				—			—				1,581
Adjustment to retirement benefit liability, net of taxes of $(2)	—	—		—				—		(2		)		—			—				(2		)
Adjustment to post employment health care benefit liability, net of taxes of $18	—	—		—				—		29				—			—				29
Stock compensation expense	—	—		1,878				—		—				—			—				1,878
Stock options exercised	24	—		402				—		—				—			—				402
Issuance of restricted stock	—	—		—				—		—				—			—				—
Net settlement of restricted stock units	96	1		(1		)		—		—				34			(979		)		(979		)
Balance at September 30, 2017	32,275	$	322	$	269,880			$	249,386	$	(4,290	)		588			$	(9,867	)		$	505,431
Balance at March 31, 2018																								32,398		$	324	$	274,279			$	283,538			$	(4,579	)		639		$	(11,607	)		$	541,955

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


(1)	CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited consolidated financial statements have been prepared by management in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting of normal recurring adjustments considered necessary for the fair presentation of results for the interim period have been included. The Company's operations are seasonal; for this and other reasons, financial results for any interim period are not necessarily indicative of the results expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our annual Form 10-K for the year ended December 31, ~~2017.~~2018.

The balance sheet at December 31, ~~2017~~2018 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

Refer to Note 1 of the Company's annual report on Form 10-K for the year ended December 31, 2017 for the cumulative effect of an accounting change adjustment recognized during the quarter ended March 31, 2017 and presented in the Company's Consolidated Statement of Shareholders' Equity for the nine months ended September 30, 2017 in this Form 10-Q.

Table of Contents


(2)	RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements Adopted



Standard	Description	Financial Statement Effect or Other Significant Matters
ASU No. ~~2014-09~~ ~~Revenue from Contracts with Customers (Topic 606) And All Related ASUs~~	The standard requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires additional disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and assets recognized from costs incurred to obtain or fulfill a contract. The provisions of the standard, as well as all subsequently issued clarifications to the standard, are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The standard can be adopted using either a full retrospective or modified retrospective approach.	The Company has adopted this standard using the modified retrospective method. The Company recognized the cumulative- effect adjustment of initially applying this standard of $274,000 to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standard in effect for that period. Refer to Note 4 for further disclosure of the financial statement effect and other significant matters as a result of the adoption of this standard. ~~Date of adoption: Q1 2018~~
~~ASU No. 2016-15~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~	The standard provides guidance on eight specific cash flow issues to reduce diversity in reporting. The provisions of this standard are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted.	~~The Company has adopted this standard and it did not have any impact on the Company's consolidated financial statements.~~ ~~Date of adoption: Q1 2018~~
~~ASU No. 2016-16~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~	The standard allows an entity to recognize income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The provisions of this standard are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance.	~~The Company has adopted this standard and it did not have any impact on the Company's consolidated financial statements.~~ ~~Date of adoption: Q1 2018~~
~~ASU No. 2018-02~~ ~~Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~	The standard allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The provisions of this standard are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the standard is permitted, including adoption in any interim period.	The Company has early adopted this standard. As a result of adopting this standard, the Company recorded an adjustment of $350,000 from accumulated other comprehensive income to retained earnings in the consolidated statement of shareholders' equity as of the beginning of the January 1, 2018, and will record any subsequent period adjustments, if changes to provisional amounts result in additional amounts stranded in accumulated other comprehensive income. ~~Date of adoption: Q1 2018~~

~~Table of Contents~~

~~Recent Accounting Pronouncements Not Yet Adopted~~



~~Standard~~	~~Description~~	~~Financial Statement Effect or Other Significant Matters~~
~~ASU No.~~ 2016-02 Leases (Topic 842)	The standard requires lessees to recognize most leases as assets and liabilities on the balance sheet, but record expenses on the statement of operations in a manner similar to current accounting. For lessors, the guidance modifies the classification criteria and accounting for sales-type and direct financing leases. The standard also requires additional disclosures about leasing arrangements and requires a modified retrospective transition approach for existing leases, whereby the standard will be applied to the earliest year presented. The provisions of the standard are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted.	The Company ~~continues~~has adopted this standard using the modified retrospective approach and elected the transition method to ~~evaluate~~initially apply the ~~impact~~new leases standard to all leases that exist at January 1, 2019. Under this transition method, the Company initially applied Topic 842 as of January 1, 2019, and recognized a cumulative-effect adjustment which increased the ~~standard on the Company’s consolidated financial statements and related disclosures. The new standard requires lessees to recognize a lease liability and right~~Company's beginning retained earnings as of ~~use asset on the balance sheet. While the adoption will result in an increase to assets and liabilities on the Company’s balance sheet, we do not expect that the impact will be material.~~January 1, 2019 by approximately $1.6 million. In addition, the Company ~~does not expect that~~elected the ~~adoption will result in a material impact to our consolidated statement~~package of ~~operations. The Company intends to adopt this guidance by applying~~practical expedients permitted under the transition ~~provisions on a modified retrospective basis as of~~guidance within the ~~effective date~~new leases standard, which among other things, permitted the Company to carry forward its historical lease classification for leases in place prior to January 1, 2019. The comparative period information has not been restated and continues to be reported and presented under the accounting standards in effect for that period. The standard did not materially impact the Company's consolidated net earnings and had no impact on cash flows. ~~Planned date~~Date of adoption: Q1 2019

Recent Accounting Pronouncements Not Yet Adopted



Standard	Description	Financial Statement Effect or Other Significant Matters
ASU No. 2016-13 Financial Instruments - Credit Losses (Topic 326)	The objective of this standard is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit, including trade receivables, held by an entity at each reporting date. The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The provisions of this standard are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. An entity will apply the amendments in this update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective, that is, a modified-retrospective approach.	The Company is currently evaluating the requirements of this standard. It does not expect it to have a material impact on the Company's financial statements. Date of adoption: Q1 2020

Table of Contents


(3)	ACCOUNTS RECEIVABLE, NET

Accounts receivable consists of the following (in thousands):


	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Trade accounts receivable	$	166,208		$	140,209		$	149,159		$	124,609
Costs in excess of billings	21,522			11,610			25,519			22,634
Total accounts receivables	187,730			151,819			174,678			147,243
Less allowance for doubtful accounts	(6,855		)	(6,434		)	(7,477		)	(6,960		)
Accounts receivable	$	180,875		$	145,385		$	167,201		$	140,283

Refer to Note 4 of the Company's consolidated financial statements included in this quarterly report on Form 10-Q for additional information concerning the Company's costs in excess of billings.


(4)	REVENUE

Sales includes revenue from contracts with customers from roof and foundation ventilation products; centralized mail systems and electronic package solutions; rain dispersion products and roofing accessories; expanded and perforated metal; perimeter security solutions; expansion joints and structural bearings; designing, engineering, manufacturing and installation of solar racking systems and greenhouse structures.

Revenue recognition

Revenue is recognized when, or as, the Company transfers control of promised products or service to a customer in an amount that reflects the consideration the Company expects to be entitled in exchange for transferring those products or service. Refer to Note 16 of this quarterly report on Form ~~10Q~~10-Q for additional information related to revenue recognized by timing of transfer of control by reportable segment.

Payment terms and conditions vary by contract, although terms generally include a requirement of payment within a range from 30 to 60 days, or in certain cases, up front deposits. In circumstances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that the Company's contracts generally

~~Table of Contents~~

~~do not include a significant financing component. Taxes collected from customers, which are subsequently remitted to governmental authorities, are excluded from sales.~~

~~Performance obligations satisfied at a point in time and significant judgments~~

The majority of the Company's revenue from contracts with customers is recognized when the Company transfers control of the promised product at a point in time, which is determined when the customer has legal title and the significant risks and rewards of ownership of the asset, and the Company has a present right to payment for the product. These contracts with customers include promised products, which are generally capable of being distinct and accounted for as separate performance obligations. Accordingly, the Company allocates the transaction price, which is generally the quoted price per terms of the contract and the consideration the Company expects to receive, to each performance obligation in an amount based on an observable price of the products as the Company frequently sells these products separately in similar circumstances and to similar customers. These products are generally sold with rights of return and these contracts may provide other credits or incentives, which are accounted for as variable consideration. Variable consideration is estimated at the most likely amount to predict the consideration to which the Company will be entitled, and only to the extent it is probable that a subsequent change in estimate will not result in a significant revenue reversal when estimating the amount of revenue to recognize. Sales returns, allowances, and customer incentives, including rebates, are treated as reductions to the sales transaction price and based largely on an assessment of all information (i.e., historical, current and forecasted) that is reasonably available to the Company, and estimated at contract inception and updated at the end of each reporting period as additional information becomes available.

~~Performance obligations satisfied over time and significant judgments~~

For contracts with customers which the Company satisfies a promise to the customer to construct a certain asset that the customer controls as it is being created or enhanced, or a promise to provide a product that has no alternative use to the Company and the Company has enforceable rights to payment, the Company satisfies the performance obligation and recognizes revenue over time. For the contracts to construct a certain asset, the Company determines that the customer controls the asset while it is being constructed. For the contracts for products that have no alternative use and for which the Company has an enforceable right to payment, the Company identifies these products as products that are not a standard inventory item or the Company cannot readily direct the product to another customer or use without incurring a significant economic loss, or significant costs to rework the product.

When the promised products and services are to construct a certain asset that the customer controls, the entire contract is accounted for as one performance obligation. The Company determines the transaction price for each contract based on the consideration the Company expects to receive for the promised products and services under the entire contract, which is generally the stated contract price based on an expected cost plus a margin approach.

When the promised products do not have an alternative use to the Company, and the Company has enforceable rights to payment, the transaction price is determined for each contract based on the consideration the Company expects to receive for the promised products under the contract and is generally the stated contract price based on an expected cost plus a margin approach for each performance obligation. These promised products are generally capable of being distinct and accounted for as separate performance obligations.

For the above contracts with customers with respect to which the Company satisfies a performance obligation over time, the Company recognizes revenue based on the extent of progress towards completion of the performance obligation. The cost-to-cost measure of progress best depicts the transfer of control to the customer which occurs as the Company incurs costs on the contract as the incurred costs are proportionate to the Company's progress in satisfying the performance obligation. Under the cost-to-cost measure of progress, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recognized proportionally as costs are incurred. Costs to fulfill a contract include all direct costs related to contract performance. Selling and administrative expenses are charged to operations as incurred. Provision for loss on an uncompleted performance obligation is recognized in the period in which such loss is determined.

The Company regularly reviews the progress and performance of the performance obligation recognized over time under the cost-to-cost method. Any adjustments to net sales, cost of sales, and the related impact to operating income are recognized as necessary in the period they become known. Changes in estimates of net sales, cost of sales, and the related impact to operating income are recognized on a cumulative catch-up basis, which recognizes in the current

~~Table of Contents~~

~~period the cumulative effect of the changes on current or prior periods based on a performance obligation's cost-to-cost measure of progress.~~

The Company also recognizes revenues from services contracts over time. For these contracts, the transaction price is determined for each contract based on the consideration the Company expects to receive for the promised service under the contract, which generally is the stated contract price. In order to estimate the standalone selling price of the performance obligation, the Company evaluates the market in which the promised service is sold and estimates the price that customers in the market would be willing to pay. Further, the Company recognizes revenue over time during the term of the agreement as the customer is simultaneously receiving and consuming the benefits provided throughout the Company's performance. Therefore due to control transferring over time, the Company recognizes revenue on a straight-line basis throughout the contract period.

~~Remaining performance obligations~~

As of ~~September 30, 2018,~~March 31, 2019, the Company's remaining performance obligations are part of contracts that have an original expected duration of one year or less. ~~Therefore, any remaining performance obligations are not required to be disclosed.~~

Contract assets and contract liabilities

Contract assets consist of costs in excess of billings. Costs in excess of billings includes unbilled amounts resulting from revenues under contracts with customers that are satisfied over time and when the cost-to-cost measurement method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Costs in excess of billings are classified as current assets and are reported net of contract billings on a contract-by-contract basis at the end of each reporting period.

~~Contract liabilities~~

Contract liabilities consist of billings in excess of ~~cost. Billings~~cost and unearned revenue. Unearned revenue relates to payments received in ~~excess~~advance of cost includes billings in excess of revenue recognized and deferred revenue, which includes advanced payments, up-front payments, and progress billing payments. Billings in excess of cost are reported net of contract cost on a contract-by-contract basis at the end of each reporting period and are classified as current liabilities. To determine the revenue recognized in the period from the beginning balance of billings in excess of cost,performance under the contract ~~liability as of the beginning of the period~~and is recognized ~~as revenue on a contract by contract basis~~ when the Company ~~incurs costs to satisfy~~performs under the ~~performance obligation related to the individual~~ contract. ~~Once the beginning contract liability balance for an individual contract has been fully recognized as~~Unearned revenue ~~any additional payments received~~is presented within accrued expenses in the ~~period are recognized as revenue once the related costs have been incurred.~~Company's consolidated balance sheet.

~~Costs to obtain a contract with a customer~~

The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. As of September 30, 2018, the Company does not have any open contracts with an original expected duration of greater than one year, and therefore, we expense such costs as incurred. These incremental costs include, but are not limited to, sales commissions incurred to obtain a contract with a customer.

~~Table of Contents~~

~~Contract assets and contract liabilities~~

~~The Company's contract assets and contract liabilities consist of costs in excess of billings and billings in excess of cost, respectively.~~ The following table presents the beginning and ending balances and significant changes in the costs in excess of billings and billings in excess of cost balance during the three months ended ~~September 30, 2018:~~March 31, 2019 and 2018, respectively (in thousands):

Costs in Excess of Billings Billings in Excess of Cost
Beginning balance, January 1, 2018 (1) $ 16,532
$ (12,779 )
Reclassification of the beginning balances of:
Costs in excess of billings to receivables (15,450 ) —
Billings in excess of cost to revenue —
9,294
Costs in excess of billings recognized, net of reclassification to receivables 20,440
—
Net billings in advance and cash payments not recognized as revenue —
(18,415 )
Ending balance, September 30, 2018 $ 21,522
$ (21,900 )



(1) Due to the adoption of ASC 606 effective January 1, 2018, the Company recorded a transition adjustment to the opening balance of "Costs in excess of billings" at January 1, 2018. There were no transition adjustments to the opening balance of "Billings in Excess of Cost" at January 1, 2018. Refer to "Transition disclosures" below for further explanation of cumulative effect of the changes made to the Company's consolidated January 1, 2018 balance sheet for the adoption of ASC 606.

~~Transition disclosures~~

On January 1, 2018, the Company adopted the accounting standard ASC 606, Revenue from Contracts with Customers, only for contracts that were not completed at the date of initial application using the modified retrospective method. The Company recognized the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of retained earnings. The comparative period information has not been restated and continues to be reported under the accounting standards in effect for that period. The Company does not expect the adoption of this standard to have a material impact to the Company's net income on an ongoing basis.

A majority of the Company's revenues continue to be recognized when products are shipped or service is provided and the customer takes ownership and assumes the risk of loss. For certain custom fabricated products for which there is no alternative use and the Company has enforceable rights to payment for performance to date where revenue was previously recognized upon transfer of title and risk of loss, the Company now recognizes revenue as the Company satisfies its performance over time in accordance with ASC 606.



	March 31, 2019			December 31, 2018
Costs in excess of billings	$	25,519		$	22,634
Billings in excess of cost	(18,259		)	(17,857		)
Unearned revenue	(12,917		)	(12,028		)

Table of Contents

~~The cumulative effect of the changes made to the Company's consolidated January 1, 2018 balance sheet for the adoption of ASC 606 is as follows (in thousands):~~

Balance at December 31, 2017 Adjustments Balance at January 1, 2018
Assets
Accounts receivable, net $ 145,385
$ 4,922
$ 150,307
Costs in excess of billings (1) $ 11,610
$ 4,922
$ 16,532
Inventories $ 86,372
$ (4,735 ) $ 81,637
Total current assets $ 462,764
$ 187
$ 462,951
Total assets $ 991,385
$ 187
$ 991,572

Liabilities
Accrued expenses $ 75,467
$ (87 ) $ 75,380
Total current liabilities $ 171,033
$ (87 ) $ 170,946

Shareholders' equity
Retained earnings $ 274,562
$ 274
$ 274,836
Total shareholders' equity $ 531,719
$ 274
$ 531,993
Total liabilities and shareholders' equity $ 991,385
$ 187
$ 991,572



(1) The balance presented at December 31, 2017 for "Costs in excess of billings" represents the balance reported in Note 2 of the Company's annual report on Form 10-K for the year ended December 31, 2017. This balance was included within the total balance of "Accounts receivable, net" presented on the Company's Consolidated Balance Sheet on Form 10-K as of December 31, 2017. Due to the adoption of ASC 606 effective January 1, 2018, the Company recorded a transition adjustment to the opening balance of "Costs in excess of billings" at January 1, 2018 that is included in the "Accounts receivable, net" line item presented on the Company's Consolidated Balance Sheet and disclosed in Note 3 of this Form 10-Q for the nine months ended September 30, 2018.



	Three Months Ended March 31, 2019		Three Months Ended March 31, 2018
Revenue recognized in the period from:
Amounts included in billings in excess of cost at the beginning of the period	$	9,697	$	8,340
Amounts included in unearned revenue at the beginning of the period	$	4,661	$	1,836

~~Table of Contents~~

In accordance with ASC 606, the disclosure of the impact of adoption on the Company's consolidated statement of income and balance sheet for the periods ended September 30, 2018 is as follows (in thousands):

Consolidated Statement of Income
Three Months Ended September 30, 2018
As Reported Without Adoption of ASC 606
Effect of Change
Higher (Lower)

Net sales $ 280,086
$ 281,156
$ (1,070 )
Cost of sales 209,807
210,878
(1,071 )
Gross profit 70,279
70,278
1
Provision for income taxes 6,473
6,473
—
Net income $ 19,503
$ 19,502
$ 1

Consolidated Statement of Income
Nine Months Ended September 30, 2018
As Reported Without Adoption of ASC 606
Effect of Change
Higher (Lower)

Net sales $ 761,459
$ 760,277
$ 1,182
Cost of sales 572,359
572,039
320
Gross profit 189,100
188,238
862
Provision for income taxes 15,574
15,332
242
Net income $ 50,692
$ 50,072
$ 620

Consolidated Balance Sheet
September 30, 2018
As Reported Without Adoption of ASC 606
Effect of Change
Higher (Lower)
Assets
Accounts receivable, net $ 180,875
$ 174,426
$ 6,449
Inventories 97,486
102,662
(5,176 )
Total current assets 532,723
531,450
1,273
Total assets 1,053,787
1,052,514
1,273

Liabilities
Accrued expenses 76,268
75,889
379
Total current liabilities 191,565
191,186
379

Shareholders' equity
Retained earnings 325,878
324,984
894
Total shareholders' equity 582,875
581,981
894
Total liabilities and shareholders' equity $ 1,053,787
$ 1,052,514
$ 1,273

~~Table of Contents~~


(5)	INVENTORIES

Inventories consist of the following (in thousands):


	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Raw material	$	51,860	$	42,661	$	58,376	$	57,845
Work-in-process	7,861		10,598		7,626		6,930
Finished goods	37,765		33,113		32,592		34,138
Total inventories	$	97,486	$	86,372	$	98,594	$	98,913

(6) ACQUISITIONS

On August 21, 2018, the Company acquired all of the outstanding stock of SolarBOS. SolarBOS is a provider of electrical balance of systems products, which consists of electrical components such as wiring, switches, and combiner boxes that support photovoltaic systems, for the U.S. solar renewable energy market. The Company expects the acquisition of SolarBOS to enable the Company to provide complementary product offerings to its existing customers and strengthen its position in the solar renewable energy market. The results of SolarBOS have been included in the Company's consolidated financial results since the date of acquisition (within the Company's Renewable Energy and Conservation segment). The ~~preliminary~~ aggregate purchase consideration for the acquisition of SolarBOS was ~~$6.5~~$6.4 million, which includes a working capital adjustment and certain other adjustments provided for in the stock purchase agreement. The acquisition was financed through cash on hand.

The ~~preliminary~~ purchase price for the acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values. The excess consideration was recorded as goodwill and approximated ~~$2.8~~$2.9 million, all of which is deductible for tax purposes. Goodwill represents future economic benefits arising from other assets acquired that could not be individually identified including workforce additions, growth opportunities, and increased presence in the solar renewable energy markets.

The allocation of the ~~preliminary~~ purchase consideration to the fair value of the assets acquired and liabilities assumed is as follows as of the date of the acquisition (in thousands):


Cash	$	915		$	915
Working capital	828			680
Property, plant and equipment	547			483
Acquired intangible assets	1,450			1,450
Other assets	13			13
Other liabilities	(51		)	(51		)
Goodwill	2,838			2,879
Fair value of purchase consideration	$	6,540		$	6,369

Table of Contents

The intangible assets acquired in this acquisition consisted of the following (in thousands):



	Fair Value		Estimated Useful Life
Trademarks	$	300	3 years
Technology	450		9 years
Customer relationships	700		9 years
Total	$	1,450

The Company incurred certain acquisition-related costs composed of legal and consulting fees, and these costs were recognized as a component of selling, general and administrative expenses in the consolidated statements of income. Acquisition-related costs were $0.5 million, for bothDuring the three month periods ended March 31, 2019 and ~~nine months ended September 30, 2018.~~

~~Table of Contents~~

~~On February 22, 2017,~~2018, the Company ~~acquired all of the outstanding stock of Package Concierge. Package Concierge is a leading provider of multifamily electronic package delivery locker systems in the United States.~~

The acquisition of Package Concierge is expected to enable the Company to expand its position in the fast-growing package delivery solutions market. The results of Package Concierge have been included in the Company's consolidated financial results since the date of acquisition (within the Company's Residential Products segment). The final aggregate purchase consideration for the acquisition of Package Concierge was $18.9 million.

The purchase price for the acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values. The excess consideration was recorded as goodwill and approximated $16.8 million, which isdid not deductible for tax purposes. Goodwill represents future economic benefits arising from other assets acquired that could not be individually identified including workforce additions, growth opportunities, and increased presence in the building products markets.

~~The allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed is as follows as of the date of the acquisition (in thousands):~~

Cash $ 590
Working capital (1,998 )
Property, plant and equipment 55
Acquired intangible assets 3,600
Other assets 8
Deferred income taxes (128 )
Goodwill 16,790
Fair value of purchase consideration $ 18,917

~~The intangible assets acquired in this acquisition consisted of the following (in thousands):~~

Fair Value Estimated
Useful Life
Trademarks $ 600
Indefinite
Technology 1,300
10 years
Customer relationships 1,700
7 years
Total $ 3,600

~~The acquisition of Package Concierge was funded from available cash on hand. The Company incurred certain~~incur any acquisition-related costs composed of legal and consulting fees, and these costs were recognized as a component of selling, general and administrative expenses in the consolidated statements of income. Acquisition-related costs were $31 thousand and $146 thousand for the three and nine months ended September 30, 2017, respectively.costs.

~~Table of Contents~~


(7)	GOODWILL AND RELATED INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 are as follows (in thousands):

Residential
Products

Industrial and
Infrastructure
Products
Renewable Energy & Conservation Total
Balance at December 31, 2017 $ 198,075
$ 54,280
$ 68,719
$ 321,074
Acquired goodwill —
—
2,838
2,838
Adjustments to prior year acquisitions —
(38 ) —
(38 )
Foreign currency translation —
(165 ) (388 ) (553 )
Balance at September 30, 2018 $ 198,075
$ 54,077
$ 71,169
$ 323,321



	Residential Products		Industrial and Infrastructure Products		Renewable Energy & Conservation			Total
Balance at December 31, 2018	$	198,075	$	53,769	$	71,827		$	323,671
Adjustments to prior year acquisitions	—		—		(172		)	(172		)
Foreign currency translation	—		116		(42		)	74
Balance at March 31, 2019	$	198,075	$	53,885	$	71,613		$	323,573

Acquired Intangible Assets

Acquired intangible assets consist of the following (in thousands):

September 30, 2018 December 31, 2017

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization

Estimated
Life
Indefinite-lived intangible assets:
Trademarks $ 45,096
$ —
$ 45,107
$ —
Indefinite
Finite-lived intangible assets:
Trademarks 6,148
3,397
5,876
3,062
3 to 15 Years
Unpatented technology 28,644
13,406
28,107
12,033
5 to 20 Years
Customer relationships 70,593
34,626
80,707
39,652
5 to 17 Years
Non-compete agreements 1,649
1,156
1,649
931
4 to 10 Years
107,034
52,585
116,339
55,678

Total acquired intangible assets $ 152,130
$ 52,585
$ 161,446
$ 55,678

The Company recognized impairment charges related to a finite-lived intangible asset for the three and nine months ended September 30, 2018 of $1.3 million. The charge relates to the discontinuation of lower margin sales in the Residential Products segment.



	March 31, 2019				December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Estimated Life
Indefinite-lived intangible assets:
Trademarks	$	43,870	$	—	$	43,870	$	—	Indefinite
Finite-lived intangible assets:
Trademarks	6,114		3,669		6,094		3,518		3 to 15 Years
Unpatented technology	28,644		14,352		28,644		13,881		5 to 20 Years
Customer relationships	70,348		36,791		70,419		35,678		5 to 17 Years
Non-compete agreements	1,649		1,293		1,649		1,224		4 to 10 Years
	106,755		56,105		106,806		54,301
Total acquired intangible assets	$	150,625	$	56,105	$	150,676	$	54,301

The following table summarizes the acquired intangible asset amortization expense for the three ~~and nine~~ months ended ~~September 30~~March 31 (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
Amortization expense $ 2,121
$ 2,208
$ 6,408
$ 6,600



	Three Months Ended March 31,
	2019		2018
Amortization expense	$	1,797	$	2,139

Table of Contents

Amortization expense related to acquired intangible assets for the remainder of fiscal ~~2018~~2019 and the next five years thereafter is estimated as follows (in thousands):

2018 2019 2020 2021 2022 2023
Amortization expense $ 1,960
$ 7,841
$ 7,329
$ 6,726
$ 6,315
$ 5,776



	2019		2020		2021		2022		2023		2024
Amortization expense	$	5,390	$	6,895	$	6,700	$	6,222	$	5,684	$	5,428

~~Table of Contents~~


(8)	LONG-TERM DEBT

Long-term debt consists of the following (in thousands):


	September 30, 2018			December 31, 2017			March 31, 2019		December 31, 2018
Senior Subordinated 6.25% Notes	$	210,000		$	210,000		$	—	$	210,000
Other debt	2,000			2,400			2,000		2,000
Less unamortized debt issuance costs	(1,791		)	(2,379		)	—		(1,595		)
Total debt	210,209			210,021			2,000		210,405
Less current maturities	400			400			400		208,805
Total long-term debt	$	209,809		$	209,621		$	1,600	$	1,600

~~The Company's~~

Senior Credit Agreement

On January 24, 2019, the Company entered into a Sixth Amended and Restated Credit Agreement ("2019 Senior Credit Agreement"), which amends and restates the Company’s Fifth Amended and Restated Credit Agreement dated December 9, ~~2015 (the "Senior Credit Agreement") was amended to convert our secured asset based credit facility into a secured cash flow revolver, and terminates on December 9, 2020.~~2015.

The 2019 Senior Credit Agreement provides for a revolving credit facility and letters of credit in an aggregate amount ~~of $300~~equal to $400 million. The Company ~~has the option to~~can request additional financing from the ~~banks~~lenders to ~~either~~ increase the revolving credit facility to ~~$500~~$700 million or ~~to provide~~enter into a term loan of up to ~~$200 million.~~$300 million subject to conditions set forth in the Senior Credit Agreement. The 2019 Senior Credit Agreement contains three financial covenants. As of ~~September 30, 2018,~~March 31, 2019, the Company is in compliance with all three covenants.

Borrowings under the 2019 Senior Credit Agreement are secured by the trade receivables, inventory, personal property, equipment, and ~~certain real property~~general intangibles of the Company’s significant domestic subsidiaries.

Interest rates on the 2019 revolving credit facility are based on the LIBOR plus an additional margin that ranges from ~~1.25%~~1.125% to ~~2.25% for LIBOR loans based on the Total Leverage Ratio.~~

2.00%. In addition, the revolving credit facility is subject to an undrawn commitment fee ranging between ~~0.20%~~0.15% and ~~0.30%~~0.25% based on the Total Leverage Ratio and the daily average undrawn balance. The 2019 Senior Credit Agreement terminates on January 23, 2024.

Standby letters of credit of ~~$9.5~~$8.1 million have been issued under the 2019 Senior Credit Agreement on behalf of the Company as of ~~September 30, 2018.~~March 31, 2019. These letters of credit reduce the amount otherwise available under the revolving credit facility. As of ~~September 30, 2018,~~March 31, 2019, the Company had ~~$290.5~~$391.9 million of availability under the revolving credit facility. No borrowings were outstanding under the Company's revolving credit facility at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

Senior Subordinated Notes

On January 31, 2013, the Company issued $210 million of 6.25% Senior Subordinated Notes ("6.25% Notes") due February 1, 2021.The provisions of the 6.25% Notes include, without limitation, restrictions on indebtedness, liens, and distributions from restricted subsidiaries, asset sales, affiliate transactions, dividends, and other restricted payments. Dividend payments are subject to annual limits and interest is paid semiannually on February 1 and August 1 of each year.

On December 20, 2018, the Company announced its redemption of its $210 million outstanding Senior Subordinated 6.25% Notes, effective February 1, 2019. The 6.25% Notes were redeemed in accordance with the provisions of the

Table of Contents

indenture governing the Notes on February 1, 2019. The Company recorded a charge of $1.1 million for the write-off of deferred financing fees relating to the 6.25% Notes during the quarter ending March 31, 2019.


(9)	ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following tables summarize the cumulative balance of each component of accumulated other comprehensive loss, net of tax, for the ~~nine~~three months ended ~~September 30,~~March 31, (in thousands):


	Foreign Currency Translation Adjustment			Minimum Pension Liability Adjustment			Unamortized Post Retirement Health Care Costs			Total Pre-Tax Amount			Tax (Benefit) Expense			Accumulated Other Comprehensive (Loss) Income			Foreign Currency Translation Adjustment			Minimum pension and post retirement benefit plan adjustments			Total Pre-Tax Amount			Tax (Benefit) Expense			Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2017	$	(2,698	)	$	171		$	(2,809	)	$	(5,336	)	$	(970	)	$	(4,366	)
Cumulative effect of accounting change (see Note 2)	—			15			(365		)	(350		)	—			(350		)
Balance at December 31, 2018																			$	(5,939	)	$	(2,040	)	$	(7,979	)	$	(745	)	$	(7,234	)
Minimum pension and post retirement health care plan adjustments	—			(7		)	44			37			10			27			—			16			16			4			12
Foreign currency translation adjustment	110			—			—			110			—			110			842			—			842			—			842
Balance at March 31, 2018	$	(2,588	)	$	179		$	(3,130	)	$	(5,539	)	$	(960	)	$	(4,579	)
Minimum pension and post retirement health care plan adjustments	—			(7		)	44			37			11			$	26
Foreign currency translation adjustment	(1,787		)	—			—			(1,787		)	—			$	(1,787	)
Balance at June 30, 2018	$	(4,375	)	$	172		$	(3,086	)	$	(7,289	)	$	(949	)	$	(6,340	)
Minimum pension and post retirement health care plan adjustments	—			(7		)	44			37			10			27
Foreign currency translation adjustment	139			—			—			139			—			139
Balance at September 30, 2018	$	(4,236	)	$	165		$	(3,042	)	$	(7,113	)	$	(939	)	$	(6,174	)
Balance at March 31, 2019																			$	(5,097	)	$	(2,024	)	$	(7,121	)	$	(741	)	$	(6,380	)


	Foreign Currency Translation Adjustment			Minimum Pension Liability Adjustment			Unamortized Post Retirement Health Care Costs			Total Pre-Tax Amount			Tax (Benefit) Expense			Accumulated Other Comprehensive (Loss) Income			Foreign Currency Translation Adjustment			Minimum pension and post retirement benefit plan adjustments			Total Pre-Tax Amount			Tax (Benefit) Expense			Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2016	$	(5,848	)	$	197		$	(3,150	)	$	(8,801	)	$	(1,080	)	$	(7,721	)
Balance at December 31, 2017																			$	(2,698	)	$	(2,638	)	$	(5,336	)	$	(970	)	$	(4,366	)
Cumulative effect of accounting change																						(350		)	(350		)	—			(350		)
Minimum pension and post retirement health care plan adjustments	—			(5		)	48			43			17			26			—			37			37			10			27
Foreign currency translation adjustment	$	679		$	—		$	—		$	679		$	—		$	679		110			—			110			—			110
Balance at March 31, 2017	(5,169		)	192			(3,102		)	(8,079		)	(1,063		)	$	(7,016	)
Minimum pension and post retirement health care plan adjustments	$	—		$	(4	)	$	47		$	43		$	16		$	27
Foreign currency translation adjustment	1,091			—			—			1,091			—			1,091
Balance at June 30, 2017	(4,078		)	188			(3,055		)	(6,945		)	(1,047		)	(5,898		)
Minimum pension and post retirement health care plan adjustments	$	—		$	(4	)	$	47		$	43		$	16		$	27
Foreign currency translation adjustment	$	1,581		$	—		$	—		$	1,581		$	—		$	1,581
Balance at September 30, 2017	$	(2,497	)	$	184		$	(3,008	)	$	(5,321	)	$	(1,031	)	$	(4,290	)
Balance at March 31, 2018																			$	(2,588	)	$	(2,951	)	$	(5,539	)	$	(960	)	$	(4,579	)

The realized adjustments relating to the Company’s minimum pension liability and post retirement health care costs were reclassified from accumulated other comprehensive loss and included in other expense in the consolidated statements of income.


(10)	EQUITY-BASED COMPENSATION

~~Table of Contents~~

On May 4, 2018, the shareholders of the Company approved the adoption of the Gibraltar Industries, Inc. 2018 Equity Incentive Plan (the "2018 Plan"). The 2018 Plan provides for the issuance of up to 1,000,000 shares of common stock and supplements the remaining shares available for issuance under the existing Gibraltar Industries, Inc. 2015 Equity Incentive Plan (the "2015 Plan"). Both the 2018 Plan and the 2015 Plan allow the Company to grant equity-based incentive compensation awards, in the form of non-qualified options, restricted shares, restricted stock units, performance shares, performance stock units, and stock rights to eligible participants.

In 2016, the shareholders of the Company approved the adoption of the Gibraltar Industries, Inc. 2016 Stock Plan for Non-Employee Directors ("Non-Employee Directors Plan") which allows the Company to grant awards of shares of the Company's common stock to non-employee Directors of the Company and permits the Directors to defer receipt of such shares pursuant to the terms of the Non-Employee Directors Plan.

Table of Contents

Equity Based Awards - Settled in Stock

The following table sets forth the number of equity-based awards granted during the ~~nine~~three months ended ~~September 30,~~March 31, which will convert to shares upon vesting, along with the weighted average grant date fair values:


	2018			2017			2019			2018
Awards	Number of Awards (1)	Weighted Average Grant Date Fair Value		Number of Awards (2)	Weighted Average Grant Date Fair Value		Number of Awards (1)	Weighted Average Grant Date Fair Value		Number of Awards (2)	Weighted Average Grant Date Fair Value
Performance stock units	135,540	$	33.60	108,748	$	42.72	145,420	$	40.55	132,288	$	33.35
Restricted stock units	95,674	$	36.81	120,048	$	37.14	117,821	$	39.37	67,055	$	33.35
Options	—	$	—	25,000	$	42.35
Deferred stock units	10,255	$	35.96	10,170	$	34.42
Common shares	2,113	$	35.50	2,034	$	34.42

(1) Performance stock units granted will convert to shares based on the Company's actual return on invested capital ("ROIC") relative to the ROIC targeted for the performance period ended December 31, ~~2018.~~2019.

(2) Performance stock units granted ~~include 78,482 units awarded~~ in ~~February 2017~~2018 which will convert to ~~23,546~~126,337 shares to be issued ~~in February~~on December 31, 2020, representing ~~30%~~95.5% of the targeted ~~2017~~2018 award, based on the Company’s actual ROIC compared to ROIC target for the performance period ended December 31, 2017. The remaining performance stock units granted include 20,000 units awarded in February 2017 and 10,266 units awarded in April 2017. The number of these shares to be issued to the recipients will be determined based upon the ranking of the Company’s total shareholder return ("TSR") over a three (3) year performance period ended February 1, 2020 compared to the TSR of companies in the S&P Small Cap Industrial Sector over the same three year period.2018.

Equity Based Awards - Settled in Cash

The Company's equity-based ~~liabilities include performance based stock units settled in cash and~~liability includes awards under a management stock purchase ~~plan.~~plan and cash-settled performance awards issued in 2016. As of ~~September 30, 2018,~~March 31, 2019, the Company's total share-based liabilities recorded on the consolidated balance sheet were ~~$38.5~~$26.6 million, of which ~~$23.0~~$22.0 million was included in non-current liabilities. The share-based liabilities as of December 31, 2018 were $38.4 million, of which $23.6 million was included in non-current liabilities.

~~Performance Stock Units - Settled in Cash~~

~~The~~During the quarter ended March 31, 2019, the Company ~~awarded~~paid $8.9 million to participants of cash-settled performance stock units ~~("PSUs") that will convert to cash after three years based upon a one year performance period.~~awarded in 2016. The cost of these awards is recognized over the requisite vesting period. The PSUs earned over the performance period are determined based on the Company’s actual ROIC relative to the ROIC targeted for the performance period.

~~During the 2016 performance period, the~~ participants earned ~~an aggregate of 256,000 PSUs, representing 200% the targeted 2016 award of 128,000. This award will convert to cash payable in the first quarter of 2019.~~

~~During the 2015 performance period, the participants earned an aggregate of 438,000 PSUs, representing~~ 200% of the ~~targeted 2015 award of 219,000. This award~~target, or 256,000 units, which were converted to cash and ~~was paid in~~valued at the ~~first quarter~~trailing 90-day closing price of the Company's common stock as of December 31, 2018.

~~Table of Contents~~

~~The following table summarizes the compensation expense recognized for the PSUs, which will convert to cash, for the three and nine months ended September 30, (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
PSUs compensation expense $ 1,518
$ (405 ) $ 3,126
$ 1,673

Management Stock Purchase Plan

The Management Stock Purchase Plan ("MSPP") provides participants the ability to defer a portion of their compensation or Directors’ fees, which deferral is converted to restricted stock units, and credited to an account. Employees eligible to defer a portion of their compensation may elect to convert their deferral to unrestricted investments, restricted stock units, or a combination of both, and also receive a company-matching award in restricted stock units equal to a percentage of their ~~deferral. Directors do not receive any company-matching on amounts deferred.~~compensation. The account represents a share-based liability that iswill be converted to and settled in cash payable to participants upon retirement or a termination of their service to the Company.

The following table provides the number of restricted stock units credited to active participant accounts and the payments made with respect to restricted stock units issued under the MSPP during the ~~nine~~three months ended ~~September 30,~~March 31,:


	2018		2017		2019		2018
Restricted stock units credited	74,180		90,754		51,608		63,937
Share-based liabilities paid (in thousands)	$	4,986	$	2,392	$	4,933	$	4,717

Table of Contents


(11)	FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for similar assets and liabilities.

Level 3 - Inputs that are unobservable inputs for the asset or liability.

The Company had no financial assets or liabilities measured at fair value on a recurring basis at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017. The Company’s~~2018. As of March 31, 2019, the Company does not have any financial instrument for which the carrying value differs from its fair value. At December 31, 2018, the Company's only financial instrument for which the carrying value differs from its fair value ~~is long-term debt.~~was the Company's Senior Subordinated 6.25% Notes, which were redeemed on February 1, 2019. At ~~September 30, 2018 and~~ December 31, ~~2017,~~2018, the fair value of the outstanding debt, net of unamortized debt issuance costs, was ~~$211.8~~$210.8 million ~~and $213.8 million, respectively,~~ compared to its carrying value of $210.2 million and $210.0 million, respectively. The fair value of the Company’s 6.25% Notes is classified as Level 2 within the fair value hierarchy and was estimated based on quoted market prices adjusted for unamortized debt issuance costs. $210.4 million.


(12)	~~DISCONTINUED OPERATIONS~~LEASES

The Company leases are classified as operating leases and consist of manufacturing facilities, distribution centers, office space, vehicles and equipment. For ~~certain divestiture transactions completed in prior years,~~leases with terms greater than twelve months, at lease commencement the Company ~~has agreed to indemnify~~recognizes a right-of-use asset and a lease liability. The initial lease liability is recognized at the ~~buyer for various liabilities that may arise after~~present value of remaining lease payments over the ~~disposal date, subject to limits~~lease term. Leases with an initial term of ~~time and amount.~~twelve months or less are not recorded on the Company's consolidated balance sheet. The Company recognizes lease expense for operating leases on a straight-line basis over the lease term. The Company combines lease and non-lease components, such as common area maintenance costs, in calculating the related asset and lease liabilities for all underlying asset groups. Operating lease cost is ~~a party~~included in income from operations and includes short-term leases and variable lease costs which are immaterial.

Most of the Company's leases include one or more options to ~~certain claims made under these indemnification provisions.~~renew, with renewal terms that can extend the respective lease term from one month to fifteen years. The exercise of lease renewal options is at the Company's sole discretion. As of ~~September 30, 2018,~~March 31, 2019, the Company's renewal options are not part of the Company's operating lease assets and operating lease liabilities. Certain leases also include options to purchase at fair value the underlying leased asset at the Company's sole discretion.



	Classification	March 31, 2019
Assets	Operating lease assets	$	31,823

Liabilities
Current	Accrued expenses	$	9,342
Non-current	Non-current operating lease liabilities	22,751
		$	32,093

Table of Contents



	Three Months Ended March 31, 2019
Lease cost:
Operating lease cost	$	3,357

Other information:
Cash paid for amounts included in the measurement of operating liabilities	$	2,640
Right-of-use assets obtained in exchange for new lease liabilties	$	3,470
Weighted-average remaining lease term - operating leases	4.33			years
Weighted-average discount rate - operating leases	5.70		%



Maturity of lease liabilities	Three Months Ended March 31, 2019
2019 (April 1, 2019 through December 31, 2019)	$	8,276
2020	8,981
2021	6,929
2022	5,175
2023	4,603
After 2023	2,328
Total lease payments	36,292
Less: present value discount	(4,199		)
Present value of lease liabilities	$	32,093

The Company ~~has~~uses the Company's incremental borrowing rate based on information available at the commencement date of a ~~contingent liability recorded for such provisions~~lease in determining the present value of lease payments as the rates implicit in most of the Company's leases are not readily determinable.

Upon adoption of ASU 2016-02 on January 1, 2019, the unrecognized deferred gain related to ~~discontinued operations. Management does not believe that the outcome~~sale-leaseback transactions was recorded as a cumulative-effect adjustment to increase retained earnings, net of ~~these claims, or other claims, would significantly affect the Company's financial condition or results of operation.~~related income tax effects.


(13)	EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS

~~Table of Contents~~

The Company has incurred exit activity costs and asset impairment charges as a result of its 80/20 simplification and portfolio management initiatives. These initiatives have resulted in the identification of low-volume, low margin, internally-produced products which have been or will be outsourced or discontinued, the simplification of processes, and in the sale and exiting of less profitable businesses or products lines.

Exit activity costs were incurred during the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 which related to contract terminations, severance, and other moving and closing costs. During this time, the Company also incurred asset impairment charges related to the write-down of inventory, impairment of machinery and equipment and intangible assets associated with either discontinued product lines or reduced sales of lower margin products. In conjunction with these initiatives, the Company also sold and leased back a facility which resulted in a gain, as well as closed two other facilities during the first nine months of 2018.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, the Company incurred ~~asset impairment charges and~~ exit activity costs resulting from the above initiatives. ~~Also, as a result of~~In conjunction with these initiatives, the Company closed ~~three facilities~~one facility during the first ~~nine~~three months of ~~2017.~~2018 and sold and leased back another facility which resulted in a gain, which was partially offset by inventory impairment charges incurred for discontinued products.

Table of Contents

The following tables set forth the asset impairment charges and exit activity costs incurred by segment during the three ~~and nine~~ months ended ~~September 30,~~March 31, related to the restructuring activities described above (in thousands):

Three months ended September 30,
2018 2017
Inventory write-downs &/or asset impairment charges Exit activity costs (recoveries), net Total Inventory write-downs &/or asset impairment charges Exit activity costs (recoveries), net Total
Residential Products $ 1,392
$ 485
$ 1,877
$ 442
$ 566
$ 1,008
Industrial & Infrastructure Products 358
1,417
1,775
98
(12 ) 86
Renewable Energy & Conservation —
(156 ) (156 ) 266
191
457
Corporate —
164
164
—
16
16
Total exit activity costs & asset impairments $ 1,750
$ 1,910
$ 3,660
$ 806
$ 761
$ 1,567


	Nine months ended September 30,																Three months ended March 31,
	2018									2017							2019								2018
	Inventory write-downs &/or asset impairment charges (recoveries), net			Exit activity costs (recoveries), net			Total			Inventory write-downs &/or asset impairment charges (recoveries), net			Exit activity costs		Total		Inventory write-downs &/or asset impairment charges		Exit activity costs (recoveries), net			Total			Inventory write-downs &/or asset impairment (recoveries) charges, net			Exit activity (recoveries) costs, net			Total
Residential Products	$	1,349		$	333		$	1,682		$	295		$	958	$	1,253	$	—	$	151		$	151		$	(43	)	$	(123	)	$	(166	)
Industrial & Infrastructure Products	(345		)	1,607			1,262			(2,492		)	2,959		467		—		(33		)	(33		)	(703		)	218			(485		)
Renewable Energy & Conservation	84			(107		)	(23		)	266			2,610		2,876		—		94			94			19			117			136
Corporate	—			431			431			—			179		179		—		7			7			—			44			44
Total exit activity costs & asset impairments	$	1,088		$	2,264		$	3,352		$	(1,931	)	$	6,706	$	4,775	$	—	$	219		$	219		$	(727	)	$	256		$	(471	)

The following table provides a summary of where the asset impairments and exit activity costs were recorded in the consolidated statements of income for the three ~~and nine~~ months ended ~~September 30,~~March 31, (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
Cost of sales $ 1,621
$ 860
$ 1,465
$ 382
Selling, general, and administrative expense 2,039
707
1,887
4,393
Net asset impairment and exit activity charges $ 3,660
$ 1,567
$ 3,352
$ 4,775



	Three Months Ended March 31,
	2019			2018
Cost of sales	$	(34	)	$	37
Selling, general, and administrative expense (recoveries)	253			(508		)
Net asset impairment and exit activity charges (recoveries)	$	219		$	(471	)

The following table reconciles the beginning and ending liability for exit activity costs relating to the Company’s facility consolidation efforts (in thousands):

2018 2017
Balance at January 1 $ 961
$ 3,744
Exit activity costs recognized 2,264
6,706
Cash payments (1,608 ) (9,207 )
Balance at September 30 $ 1,617
$ 1,243



	2019			2018
Balance at January 1	$	1,923		$	961
Exit activity costs recognized	219			256
Cash payments	(550		)	(739		)
Balance at March 31	$	1,592		$	478

~~Table of Contents~~


(14)	INCOME TAXES

The following table summarizes the provision for income taxes for continuing operations (in thousands) for the three ~~and nine~~ months ended ~~September 30,~~March 31, and the applicable effective tax rates:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Provision for income taxes	$	6,473		$	11,184		$	15,574		$	21,090		$	1,571		$	2,807
Effective tax rate	24.9		%	35.2		%	23.5		%	35.8		%	19.8		%	25.2		%

~~The change in the effective tax rate year over year is primarily due to the reduction in the U.S. federal statutory tax rate from 35% to 21%.~~ The effective tax rate for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 was less than the U.S. federal statutory rate of 21% due to favorable discrete items partially offset by state taxes and nondeductible permanent differences. The effective tax rate for the three months ended March 31, 2018 was greater than the U.S. federal statutory rate of 21% due to state taxes and nondeductible permanent differences partially offset by favorable discrete items, including a $2.6 million tax benefit related to performance share unit vesting. The effective tax rate for the three and nine months ended September 30, 2017 was greater than the U.S. federal statutory rate of 35% due to state taxes and $2.2 million of pretax losses generated by the European residential solar racking business for which no tax benefit had been recorded as such benefit is not expected to be realizable, partially offset by net deductible permanent differences and favorable discrete items.

On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Reform Act") was signed into law. On this day, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a

Table of Contents

registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. The Company recognized the provisional tax impacts related to the one-time transition tax, withholding tax and the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. Our preliminary estimate of the one-time transition tax and the re-measurement of our deferred tax assets and liabilities ~~is subject to~~was finalized in the ~~finalization~~fourth quarter of ~~management’s analysis related to certain matters, such as developing interpretations of the provisions of~~2018.

While the Tax Reform Act ~~changes to certain estimates and amounts related to~~provides for a territorial tax system, beginning in 2018, it included two new U.S. tax base erosion provisions, the ~~earnings and profits of certain subsidiaries~~global intangible low-taxed income (“GILTI”) provisions and the ~~filing of our~~base-erosion and anti-abuse tax ~~returns, U.S. Treasury regulations, administrative interpretations or court decisions interpreting the Tax Reform Act may require further adjustments and changes in our estimates.~~(“BEAT”) provisions.

~~During the nine month period ended September 30, 2018,~~The GILTI provisions require the Company ~~recognized an adjustment~~ to ~~the provisional amounts recorded at December 31, 2017. The following table sets forth the components of the adjustment which were recorded~~include in its U.S. income tax ~~expense from continuing operations during nine month period ended September 30, 2018, (in thousands):~~



~~Remeasurement of certain deferred tax balances (1)~~	~~174~~
~~One-time transition tax (1)~~	~~(363~~	)
~~Non-deductible performance based compensation (2)~~	~~366~~
~~Net adjustment recorded to provisional income tax expense~~	~~177~~

~~(1) Provisional amounts primarily related to~~ return ~~to provision adjustments.~~

~~(2) Provisional amounts primarily related to further guidance~~any foreign subsidiary earnings in excess of ~~Notice 2018-68 (guidance~~an allowable return on ~~performance-based compensation issued in~~ the ~~third quarter).~~

foreign subsidiary’s tangible assets. The Company has elected to account for ~~global intangible low-taxed income ("GILTI")~~GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the ~~year ended December 31, 2017, or during the~~ three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and March 31, 2018. ~~As a result of proposed regulations issued~~

The BEAT provisions in the ~~third quarter~~Tax Reform Act eliminate the deduction of ~~2018, the impact of GILTI on our current annual effective~~certain base-erosion payments made to related foreign corporations, and impose a minimum tax ~~decreased the~~if greater than regular tax. The BEAT tax had no impact on the ~~effective rate from 0.6% to 0.3%. If future guidance differs from our interpretations, this amount may change.~~

~~Table of Contents~~

~~The final determination of~~Company's consolidated financial statements for the ~~one-time transition tax~~three months ended March 31, 2019 and ~~the re-measurement of our deferred assets and liabilities will be completed as additional information becomes available, but no later than one year from the enactment of the Tax Reform Act.~~March 31, 2018.

In January 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated other Comprehensive Income, which gives entities the option to reclassify retained earning tax effects resulting from Tax Reform related to items in AOCI that the FASB refers to as having been stranded in AOCI. The Company must adopt this guidance for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted for periods for which financial statements have not yet been issued or made available for issuance, including the period Tax Reform was enacted. We elected to early adopt ASU 2018-02. As a result of adopting this standard, we reclassified $350,000 from AOCI to retained ~~earnings.~~earnings on January 1, 2018.

(15) EARNINGS PER SHARE

Basic earnings and diluted weighted-average shares outstanding are as follows for the three ~~and nine~~ months ended ~~September 30,~~March 31, (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
	2018		2017		2018		2017			2019		2018
Numerator:
Income from continuing operations	$	19,503	$	20,619	$	50,692	$	37,789		$	6,345	$	8,352
Loss from discontinued operations	—		—		—		(405		)
Net income available to common shareholders	$	19,503	$	20,619	$	50,692	$	37,384		$	6,345	$	8,352
Denominator for basic earnings per share:
Weighted average shares outstanding	32,115		31,703		31,922		31,700			32,279		31,786
Denominator for diluted earnings per share:
Weighted average shares outstanding	32,115		31,703		31,922		31,700			32,279		31,786
Common stock options and restricted stock	456		507		602		516
Common stock options and stock units										338		658
Weighted average shares and conversions	32,571		32,210		32,524		32,216			32,617		32,444

The weighted average number of diluted shares does not include potential anti-dilutive common shares issuable pursuant to equity based incentive compensation awards, aggregating to ~~247,000~~258,000 and ~~489,000~~359,000 for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and 328,000 and 523,000 for the nine months ended September 30, 2018 and 2017,~~ respectively.


(16)	SEGMENT INFORMATION

The Company is organized into three reportable segments on the basis of the production process and products and services provided by each segment, identified as follows:

Table of Contents


(i)	Residential Products, which primarily includes roof and foundation ventilation products, rain dispersion products and roofing accessories, centralized mail systems and electronic package ~~solutions, rain dispersion products and roofing accessories;~~solutions;


(ii)	Industrial and Infrastructure Products, which primarily includes expanded and perforated metal, perimeter security systems, expansion joints, and structural ~~bearings and perimeter security;~~bearings; and


(iii)	Renewable Energy and Conservation, which primarily includes designing, engineering, manufacturing and installation of solar racking and electrical balance of systems and greenhouse structures.

When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics.

~~Table of Contents~~

The following table illustrates certain measurements used by management to assess performance of the segments described above for the three ~~and nine~~ months ended ~~September 30,~~March 31, (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Net sales:
Residential Products	$	125,839		$	129,501		$	360,915		$	361,304		$	103,709		$	103,948
Industrial and Infrastructure Products	56,033			57,162			172,218			165,806			55,188			54,624
Less: Intersegment sales	(272		)	(224		)	(861		)	(994		)	(317		)	(221		)
Net Industrial and Infrastructure Products	55,761			56,938			171,357			164,812			54,871			54,403
Renewable Energy and Conservation	98,486			88,135			229,187			202,690			68,837			56,986
Total consolidated net sales	$	280,086		$	274,574		$	761,459		$	728,806		$	227,417		$	215,337

Income from operations:
Residential Products	$	20,138		$	23,764		$	57,572		$	61,984		$	12,090		$	13,238
Industrial and Infrastructure Products	2,892			2,554			12,098			5,914			4,129			2,602
Renewable Energy and Conservation	15,072			11,549			28,690			18,381			1,632			4,062
Unallocated Corporate Expenses	(8,698		)	(2,174		)	(22,839		)	(15,977		)	(7,285		)	(6,059		)
Total income from operations	$	29,404		$	35,693		$	75,521		$	70,302		$	10,566		$	13,843

The following tables illustrate revenue disaggregated by timing of transfer of control to the customer for the three ~~and nine~~ months ended ~~September 30~~March 31 (in thousands):

Three Months Ended September 30, 2018
Residential Products Industrial and Infrastructure Products Renewable Energy and Conservation Total
Net sales:
Point in Time $ 125,118
$ 47,686
$ 10,784
$ 183,588
Over Time 721
8,075
87,702
96,498
Total $ 125,839
$ 55,761
$ 98,486
$ 280,086


	Three Months Ended September 30, 2017								Three Months Ended March 31, 2019
	Residential Products		Industrial and Infrastructure Products		Renewable Energy and Conservation		Total		Residential Products		Industrial and Infrastructure Products		Renewable Energy and Conservation		Total
Net sales:
Point in Time	$	129,501	$	56,938	$	7,659	$	194,098	$	102,892	$	45,287	$	7,290	$	155,469
Over Time	—		—		80,476		80,476		817		9,584		61,547		71,948
Total	$	129,501	$	56,938	$	88,135	$	274,574	$	103,709	$	54,871	$	68,837	$	227,417

Table of Contents


	Nine Months Ended September 30, 2018								Three Months Ended March 31, 2018
	Residential Products		Industrial and Infrastructure Products		Renewable Energy and Conservation		Total		Residential Products		Industrial and Infrastructure Products		Renewable Energy and Conservation		Total
Net sales:
Point in Time	$	358,960	$	145,657	$	25,128	$	529,745	$	102,884	$	46,543	$	5,620	$	155,047
Over Time	1,955		25,700		204,059		231,714		1,064		7,860		51,366		60,290
Total	$	360,915	$	171,357	$	229,187	$	761,459	$	103,948	$	54,403	$	56,986	$	215,337

	Nine Months Ended September 30, 2017
	Residential Products		Industrial and Infrastructure Products		Renewable Energy and Conservation		Total
Net sales:
Point in Time	$	361,304	$	164,812	$	18,835	$	544,951
Over Time	—		—		183,855		183,855
Total	$	361,304	$	164,812	$	202,690	$	728,806


~~(17)~~	~~SUPPLEMENTAL FINANCIAL INFORMATION~~

The following information sets forth the consolidating summary financial statements of the issuer (Gibraltar Industries, Inc.) and guarantors, which guarantee the 6.25% Notes due February 1, 2021, and the non-guarantors. The guarantors are 100% owned domestic subsidiaries of the issuer and the guarantees are full, unconditional, joint and several.

Investments in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor subsidiaries and non-guarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

~~Table of Contents~~