UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended June 30, ~~2020~~2021


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

For the transition period from to

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 ☒ 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 ☒ 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 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

☒

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 ☒

As of August ~~3, 2020,~~2, 2021, the number of common shares outstanding was: ~~32,423,220.~~32,636,340.

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 SSix i x Months Ended June 30 , ~~2020~~2021 and ~~2019~~2020 (unaudited)

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30 , ~~2020~~2021 and ~~2019~~2020 (unaudited)

Consolidated Balance Sheets as of June 30 , ~~2020~~2021 (unaudited) and December 31, ~~2019~~2020

Consolidated Statements of Cash Flows for the ~~Six~~S ix Months Ended June 30 , ~~2020~~2021 and ~~2019~~2020 (unaudited)

Consolidated Statement of ~~Shareholders’~~Stockholders’ Equity for the Six Months Ended June 30 , ~~2020~~2021 and ~~2019~~2020 (unaudited)

Notes to Consolidated Financial Statements (unaudited)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

3435

Item 4.

Controls and Procedures

PART II.

Item 1.

Item 1A.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Item 6.

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 June 30,						Six Months Ended June 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net Sales	Net Sales	$	285,814	$	262,655	$	535,253	$	490,072	Net Sales	$	348,389	$	255,184	$	635,981	$	470,585
Cost of sales	Cost of sales	213,556		199,097		406,608		382,614		Cost of sales	267,458		189,623		495,032		355,163
Gross profit	Gross profit	72,258		63,558		128,645		107,458		Gross profit	80,931		65,561		140,949		115,422
Selling, general, and administrative expense	Selling, general, and administrative expense	37,667		36,952		78,864		70,286		Selling, general, and administrative expense	49,522		34,813		96,725		71,897

Income from operations	Income from operations	34,591		26,606		49,781		37,172		Income from operations	31,409		30,748		44,224		43,525
Interest expense	Interest expense	214		219		167		2,280		Interest expense	245		222		689		266
Other (income) expense		(1,787)		(13)		(1,595)		576
Other income										Other income	(4,666)		(1,892)		(4,351)		(1,374)
Income before taxes	Income before taxes	36,164		26,400		51,209		34,316		Income before taxes	35,830		32,418		47,886		44,633
Provision for income taxes	Provision for income taxes	8,872		6,487		11,858		8,058		Provision for income taxes	9,457		7,961		11,017		10,274

Income from continuing operations										Income from continuing operations	26,373		24,457		36,869		34,359
Discontinued operations:										Discontinued operations:
(Loss) Income before taxes										(Loss) Income before taxes	(502)		3,746		2,068		6,576
(Benefit from) Provision for income taxes										(Benefit from) Provision for income taxes	(78)		911		226		1,584
(Loss) Income from discontinued operations										(Loss) Income from discontinued operations	(424)		2,835		1,842		4,992
Net income	Net income	$	27,292	$	19,913	$	39,351	$	26,258	Net income	$	25,949	$	27,292	$	38,711	$	39,351
Net earnings per share – Basic:										Net earnings per share – Basic:
Income from continuing operations										Income from continuing operations	$	0.80	$	0.75	$	1.12	$	1.05
(Loss) Income from discontinued operations										(Loss) Income from discontinued operations	(0.01)		0.09		0.06		0.16
Net income										Net income	$	0.79	$	0.84	$	1.18	$	1.21
Weighted average shares outstanding -- Basic										Weighted average shares outstanding -- Basic	32,790		32,605		32,791		32,596
Net earnings per share – Diluted:										Net earnings per share – Diluted:
Income from continuing operations										Income from continuing operations	$	0.80	$	0.74	$	1.11	$	1.05
(Loss) Income from discontinued operations										(Loss) Income from discontinued operations	(0.01)		0.09		0.06		0.15
Net income										Net income	$	0.79	$	0.83	$	1.17	$	1.20
Weighted average shares outstanding -- Diluted										Weighted average shares outstanding -- Diluted	33,056		32,860		33,071		32,868

Net earnings per share:
Basic		$	0.84	$	0.62	$	1.21	$	0.81
Diluted		$	0.83	$	0.61	$	1.20	$	0.80
Weighted average shares outstanding:
Basic		32,605		32,321		32,596		32,300
Diluted		32,860		32,642		32,868		32,630

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net income	Net income	$	27,292	$	19,913	$	39,351	$	26,258	Net income	$	25,949	$	27,292	$	38,711	$	39,351
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	2,815		998		(3,083)		1,840		Foreign currency translation adjustment	761		2,815		3,959		(3,083)

Minimum pension and post retirement benefit plan adjustments		18		12		36		24
Minimum post retirement benefit plan adjustments										Minimum post retirement benefit plan adjustments	27		18		54		36

Other comprehensive income (loss)	Other comprehensive income (loss)	2,833		1,010		(3,047)		1,864		Other comprehensive income (loss)	788		2,833		4,013		(3,047)
Total comprehensive income	Total comprehensive income	$	30,125	$	20,923	$	36,304	$	28,122	Total comprehensive income	$	26,737	$	30,125	$	42,724	$	36,304

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)


		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
		(unaudited)					(unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	120,859	$	191,363	Cash and cash equivalents	$	16,963	$	32,054
Accounts receivable, net of allowance of $6,270 and $6,330		193,609		147,515
Inventories		79,058		78,476
Accounts receivable, net of allowance of $5,294 and $3,529						Accounts receivable, net of allowance of $5,294 and $3,529	225,315		197,990
Inventories, net						Inventories, net	133,625		98,307
Prepaid expenses and other current assets	Prepaid expenses and other current assets	22,849		19,748		Prepaid expenses and other current assets	23,641		19,671
Assets of discontinued operations						Assets of discontinued operations	0		77,438
Total current assets	Total current assets	416,375		437,102		Total current assets	399,544		425,460
Property, plant, and equipment, net	Property, plant, and equipment, net	94,723		95,409		Property, plant, and equipment, net	95,837		89,562
Operating lease assets	Operating lease assets	33,383		27,662		Operating lease assets	21,651		25,229
Goodwill	Goodwill	378,740		329,705		Goodwill	508,857		514,279
Acquired intangibles	Acquired intangibles	110,481		92,592		Acquired intangibles	159,734		156,365
Other assets	Other assets	1,794		1,980		Other assets	510		1,599
		$	1,035,496	$	984,450		$	1,186,133	$	1,212,494
Liabilities and Shareholders’ Equity
Liabilities and Stockholders’ Equity						Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	116,853	$	83,136	Accounts payable	$	168,917	$	134,738
Accrued expenses	Accrued expenses	94,009		98,463		Accrued expenses	68,677		83,505
Billings in excess of cost	Billings in excess of cost	29,281		47,598		Billings in excess of cost	49,215		34,702

Liabilities of discontinued operations						Liabilities of discontinued operations	0		49,295
Total current liabilities	Total current liabilities	240,143		229,197		Total current liabilities	286,809		302,240

Long-term debt						Long-term debt	32,309		85,636
Deferred income taxes	Deferred income taxes	40,022		40,334		Deferred income taxes	37,555		39,057
Non-current operating lease liabilities	Non-current operating lease liabilities	24,400		19,669		Non-current operating lease liabilities	14,391		17,730
Other non-current liabilities	Other non-current liabilities	21,167		21,286		Other non-current liabilities	27,461		24,026
Shareholders’ equity:
Stockholders’ equity:						Stockholders’ equity:
Preferred stock, $0.01 par value; authorized 10,000 shares; NaN outstanding	Preferred stock, $0.01 par value; authorized 10,000 shares; NaN outstanding	—		—		Preferred stock, $0.01 par value; authorized 10,000 shares; NaN outstanding	0		0
Common stock, $0.01 par value; authorized 50,000 shares; 33,413 shares and 33,192 shares issued and outstanding in 2020 and 2019		334		332
Common stock, $0.01 par value; 100,000 and 50,000 shares authorized as June 30, 2021 and December 31, 2020, respectively; 33,718 shares and 33,568 shares issued and outstanding in 2021 and 2020						Common stock, $0.01 par value; 100,000 and 50,000 shares authorized as June 30, 2021 and December 31, 2020, respectively; 33,718 shares and 33,568 shares issued and outstanding in 2021 and 2020	337		336
Additional paid-in capital	Additional paid-in capital	299,829		295,582		Additional paid-in capital	310,728		304,870
Retained earnings	Retained earnings	444,728		405,668		Retained earnings	508,654		469,943
Accumulated other comprehensive loss		(8,438)		(5,391)
Cost of 993 and 906 common shares held in treasury in 2020 and 2019		(26,689)		(22,227)
Total shareholders’ equity		709,764		673,964
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	1,552		(2,461)
Cost of 1,083 and 1,028 common shares held in treasury in 2021 and 2020						Cost of 1,083 and 1,028 common shares held in treasury in 2021 and 2020	(33,663)		(28,883)
Total stockholders’ equity						Total stockholders’ equity	787,608		743,805
		$	1,035,496	$	984,450		$	1,186,133	$	1,212,494

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


		Six Months Ended June 30,							Six Months Ended June 30,
		2020		2019			2021		2020
Cash Flows from Operating Activities	Cash Flows from Operating Activities					Cash Flows from Operating Activities
Net income	Net income	$	39,351	$	26,258	Net income	$	38,711	$	39,351

Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Income from discontinued operations						Income from discontinued operations	1,842		4,992
Income from continuing operations						Income from continuing operations	36,869		34,359
Adjustments to reconcile net income to net cash provided by (used in) operating activities:						Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization	Depreciation and amortization	11,054		9,892		Depreciation and amortization	16,014		9,942
Stock compensation expense	Stock compensation expense	4,171		6,091		Stock compensation expense	4,935		4,171

Gain on sale of business	Gain on sale of business	(1,881)		—		Gain on sale of business	0		(1,881)
Exit activity costs, non-cash	Exit activity costs, non-cash	346		—		Exit activity costs, non-cash	1,193		346

(Benefit of) provision for deferred income taxes		(216)		278
Benefit of deferred income taxes						Benefit of deferred income taxes	(36)		(195)

Other, net	Other, net	1,018		2,437		Other, net	349		429

Changes in operating assets and liabilities, excluding the effects of acquisitions:	Changes in operating assets and liabilities, excluding the effects of acquisitions:					Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable	Accounts receivable	(25,842)		(41,156)		Accounts receivable	(29,150)		(26,289)
Inventories	Inventories	5,661		13,464		Inventories	(42,686)		3,289
Other current assets and other assets	Other current assets and other assets	1,996		(4,983)		Other current assets and other assets	(611)		1,893
Accounts payable	Accounts payable	(1,732)		4,012		Accounts payable	35,174		(989)
Accrued expenses and other non-current liabilities	Accrued expenses and other non-current liabilities	(41,181)		(9,807)		Accrued expenses and other non-current liabilities	(9,274)		(36,042)

Net cash (used in) provided by operating activities		(7,255)		6,486
Net cash provided by (used in) operating activities of continuing operations						Net cash provided by (used in) operating activities of continuing operations	12,777		(10,967)
Net cash (used in) provided by operating activities of discontinued operations						Net cash (used in) provided by operating activities of discontinued operations	(2,002)		3,712
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	10,775		(7,255)
Cash Flows from Investing Activities	Cash Flows from Investing Activities					Cash Flows from Investing Activities
Purchases of property, plant, and equipment						Purchases of property, plant, and equipment	(9,474)		(4,178)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(54,385)		(264)		Acquisitions, net of cash acquired	(2)		(54,385)
Net proceeds from sale of property and equipment		59		60
Purchases of property, plant, and equipment		(5,231)		(6,265)
Net proceeds from sale of business	Net proceeds from sale of business	704		—		Net proceeds from sale of business	39,991		704

Net proceeds from sale of property and equipment						Net proceeds from sale of property and equipment	0		59
Net cash provided by (used in) investing activities of continuing operations						Net cash provided by (used in) investing activities of continuing operations	30,515		(57,800)
Net cash used in investing activities of discontinued operations						Net cash used in investing activities of discontinued operations	(176)		(1,053)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	30,339		(58,853)
Cash Flows from Financing Activities						Cash Flows from Financing Activities
Proceeds from long-term debt						Proceeds from long-term debt	31,200		0
Long-term debt payments						Long-term debt payments	(83,636)		0

Net cash used in investing activities		(58,853)		(6,469)
Cash Flows from Financing Activities

Long-term debt payments		—		(212,000)
Payment of debt issuance costs		—		(1,235)

Purchase of treasury stock at market prices	Purchase of treasury stock at market prices	(4,462)		(3,149)		Purchase of treasury stock at market prices	(4,780)		(4,462)
Net proceeds from issuance of common stock	Net proceeds from issuance of common stock	78		208		Net proceeds from issuance of common stock	924		78

Net cash used in financing activities	Net cash used in financing activities	(4,384)		(216,176)		Net cash used in financing activities	(56,292)		(4,384)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(12)		1,035		Effect of exchange rate changes on cash	87		(12)
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	(70,504)		(215,124)		Net decrease in cash and cash equivalents	(15,091)		(70,504)
Cash and cash equivalents at beginning of year	Cash and cash equivalents at beginning of year	191,363		297,006		Cash and cash equivalents at beginning of year	32,054		191,363
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	120,859	$	81,882	Cash and cash equivalents at end of period	$	16,963	$	120,859

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF ~~SHAREHOLDERS’~~STOCKHOLDERS’ 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) Income		Treasury Stock				Total Stockholders’ Equity
		Shares	Amount											Shares			Amount				Shares		Amount							Shares			Amount
Balance at December 31, 2019		33,192	$	332	$	295,582	$	405,668	$	(5,391)	906	$	(22,227)		$	673,964
Balance at December 31, 2020																	Balance at December 31, 2020	33,568	$	336	$	304,870	$	469,943			$	(2,461)			1,028		$	(28,883)	$	743,805
Net income	Net income	—	—		—		12,059		—		—	—			12,059		Net income	—	—		—		12,762		—				—		—		12,762
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—		—		(5,898)		—	—			(5,898)		Foreign currency translation adjustment	—	—		—		—		3,198				—		—		3,198
Minimum pension and post retirement benefit plan adjustments, net of taxes of $7		—	—		—		—		18		—	—			18
Minimum post retirement benefit plan adjustments, net of taxes of $10																	Minimum post retirement benefit plan adjustments, net of taxes of $10	—	—		—		—		27				—		—		27
Stock compensation expense																	Stock compensation expense	—	—		2,368		—		—				—		—		2,368

Stock compensation expense		—	—		1,665		—		—		—	—			1,665
Cumulative effect of accounting change (See Note 2)		—	—		—		(291)		—		—	—			(291)
Stock options exercised	Stock options exercised	3	—		24		—		—		—	—			24		Stock options exercised	25	—		910		—		—				—		—		910

Net settlement of restricted stock units	Net settlement of restricted stock units	193	2		(2)		—		—		80	(4,184)			(4,184)		Net settlement of restricted stock units	118	1		(1)		—		—				54		(4,662)		(4,662)

Balance at March 31, 2020		33,388	$	334	$	297,269	$	417,436	$	(11,271)	986	$	(26,411)		$	677,357
Balance at March 31, 2021																	Balance at March 31, 2021	33,711	$	337	$	308,147	$	482,705	$	764			1,082		$	(33,545)	$	758,408
Net income	Net income	—	—		—		27,292		—		—	—			27,292		Net income	—	—		—		25,949		—				—		—		25,949
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—		—		2,815		—	—			2,815		Foreign currency translation adjustment	—	—		—		—		761				—		—		761
Minimum pension and post retirement benefit plan adjustments, net of taxes of $6		—	—		—		—		18		—	—			18
Minimum post retirement benefit plan adjustments, net of taxes of $10																	Minimum post retirement benefit plan adjustments, net of taxes of $10	—	—		—		—		27				—		—		27
Stock compensation expense	Stock compensation expense	—	—		2,506		—		—		—	—			2,506		Stock compensation expense	—	—		2,567		—		—				—		—		2,567
Stock options exercised	Stock options exercised	6	—		54		—		—		—	—			54		Stock options exercised	1	—		14		—		—				—		—		14
Awards of common shares	Awards of common shares	4	—		—		—		—		—	—			—		Awards of common shares	3	—		—		—		—				—		—		—
Net settlement of restricted stock units	Net settlement of restricted stock units	15	—		—		—		—		7	(278)			(278)		Net settlement of restricted stock units	3	0		0		—		—				1		(118)		(118)

Balance at June 30, 2020		33,413	$	334	$	299,829	$	444,728	$	(8,438)	993	$	(26,689)		$	709,764
Balance at June 30, 2021																	Balance at June 30, 2021	33,718	$	337	$	310,728	$	508,654	$	1,552			1,083		$	(33,663)	$	787,608

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF ~~SHAREHOLDERS’~~STOCKHOLDERS’ 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 Stockholders’ Equity
		Shares	Amount												Shares			Amount							Shares				Amount										Shares					Amount
Balance at December 31, 2018		32,887	$	329	$	282,525	$	338,995		$	(7,234)	796	$	(17,922)		$	596,693
Balance at December 31, 2019																			Balance at December 31, 2019	33,192			$	332			$	295,582			$	405,668			$	(5,391)			906			$	(22,227)			$	673,964
Net income	Net income	—	—		—		6,345			—		—	—			6,345			Net income	—		—				—				12,059				—				—			—				12,059
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—		—			842		—	—			842			Foreign currency translation adjustment	—		—				—				—			(5,898)				—			—				(5,898)
Minimum pension and post retirement benefit plan adjustments, net of taxes of $4		—	—		—		—			12		—	—			12
Minimum post retirement benefit plan adjustments, net of taxes of $7																			Minimum post retirement benefit plan adjustments, net of taxes of $7	—		—				—				—			18				—			—				18

Stock compensation expense	Stock compensation expense	—	—		2,371		—			—		—	—			2,371			Stock compensation expense	—		—				1,665				—			—				—			—				1,665
Cumulative effect of accounting change	Cumulative effect of accounting change	—	—		—		1,582			—		—	—			1,582			Cumulative effect of accounting change	—		—				—				(291)			—				—			—				(291)
Stock options exercised	Stock options exercised	12	—		139		—			—		—	—			139			Stock options exercised	3		—				24				—			—				—			—				24

Net settlement of restricted stock units	Net settlement of restricted stock units	127	1		(1)		—			—		59	(2,151)			(2,151)			Net settlement of restricted stock units	193		2				(2)				—			—				80			(4,184)				(4,184)

Balance at March 31, 2019		33,026	$	330	$	285,034	$	346,922		$	(6,380)	855	$	(20,073)		$	605,833
Balance at March 31, 2020																			Balance at March 31, 2020	33,388		$	334			$	297,269			$	417,436		$	(11,271)			986			$	(26,411)			$	677,357
Net income	Net income	—	—		—		19,913			—		—	—			19,913			Net income	—		—				—				27,292			—				—			—				27,292
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—		—			998		—	—			998			Foreign currency translation adjustment	—		—				—				—			2,815				—			—				2,815
Minimum pension and post retirement benefit plan adjustments, net of taxes of $5		—	—		—		—			12		—	—			12
Minimum post retirement benefit plan adjustments, net of taxes of $6																			Minimum post retirement benefit plan adjustments, net of taxes of $6	—		—				—				—			18				—			—				18
Stock compensation expense	Stock compensation expense	—	—		3,720		—			—		—	—			3,720			Stock compensation expense	—		—				2,506				—			—				—			—				2,506
Stock options exercised	Stock options exercised	5	—		69		—			—		—	—			69			Stock options exercised	6		—				54				—			—				—			—				54
Awards of common shares	Awards of common shares	8	—		—		—			—		—	—			—			Awards of common shares	4		—				—				—			—				—			—				—
Net settlement of restricted stock units	Net settlement of restricted stock units	62	1		(1)		—			—		25	(998)			(998)			Net settlement of restricted stock units	15		0				0				—			—				7			(278)				(278)

Balance at June 30, 2019		33,101	$	331	$	288,822	$	366,835	��	$	(5,370)	880	$	(21,071)		$	629,547
Balance at June 30, 2020																			Balance at June 30, 2020	33,413		$	334			$	299,829			$	444,728		$	(8,438)			993			$	(26,689)			$	709,764

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 of Gibraltar Industries, Inc. (the "Company") 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, such as the impact of the COVID-19 pandemic, financial results for any interim period are not necessarily indicative of the results expected for any subsequent interim period or 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, ~~2019.~~2020.

The balance sheet at December 31, ~~2019~~2020 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.

Table of Contents

(2) RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements ~~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 standard is effective for the Company as of January 1, 2020. The Company adopted the amendments in this update using the modified retrospective approach through a cumulative-effect adjustment to retained earnings of $291,000, net of $96,000 of income taxes, on the opening consolidated balance sheet as of January 1, 2020. The Company's financial assets that are in the scope of the standard are contract assets and accounts receivables which are short-term in nature. Additionally, the Company has identified and implemented appropriate changes to the Company's business processes, policies and internal controls to support reporting and disclosures.

~~Date of adoption: Q1 2020~~

~~ASU 2018-15~~

~~Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~

The amendments in this update require an entity to apply the same requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract as the entity would for implementation costs incurred to develop or obtain internal-use software. The accounting for the service element is not affected by the amendments in this update.

The standard is effective for the Company as of January 1, 2020. The Company adopted the amendments in this update using the prospective method of adoption, and the adoption did not have a material impact to the Company's financial statements.

Date of adoption: Q1 2020

~~Recent Accounting Pronouncements Not Yet~~ Adopted

Standard

Description

Financial Statement Effect or Other Significant Matters

ASU No. 2019-12

Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes

The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and improve consistent application by clarifying and amending existing guidance. The amendments of this standard are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued, with the amendments to be applied on a respective, modified retrospective or prospective basis, depending on the specific amendment.

The ~~Company is currently evaluating the requirements of this standard. The~~ standard is effective for the Company as of January 1, 2021. The Company adopted the amendments in this update and the adoption did not ~~expected to~~ have a material impact onto the ~~Company's~~Company’s financial statements.

Date of adoption: Q1 2021

~~Table of Contents~~

(3) ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable consists of the following (in thousands):


		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Trade accounts receivable	Trade accounts receivable	$	175,251	$	133,238	Trade accounts receivable	$	182,015	$	174,604
Costs in excess of billings	Costs in excess of billings	24,628		20,607		Costs in excess of billings	48,594		26,915
Total accounts receivables	Total accounts receivables	199,879		153,845		Total accounts receivables	230,609		201,519
Less allowance for doubtful accounts and contract assets	Less allowance for doubtful accounts and contract assets	(6,270)		(6,330)		Less allowance for doubtful accounts and contract assets	(5,294)		(3,529)
Accounts receivable		$	193,609	$	147,515
Accounts receivable, net						Accounts receivable, net	$	225,315	$	197,990

Refer to Note 4 "Revenue" concerning the Company's costs in excess of billings.

The Company is exposed to credit losses through sales of products and services. The Company’s expected loss allowance methodology for accounts receivable and costs in excess of billings (collectively "accounts receivable") is developed using historical collection experience, current and future economic and market conditions, and a review of the current status of customers' accounts receivables. Due to the short-term nature of such accounts receivable, the estimated amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances. Additionally, specific allowance amounts are established to record the appropriate provision for customers that no longer share risk characteristics similar with other accounts receivable. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and determined that the estimate of credit losses was not significantly impacted as of June 30, 2020.

~~Estimates are used to determine the allowance. It is based on assessment of anticipated payment and all other historical, current and future information that is reasonably available.~~

The following table provides a roll-forward of the allowance for credit losses, for the six month period ended June 30, 2021, that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.

(4) REVENUE

Sales includes revenue from contracts with customers ~~for~~for: designing, engineering, manufacturing and installation of solar racking ~~systems and greenhouse structures; extraction~~systems; electrical balance of systems; roof and foundation ventilation products; centralized mail systems and electronic package solutions; retractable awnings; gutter guards; rain dispersion ~~products~~products; trims and ~~roofing~~flashings and other accessories; ~~expanded~~designing, engineering, manufacturing and ~~perforated metal; perimeter security solutions;~~installation of greenhouses; botanical extraction systems; structural bearings; expansion ~~joints~~joints; pavement sealant; elastomeric concrete; and ~~structural bearings.~~bridge cable protection systems.

Refer to Note 1415 "Segment Information" for additional information related to revenue recognized by timing of transfer of control by reportable segment.

Table of Contents

As of June 30, ~~2020,~~2021, the Company's remaining performance obligations are part of contracts that have an original expected duration of one year or less.

Contract assets consist of costs in excess of billings. Contract liabilities consist of billings in excess of cost and unearned revenue. ~~The following table presents the beginning and ending balances of costs in excess of billings, billings in excess of cost and unearned~~Unearned revenue as of June 30, ~~2020~~2021 and December 31, ~~2019, respectively,~~2020 was $4.7 million and

~~Table of Contents~~

~~revenue~~ $21.3 million, respectively. Revenue recognized during the ~~six~~three months ended June 30, ~~2020~~2021 and ~~2019, respectively,~~2020 that was in ~~billings in excess of cost and unearned revenue~~contract liabilities at the beginning of the ~~period (in thousands):~~

June 30, 2020 December 31, 2019
Costs in excess of billings $ 24,627 $ 20,607
Billings in excess of cost (29,281) (47,598)
Unearned revenue (16,503) (17,311)

Six Months Ended
June 30, 2020 Six Months Ended
June 30, 2019
Revenue recognized in the period from:
Amounts included in billings in excess of cost
at the beginning of the period $ 42,115 $ 11,357
Amounts included in unearned revenue
at the beginning of the period $ 12,553 $ 6,153
respective periods was $49.2 million and $53.3 million, respectively.

(5) INVENTORIES

Inventories consist of the following (in thousands):


		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Raw material	Raw material	$	43,234	$	45,700	Raw material	$	99,074	$	66,018
Work-in-process	Work-in-process	6,206		5,988		Work-in-process	6,197		5,382
Finished goods	Finished goods	29,618		26,788		Finished goods	33,623		31,205
Total inventories		$	79,058	$	78,476
Gross inventory						Gross inventory	$	138,894	$	102,605
Less reserves						Less reserves	(5,269)		(4,298)
Total inventories, net						Total inventories, net	$	133,625	$	98,307

(6) ACQUISITIONS

2020 Acquisitions

During the year ended December 31, 2020, the Company acquired 5 businesses in separate transactions, 2 of which are included within our Renewables segment, 2 in our Agtech segment, and 1 in our Residential segment. The purchase consideration for each acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values.

On December 31, 2020, the Company purchased all the outstanding membership interests of TerraSmart LLC and TerraTrak LLC (collectively, "TerraSmart"), a leading provider of screw-based, ground-mount solar racking technology, particularly used for solar projects installed on challenging terrain. The results of TerraSmart have been included in the Company's consolidated financial results since the date of acquisition within the Company's Renewables segment. The purchase consideration for the acquisition of TerraSmart was $223.9 million, which includes a working capital adjustment and certain other adjustments provided for in the equity purchase agreement.

The purchase price for the TerraSmart acquisition was preliminarily allocated to the assets acquired and liabilities assumed based upon their respective fair values estimated as of the date of acquisition. The Company has commenced the process to confirm the existence, condition and completeness of the assets acquired and liabilities assumed to establish fair values of such acquired assets and assumed liabilities and to determine the amount of goodwill to be recognized as of the date of acquisition. Due to the timing of the acquisition, we continue to gather information supporting the acquired assets and assumed liabilities. Accordingly, all amounts recorded are provisional. These provisional amounts are subject to change if new information is obtained concerning facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. The final determination of the fair value of certain assets and liabilities will be completed within a measurement period of up to one year from the date of acquisition. The final values may also result in changes to depreciation and amortization expense related to certain assets such as property, plant and equipment and acquired intangible assets. The preliminary excess consideration was recorded as goodwill and approximated $139.1 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 domestic solar energy market. The final purchase price allocation will be completed no later than December 31, 2021.

Table of Contents

~~(6) ACQUISITIONS~~The preliminary allocation of the TerraSmart purchase consideration to the estimated fair value of the assets acquired and liabilities assumed is as follows as of the date of the acquisition (in thousands):


Cash	$	1,491
Working capital	7,148
Property, plant and equipment	11,758
Acquired intangible assets	64,150
Other assets	1,854
Other liabilities	(1,640)
Goodwill	139,106
Fair value of purchase consideration	$	223,867

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


	Fair Value		Weighted-Average Amortization Period
Trademarks	$	20,830	Indefinite

Technology	1,940		12 years
Customer relationships	35,110		12 years

Backlog	6,270		Less than 1 year
Total	$	64,150

On December 11, 2020, ~~Acquisitions~~the Company purchased all the outstanding stock of Sunfig Corporation ("Sunfig"), a provider of software solutions that optimize solar energy investments through upstream design, performance and financial modeling, for a purchase consideration of $3.8 million, which includes a working capital adjustment and certain other adjustments provided for in the stock purchase agreement. The results of Sunfig have been included in the Company's consolidated financial results since the date of acquisition within the Company's Renewables segment. The excess consideration was recorded as goodwill and approximated $3.2 million, all of which is deductible for tax purposes.

On October 15, 2020, the Company purchased substantially all of the assets of Architectural Mailboxes LLC ("Architectural Mailboxes"), a complementary addition to the Company's existing mail and package solutions business within the Residential segment, for a purchase consideration of $26.9 million, which includes a working capital adjustment and certain other adjustments provided for in the asset purchase agreement. The results of Architectural Mailboxes have been included in the Company's consolidated financial results since the date of acquisition within the Company's Residential segment. The excess consideration was recorded as goodwill and approximated $7.4 million, all of which is deductible for tax purposes.

On February 13, 2020, the Company purchased substantially all of the assets of Delta Separations, LLC ~~a California limited liability company,~~ and Teaching Tech, LLC ~~a California limited liability company~~ (collectively, ~~described as~~ "Delta Separations"). for a purchase consideration of $47.1 million, which includes a working capital adjustment and certain other adjustments provided for in the asset purchase agreement. Delta Separations was a privately-held engineering company primarily engaged in the assembly and sale of centrifugal ethanol-based extraction systems. The results of Delta Separations have been included in the Company's consolidated financial results since the date of acquisition within the Company's ~~Renewable Energy and Conservation~~Agtech segment. The purchase consideration for the acquisition of Delta Separations was $47.1 million, which includes a working capital adjustment and certain other adjustments provided for in the asset purchase agreement.

~~The purchase price for the acquisition of the assets was allocated to the assets acquired and liabilities assumed based upon their respective fair values.~~ The excess consideration was recorded as goodwill and approximated ~~$32.9~~$32.2 million, all of which is deductible for tax purposes.

On January 15, 2020, the Company purchased substantially all of the assets of Thermo Energy Systems Inc. ("Thermo"), a Canadian-based, privately held provider of commercial greenhouse solutions in North America providing growing infrastructure for the plant based organic food market, for a purchase consideration of $7.3 million. The results of Thermo have been included in the Company's consolidated financial results since the date of acquisition within the Company's Agtech segment. Goodwill of approximately $18.7 million was recorded, all of which is deductible for tax purposes.

Table of Contents

The preliminary allocation of the purchase price for Sunfig and Architectural Mailboxes remains subject to adjustments during the measurement period as third-party valuations are finalized. The preliminary and final allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed in the acquisitions of Sunfig, Architectural Mailboxes, Delta Separations and Thermo is as follows as of the respective date of the acquisition (in thousands):


Cash	$	200
Working capital	(14,957)
Property, plant and equipment	1,740
Acquired intangible assets	38,296
Other current assets	1,528
Other assets	2,381
Other liabilities	(5,508)
Goodwill	61,422
Fair value of purchase consideration	$	85,102

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 ~~extraction processing~~respective 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):~~



~~Working capital~~	$	~~4,063~~
~~Property, plant and equipment~~	~~219~~
~~Acquired intangible assets~~	~~13,000~~
~~Other assets~~	~~951~~
~~Other liabilities~~	~~(4,027)~~
~~Goodwill~~	~~32,906~~
~~Fair value of purchase consideration~~	$	~~47,112~~

The intangible assets acquired in ~~this acquisition~~the acquisitions of Sunfig, Architectural Mailboxes, Delta Separations and Thermo consisted of the following (in thousands):


	Fair Value		Weighted-Average Amortization Period
Trademarks	$	~~6,000~~8,200	Indefinite
~~Technology~~	~~3,200~~		~~10 years~~
~~Customer relationships~~	~~3,200~~		~~11 years~~
~~Non-compete agreements~~	~~300~~		~~5 years~~
~~Backlog~~	~~300~~		~~0.25 years~~
~~Total~~	$	~~13,000~~

On January 15, 2020, the Company purchased substantially all of the assets of Thermo Energy Systems Inc. ("Thermo"), a Canadian-based, privately held provider of commercial greenhouse solutions in North America supporting the plant based organic food market. The results of Thermo 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 purchase consideration for the acquisition of Thermo was $7.3 million.

The purchase price for the acquisition was preliminarily allocated to the assets acquired and liabilities assumed based upon their respective estimated fair values and the remaining consideration was recorded to goodwill. Goodwill of approximately $16.1 million was recorded, 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 commercial greenhouse markets. The preliminary allocation of the purchase price is subject to adjustments during the measurement period

~~Table of Contents~~

~~as third-party valuations are finalized. The final purchase price allocation will be completed no later than the first quarter of 2021.~~

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


~~Cash~~	$	~~135~~
~~Working capital~~	~~(19,718)~~
~~Property, plant and equipment~~	~~1,069~~
~~Acquired intangible assets~~	~~9,750~~
~~Other current assets~~	35
~~Other assets~~	~~1,335~~
~~Other liabilities~~	~~(1,335)~~
~~Goodwill~~	~~16,062~~
~~Fair value of purchase consideration~~	$	~~7,333~~

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

~~Fair Value~~

~~Weighted-Average Amortization Period~~

Trademarks

$1,177

~~660~~

3 years

Technology

~~2,639~~

8,175

7 - 15 years

Customer relationships

~~6,451~~

18,780

5 - 13 years

10Non-compete agreements

1,036

5 years

Backlog

928

Less than 1 year

Total

~~9,750~~38,296

~~2019 Acquisition~~

On August 30, 2019, the Company acquired all of the outstanding membership interests of Apeks LLC ("Apeks"), a designer and manufacturer of botanical oil extraction systems and equipment. The results of Apeks 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 aggregate purchase consideration for the acquisition of Apeks was $12.6 million, which includes a working capital adjustment and certain other adjustments provided for in the membership interest purchase agreement.

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 $6.4 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 presence in the extraction processing 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~~	$	~~4,154~~
~~Working capital~~	~~(1,515)~~
~~Property, plant and equipment~~	~~1,059~~
~~Acquired intangible assets~~	~~3,000~~
~~Other assets~~	~~508~~
~~Other liabilities~~	~~(1,081)~~
~~Goodwill~~	~~6,436~~
~~Fair value of purchase consideration~~	$	~~12,561~~

~~Table of Contents~~

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


	~~Fair Value~~		~~Weighted-Average Amortization Period~~
~~Trademarks~~	$	~~1,400~~	~~Indefinite~~
~~Technology~~	~~900~~		~~7 years~~
~~Customer relationships~~	~~700~~		~~6 years~~
~~Total~~	$	~~3,000~~

In determining the allocation of the purchase price to the assets acquired and the liabilities assumed, the Company uses all available information to make fair value determinations using Level 3 unobservable inputs in which little or no market data exists, and therefore, engages independent valuation specialists to assist in the fair value determination of the acquired long-lived assets.

The acquisition of TerraSmart was financed through a combination of cash on hand and borrowings under the Company's revolving credit facility. The acquisitions of Sunfig, Architectural Mailboxes, Delta Separations ~~Thermo~~ and ~~Apeks~~Thermo were funded from available cash on hand.

The Company recognized costs as a component of cost of sales related to the sale of inventory at fair value as a result of allocating the purchase price of recent acquisitions. The Company also incurred certain acquisition-related costs composed of legal and consulting fees. These costs were recognized as a component of selling, general, and administrative expenses in the consolidated statement of operations. ~~The Company also recognized costs as a component of cost of sales related to the sale of inventory at fair value as a result of allocating the purchase price of recent acquisitions.~~

Table of Contents

The acquisition-related costs consisted of the following for the three and six months ended June 30 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Selling, general and administrative costs $ 588 $ 4 $ 1,848 $ 4
Cost of sales 634 — 634 —
Total acquisition-related costs $ 1,222 $ 4 $ 2,482 $ 4


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Cost of sales	$	0	$	634	$	0	$	634
Selling, general and administrative costs	0		288		893		1,548
Total acquisition-related costs	$	0	$	922	$	893	$	2,182

~~Table of Contents~~

(7) GOODWILL AND RELATED INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the six months ended June 30, ~~2020~~2021 are as follows (in thousands):

Renewable Energy & Conservation Residential Products Industrial and
Infrastructure
Products Total
Balance at December 31, 2019 $ 77,602 $ 198,075 $ 54,028 $ 329,705
Acquired goodwill 49,001 — — 49,001
Adjustments to prior year acquisitions 579 — — 579
Foreign currency translation (281) — (264) (545)
Balance at June 30, 2020 $ 126,901 $ 198,075 $ 53,764 $ 378,740


	Renewables		Residential		Agtech		Infrastructure		Total
Balance at December 31, 2020	$	192,527	$	205,452	$	84,622	$	31,678	$	514,279
Adjustments to prior year acquisitions	(4,593)		0		0		0		(4,593)

Foreign currency translation	(990)		0		161		0		(829)
Balance at June 30, 2021	$	186,944	$	205,452	$	84,783	$	31,678	$	508,857

The Company conducts its annual goodwill impairment test as of October 31 each year. All of the Company’s ten reporting units had fair values exceeding their carrying values as of October 31, 2019. In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing. The Company considered the current and future macroeconomic and market conditions, along with its current market capitalization, projected cash flows and internal and external forecasts, and projections relating to the impact of the COVID-19 pandemic on each of its reporting units. The Company determined that a triggering event has not occurred which would require an interim impairment test to be performed.

Acquired Intangible Assets

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


		June 30, 2020						December 31, 2019							June 30, 2021				December 31, 2020
		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:									Indefinite-lived intangible assets:
Trademarks	Trademarks	$	51,295	$	—	$	45,770	$	—	Trademarks	$	61,100	$	0	$	56,570	$	0
Finite-lived intangible assets:	Finite-lived intangible assets:									Finite-lived intangible assets:
Trademarks	Trademarks	6,753		4,328		6,139		4,105		Trademarks	5,550		3,747		5,818		3,385
Unpatented technology	Unpatented technology	35,383		17,031		29,544		15,807		Unpatented technology	38,386		19,194		38,752		17,765
Customer relationships	Customer relationships	80,976		42,876		71,195		40,294		Customer relationships	109,329		35,658		98,500		31,580
Non-compete agreements	Non-compete agreements	1,949		1,640		1,649		1,499		Non-compete agreements	2,691		1,859		4,885		1,747
Backlog	Backlog	300		300		—		—		Backlog	7,216		4,080		7,228		911
		125,361		66,175		108,527		61,705			163,172		64,538		155,183		55,388
Total acquired intangible assets	Total acquired intangible assets	$	176,656	$	66,175	$	154,297	$	61,705	Total acquired intangible assets	$	224,272	$	64,538	$	211,753	$	55,388

Table of Contents

The following table summarizes the acquired intangible asset amortization expense for the three and six months ended June 30 (in thousands):

Three Months Ended

June 30, Six Months Ended

June 30,
2020 2019 2020 2019
Amortization expense $ 2,412 $ 1,797 $ 4,490 $ 3,594

~~Table of Contents~~


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Amortization expense	$	4,736	$	2,018	$	9,479	$	4,002

Amortization expense related to acquired intangible assets for the remainder of fiscal ~~2020~~2021 and the next five years thereafter is estimated as follows (in thousands):

2020 2021 2022 2023 2024 2025
Amortization expense $ 3,860 $ 7,633 $ 7,154 $ 6,617 $ 6,363 $ 6,203


	2021		2022		2023		2024		2025		2026
Amortization expense	$	9,414	$	12,167	$	11,236	$	11,055	$	10,820	$	9,186

(8) LONG-TERM DEBT

~~The Company did 0t have any long-term~~Long-term debt ~~outstanding at June 30, 2020 and December 31, 2019.~~consists of the following (in thousands):


	June 30, 2021		December 31, 2020
Revolving credit facility	$	33,200	$	85,000
Other debt	0		636
Less unamortized debt issuance costs	(891)		0
Total debt	$	32,309	$	85,636

Senior Credit Agreement

On January 24, 2019, the Company entered into a Sixth Amended and Restated Credit Agreement ("Senior Credit Agreement"), which amended and restated the Company’s Fifth Amended and Restated Credit Agreement dated December 9, 2015, and provides for a revolving credit facility and letters of credit in an aggregate amount equal to $400 million. The Company can request additional financing from the lenders to increase the revolving credit facility to $700 million or enter into a term loan of up to $300 million subject to conditions set forth in the Senior Credit Agreement. The Senior Credit Agreement contains 3 financial covenants. As of June 30, ~~2020,~~2021, the Company iswas in compliance with all 3 covenants.

Interest rates on the revolving credit facility are based on LIBOR plus an additional margin that ranges from 1.125% to 2.00%. In addition, the revolving credit facility is subject to an undrawn commitment fee ranging between 0.15% and 0.25% based on the Total Leverage Ratio (as defined in the Senior Credit Agreement) and the daily average undrawn balance. The Senior Credit Agreement terminates on January 23, 2024.

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

Standby letters of credit of ~~$5.9~~$6.6 million have been issued under the Senior Credit Agreement on behalf of the Company as of June 30, ~~2020.~~2021. These letters of credit reduce the amount otherwise available under the revolving credit facility. ~~As of June 30, 2020, the~~The Company had ~~$394.1~~$360.2 million and $309.2 million of availability under the revolving credit ~~facility. NaN borrowings were outstanding under the Company's revolving credit~~ facility at June 30, ~~2020~~2021 and December 31, ~~2019.~~2020, respectively.

Table of Contents

(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 three and six months ended June 30, (in thousands):

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, 2019 $ (4,173) $ (1,939) $ (6,112) $ (721) $ (5,391)
Minimum pension and post retirement health care plan adjustments — 25 25 7 18
Foreign currency translation adjustment (5,898) — (5,898) — (5,898)
Balance at March 31, 2020 $ (10,071) $ (1,914) $ (11,985) $ (714) $ (11,271)
Minimum pension and post retirement health care plan adjustments — 24 24 6 18
Foreign currency translation adjustment 2,815 — 2,815 — 2,815
Balance at June 30, 2020 $ (7,256) $ (1,890) $ (9,146) $ (708) $ (8,438)


	Foreign Currency Translation Adjustment		Minimum post retirement benefit plan adjustments		Total Pre-Tax Amount		Tax (Benefit) Expense		Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2020	$	(872)	$	(2,426)	$	(3,298)	$	(837)	$	(2,461)

Minimum post retirement health care plan adjustments	—		37		37		10		27
Foreign currency translation adjustment	3,198		—		3,198		—		3,198
Balance at March 31, 2021	$	2,326	$	(2,389)	$	(63)	$	(827)	$	764

Minimum post retirement health care plan adjustments	—		37		37		10		27
Foreign currency translation adjustment	761		—		761		—		761
Balance at June 30, 2021	$	3,087	$	(2,352)	$	735	$	(817)	$	1,552

~~Table of Contents~~

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, 2018 $ (5,939) $ (2,040) $ (7,979) $ (745) $ (7,234)
Minimum pension and post retirement health care plan adjustments — 16 16 4 12
Foreign currency translation adjustment 842 — 842 — 842
Balance at March 31, 2019 $ (5,097) $ (2,024) $ (7,121) $ (741) $ (6,380)
Minimum pension and post retirement health care plan adjustments — 17 17 5 12
Foreign currency translation adjustment 998 — 998 — 998
Balance at June 30, 2019 $ (4,099) $ (2,007) $ (6,106) $ (736) $ (5,370)


	Foreign Currency Translation Adjustment		Minimum post retirement benefit plan adjustments		Total Pre-Tax Amount		Tax (Benefit) Expense		Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2019	$	(4,173)	$	(1,939)	$	(6,112)	$	(721)	$	(5,391)

Minimum post retirement health care plan adjustments	—		25		25		7		18
Foreign currency translation adjustment	(5,898)		—		(5,898)		—		(5,898)
Balance at March 31, 2020	$	(10,071)	$	(1,914)	$	(11,985)	$	(714)	$	(11,271)













Minimum post retirement health care plan adjustments	—		24		24		6		$	18
Foreign currency translation adjustment	2,815		—		2,815		—		2,815
Balance at June 30, 2020	$	(7,256)	$	(1,890)	$	(9,146)	$	(708)	$	(8,438)

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

On May 4, 2018, the ~~shareholders~~stockholders 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~~stockholders of the Company approved the adoption of the Gibraltar Industries, Inc. 2016 Stock Plan for Non-Employee Directors ("Non-Employee Directors Plan") which provides for the issuance of up to 100,000 shares, 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 six months ended June 30, which will convert to shares upon vesting, along with the weighted average grant date fair values:


		2020				2019						2021			2020
Awards	Awards	Number of Awards (1)	Weighted Average Grant Date Fair Value		Number of Awards (2)	Weighted Average Grant Date Fair Value		Awards	Number of Awards	Weighted Average Grant Date Fair Value		Number of Awards (2)	Weighted Average Grant Date Fair Value
Performance stock units(1)	Performance stock units(1)	127,397	$	53.16	145,420	$	40.55	Performance stock units(1)	62,778	$	87.84	127,397	$	53.16
Restricted stock units	Restricted stock units	43,842	$	52.12	117,821	$	39.37	Restricted stock units	33,187	$	87.91	43,842	$	52.12
Deferred stock units	Deferred stock units	12,402	$	45.98	7,509	$	37.95	Deferred stock units	7,536	$	83.58	12,402	$	45.98
Common shares	Common shares	4,134	$	45.98	7,509	$	37.95	Common shares	2,512	$	83.58	4,134	$	45.98

(1) The Company’s performance stock units (“PSUs”) represent shares granted for which the final number of shares earned depends on financial performance or market conditions. The number of shares to be issued may vary between 0% and 200% of the number of ~~performance stock units~~PSUs granted depending on the relative achievement to targeted thresholds. The Company's PSUs with a financial performance condition are based on either the Company’s return on invested capital (“ROIC”) over a ~~one-year period~~one-year performance period or other criteria such as revenue, gross profit and operating profit thresholds over a two or ~~three-year~~three-year performance period. The Company's PSUs with a market condition are based on the ranking of the

~~Table of Contents~~

Company’s total ~~shareholder~~stockholder return (“TSR”) performance, on a percentile basis, over a three year performance period compared to the S&P Small Cap Industrial sector, over the same three year performance period.

(2) ~~Performance stock units~~PSUs granted in ~~2019 have~~2020 include 74,676 PSUs that will be converted to ~~168,688~~ shares ~~to be~~and issued to recipients in the first quarter of ~~2022, representing 116%~~2023 at 109.5% of the ~~targeted 2019 award,~~target amount granted, based on the Company’s actual ROIC compared to ROIC target for the performance period ended December 31, ~~2019.~~2020.

Equity Based Awards - Settled in Cash

The Company's equity-based liability ~~includes~~is comprised of awards under a management stock purchase plan. As of June 30, ~~2020,~~2021, the Company's total share-based liabilities recorded on the consolidated balance sheet were ~~$29.2~~$21.6 million, of which ~~$12.7~~$18.0 million was included in non-current liabilities. The share-based liabilities as of December 31, ~~2019~~2020 were ~~$28.0~~$18.2 million, of which ~~$13.2~~$14.7 million was included in non-current liabilities.

The Company's Management Stock Purchase Plan ("MSPP") provides participants the ability to defer a portion of their compensation, convertible to unrestricted investments, restricted stock units, or a combination of both, or defer a portion of their directors’ fees, convertible to restricted stock units. Employees eligible to defer a portion of their compensation also receive a company-matching award in restricted stock units equal to a percentage of their compensation.

The deferrals and ~~company-matching~~related company match are credited to an account that represents a share-based liability. ~~Eligible employees may direct their deferrals to invest in phantom restricted stock units that are measured on the 200-day average~~The portion of the ~~Company’s stock price, hypothetical investment alternatives available under Company’s 401(k) plan that are~~account deferred to unrestricted investments is measured at fair market value ~~or a combination of both. Non-employee directors may only direct their deferrals into phantom restricted stock units that are measured on the 200-day average~~ of the ~~Company’s stock price. The company-matching is made in phantom~~unrestricted investments, and the portion of the account deferred to restricted stock units and company-matching restricted stock units is measured ~~on the~~at a 200-day average of the Company’s stock price. The account will 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 six months ended June 30,:


		2020		2019			2021		2020
Restricted stock units credited	Restricted stock units credited	52,965		55,513		Restricted stock units credited	26,240		52,965
Share-based liabilities paid (in thousands)	Share-based liabilities paid (in thousands)	$	4,433	$	5,742	Share-based liabilities paid (in thousands)	$	3,510	$	4,433

Table of Contents

(11) DISCONTINUED OPERATIONS

On February 23, 2021, the Company sold the stock of its Industrial business which had been classified as held for sale and reported as a discontinued operation in the Company’s consolidated financial statements for the year ended December 31, 2020. Net proceeds of $38 million, consisting of cash and a $13 million seller note, resulted in an estimated pre-tax loss of $30 million, subject to working capital and other adjustments, of which $29.6 million was recorded when the assets of the Industrial business were written down to fair market value during the fourth quarter of 2020. The seller note was paid in full to the Company during the second quarter of 2021.

The results of operations and financial position of the Industrial business have been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented. The Company allocates interest to its discontinued operations in accordance with ASC Subtopic 205-20, “Presentation of Financial Statements – Discontinued Operations.” Interest was allocated based on the amount of net assets held by the discontinued operation in comparison to consolidated net assets.

The following carrying amounts of the major classes of assets and liabilities included in discontinued operations related to the Industrial business have been segregated from the Company's continuing operations and are reported as assets and liabilities of discontinued operations, respectively, in the consolidated balance sheet at December 31, 2020 (in thousands):


	December 31, 2020
Assets
Accounts receivable, net	$	11,261
Inventories, net	13,041
Prepaid expenses and other current assets	21,310
Total current assets (1)	45,612
Property, plant, and equipment, net	16,999
Operating lease assets	6,470
Goodwill	22,475
Acquired intangibles	15,482
Loss recognized on classification as held for sale	(29,600)
Total noncurrent assets (1)	31,826
Total assets classified as held for sale	$	77,438

Liabilities
Accounts payable	$	10,708
Accrued expenses	9,274
Total current liabilities (1)	19,982
Deferred income taxes	24,657
Non-current operating lease liabilities	4,639
Other non-current liabilities	17
Total noncurrent liabilities (1)	29,313
Total liabilities classified as held for sale	$	49,295

(1) The assets and liabilities of the discontinued operations were classified as current on the December 31, 2020 consolidated balance sheet, as it was probable that the sale would occur and proceeds would be collected within one year.

Table of Contents

Components of income from discontinued operations before taxes, including the interest allocated to discontinued operations, for the three and six months ended June 30 are as follows (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Net sales	$	0	$	30,630	$	20,391	$	64,668
Operating expenses	0		26,850		17,493		58,052
Adjustment to loss on disposal	502		0		830		0
Interest expense allocation	0		34		0		40
(Loss) Income from discontinued operations before taxes	$	(502)	$	3,746	$	2,068	$	6,576

(12) EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS

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, the sale and exiting of less profitable businesses or product lines, and ~~the~~a reduction in our manufacturing footprint.

Exit activity costs were incurred during the six months ended June 30, ~~2020~~2021 and ~~2019~~2020 which related to moving and closing costs, contract terminations, and severance, ~~incurred~~along with asset impairment charges related to the write-down of inventory and impairment of machinery and equipment associated with discontinued product lines, as a result of process simplification initiatives. ~~During~~In conjunction with these initiatives, the Company closed 2 facilities during the six months ended June 30, ~~2020, the Company closed~~2021, and 1 facility ~~in conjunction with these initiatives. NaN facilities were closed as a result of these initiatives~~ during the ~~first half of 2019.~~six months ended June 30, 2020.

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


	Three months ended June 30,
	2021						2020
	Exit activity costs		Asset impairment charges		Total		Exit activity costs		Asset impairment charges		Total
Renewables	$	786	$	0	$	786	$	0	$	0	$	0
Residential	29		0		29		263		0		263
Agtech	1,287		0		1,287		316		72		388
Infrastructure	0		0		0		0		0		0
Corporate	59		0		59		45		0		45
Total exit activity costs & asset impairments	$	2,161	$	0	$	2,161	$	624	$	72	$	696


	Six months ended June 30,
	2021						2020
	Exit activity costs		Asset impairment charges		Total		Exit activity costs		Asset impairment charges		Total
Renewables	$	4,564	$	1,193	$	5,757	$	18	$	0	$	18
Residential	94		0		94		484		0		484
Agtech	1,491		0		1,491		316		72		388
Infrastructure	0		0		0		0		0		0
Corporate	59		0		59		99		0		99
Total exit activity costs & asset impairments	$	6,208	$	1,193	$	7,401	$	917	$	72	$	989

Table of Contents

Three months ended June 30,
2020 2019
Inventory write-downs &/or asset impairment charges Exit activity costs Total Inventory write-downs &/or asset impairment charges Exit activity (recoveries) costs, net Total
Renewable Energy and Conservation $ 72 $ 316 $ 388 $ — $ (95) $ (95)
Residential Products — 263 263 — 219 219
Industrial and Infrastructure Products 274 40 314 — 1,346 1,346
Corporate — 45 45 — 666 666
Total exit activity costs & asset impairments $ 346 $ 664 $ 1,010 $ — $ 2,136 $ 2,136

Six months ended June 30,
2020 2019
Inventory write-downs &/or asset impairment charges Exit activity costs Total Inventory write-downs &/or asset impairment charges Exit activity (recoveries) costs, net Total
Renewable Energy and Conservation $ 72 $ 334 $ 406 $ — $ (1) $ (1)
Residential Products — 484 484 — 370 370
Industrial and Infrastructure Products 274 38 312 — 1,313 1,313
Corporate — 99 99 — 673 673
Total exit activity costs & asset impairments $ 346 $ 955 $ 1,301 $ — $ 2,355 $ 2,355

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 six months ended June 30, (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Cost of sales	Cost of sales	$	786	$	319	$	873	$	285	Cost of sales	$	718	$	472	$	5,765	$	541
Selling, general, and administrative expense	Selling, general, and administrative expense	224		1,817		428		2,070		Selling, general, and administrative expense	1,443		224		1,636		448
Total asset impairment and exit activity charges	Total asset impairment and exit activity charges	$	1,010	$	2,136	$	1,301	$	2,355	Total asset impairment and exit activity charges	$	2,161	$	696	$	7,401	$	989

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


		2020		2019			2021		2020
Balance at January 1	Balance at January 1	$	5,449	$	1,923	Balance at January 1	$	1,030	$	2,083
Exit activity costs recognized	Exit activity costs recognized	955		2,355		Exit activity costs recognized	6,208		917
Cash payments	Cash payments	(5,575)		(1,329)		Cash payments	(4,646)		(2,171)
Balance at June 30	Balance at June 30	$	829	$	2,949	Balance at June 30	$	2,592	$	829

On June 30, 2020, the Company sold its self-guided apartment tour application business to a third party from its Residential Products segment. The $2.0 million net proceeds from the sale resulted in pre-tax net gain of $1.9 million and has been presented within other (income) expense in the consolidated statements of income. This divestiture does not meet the criteria to be reported as a discontinued operation nor will it have a major effect on the Company's operations.

~~Table of Contents~~

~~(12)~~(13) INCOME TAXES

The following table summarizes the provision for income taxes for continuing operations (in thousands) for the three and six months ended June 30, and the applicable effective tax rates:


		Three Months Ended June 30,									Six Months Ended June 30,										Three Months Ended June 30,						Six Months Ended June 30,
		2020			2019			2020			2019				2021			2020			2021			2020
Provision for income taxes	Provision for income taxes	$	8,872		$	6,487		$	11,858		$	8,058		Provision for income taxes	$	9,457		$	7,961		$	11,017		$	10,274
Effective tax rate	Effective tax rate	24.5		%	24.6		%	23.2		%	23.5		%	Effective tax rate	26.4		%	24.6		%	23.0		%	23.0		%

The effective tax rate for the three and six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, was ~~more~~greater than the U.S. federal statutory rate of 21% due to state taxes and nondeductible permanent differences partially offset by favorable discrete ~~items.~~items due to an excess tax benefit on stock-based compensation.

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The CARES Act, among other things, includes certain income tax provisions for individuals and corporations; however, these benefits do not materially impact the Company’s income tax provision.

~~On July 20, 2020, the Department~~Table of Treasury and the Internal Revenue Service issued final regulations addressing the treatment of income earned by certain foreign corporations related to the treatment of income that is subject to high rate of foreign tax under the global intangible low-taxed income ("GILTI") and subpart F income regimes. These provisions would be effective for the Company starting in 2021 but includes retroactive provisions that may allow for retroactive application. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.Contents

~~(13)~~(14) EARNINGS PER SHARE

Basic earnings and weighted-average of diluted ~~weighted-average~~ shares outstanding are as follows for the three and six months ended June 30, (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Numerator:	Numerator:									Numerator:

Net income available to common shareholders		$	27,292	$	19,913	$	39,351	$	26,258
Income from continuing operations										Income from continuing operations	$	26,373	$	24,457	$	36,869	$	34,359
(Loss) Income from discontinued operations										(Loss) Income from discontinued operations	(424)		2,835		1,842		4,992
Net income available to common stockholders										Net income available to common stockholders	$	25,949	$	27,292	$	38,711	$	39,351
Denominator for basic earnings per share:	Denominator for basic earnings per share:									Denominator for basic earnings per share:
Weighted average shares outstanding	Weighted average shares outstanding	32,605		32,321		32,596		32,300		Weighted average shares outstanding	32,790		32,605		32,791		32,596
Denominator for diluted earnings per share:	Denominator for diluted earnings per share:									Denominator for diluted earnings per share:
Weighted average shares outstanding	Weighted average shares outstanding	32,605		32,321		32,596		32,300		Weighted average shares outstanding	32,790		32,605		32,791		32,596
Common stock options and stock units	Common stock options and stock units	255		321		272		330		Common stock options and stock units	266		255		280		272
Weighted average shares and conversions	Weighted average shares and conversions	32,860		32,642		32,868		32,630		Weighted average shares and conversions	33,056		32,860		33,071		32,868

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~~awards. There were 52,000 and 77,000 ~~and 366,000~~anti-dilutive shares outstanding for the three months ended June 30, 2021 and 2020, ~~and 2019, respectively, and 47,000 and 312,000~~respectively. There were 0 anti-dilutive shares outstanding for the six months ended June 30, ~~2020~~2021 and ~~2019, respectively.~~47,000 for the six months ended June 30, 2020.

~~(14)~~(15) SEGMENT INFORMATION

The Company is organized into 34 reportable segments on the basis of the production ~~process and~~processes, products and services provided by each segment, identified as follows:

~~Table of Contents~~

(i)~~Renewable Energy and Conservation,~~Renewables, which primarily includes designing, engineering, manufacturing and installation of solar racking and electrical balance of ~~systems, extraction systems and greenhouse structures;~~systems;

(ii)Residential, ~~Products,~~ which primarily includes roof and foundation ventilation products, ~~rain dispersion products and roofing accessories,~~ centralized mail systems and electronic package ~~solutions;~~solutions, retractable awnings and gutter guards, and rain dispersion products, trims and flashings and other accessories;

(iii)~~Industrial~~Agtech, which provides growing and processing solutions including the designing, engineering, manufacturing and installation of greenhouses, and botanical extraction systems; and

(iv)Infrastructure, ~~Products,~~ which primarily includes ~~expanded and perforated metal, perimeter security systems,~~structural bearings, expansion joints and ~~structural bearings.~~pavement sealant for bridges, airport runways and roadways, elastomeric concrete, and bridge cable protection systems.

When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics. During the first quarter of 2021, the Company reassessed its reportable segments. As a result, the Company's former Renewable Energy and Conservation segment was divided into two reportable segments: Renewables and Agtech.

Table of Contents

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

Three Months Ended

June 30, Six Months Ended

June 30,
2020 2019 2020 2019
Net sales:
Renewable Energy and Conservation $ 98,259 $ 76,004 $ 194,756 $ 144,841
Residential Products 139,472 130,433 242,891 234,142
Industrial and Infrastructure Products 48,263 56,547 98,064 111,735
Less: Intersegment sales (180) (329) (458) (646)
Net Industrial and Infrastructure Products 48,083 56,218 97,606 111,089
Total consolidated net sales $ 285,814 $ 262,655 $ 535,253 $ 490,072
Income from operations:
Renewable Energy and Conservation $ 9,188 $ 9,649 $ 14,887 $ 11,281
Residential Products 27,964 20,778 41,689 32,868
Industrial and Infrastructure Products 6,644 4,069 10,633 8,198
Unallocated Corporate Expenses (9,205) (7,890) (17,428) (15,175)
Total consolidated income from operations $ 34,591 $ 26,606 $ 49,781 $ 37,172


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net sales:
Renewables	$	107,751	$	55,950	$	193,263	$	103,213
Residential	164,209		139,472		304,426		242,891
Agtech	53,696		42,309		100,435		91,543
Infrastructure	22,733		17,453		37,857		32,938
Total net sales	$	348,389	$	255,184	$	635,981	$	470,585

Income from operations:
Renewables	$	9,510	$	8,422	$	8,989	$	12,781
Residential	27,155		27,964		50,089		41,689
Agtech	977		766		1,906		2,106
Infrastructure	4,186		2,801		6,223		4,377
Unallocated Corporate Expenses	(10,419)		(9,205)		(22,983)		(17,428)
Total income from operations	$	31,409	$	30,748	$	44,224	$	43,525


	June 30, 2021		December 31, 2020
Total assets:
Renewables	$	424,884	$	402,796
Residential	443,903		407,132
Agtech	204,264		216,275
Infrastructure	86,748		80,796
Unallocated corporate assets	26,334		28,057
Assets of discontinued operations	0		77,438
	$	1,186,133	$	1,212,494

Table of Contents

The following tables illustrate segment revenue disaggregated by timing of transfer of control to the customer for the three and six months ended June 30 (in thousands):


		Three Months Ended June 30, 2020															Three Months Ended June 30, 2021
		Renewable Energy and Conservation		Residential Products		Industrial and Infrastructure Products		Total			Renewables		Residential		Agtech		Infrastructure		Total
Net sales:	Net sales:									Net sales:
Point in Time	Point in Time	$	12,416	$	138,288	$	37,179	$	187,883	Point in Time	$	6,049	$	162,978	$	7,388	$	11,637	$	188,052
Over Time	Over Time	85,843		1,184		10,904		97,931		Over Time	101,702		1,231		46,308		11,096		160,337
Total net sales	Total net sales	$	98,259	$	139,472	$	48,083	$	285,814	Total net sales	$	107,751	$	164,209	$	53,696	$	22,733	$	348,389

Three Months Ended June 30, 2019
Renewable Energy and Conservation Residential Products Industrial and Infrastructure Products Total
Net sales:
Point in Time $ 8,469 $ 129,566 $ 46,315 $ 184,350
Over Time 67,535 867 9,903 78,305
Total net sales $ 76,004 $ 130,433 $ 56,218 $ 262,655


	Three Months Ended June 30, 2020
	Renewables		Residential		Agtech		Infrastructure		Total
Net sales:
Point in Time	$	5,512	$	138,288	$	12,088	$	6,549	$	162,437
Over Time	50,438		1,184		30,221		10,904		92,747
Total net sales	$	55,950	$	139,472	$	42,309	$	17,453	$	255,184


	Six Months Ended June 30, 2021
	Renewables		Residential		Agtech		Infrastructure		Total
Net sales:
Point in Time	$	13,020	$	301,997	$	12,531	$	17,107	$	344,655
Over Time	180,243		2,429		87,904		20,750		291,326
Total net sales	$	193,263	$	304,426	$	100,435	$	37,857	$	635,981


	Six Months Ended June 30, 2020
	Renewables		Residential		Agtech		Infrastructure		Total
Net sales:
Point in Time	$	9,208	$	240,619	$	26,184	$	12,006	$	288,017
Over Time	94,005		2,272		65,359		20,932		182,568
Total net sales	$	103,213	$	242,891	$	91,543	$	32,938	$	470,585

2223

Table of Contents

Six Months Ended June 30, 2020
Renewable Energy and Conservation Residential Products Industrial and Infrastructure Products Total
Net sales:
Point in Time $ 27,004 $ 240,619 $ 76,674 $ 344,297
Over Time 167,752 2,272 20,932 190,956
Total net sales $ 194,756 $ 242,891 $ 97,606 $ 535,253

Six Months Ended June 30, 2019
Renewable Energy and Conservation Residential Products Industrial and Infrastructure Products Total
Net sales:
Point in Time $ 15,759 $ 232,458 $ 91,602 $ 339,819
Over Time 129,082 1,684 19,487 150,253
Total net sales $ 144,841 $ 234,142 $ 111,089 $ 490,072

~~Table of Contents~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain information set forth herein includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and, therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “anticipates,” "aspires," “expects,” “estimates,” “seeks,” “projects,” “intends,” “plans,” “may,” ~~“will”~~��will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, competition, strategies and the industries in which we operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in the “Risk Factors” disclosed in our Annual Report on Form 10-K along with Item 1A of this Form 10-Q. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, liquidity and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained herein. In addition, even if our results of operations, financial condition, liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this quarterly report, those results or developments may not be indicative of results or developments in subsequent periods. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statements that we make herein speak only as of the date of those statements, and we undertake no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

We use certain operating performance measures, specifically consolidated gross margin, operating margin by segment and consolidated operating margin, to manage our businesses, set operational goals, and establish performance targets for incentive compensation for our employees. We define consolidated gross margin as a percentage of total consolidated gross profit to total consolidated net sales. We define operating margin by segment as a percentage of total income from operations by segment to total net sales by segment and consolidated operating margin as a percentage of total consolidated income from operations to total consolidated net sales. We believe consolidated gross margin, operating margin and consolidated operating margin may be useful to investors in evaluating the profitability of our segments and Company on a consolidated basis.

Overview

Gibraltar Industries, Inc. (the "Company") is a leading manufacturer and provider of products and services for the renewable energy, ~~conservation,~~ residential, ~~industrial~~agtech, and infrastructure markets.

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

•~~Renewable Energy and Conservation;~~Renewables;

•~~Residential Products;~~Residential;

•Agtech; and

•~~Industrial and Infrastructure Products.~~Infrastructure.

The Company serves customers primarily in North America including renewable energy (solar) developers, home improvement retailers, wholesalers, distributors, institutional and commercial growers of food and plants, ~~home improvement retailers, wholesalers, distributors,~~ and contractors. As part of our continuing operations at June 30, ~~2020,~~2021, we operated 4436 facilities, comprised of 26 manufacturing facilities, one distribution center, and nine offices, which are located in 1916 states, Canada, China, and ~~Japan which includes 32 manufacturing facilities and five distribution centers.~~Japan. Our operational infrastructure provides the necessary scale to support ~~local,~~ regional and national customers in each of our markets.

Table of Contents

COVID-19 Update

While the Company continues to encounter challenges and uncertainty associated with COVID-19, the pandemic did not have a material adverse effect on our reported results ~~for the three and six months ended June 30, 2020.~~

~~Table of Contents~~

~~While most of our operations have been considered essential businesses and have remained open~~ during ~~the pandemic, the decision to keep our team intact despite some pandemic related softness in demand in certain businesses enabled us to deliver revenue and earnings growth during this period.~~2021. Our top ~~priorities continue~~priority continues to be focused on our organization - keeping ~~the~~our team and their families as safe as possible, maintaining the timely and effective functioning of our supply chain operating ~~well,~~ and providing a high level of responsiveness to customer needs. We ~~will~~ continue to ~~actively monitor the impact of the COVID-19 outbreak on operations for the remainder of 2020 and beyond,~~proactively execute our pandemic “playbook” in 2021 and make adjustments to our operating protocols as ~~necessary.~~we navigate forward. The extent to which our operations will be impacted by the outbreak, ~~will largely depend on future developments, which are highly uncertain~~including but not limited to the current impact of supply chain, transportation and ~~cannot be accurately predicted, including~~labor challenges, along with new ~~information which may emerge concerning the severity,~~requirements or ~~reemergence, of the outbreak and actions~~regulations mandated by government authorities, remains uncertain and challenging to ~~contain the outbreak or respond to its impact, among other things.~~predict, Refer to the Company's Outlook section in this management discussion and analysis for consideration relative to future periods.

~~Our Business~~

The end markets that our businesses serve are subject to changes in economic and competitive conditions that are influenced by various factors that could cause actual results to differ materially from current expectations. ~~Such factors include, but are not limited to:~~

•~~the impacts of the COVID-19 pandemic on the global economy, our customers, suppliers, employees, operations, business, liquidity and cash flows;~~

•~~general economic conditions and conditions in the particular markets in which we operate;~~

•~~changes in customer demand for residential construction, repair and remodeling, non-residential construction and infrastructure projects, botanical extraction equipment, and renewable energy sources;~~

•~~capital spending, competitive factors and pricing pressures;~~

•~~our ability to develop and launch new products in a cost-effective manner;~~

•our ability to realize synergies from newly acquired businesses, and our ability to derive expected benefits from restructuring, productivity initiatives, liquidity enhancing actions, and other cost reduction actions;

•~~changes in interest rates, exchange rates, commodity costs;~~

•~~changes in governmental policies and funding, tax policies and incentives, tariffs, trade policies;~~

•~~the need for protection of high value assets; and~~

•~~climate change.~~

We believe the key elements of our strategy discussed below will allow us to respond timely to the challenges presented by the COVID-19 pandemic and changes in the various factors that could cause our actual results to differ materially from current expectations.

Business Strategy

~~Gibraltar’s~~The Company's mission is to create compounding and sustainable value for our stockholders and other stakeholders with strong and relevantleadership positions in higher growth, ~~and~~ profitable end ~~markets.~~markets focused on addressing some of the world's most challenging opportunities. The foundation of the Company's ~~operational foundation employs a Three~~-~~Pillar~~ strategy ~~focusing~~is built on three core ~~tenets:~~pillars: Business ~~Systems,~~System, Portfolio Management, and ~~Organizational~~Organization Development.

1.Business ~~Systems - operational excellence~~System reflects the necessary systems, processes, and ~~product innovation~~management tools required to deliver consistent and continuous performance improvement, every day. Our Business System is ~~supported by an execution review~~a critical enabler to grow, scale, and deliver our plans. Our Business System is focused on deploying effective tools to drive growth, improve operating performance, and develop the organization. Our Business System challenges existing paradigms, drives day-to-day performance, forces prioritization of ~~the Company's monthly~~resources, challenges our business ~~performance, implementation of key investments, information technology operating~~models, and ~~digital systems performance, and~~brings focus to new product and services development and innovation.

2.Portfolio Management ~~- acquisitions and portfolio management~~ is focused on optimizing the Company’s business portfolio and ~~ensuring~~ensures our ~~human and~~ financial capital and human resources are ~~invested~~effectively and efficiently deployed to ~~provide~~deliver sustainable, profitable growth while ~~expanding~~increasing our relevance towith customers and shaping our markets. ~~The~~For a description of recent ~~acquisitions of Apeks, LLC ("Apeks")~~portfolio management activities, see the actions described below in ~~August 2019, Thermo Energy Systems Inc. ("Thermo") in January 2020, and Delta Separations LLC and Teaching Tech LLC (collectively “Delta Separations”) in February 2020 were~~ the ~~direct result of executing our Portfolio Management strategy.~~Recent Developments section.

3.~~Organizational~~Organization Development isdrives the ~~third pillar of our strategy. In order to execute Business Systems~~Company’s continuous focus on strengthening and ~~Portfolio Management,~~scaling the ~~Company must have a strong~~ organization to execute the Company’s plans and ~~the organization must continuously develop and improve.~~meet commitments. The Company aspires to make our ~~workplace~~place of work the "Best Place to Work", ~~by focusing~~where we focus on creating ~~the best development and learning~~an environment for our people ~~proactively operating businesses that mitigate environmental~~to have the best opportunity for success, continue to develop, grow, and ~~climate related impacts,~~learn. At core of this pillar is the Company’s development process focused on helping employees reach their potential, improve performance, develop career roadmaps, identify ongoing education requirements, and ~~engaging and supporting~~

~~Table of Contents~~

~~the communities in which we are located.~~respective succession plans. We believe doing so helps us attract and retain the best people ~~enhancing our ability to~~so we can execute our business plans.

~~In addition to our Three-Pillar strategy, the Company:~~

•~~implemented new management tools to complement our core 80/20 toolkit and drive improvements in our operating margins;~~

•increased the percentage of our sales that are direct to end customers, allowing us to have a more meaningful connection with our end customers, providing the opportunity to better understand the challenges our customers face, and developing solutions to these challenges; and

•~~continued to shift the focus of our portfolio to take advantage of rising tides in the renewable energy and conservation markets.~~

We believe the key elements of our strategy have, and will continue to, enable us to respond timely to changes in the end markets we serve, including evolving changes due to COVID-19 and the ~~outbreak of COVID-19.~~challenges noted above. We have and expect to continue to examine the need for restructuring of our operations, including consolidation of facilities, reducing overhead costs, curtailing investments in inventory, and managing our business to generate incremental cash. We believe our enhanced strategy has enabled us to better react to volatility in commodity and other input costs and fluctuations in customer demand, along with helping to improve margins. We have used the improved cash flows generated by these initiatives to pay down debt, improve our liquidity position, and invest in growth initiatives. Overall, we continue to strive to achieve stronger financial results, make more efficient use of capital, and deliver higher ~~shareholder~~stockholder returns.

Table of Contents

Recent Developments

~~On February 13,~~During the first quarter of 2021, the Company sold its Industrial business as a result of its Portfolio Management strategy to focus on participation in higher value and faster growing markets. The Industrial business, previously reported in the Company's Industrial and Infrastructure Products segment, was reported as discontinued operations as of December 31, 2020.

During 2020, the Company ~~acquired~~completed the assets of California-based Delta Separations, a privately held ethanol-based extraction systems manufacturer and training and laboratory design and operations consultative partner for $50 million in an all cash transaction. Delta Separations had revenue of approximately $46 million in 2019.following acquisitions:

On January 15, 2020, the Company acquired the assets of Canadian-based Thermo, a privately held provider of commercial greenhouse solutions in North America supporting the biologically grown organic food market, in an all cash transaction for approximately $7 million. The Company also expects to invest approximately $42 million into Thermo to provide an appropriate level of working capital. Thermo is expected to contribute annual revenue at a run rate of approximately $75 million.

Business Acquired

Date of Acquisition in 2020

Purchase price

( in millions)1

Description

Segment

TerraSmart LLC

December 31

223.7

Provider of screw-based, ground-mount solar racking technology, particularly used for solar projects installed on challenging terrain

Renewables

Sunfig Corporation

December 11

3.8

Provider of software solutions that optimize solar energy investments through upstream design, performance and financial modeling

Renewables

Architectural Mailboxes

October 15

26.9

Provider, designer, and developer of decorative residential mailboxes and related products

Residential

Delta Separations

February 13

47.1

Provider of ethanol-based extraction systems manufacturer and training and laboratory design and operations consultative partner

Agtech

Thermo Energy Systems

January 15

7.3

Provider of commercial greenhouse solutions in North America supporting the biologically grown organic food market

Agtech

~~On August 30, 2019,~~Note 1: Except for TerraSmart, which was financed through a combination of cash on hand and borrowings under the ~~Company acquired~~Company's revolving credit facility, all of the ~~outstanding membership interests of Apeks, a designer and manufacturer of botanical oil extraction systems utilizing subcritical and supercritical carbon dioxide. The acquisition was financed through~~above 2020 acquisitions were funded from cash on ~~hand~~hand. The purchase price for the acquisitions of ~~$12 million. Apeks had trailing twelve months of revenues as of June 30, 2019 of $17.7 million.~~TerraSmart, Sunfig, and Architectural Mailboxes represents the preliminary allocation to the assets acquired and liabilities assumed in each transaction. The ~~results of operations of Apeks have been included~~purchase price shown above for Delta and Thermo represents the final purchase price in ~~the Renewable Energy and Conservation segment of the Company's consolidated financial statements from the date of acquisition.~~

each transaction.

Table of Contents

Results of Operations

Three Months Ended June 30, ~~2020~~2021 Compared to the Three Months Ended June 30, ~~2019~~2020

The following table sets forth selected results of operations data ~~(in thousands)~~ and its percentage of net sales for the three months ended June ~~30:~~30 (in thousands):


		2020						2019							2021				2020
Net sales	Net sales	$	285,814	100.0	%	$	262,655	100.0	%	Net sales	$	348,389	100.0	%	$	255,184	100.0	%
Cost of sales	Cost of sales	213,556		74.7	%	199,097		75.8	%	Cost of sales	267,458		76.8	%	189,623		74.3	%
Gross profit	Gross profit	72,258		25.3	%	63,558		24.2	%	Gross profit	80,931		23.2	%	65,561		25.7	%
Selling, general, and administrative expense	Selling, general, and administrative expense	37,667		13.2	%	36,952		14.1	%	Selling, general, and administrative expense	49,522		14.2	%	34,813		13.7	%

Income from operations	Income from operations	34,591		12.1	%	26,606		10.1	%	Income from operations	31,409		9.0	%	30,748		12.0	%
Interest expense	Interest expense	214		0.1	%	219		0.0	%	Interest expense	245		0.0	%	222		0.0	%
Other income	Other income	(1,787)		(0.6)	%	(13)		0.0	%	Other income	(4,666)		(1.3)	%	(1,892)		(0.7)	%
Income before taxes	Income before taxes	36,164		12.6	%	26,400		10.1	%	Income before taxes	35,830		10.3	%	32,418		12.7	%
Provision for income taxes	Provision for income taxes	8,872		3.1	%	6,487		2.5	%	Provision for income taxes	9,457		2.7	%	7,961		3.1	%

Income from continuing operations										Income from continuing operations	26,373		7.6	%	24,457		9.6	%
(Loss) income from discontinued operations										(Loss) income from discontinued operations	(424)		(0.2)	%	2,835		1.1	%
Net income	Net income	$	27,292	9.5	%	$	19,913	7.6	%	Net income	$	25,949	7.4	%	$	27,292	10.7	%

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

Change due to
2020 2019 Total
Change Acquisitions Operations
Net sales:
Renewable Energy and Conservation $ 98,259 $ 76,004 $ 22,255 $ 19,068 $ 3,187
Residential Products 139,472 130,433 9,039 — 9,039
Industrial and Infrastructure Products 48,263 56,547 (8,284) — (8,284)
Less: Intersegment sales (180) (329) 149 — 149
Net Industrial and Infrastructure Products 48,083 56,218 (8,135) — (8,135)
Consolidated $ 285,814 $ 262,655 $ 23,159 $ 19,068 $ 4,091


							Change due to
	2021		2020		Total Change		Acquisitions		Operations
Net sales:
Renewables	$	107,751	$	55,950	$	51,801	$	49,825	$	1,976
Residential	164,209		139,472		24,737		7,705		17,032
Agtech	53,696		42,309		11,387		—		11,387
Infrastructure	22,733		17,453		5,280		—		5,280
Consolidated	$	348,389	$	255,184	$	93,205	$	57,530	$	35,675

Consolidated net sales increased by ~~$23.2~~$93.2 million, or ~~8.8%~~36.5%, to ~~$285.8~~$348.4 million for the three months ended June 30, ~~2020~~2021 compared to the three months ended June 30, ~~2019.~~2020. The ~~8.8%~~36.5% increase in revenue was ~~largely~~driven by the Renewables and Residential segments. Sales generated from our prior year acquisitions of TerraSmart and Architectural Mailboxes contributed 22.5%, or $57.5 million to the growth from the prior year quarter. The $35.7 million, or 14.0% increase in organic growth during the current year quarter was driven by volume increases across all of our segments, the result of ~~$19.1~~strong end market demand and participation gains, along with increases in pricing to customers. Consolidated backlog increased 54% to $403 million ~~of sales generated~~up from ~~our first quarter 2020 acquisitions~~$262 million at the end of ~~Thermo and Delta Separations and~~ the prior year acquisition of Apeks. The $4.1 million of organic growth in the quarter was primarily due to increased volume for both our Residential Products segment and our Renewable Energy and Conservation segment, which more than offset the volume decline in our Industrial and Infrastructure Products segment.quarter.

Net sales in our ~~Renewable Energy and Conservation~~Renewables segment increased ~~29.3%~~$51.8 million, or 92.5%, ~~or $22.3 million,~~ to ~~$98.3~~$107.8 million for the three months ended June 30, ~~2020~~2021 compared to ~~$76.0~~$56.0 million for the three months ended June 30, ~~2019.~~2020. Sales generated from ~~the current year acquisitions of Thermo and Delta Separations, along with~~ the prior year acquisition of ~~Apeks,~~TerraSmart of $49.8 million primarily contributed ~~$19.1 million~~ to the increase in the current year quarter. Organic ~~growth of $3.2 million or 4.2% was largely~~revenue increased 3.5% during the quarter driven by ~~healthy~~strong demand across our broad offering of fixed tilt, tracker, canopy and electrical balance-of-system product solutions serving the community and commercial and industrial market ~~dynamics and participation gains~~segments. This growth was partially offset by headwinds impacting the solar industry including steel inflation, supply chain challenges with solar panels, as well as, a decline in ~~our renewable energy~~safe-harbor related ~~businesses. These factors, along with the impact of recent acquisitions contributed~~demand due to the ~~15% improvement~~extension of the investment tax credit in ~~backlog~~late 2020. Backlog improved 120% year over year, or 54% on a proforma basis for this segment.

Net sales in our Residential Products segment increased 6.9%, or $9.0 million, to $139.5 million for the three months ended June 30, 2020 compared to $130.4 million for the three months ended June 30, 2019. The increase from the prior year quarter was largely due to strong repair and remodel activity by homeowners during the COVID-19 pandemic along with participation gains.

Table of Contents

Net sales in our ~~Industrial and Infrastructure Products~~Residential segment ~~decreased 14.4%~~increased 17.7%, or ~~$8.1~~$24.7 million, to ~~$48.1~~$164.2 million for the three months ended June 30, ~~2020~~2021 compared to ~~$56.2~~$139.5 million for the three months ended June 30, 2019. Lower demand for its core industrial products during the COVID-19 pandemic resulted in a decrease in revenue in the Industrial businesses. Revenue in the Infrastructure business was comparable to2020. The increase from the prior year quarter was largely due to continued strong activity across all residential businesses along with increased pricing that offset challenges from supply chain dynamics related to material, labor and ~~its backlog continued~~logistics availability. Sales from the prior year acquisition of Architectural Mailboxes also contributed $7.7 million to ~~grow during~~ the increase in the current year quarter.

~~Our consolidated gross margin~~Net sales in our Agtech segment increased 27.0%, or $11.4 million, to ~~25.3%~~$53.7 million for the three months ended June 30, ~~2020~~2021 compared to ~~24.2%~~$42.3 million for the three months ended June 30, ~~2019. This~~2020. The revenue increase was led by solid demand across the produce, commercial, car wash, retail and processing equipment segments, despite the shift in timing of projects from the second quarter into future quarters as schedules have been impacted by permit delays, re-scoping of projects and supply chain disruptions. While backlog experienced a slight and temporary decrease of 7% year over year, due to the impact of re-scoping of projects and supply chain disruptions impacting project scheduling, subsequent order activity is accelerating backlog momentum.

Net sales in our Infrastructure segment increased 29.7%, or $5.3 million, to $22.7 million for the three months ended June 30, 2021 compared to $17.5 million for the three months ended June 30, 2020. During the current year quarter, demand for fabricated and non-fabricated products from this segment increased as state project funding improved and the domestic economy strengthened. Backlog remained strong increasing 11% compared to the prior year quarter.

Our consolidated gross margin decreased to 23.2% for the three months ended June 30, 2021 compared to 25.7% for the three months ended June 30, 2020. The decrease was the result of ~~favorable~~lower gross margins generated from our recent acquisitions as we continue to integrate them operationally, along with timing and alignment of ~~material~~higher input costs to ~~customer selling prices,~~price increases, supply chain disruptions, and shifts in project timing in the Agtech and Renewables segments. Partially offsetting the decrease was improved operating execution in ~~all~~ our core businesses compared to the prior year quarter, which included incremental costs for design refinement and field improvements for our solar tracking solution and benefits from our 80/20 simplification initiatives. Partially offsetting the above improvements were lower gross margins generated from our recent acquisitions.quarter.

Selling, general, and administrative ("SG&A") expenses increased by ~~$0.7~~$14.7 million, or ~~1.9%~~42.3%, to ~~$37.7~~$49.5 million for the three months ended June 30, ~~2020~~2021 from ~~$37.0~~$34.8 million for the three months ended June 30, ~~2019.~~2020. The ~~$0.7~~$14.7 million increase was ~~largely the result~~primarily due to $6.3 million of ~~$3.5 million in~~ incremental SG&A expenses recorded quarter over quarter ~~for~~from our recent acquisitions ~~partially offset by a decrease in exit activity~~and transaction costs to complete those acquisitions, along with $1.3 million of higher performance-based compensation expenses as compared to the prior year ~~quarter along with a slowdown in spending due to COVID-19 pandemic-related restrictions on travel.~~quarter. Additionally, we have invested in the development of our organization and ~~the~~ safety of our team through actions including but not limited to the expansion of headcount in key positions and the launch of other improvement initiatives. Furthermore, healthcare costs increased year over year as prior year spend was down due to COVID-related closures of medical facilities, while the current year quarter spend was impacted by ~~reallocating SG&A spending.~~deferred treatments due to those closures. SG&A expenses as a percentage of net sales ~~decreased~~increased to ~~13.2%~~14.2% for the three months ended June 30, ~~2020~~2021 compared to ~~14.1%~~13.7% for the three months ended June 30, ~~2019.~~2020.

The following table sets forth the Company’s income from operations and income from operations as a percentage of net sales by reportable segment for the three months ended June 30, (in thousands):


		2020						2019				Total Change						2021				2020		Total Change
Income from operations:	Income from operations:												Income from operations:
Renewable Energy and Conservation		$	9,188	9.4	%	$	9,649	12.7	%	$	(461)
Residential Products		27,964		20.0	%	20,778		15.9	%	7,186
Industrial and Infrastructure Products		6,644		13.8	%	4,069		7.2	%	2,575
Renewables													Renewables	$	9,510	8.8	%	$	8,422	15.1	%	$	1,088
Residential													Residential	27,155		16.5	%	27,964		20.0	%	(809)
Agtech													Agtech	977		1.8	%	766		1.8	%	211
Infrastructure													Infrastructure	4,186		18.4	%	2,801		16.0	%	1,385
Unallocated Corporate Expenses	Unallocated Corporate Expenses	(9,205)		(3.2)	%	(7,890)		(3.0)	%	(1,315)			Unallocated Corporate Expenses	(10,419)		(3.0)	%	(9,205)		(3.6)	%	(1,214)
Consolidated income from operations	Consolidated income from operations	$	34,591	12.1	%	$	26,606	10.1	%	$	7,985		Consolidated income from operations	$	31,409	9.0	%	$	30,748	12.0	%	$	661

~~Our Renewable Energy and Conservation~~The Renewables segment generated an operating margin of ~~9.4%~~8.8% in the current year quarter compared to ~~12.7%~~15.1% in the prior year quarter. The decrease in operating margin was partly due to the expected lower margins generated by our recent acquisitions, the result of backlog amortization and integration costs, as we continue to integrate these businesses operationally. Additionally contributing to the decrease, was a one-time tariff credit received in the prior year quarter along with the impact of timing and alignment of price to input costs and project movement associated

Table of Contents

with supply chain challenges. Partially offsetting the lower margin is improvement in our core business resulting from 80/20 productivity initiatives. TerraSmart's operating margin nearly doubled over the first quarter and remains on track relative to our full year integration plans.

The Residential segment generated an operating margin of 16.5% in the current year quarter compared to 20.0% in the prior year quarter. The decrease in operating margin was the result of accelerated inflation, material and labor availability and the ~~expected lower margins generated by our recent acquisitions as we continue~~timing and alignment of price actions and input costs. While multiple price increases have been implemented, historically, operating margin alignment lags and recovers within a one to ~~integrate them operationally, along with COVID-19 pandemic-related weakness in cannabis growing solutions.~~two quarter period. Partially offsetting ~~this decrease was favorable product and services mix and strong~~the lower margin is continued solid execution ~~in our renewable energy businesses, as well as, the absence of incremental costs incurred during the prior year quarter for design refinement and field improvements for our solar tracking solution.~~

The Residential Products segment generated an operating margin of 20.0% during the three months ended June 30, 2020 compared to 15.9% during the three months ended June 30, 2019. The increase in operating margin was a result of an improved alignment of material costs to customer selling prices along with volume leverage and continued benefits from 80/20 simplification initiatives.

Our ~~Industrial and Infrastructure Products~~Agtech segment generated an operating margin of ~~13.8%~~1.8% during both the three months ended June 30, 2021 and 2020, respectively. Operating margin was flat due to the combined results of improvements in the legacy greenhouse structures, cannabis greenhouse structures, and processing equipment businesses along with lower restructuring and acquisition costs incurred as compared to the prior year quarter. These improvements were essentially offset by abovementioned movement of certain projects into the second half of the year, higher input costs, and supply chain and logistics challenges incurred in the current year quarter.

Our Infrastructure segment generated an operating margin of 18.4% during the three months ended June 30, ~~2020~~2021 compared to 7.2% during the three months ended June 30, 2019. The increase resulted from continued improvement in execution in our industrial business, a more favorable alignment of material costs to customer selling prices, product mix and ongoing benefits from the Company's 80/20 initiatives.

~~Unallocated corporate expenses increased $1.3 million from $7.9 million during the three months ended June 30, 2019 to $9.2 million~~16.0% during the three months ended June 30, 2020. The increase iswas driven by higher margin mix resulting from increased non-fabricated product volumes, along with strong execution on higher volumes and continued investment in 80/20 productivity initiatives.

Unallocated corporate expenses increased $1.2 million from $9.2 million during the three months ended June 30, 2020 to $10.4 million during the three months ended June 30, 2021. The increase in expense was primarily the result of ~~investments in~~$1.1 million of higher performance-based compensation expenses as compared to the ~~development of our organization and safety of our team.~~prior year quarter.

~~Table of Contents~~

Interest expense was $0.2 million for both the three months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively. Expense in the current year quarter was the net result of $32.3 million in the outstanding balance on the Company's revolving credit facility as of June 30, 2021, partially offset by interest income. No amounts were outstanding under our revolving credit facility during the three months ended June 30, ~~2020 and 2019.~~2020.

The Company recorded other income of ~~$1.8~~$4.7 million for the three months ended June 30, ~~2020. Other income~~2021, compared to $1.9 million recorded for the three months ended June 30, ~~2019 was negligible.~~2020. The $2.8 million increase ~~in other income~~ from the prior year quarter was ~~primarily~~largely the result of a $4.7 million gain recognized on the sale of securities received from the sellers of Thermo Energy Systems, Inc. ("Thermo") to settle indemnification claims, partially offset by a $1.9 million pre-tax gain in the prior year quarter on the sale of the Company's self-guided apartment tour application business within the Residential ~~Products~~ segment.

We recognized a provision for income taxes of ~~$8.9~~$9.5 million and ~~$6.5~~$8.0 million, with effective tax rates of ~~24.5%~~26.4% and 24.6% for the three months ended June 30, ~~2020,~~2021, and ~~2019,~~2020, respectively. The effective tax rates for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, were greater than the U.S. federal statutory rate of 21% due to state taxes and nondeductible permanent differences partially offset by favorable discrete ~~items.~~items due to an excess tax benefit on stock-based compensation.

Six Months Ended June 30, ~~2020~~2021 Compared to the Six Months Ended June 30, ~~2019~~2020

The following table sets forth selected results of operations data ~~(in thousands)~~ and its percentage of net sales for the six months ended June ~~30:~~30 (in thousands):

2020 2019
Net sales $ 535,253 100.0 % $ 490,072 100.0 %
Cost of sales 406,608 76.0 % 382,614 78.1 %
Gross profit 128,645 24.0 % 107,458 21.9 %
Selling, general, and administrative expense 78,864 14.7 % 70,286 14.3 %
Income from operations 49,781 9.3 % 37,172 7.6 %
Interest expense 167 0.0 % 2,280 0.5 %
Other (income) expense (1,595) (0.3) % 576 0.1 %
Income before taxes 51,209 9.6 % 34,316 7.0 %
Provision for income taxes 11,858 2.2 % 8,058 1.6 %
Net income $ 39,351 7.4 % $ 26,258 5.4 %

Table of Contents


	2021				2020
Net sales	$	635,981	100.0	%	$	470,585	100.0	%
Cost of sales	495,032		77.8	%	355,163		75.5	%
Gross profit	140,949		22.2	%	115,422		24.5	%
Selling, general, and administrative expense	96,725		15.2	%	71,897		15.3	%

Income from operations	44,224		7.0	%	43,525		9.2	%
Interest expense	689		0.1	%	266		0.0	%
Other income	(4,351)		(0.6)	%	(1,374)		(0.3)	%
Income before taxes	47,886		7.5	%	44,633		9.5	%
Provision for income taxes	11,017		1.7	%	10,274		2.2	%
Income from continuing operations	36,869		5.8	%	34,359		7.3	%
Income from discontinued operations	1,842		0.3	%	4,992		1.1	%
Net income	$	38,711	6.1	%	$	39,351	8.4	%

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

Change due to
2020 2019 Total
Change Acquisitions Operations
Net sales:
Renewable Energy and Conservation $ 194,756 $ 144,841 $ 49,915 $ 34,797 $ 15,118
Residential Products 242,891 234,142 8,749 — 8,749
Industrial and Infrastructure Products 98,064 111,735 (13,671) — (13,671)
Less: Intersegment sales (458) (646) 188 — 188
Net Industrial and Infrastructure Products 97,606 111,089 (13,483) — (13,483)
Consolidated $ 535,253 $ 490,072 $ 45,181 $ 34,797 $ 10,384


							Change due to
	2021		2020		Total Change		Acquisitions		Operations
Net sales:
Renewables	$	193,263	$	103,213	$	90,050	$	87,081	$	2,969
Residential	304,426		242,891		61,535		16,439		45,096
Agtech	100,435		91,543		8,892		4,600		4,292
Infrastructure	37,857		32,938		4,919		—		4,919
Consolidated	$	635,981	$	470,585	$	165,396	$	108,120	$	57,276

Consolidated net sales increased by ~~$45.2~~$165.4 million, or ~~9.2%~~35.1%, to ~~$535.3~~$636.0 million for the six months ended June 30, ~~2020~~2021 compared to the six months ended June 30, ~~2019.~~2020. The ~~9.2%~~35.1% increase in revenue was driven by ~~$34.8 million of sales~~the Renewables and Residential segments. Sales generated from our ~~current~~prior year acquisitions of TerraSmart, Thermo, ~~and~~ Delta Separations and Architectural Mailboxes contributed 23.0%, or $108.1 million to the growth from the prior year. The $57.3 million, or 12.1% increase, in organic growth during the current year was primarily the result of an increase in volume across all of our segments, the result of strong end market demand and participation gains, along with increases in pricing to customers. Consolidated backlog increased 54% to $403 million up from $262 million at the end of the prior year period.

Net sales in our Renewables segment increased $90.1 million, or 87.3%, to $193.3 million for the six months ended June 30, 2021 compared to $103.2 million for the six months ended June 30, 2020. Sales generated from the prior year acquisition of ~~Apeks. The $10.4~~TerraSmart of $87.1 million, ~~of organic growth~~primarily contributed to the increase in the current year. Organic revenue increased 2.9% during the current year driven by strong demand across our broad offering of fixed tilt, tracker, canopy and electrical balance-of-system product solutions serving the community and commercial and industrial market segments. This growth was partially offset by projects impacted by headwinds impacting the solar industry including steel inflation, supply chain challenges withsolar panels, as well as, a decline in safe-harbor related demand due to the extension of the investment tax credit in late 2020. Backlog improved 120% year over year, or 54% on a proforma basis for this segment.

Net sales in our Residential segment increased 25.3%, or $61.5 million, to $304.4 million for the six months ended June 30, 2021 compared to $242.9 million for the six months ended June 30, 2020. The increase from the prior year was ~~primarily~~largely due to continued strong demand across all residential businesses along with increased ~~volume for both our Renewable Energy~~pricing and ~~Conservation segment and Residential Products segment, which more than~~participation gains across that offset challenges from supply chain dynamics. Sales from the ~~volume decline~~prior year acquisition of Architectural Mailboxes also contributed $16.4 million to the increase in the current year.

Net sales in our ~~Industrial~~Agtech segment increased 9.7%, or $8.9 million, to $100.4 million for the six months ended June 30, 2021 compared to $91.5 million for the six months ended June 30, 2020. Sales generated from Thermo and ~~Infrastructure Products~~Delta Separations acquired in the first quarter of 2020, contributed $4.6 million, to the increase in this segment.

2930

Table of Contents

Organic revenue increased $4.3 million, largely driven by growth in the produce market along with slower but improving market conditions for commercial, car wash, retail and processing equipment segments. Partially offsetting the segment increase was the shift in timing of projects from the current period into the second half of the year as schedules have been impacted by permit delays, re-scoping of projects and supply chain disruptions. While backlog experienced a slight and temporary decrease of7% year over year, due to the impact of re-scoping of projects and supply chain disruptions impacting project scheduling, subsequent order activity is accelerating backlog momentum.

Net sales in our ~~Renewable Energy and Conservation~~Infrastructure segment increased ~~34.5%~~14.9%, or ~~$49.9~~$4.9 million, to ~~$194.8~~$37.9 million for the six months ended June 30, ~~2020~~2021 compared to ~~$144.8~~$32.9 million for the six months ended June 30, ~~2019. Sales generated by~~2020. During the current year, ~~acquisitions of Thermo~~demand for fabricated and ~~Delta Separations, along with~~non-fabricated products from this segment increased as the economy strengthened and state project funding improved. Backlog remained strong increasing 11% compared to the prior year.

Our consolidated gross margin decreased to 22.2% for the six months ended June 30, 2021 compared to 24.5% for the six months ended June 30, 2020. This decrease was the result of costs incurred during the current year ~~acquisition of Apeks, contributed $34.8 million, or 24.0%,~~related to the ~~increase in~~planned discontinuation of our organic solar tracker solution as we migrate towards the ~~current year. Organic growth of $15.1 million or 10.5% was largely driven~~solution offered by ~~healthy market dynamics and participation gains in~~ our ~~renewable energy related businesses. These factors, along with the impact of~~recently acquired TerraSmart business. Additionally, lower gross margins generated from our recent acquisitions contributed to the ~~15% improvement~~decline as we continue to integrate them operationally along with timing and alignment of higher input costs to price increases, supply chain disruptions, and shifts in ~~backlog year over year for this segment.~~project timing in the Agtech and Renewables segments. Partially offsetting the decrease was improved operating execution in all our core businesses compared to the prior year.

~~Net sales in our Residential Products segment~~Selling, general, and administrative ("SG&A") expenses increased ~~3.7%~~by $24.8 million, or 34.5%, ~~or $8.7 million,~~ to ~~$242.9~~$96.7 million for the six months ended June 30, ~~2020 compared to $234.1~~2021 from $71.9 million for the six months ended June 30, ~~2019.~~2020. The ~~increase from the prior year was largely due to strong repair and remodel activity by homeowners during the COVID-19 pandemic along with participation gains. .~~

Net sales in our Industrial and Infrastructure Products segment decreased 12.2%, or $13.5 million, to $97.6 million for the six months ended June 30, 2020 compared to $111.1 million for the six months ended June 30, 2019. Lower demand and lower steel prices impacting its core industrial products resulted in a decrease in revenue in the Industrial businesses, slightly offset by higher revenues in the Infrastructure business. Backlog for the Infrastructure business grew during the six month period ended June 30, 2020.

Our consolidated gross margin increased to 24.0% for the six months ended June 30, 2020 compared to 21.9% for the six months ended June 30, 2019. This increase was the result of favorable alignment of material costs to customer selling prices, improved operating execution in all of our core businesses compared to the prior year period, which included incremental costs for design refinement and field improvements for our solar tracking solution and benefits from our 80/20 simplification initiatives. Partially offsetting the above improvements were lower gross margins generated from our recent acquisitions.

~~SG&A expenses increased by $8.6 million, or 12.2%, to $78.9 million for the six months ended June 30, 2020 from $70.3 million for the six months ended June 30, 2019. The $8.6~~$24.8 million increase was ~~largely the result of $7.3~~primarily due to $12.9 million of incremental SG&A expenses recorded year over year ~~for~~from our recent acquisitions and ~~investments~~transaction costs to complete those acquisitions, along with $4.6 million of higher performance-based compensation expenses as compared to the prior year. Additionally, we have invested in the development of our organization and safety of our team through actions including but not limited to the expansion of headcount in key positions and the launch of additional developmental improvement initiatives. Furthermore, healthcare costs increased year over year as prior year spend was down due to COVID-related closures of medical facilities, while the current year spend was impacted by ~~reallocating SG&A spending, along with costs incurred~~deferred treatments due to ~~effect~~those closures. Despite the ~~acquisitions closed during the year.~~above increases, SG&A expenses as a percentage of net sales ~~increased~~modestly decreased to ~~14.7%~~15.2% for the six months ended June 30, ~~2020~~2021 compared to ~~14.3%~~15.3% for the six months ended June 30, ~~2019.~~2020.

The following table sets forth the Company’s income from operations and income from operations as a percentage of net sales by reportable segment for the six months ended June 30, (in thousands):


		2020						2019				Total Change						2021				2020		Total Change
Income from operations:	Income from operations:												Income from operations:
Renewable Energy and Conservation		$	14,887	7.6	%	$	11,281	7.8	%	$	3,606
Residential Products		41,689		17.2	%	32,868		14.0	%	8,821
Industrial and Infrastructure Products		10,633		10.9	%	8,198		7.4	%	2,435
Renewables													Renewables	$	8,989	4.7	%	$	12,781	12.4	%	$	(3,792)
Residential													Residential	50,089		16.5	%	41,689		17.2	%	8,400
Agtech													Agtech	1,906		1.9	%	2,106		2.3	%	(200)
Infrastructure													Infrastructure	6,223		16.4	%	4,377		13.3	%	1,846
Unallocated Corporate Expenses	Unallocated Corporate Expenses	(17,428)		(3.3)	%	(15,175)		(3.1)	%	(2,253)			Unallocated Corporate Expenses	(22,983)		(3.6)	%	(17,428)		(3.7)	%	(5,555)
Consolidated income from operations	Consolidated income from operations	$	49,781	9.3	%	$	37,172	7.6	%	$	12,609		Consolidated income from operations	$	44,224	7.0	%	$	43,525	9.2	%	$	699

~~Our Renewable Energy and Conservation~~

The Renewables segment generated an operating margin of ~~7.6% during~~4.7% in the ~~six months ended June 30, 2020~~current year compared to ~~7.8% during~~12.4% in the ~~six months ended June 30, 2019.~~prior year. The ~~slight~~ decrease in operating margin was the ~~net~~combined result of costs incurred during the current year related to the discontinuation of our organic solar tracker solution along with expected lower margins generated ~~from~~by our recent acquisitions, the result of backlog amortization and integration costs, as we continue to integrate them ~~operationally, largely offset by product and services mix and strong execution~~operationally. Additionally contributing to the decrease, was a one-time tariff credit received in ~~our renewable energy businesses, as well as, the absence of incremental costs incurred during~~ the prior year ~~for design refinement~~along with the impact of timing and ~~field improvements for~~alignment of price to input costs and project movement associated with supply chain challenges. Partially offsetting the lower margin is improvement in our ~~solar tracking solution.~~core business resulting from 80/20 productivity initiatives. TerraSmart's operating margin continues to improve in the first half of 2021 and remains on track relative to our full year integration plans.

~~Our~~The Residential ~~Products~~ segment generated an operating margin of ~~17.2% during~~16.5% in the ~~six months ended June 30, 2020~~current year compared to ~~14.0% during~~17.2% in the ~~six months ended June 30, 2019.~~prior year. The ~~increase~~decrease in operating margin was ~~largely~~ the result of ~~a more favorable alignment of~~accelerated inflation, material ~~costs to customer selling prices, followed by volume leverage~~ and ~~continued benefits from 80/20 simplification initiatives.~~labor availability

3031

Table of Contents

~~The Industrial~~ and ~~Infrastructure Products~~the timing and alignment of price actions and input costs. While multiple price increases have been implemented, historically, operating margin alignment lags and recovers within a one to two quarter period. Partially offsetting the lower margin is continued solid execution and continued benefits from 80/20 simplification initiatives.

Our Agtech segment generated an operating margin of ~~10.9%~~1.9% during the six months ended June 30, ~~2020~~2021 compared to ~~7.4%~~2.3% during the six months ended June 30, ~~2019.~~2020. The ~~increase~~decrease in operating margin was the combined result of ~~a more favorable alignment~~the abovementioned movement of ~~material~~certain projects into the second half of the year, higher input costs and supply chain and logistics challenges incurred in the current year along with integration delays incurred by Thermo during the earlier months of 2021. Partially offsetting the lower margin was improvements in the legacy greenhouse structures, cannabis greenhouse structures, and processing equipment businesses along with lower restructuring and acquisition costs incurred as compared to ~~customer selling prices,~~the prior year period.

Our Infrastructure segment generated an operating margin of 16.4% during the six months ended June 30, 2021 compared to 13.3% during the six months ended June 30, 2020. The increase was driven by higher margin mix resulting from increased non-fabricated product ~~mix~~volumes, along with strong execution on higher volumes and ~~ongoing benefit from the Company's~~higher revenue and continued investment in 80/20 productivity initiatives.

Unallocated corporate expenses increased ~~$2.3~~$5.6 million from ~~$15.2 million during the six months ended June 30, 2019 to~~ $17.4 million during the six months ended June 30, ~~2020. This~~2020 to $23.0 million during the six months ended June 30, 2021. The increase ~~from the prior year~~in expense was primarily the result of ~~investments in~~$4.2 million of higher performance-based compensation expenses as compared to the ~~development of our organization and safety of our team and costs incurred to effect the acquisitions closed during the~~prior year.

Interest expense ~~decreased~~increased by ~~$2.1~~$0.4 million to ~~$0.2~~$0.7 million for the six months ended June 30, ~~2020~~2021 compared to ~~$2.3~~$0.3 million for the six months ended June 30, ~~2019.~~2020. The ~~decrease~~increase in expense ~~resulted from~~was primarily the ~~redemption~~result of $32.3 million in the outstanding balance on the Company's ~~outstanding $210 million~~revolving credit facility as of ~~6.25% Senior Subordinated Notes during the first quarter of 2019.~~June 30, 2021. No amounts were outstanding under our revolving credit facility during the six months ended June 30, ~~2020 and 2019.~~2020.

The Company recorded other income of ~~$1.6~~$4.4 million for the six months ended June 30, ~~2020 and other expense of $0.6~~2021 compared to the $1.4 million recorded for the six months ended June 30, ~~2019.~~2020. The $3.0 million increase ~~in other income~~ from the prior year was ~~primarily~~largely the result of a $4.7 million gain recognized on the sale of securities received from the sellers of Thermo to settle indemnification claims, partially offset by the prior year period $1.9 million pre-tax gain on the sale of the Company's self-guided apartment tour application business within the Residential ~~Products~~ segment.

We recognized a provision for income taxes of ~~$11.9~~$11.0 million and ~~$8.1~~$10.3 million, with effective tax rates of ~~23.2% and 23.5%~~23.0% for both the six months ended June 30, ~~2020,~~2021, and ~~2019,~~2020, respectively. The effective tax rates for the six months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively, ~~exceeded~~were greater than the U.S. federal statutory rate of 21% due to state taxes and nondeductible permanent differences partially offset by favorable discrete ~~items.~~items due to an excess tax benefit on stock-based compensation.

Outlook

~~Although the~~The Company ~~delivered strong financial performance in the first half of 2020 with a growing backlog, the uncertain pace and strength of an economic recovery in~~expects that the current business environment, ~~continues to make providing reliable quantitative guidance difficult. Our momentum and current market trends support a solid outlook for~~which has been dynamic since the ~~remainder~~beginning of the year, ~~and gives us confidence that our~~to remain so throughout the second half of ~~the year will be stronger than the first half. However, the current status of the pandemic across the country~~2021, and understanding its potential impact on our markets makes it challenging to provide an outlook and guidance with reliable precision.Therefore, we will continue with suspension of quantitative guidance and will revisit this practice in three months. In the near term, we will continue to manage inflation, minimize supply chain disruptions, operate in a tight labor market, and continue with its COVID operating protocols. The Company is currently positioned well with solid end market demand, record order backlog, a very healthy balance sheet, and strong focus on ~~what is in front of us, and on what we can control. The resiliency inherent in our business model and our strong balance sheet position us to continue investing in our businesses~~daily execution, acquisition integrations, and strengthening ~~our position in the markets we serve.~~its organization and operating systems.

As such, the Company is maintaining its full year guidance of revenues based on its performance to date in 2021, which is consistent with its historical patterns, and outlook and initiatives for improving profitability across each business Consolidated revenue is expected to range between $1.30 billion and $1.35 billion, up from $1.03 billion in 2020 and GAAP EPS from continuing operations between $2.78 and $2.95, compared with $2.53 in 2020.

Liquidity and Capital Resources

Table of Contents

~~Liquidity and Capital Resources~~

Our principal capital requirements are to fund our operations' working capital and capital improvements and to provide capital for acquisitions. We will continue to invest in growth opportunities as appropriate while focusing on working capital efficiency and profit improvement opportunities to minimize the cash invested to operate our business. The following table sets forth our liquidity position as of:


(in thousands)	(in thousands)	June 30, 2020		December 31, 2019		(in thousands)	June 30, 2021		December 31, 2020
Cash and cash equivalents	Cash and cash equivalents	$	120,859	$	191,363	Cash and cash equivalents	$	16,963	$	32,054
Availability on revolving credit facility	Availability on revolving credit facility	394,100		393,991		Availability on revolving credit facility	360,179		309,175
		$	514,959	$	585,354		$	377,142	$	341,229

We believe that our cash on hand ~~lack of outstanding debt,~~ and available borrowing capacity provided under ~~the Senior~~our Sixth Amended and Restated Credit Agreement (the "Senior Credit Agreement") provide us with ample liquidity and capital resources to weather the economic impacts of the COVID-19 pandemic while continuing to invest in operational excellence, growth initiatives and the development of our organization. As a result of the economic uncertainty caused by the COVID-19 pandemic and federal, state and local governments response to it, we had paused on our acquisition activities yet remained in contact with the companies aligned with our strategic initiatives. While we have a higher level of confidence than we did at the beginning of the second quarter, we are cautiously evaluating and re-engaging in these acquisition processes as we continue to gain more visibility into the impact of the COVID-19 pandemic and our economic outlook. We continue to remain ~~highly~~ focused on managing our working capital, ~~which may include adjusting scheduled deliveries of inventory to match current demand levels,~~ closely monitoring customer credit and collection activities, and working to extend payment terms. We believe our liquidity, together with the cash expected to be generated from operations, should be sufficient to fund working capital needs and growth initiatives.

Our Senior Credit Agreement provides us with liquidity and capital resources for use by our U.S. operations. Historically, our foreign operations have generated cash flow from operations sufficient to invest in working capital and fund their capital improvements. As of June 30, ~~2020,~~2021, our foreign subsidiaries held ~~$34.1~~$14.9 million of cash in U.S. dollars, of which $13.3 million is available to be repatriated to the U.S., net of $0.7 million of withholding tax. Subsequent cash generated by our foreign subsidiaries will be reinvested into their operations.dollars.

~~We are taking advantage of the option~~During 2020, we opted to defer remittance of the employer portion of Social Security tax as provided in the Coronavirus, Aid, Relief and Economic Security Act ("CARES Act"), ~~and estimate that this deferral will allow~~which allowed us to retain ~~approximately $4~~$4.4 million in cash during ~~the remainder of~~ 2020 that would have otherwise been remitted to the federal government. The deferred tax payments will be repaid equally inon December 31, 2021 and 2022. The CARES Act, along with other foreign government initiatives, also provides for job retention programs, which have qualified some of our businesses to receive payroll tax credits or subsidies during 2020.

Over the long-term, we expect that future investments, including strategic business opportunities such as acquisitions, may be financed through a number of sources, including internally available cash, availability under our revolving credit facility, new debt financing, the issuance of equity securities, or any combination of the above. All potential acquisitions are evaluated based on our acquisition strategy, which includes the enhancement of our existing products, operations, or capabilities, expanding our access to new products, markets, and customers, with the goal of creating compounding and sustainable ~~shareholder~~stockholder value.

These expectations are forward-looking statements based upon currently available plans and information and may change if conditions in the credit and equity markets deteriorate or other circumstances change. To the extent that operating cash flows are lower than current or expected levels, or sources of financing are not available or not available at acceptable terms, our future liquidity may be adversely affected.

Cash Flows

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


	2021		2020
Cash provided by (used in):
Operating activities of continuing operations	$	12,777	$	(10,967)
Investing activities of continuing operations	30,515		(57,800)
Financing activities of continuing operations	(56,292)		(4,384)
Discontinued operations	(2,178)		2,659
Effect of foreign exchange rate changes	87		(12)
Net decrease in cash and cash equivalents	$	(15,091)	$	(70,504)

Operating Activities

Net cash provided by operating activities of continuing operations for the six months ended June 30, 2021 of $12.8 million consisted of income from continuing operations of $36.9 million and non-cash net charges totaling $22.4

Table of Contents

2020 2019
Cash (used in) provided by:
Operating activities of continuing operations $ (7,255) $ 6,486
Investing activities of continuing operations (58,853) (6,469)
Financing activities of continuing operations (4,384) (216,176)
Effect of foreign exchange rate changes (12) 1,035
Net decrease in cash and cash equivalents $ (70,504) $ (215,124)

~~Operating Activities~~

~~Net cash used in operating activities for the six months ended June 30, 2020 of $7.3 million consisted of net income of $39.3 million and non-cash net charges totaling $14.5~~ million, which include depreciation, amortization, stock compensation, exit activity costs and other non-cash charges, ~~more than~~ offset by a ~~$61.1~~$46.5 million investment in working capital and other net assets. The investment in net working capital and other net assets was largely driven by an ~~investment~~increase in inventory due to rising material costs and accounts receivable due to seasonal increases in demand, offset by an increase in accounts payable as the result of ~~$42.4 million~~seasonal increases in Thermo, one of our recent acquisitions, which was undercapitalized at purchase, along with the payments made during the first quarter for the Company's performance based incentive plans, customer rebates, and settlements of multi-employer pension plans terminated during 2019.manufacturing activity.

Net cash ~~provided by~~used in operating activities of ~~$6.5 million during~~continuing operations for the six months ended June 30, ~~2019~~2020 of $11.0 million consisted of net income of ~~$26.3~~$34.4 million and ~~$18.7~~non-cash net charges totaling $12.8 million, ~~of non-cash charges including~~which include depreciation, amortization, stock compensation, and other non-cash charges, more than offset by ana $58.1 million investment in working capital and other net ~~assets~~assets. The working capital investment was largely comprised of ~~$38.5 million.~~$42.4 million related to our acquisition of Thermo, which was undercapitalized at time of purchase in the first quarter of 2020.

Investing Activities

Net cash provided by investing activities of continuing operations for the six months ended June 30, 2021 of $30.5million was primarily due to $40.0 million in net proceeds received from the sale of the Company's Industrial business, offset by capital expenditures of $9.5 million.

Net cash used in investing activities of continuing operations for the six months ended June 30, 2020 of ~~$58.9~~$57.8 million primarily consisted of net cash paid for the acquisitions of Delta Separations of $47.1 million and Thermo of $7.3 million and capital expenditures of ~~$5.2~~$4.2 million, offset by ~~$0.7~~$0.8 million in proceeds from the sale of a business within the Residential Products ~~segment.~~

~~Net cash used in investing activities for~~segment and the ~~six months ended June 30, 2019~~sale of ~~$6.5 million consisted of capital expenditures of $6.2 million~~property and ~~a payment of $0.3 million related to the August 21, 2018 acquisition of SolarBOS, a provider of electrical balance of systems products.~~equipment.

Financing Activities

Net cash used in financing activities of continuing operations for the six months ended June 30, 2021 of $56.3 million was primarily the result of $83.6 million in payments on long-term debt and $4.8 million of purchases of treasury stock related to the net settlement of tax obligations for participants in the Company's equity incentive plans, offset by $31.2 million in proceeds from borrowing on our long-term credit facility and $0.9 million from the issuance of common stock from stock option exercises during the period.

Net cash used in financing activities of continuing operations for the six months ended June 30, 2020 of $4.4 million was primarily the result of purchases of treasury stock related to the net settlement of tax obligations for participants in the Company's equity incentive plans.

Net cash used in financing activities for the six months ended June 30, 2019 of $216.2 million consisted of the repayment of $212.0 million of 6.25% Senior Subordinated Notes on February 1, 2019 and other debt repayments, purchases of treasury stock of $3.2 million related to the net settlement of tax obligations for participants in the Company's equity incentive plans and the payment of debt issuance costs of $1.2 million, partially offset by proceeds received from the issuance of common stock of $0.2 million from stock options exercised.

See Note 8 to the Company's consolidated financial statements in Part I, Item 1, Financial Statements, of this Form 10-Q for further information on the Company’s Senior Credit Agreement.

Off Balance Sheet Financing Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

~~Table of Contents~~

Contractual Obligations

Our contractual obligations have not changed materially from the disclosures included in Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Critical Accounting Estimates

In the current year, there have been no changes to our critical accounting estimates from those disclosed in the consolidated financial statements and accompanying notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Recent Accounting Pronouncements

See Note 2 to the Company's consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information on recent accounting pronouncements.

Table of Contents

Item 3. Qualitative and Quantitative Disclosures About Market Risk

In the ordinary course of business, the Company is exposed to various market risk factors, including changes in general economic conditions, competition, foreign exchange rates, and raw materials pricing and availability. In addition, the Company is exposed to other financial market risks, primarily related to its foreign operations. Refer to Item 7A in the Company's Form 10-K for the year ended December 31, ~~2019~~2020 for more information about the Company's exposure to market risk.

Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures

The Company maintains a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). The Company’s Chief Executive Officer and the Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls as of the end of the period covered in this report. Based upon that evaluation and the definition of disclosure controls and procedures contained in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the end of such period the Company’s disclosure controls and procedures were effective.

(b)Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined by Rule 13a-15(f) or 15d-15(f)) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risks discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operation, cash flows, and future prospects. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may materially adversely impact our business, financial condition, or operating results. We believe there have been no material changes from the risk factors previously disclosed in our Form 10-K. During the six months ended June 30, 2020, there have been no material changes to the risk factors previously disclosed under Part I, Item 1A. “Risk Factors” in our 2019 Annual Report, other than the addition of the risk factor set forth below, which was included in Part II, Item 1A of our Form 10-Q for the quarter ended March 31, 2020.

~~The COVID-19 pandemic has significantly impacted worldwide economic conditions and could have a material adverse effect on our~~ ~~business, results of operations, financial condition, and cash flows.~~

~~Table of Contents~~

The COVID-19 pandemic began to impact our operations late in the first quarter of 2020 and is likely to continue to affect our business as government authorities impose mandatory closures, work-from-home orders and social distancing protocols, seek voluntary facility closures or impose other restrictions ~~to help control the spread of COVID-19. Although we cannot predict the duration or scope of the COVID-19 pandemic, current actions to control the spread of COVID-19~~ may adversely impact our business, including limiting our ability to implement our strategic growth initiatives, causing delays in our receipt of raw materials and other product components due to disruptions in our supply chain, limiting access to our distribution channels, reducing the availability of our workforce and subcontractors and increased threats of cyber attacks on our information technology infrastructure. The instability in global financial markets and unpredictable changes in our supply chain or our production capacity and customer demand resulting from the COVID-19 pandemic may pose material risk to our results of operations, financial condition, and cash flows. We are continuously monitoring the impact to our business and operations and taking action to mitigate the risks involved. However, prolonged disruption to the economy and the end markets we serve may have a material adverse impact ~~our~~ ~~business, results of operations, financial condition, and cash flows.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Table of Contents

Item 6. Exhibits

(a) Exhibits


			3.1			Certificate of Incorporation of Gibraltar Industries, Inc., as amended by: (i) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. filed October 27, 2004, (ii) Certificate of Change of Registered Agent and Registered Office of Gibraltar Industries, Inc. filed May 11, 2005, (iii) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. executed May 22, 2012, (iv) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. executed May 11, 2015, and (v) Certificate of Amendment of Certificate of Incorporation of Gibraltar Industries, Inc. executed May 5, 2021
			31.1			Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.
			31.2			Certification of Senior Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.
			32.1			Certification of the President and Chief Executive Officer pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.
			32.2			Certification of the Senior Vice President and Chief Financial Officer pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.
			101.INS			XBRL Instance Document *
			101.SCH			XBRL Taxonomy Extension Schema Document *
			101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document *
			101.LAB			XBRL Taxonomy Extension Label Linkbase Document *
			101.PRA			XBRL Taxonomy Extension Presentation Linkbase Document *
			101.DEF			XBRL Taxonomy Extension Definition Linkbase Document *


*			Submitted electronically with this Quarterly Report on Form 10-Q.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GIBRALTAR INDUSTRIES, INC.

(Registrant)


/s/ William T. Bosway
William T. Bosway
President and Chief Executive Officer


/s/ Timothy F. Murphy
Timothy F. Murphy
Senior Vice President and Chief Financial Officer

Date: August ~~5, 2020~~3, 2021


	Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Revenue recognized in the period from:
Amounts included in billings in excess of cost at the beginning of the period	$	42,115	$	11,357
Amounts included in unearned revenue at the beginning of the period	$	12,553	$	6,153


	Renewable Energy & Conservation		Residential Products		Industrial and Infrastructure Products		Total
Balance at December 31, 2019	$	77,602	$	198,075	$	54,028	$	329,705
Acquired goodwill	49,001		—		—		49,001
Adjustments to prior year acquisitions	579		—		—		579
Foreign currency translation	(281)		—		(264)		(545)
Balance at June 30, 2020	$	126,901	$	198,075	$	53,764	$	378,740


	Three Months Ended June 30, 2019
	Renewable Energy and Conservation		Residential Products		Industrial and Infrastructure Products		Total
Net sales:
Point in Time	$	8,469	$	129,566	$	46,315	$	184,350
Over Time	67,535		867		9,903		78,305
Total net sales	$	76,004	$	130,433	$	56,218	$	262,655


	Six Months Ended June 30, 2019
	Renewable Energy and Conservation		Residential Products		Industrial and Infrastructure Products		Total
Net sales:
Point in Time	$	15,759	$	232,458	$	91,602	$	339,819
Over Time	129,082		1,684		19,487		150,253
Total net sales	$	144,841	$	234,142	$	111,089	$	490,072


	2020		2019
Cash (used in) provided by:
Operating activities of continuing operations	$	(7,255)	$	6,486
Investing activities of continuing operations	(58,853)		(6,469)
Financing activities of continuing operations	(4,384)		(216,176)

Effect of foreign exchange rate changes	(12)		1,035
Net decrease in cash and cash equivalents	$	(70,504)	$	(215,124)

Beginning balance as of January 1, ~~2020~~2021

~~6,330~~3,529

~~Adoption of ASU 2016-13, cumulative-effect adjustment to retained earnings~~

Bad debt expense, net of recoveries

~~687~~1,297

~~Write-off charged~~Accounts written off against ~~the~~ allowance and other adjustments

~~(1,134)~~468

Ending balance as of June 30, ~~2020~~2021

~~6,270~~5,294