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 ~~September~~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 ~~October 26, 2020,~~August 2, 2021, the number of common shares outstanding was: ~~32,522,138.~~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 ~~Nine~~Six Months Ended ~~September~~June 30 ~~30,~~, 2021 and 2020 ~~and 2019~~ (unaudited)	3
	Consolidated Statements of Comprehensive Income for the Three and Six ~~Nine~~Months Ended ~~September~~June 30 ~~30,~~, 2021 and 2020 ~~and 2019~~ (unaudited)	4
	Consolidated Balance Sheets as of ~~September~~June 30 ~~30, 2020~~, 2021 (unaudited) and December 31, ~~2019~~2020	5
	Consolidated Statements of Cash Flows for the ~~Nine~~S ix Months Ended ~~September~~June 30 ~~30,~~, 2021 and 2020 ~~and 2019~~ (unaudited)	6
	Consolidated Statement of ~~Shareholders’~~Stockholders’ Equity for the ~~Nine~~Six Months Ended SeJune 30 ~~ptember~~ ~~30,~~, 2021 and 2020 ~~and 2019~~ (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3335
Item 4.	Controls and Procedures	3435
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	3435
Item 1A.	Risk Factors	3435
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3435
Item 3.	Defaults Upon Senior Securities	3435
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
	SIGNATURES	37

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net Sales	Net Sales	$	329,665	$	299,236	$	864,918	$	789,308	Net Sales	$	348,389	$	255,184	$	635,981	$	470,585
Cost of sales	Cost of sales	244,222		222,658		650,830		605,272		Cost of sales	267,458		189,623		495,032		355,163
Gross profit	Gross profit	85,443		76,578		214,088		184,036		Gross profit	80,931		65,561		140,949		115,422
Selling, general, and administrative expense	Selling, general, and administrative expense	41,584		45,158		120,448		115,444		Selling, general, and administrative expense	49,522		34,813		96,725		71,897

Income from operations	Income from operations	43,859		31,420		93,640		68,592		Income from operations	31,409		30,748		44,224		43,525
Interest expense	Interest expense	218		17		385		2,297		Interest expense	245		222		689		266
Other expense (income)		53		84		(1,542)		660
Other income										Other income	(4,666)		(1,892)		(4,351)		(1,374)
Income before taxes	Income before taxes	43,588		31,319		94,797		65,635		Income before taxes	35,830		32,418		47,886		44,633
Provision for income taxes	Provision for income taxes	9,828		6,843		21,686		14,901		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	$	33,760	$	24,476	$	73,111	$	50,734	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		$	1.03	$	0.75	$	2.24	$	1.57
Diluted		$	1.02	$	0.75	$	2.22	$	1.55
Weighted average shares outstanding:
Basic		32,635		32,470		32,606		32,357
Diluted		32,969		32,770		32,902		32,677

See accompanying notes to consolidated financial statements.

Table of Contents

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net income	Net income	$	33,760	$	24,476	$	73,111	$	50,734	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	2,200		(664)		(883)		1,176		Foreign currency translation adjustment	761		2,815		3,959		(3,083)

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

Other comprehensive income (loss)	Other comprehensive income (loss)	2,218		(652)		(829)		1,212		Other comprehensive income (loss)	788		2,833		4,013		(3,047)
Total comprehensive income	Total comprehensive income	$	35,978	$	23,824	$	72,282	$	51,946	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)


		September 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	$	179,816	$	191,363	Cash and cash equivalents	$	16,963	$	32,054
Accounts receivable, net of allowance of $3,319 and $6,330		203,488		147,515
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	77,943		78,476		Inventories, net	133,625		98,307
Prepaid expenses and other current assets	Prepaid expenses and other current assets	20,306		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	481,553		437,102		Total current assets	399,544		425,460
Property, plant, and equipment, net	Property, plant, and equipment, net	94,983		95,409		Property, plant, and equipment, net	95,837		89,562
Operating lease assets	Operating lease assets	32,359		27,662		Operating lease assets	21,651		25,229
Goodwill	Goodwill	382,427		329,705		Goodwill	508,857		514,279
Acquired intangibles	Acquired intangibles	108,821		92,592		Acquired intangibles	159,734		156,365
Other assets	Other assets	1,703		1,980		Other assets	510		1,599
		$	1,101,846	$	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	$	131,746	$	83,136	Accounts payable	$	168,917	$	134,738
Accrued expenses	Accrued expenses	106,480		98,463		Accrued expenses	68,677		83,505
Billings in excess of cost	Billings in excess of cost	31,267		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	269,493		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	40,942		40,334		Deferred income taxes	37,555		39,057
Non-current operating lease liabilities	Non-current operating lease liabilities	23,314		19,669		Non-current operating lease liabilities	14,391		17,730
Other non-current liabilities	Other non-current liabilities	22,022		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	0		0		Preferred stock, $0.01 par value; authorized 10,000 shares; NaN outstanding	0		0
Common stock, $0.01 par value; authorized 50,000 shares; 33,519 shares and 33,192 shares issued and outstanding in 2020 and 2019		335		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	302,107		295,582		Additional paid-in capital	310,728		304,870
Retained earnings	Retained earnings	478,488		405,668		Retained earnings	508,654		469,943
Accumulated other comprehensive loss		(6,220)		(5,391)
Cost of 1,024 and 906 common shares held in treasury in 2020 and 2019		(28,635)		(22,227)
Total shareholders’ equity		746,075		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
		$	1,101,846	$	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)


		Nine Months Ended September 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	$	73,111	$	50,734	Net income	$	38,711	$	39,351

Adjustments to reconcile net income to net cash 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	17,325		14,923		Depreciation and amortization	16,014		9,942
Stock compensation expense	Stock compensation expense	6,151		10,087		Stock compensation expense	4,935		4,171

Gain on sale of business	Gain on sale of business	(1,881)		0		Gain on sale of business	0		(1,881)
Exit activity costs, non-cash	Exit activity costs, non-cash	505		479		Exit activity costs, non-cash	1,193		346

Provision for (benefit of) deferred income taxes		668		(429)
Benefit of deferred income taxes						Benefit of deferred income taxes	(36)		(195)

Other, net	Other, net	1,402		3,267		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	(40,176)		(56,645)		Accounts receivable	(29,150)		(26,289)
Inventories	Inventories	6,102		18,617		Inventories	(42,686)		3,289
Other current assets and other assets	Other current assets and other assets	6,095		(6,949)		Other current assets and other assets	(611)		1,893
Accounts payable	Accounts payable	13,408		22,770		Accounts payable	35,174		(989)
Accrued expenses and other non-current liabilities	Accrued expenses and other non-current liabilities	(26,516)		15,640		Accrued expenses and other non-current liabilities	(9,274)		(36,042)

Net cash provided by operating activities		56,194		72,494
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)		(8,665)		Acquisitions, net of cash acquired	(2)		(54,385)
Net proceeds from sale of property and equipment		568		87
Purchases of property, plant, and equipment		(9,335)		(7,703)
Net proceeds from sale of business	Net proceeds from sale of business	2,000		0		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		(61,152)		(16,281)
Cash Flows from Financing Activities

Long-term debt payments		0		(212,000)
Payment of debt issuance costs		0		(1,235)

Purchase of treasury stock at market prices	Purchase of treasury stock at market prices	(6,408)		(3,495)		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	377		400		Net proceeds from issuance of common stock	924		78

Net cash used in financing activities	Net cash used in financing activities	(6,031)		(216,330)		Net cash used in financing activities	(56,292)		(4,384)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(558)		729		Effect of exchange rate changes on cash	87		(12)
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	(11,547)		(159,388)		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	$	179,816	$	137,618	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

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

Net settlement of restricted stock units		193	2		(2)				—			—		80		(4,184)			(4,184)

Balance at March 31, 2020		33,388	$	334	$	297,269			$	417,436		$	(11,271)	986		$	(26,411)		$	677,357
Net income		—	—		—				27,292			—		—		—			27,292
Foreign currency translation adjustment		—	—		—				—			2,815		—		—			2,815
Minimum pension and post retirement benefit plan adjustments, net of taxes of $6		—	—		—				—			18		—		—			18
Stock compensation expense		—	—		2,506				—			—		—		—			2,506
Stock options exercised		6	—		54				—			—		—		—			54
Awards of common shares		4	—		—				—			—		—		—			—
Net settlement of restricted stock units		15	0		0				—			—		7		(278)			(278)

Balance at June 30, 2020		33,413	$	334	$	299,829			$	444,728		$	(8,438)	993		$	(26,689)		$	709,764
Net income		—	—		—				33,760			—		—		—			33,760
Foreign currency translation adjustment		—	—		—				—			2,200		—		—			2,200
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	—	—		1,980				—			—		—		—			1,980			Stock compensation expense	—			—		2,368				—			—				—		—			2,368

Stock options exercised	Stock options exercised	31	—		299				—			—		—		—			299			Stock options exercised	25			—		910				—			—				—		—			910

Net settlement of restricted stock units	Net settlement of restricted stock units	75	1		(1)				—			—		31		(1,946)			(1,946)			Net settlement of restricted stock units	118			1		(1)				—			—				54		(4,662)			(4,662)

Balance at September 30, 2020		33,519	$	335	$	302,107			$	478,488		$	(6,220)	1,024		$	(28,635)		$	746,075
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	—			—		—				25,949			—				—		—			25,949
Foreign currency translation adjustment																						Foreign currency translation adjustment	—			—		—				—			761				—		—			761
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	—			—		2,567				—			—				—		—			2,567
Stock options exercised																						Stock options exercised	1			—		14				—			—				—		—			14
Awards of common shares																						Awards of common shares	3			—		—				—			—				—		—			—
Net settlement of restricted stock units																						Net settlement of restricted stock units	3			0		0				—			—				1		(118)			(118)
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
Net income		—	—		—				24,476			—		—		—			24,476
Foreign currency translation adjustment		—	—		—				—			(664)		—		—			(664)
Minimum pension and post retirement benefit plan adjustments, net of taxes of $4		—	—		—				—			12		—		—			12
Stock compensation expense		—	—		3,996				—			—		—		—			3,996
Stock options exercised		16	—		192				—			—		—		—			192

Net settlement of restricted stock units		28	1		(1)				—			—		8		(346)			(346)

Balance at September 30, 2019		33,145	$	332	$	293,009			$	391,311		$	(6,022)	888		$	(21,417)		$	657,213
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.

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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.

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(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

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(3) ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable consists of the following (in thousands):


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Trade accounts receivable	Trade accounts receivable	$	171,375	$	133,238	Trade accounts receivable	$	182,015	$	174,604
Costs in excess of billings	Costs in excess of billings	35,432		20,607		Costs in excess of billings	48,594		26,915
Total accounts receivables	Total accounts receivables	206,807		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	(3,319)		(6,330)		Less allowance for doubtful accounts and contract assets	(5,294)		(3,529)
Accounts receivable		$	203,488	$	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 September 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.


Beginning balance as of January 1, ~~2020~~2021	$	~~6,330~~3,529
~~Adoption of ASU 2016-13, cumulative-effect adjustment to retained earnings~~	~~387~~
Bad debt expense, net of recoveries	~~780~~1,297
~~Write-off charged~~Accounts written off against ~~the~~ allowance and other adjustments	~~(4,178)~~468
Ending balance as of ~~September~~June 30, ~~2020~~2021	$	~~3,319~~5,294

(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.

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As of ~~September~~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 ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019, respectively,~~

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2020 was $4.7 million and ~~revenue~~$21.3 million, respectively. Revenue recognized during the ~~nine~~three months ended ~~September~~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):~~

September 30, 2020 December 31, 2019
Costs in excess of billings $ 35,432 $ 20,607
Billings in excess of cost (31,267) (47,598)
Unearned revenue (18,951) (17,311)

Nine Months Ended
September 30, 2020 Nine Months Ended
September 30, 2019
Revenue recognized in the period from:
Amounts included in billings in excess of cost
at the beginning of the period $ 44,723 $ 14,137
Amounts included in unearned revenue
at the beginning of the period $ 13,614 $ 11,052
respective periods was $49.2 million and $53.3 million, respectively.

(5) INVENTORIES

Inventories consist of the following (in thousands):


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Raw material	Raw material	$	47,275	$	48,799	Raw material	$	99,074	$	66,018
Work-in-process	Work-in-process	6,195		5,988		Work-in-process	6,197		5,382
Finished goods	Finished goods	29,264		28,021		Finished goods	33,623		31,205
Gross inventory	Gross inventory	$	82,734	$	82,808	Gross inventory	$	138,894	$	102,605
Less reserves	Less reserves	(4,791)		(4,332)		Less reserves	(5,269)		(4,298)
Total inventories		$	77,943	$	78,476
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.

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~~(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, "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 $32.2 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):~~



~~Working capital~~	$	~~3,918~~
~~Property, plant and equipment~~	~~219~~
~~Acquired intangible assets~~	~~13,900~~
~~Other assets~~	~~951~~
~~Other liabilities~~	~~(4,027)~~
~~Goodwill~~	~~32,151~~
~~Fair value of purchase consideration~~	$	~~47,112~~

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


	~~Fair Value~~		~~Weighted-Average Amortization Period~~
~~Trademarks~~	$	~~6,900~~	~~Indefinite~~
~~Technology~~	~~3,200~~		~~10 years~~
~~Customer relationships~~	~~3,200~~		~~11 years~~
~~Non-compete agreements~~	~~300~~		~~5 years~~
~~Backlog~~	~~300~~		~~0.25 years~~
~~Total~~	$	~~13,900~~

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.~~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 ~~Renewable Energy and Conservation~~Agtech 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 ~~$19.5~~$18.7 million was recorded, all of which is deductible for tax purposes.

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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 ~~commercial greenhouse~~

~~Table of Contents~~

respective markets. The preliminary allocation of the purchase price is subject to adjustments during the measurement period 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~~	~~(23,450)~~
~~Property, plant and equipment~~	~~1,087~~
~~Acquired intangible assets~~	~~10,102~~

~~Other assets~~	~~1,363~~
~~Other liabilities~~	~~(1,363)~~
~~Goodwill~~	~~19,459~~
~~Fair value of purchase consideration~~	$	~~7,333~~

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	$	~~1,122~~8,200	Indefinite
Trademarks	1,177		3 years
Technology	~~3,218~~8,175		107 - 15 years
Customer relationships	~~4,939~~18,780		125 - 13 years
Non-compete agreements	~~224~~1,036		5 years
Backlog	~~599~~928		~~0.75 years~~Less than 1 year
Total	$	~~10,102~~

~~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~~

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~~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~~38,296

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.~~

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

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Selling, general and administrative costs $ 16 $ 470 $ 1,564 $ 474
Cost of sales 0 134 634 134
Total acquisition-related costs $ 16 $ 604 $ 2,198 $ 608


	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

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(7) GOODWILL AND RELATED INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the ~~nine~~six months ended ~~September~~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 51,629 0 0 51,629
Adjustments to prior year acquisitions 579 0 0 579
Foreign currency translation 664 0 (150) 514
Balance at September 30, 2020 $ 130,474 $ 198,075 $ 53,878 $ 382,427


	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 10 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):


		September 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	$	52,170	$	0	$	45,770	$	0	Trademarks	$	61,100	$	0	$	56,570	$	0
Finite-lived intangible assets:	Finite-lived intangible assets:									Finite-lived intangible assets:
Trademarks	Trademarks	7,235		4,557		6,139		4,105		Trademarks	5,550		3,747		5,818		3,385
Unpatented technology	Unpatented technology	35,962		17,970		29,544		15,807		Unpatented technology	38,386		19,194		38,752		17,765
Customer relationships	Customer relationships	79,702		44,723		71,195		40,294		Customer relationships	109,329		35,658		98,500		31,580
Non-compete agreements	Non-compete agreements	2,174		1,689		1,649		1,499		Non-compete agreements	2,691		1,859		4,885		1,747
Backlog	Backlog	899		382		—		0		Backlog	7,216		4,080		7,228		911
		125,972		69,321		108,527		61,705			163,172		64,538		155,183		55,388
Total acquired intangible assets	Total acquired intangible assets	$	178,142	$	69,321	$	154,297	$	61,705	Total acquired intangible assets	$	224,272	$	64,538	$	211,753	$	55,388

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

Three Months Ended

September 30, Nine Months Ended

September 30,
2020 2019 2020 2019
Amortization expense $ 3,041 $ 1,840 $ 7,531 $ 5,434

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	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 $ 2,247 $ 8,772 $ 8,294 $ 7,664 $ 7,132 $ 6,961


	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 September 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 ~~September~~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 ~~September~~June 30, ~~2020.~~2021. These letters of credit reduce the amount otherwise available under the revolving credit facility. ~~As of September 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 ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~2020, respectively.

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(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 ~~nine~~six months ended ~~September~~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)
Minimum pension and post retirement health care plan adjustments — 25 25 7 18
Foreign currency translation adjustment 2,200 — 2,200 — 2,200
Balance at September 30, 2020 $ (5,056) $ (1,865) $ (6,921) $ (701) $ (6,220)


	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

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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)
Minimum pension and post retirement health care plan adjustments — 16 16 4 12
Foreign currency translation adjustment (664) — (664) — (664)
Balance at September 30, 2019 $ (4,763) $ (1,991) $ (6,754) $ (732) $ (6,022)


	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.

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Equity Based Awards - Settled in Stock

The following table sets forth the number of equity-based awards granted during the ~~nine~~six months ended ~~September~~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	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)	129,513	$	53.30	183,908	$	40.49	Performance stock units (1)	62,778	$	87.84	127,397	$	53.16
Restricted stock units	Restricted stock units	74,247	$	56.24	144,172	$	39.43	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

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condition are based on either the Company’s return on invested capital (“ROIC”) over a one-year performance period or other criteria such as revenue, gross profit and operating profit thresholds over a two or three-year performance period. The Company's PSUs with a market condition are based on the ranking of the 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~~2020 include ~~168,688~~74,676 PSUs tothat will be converted to shares 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 and 38,488 PSUs with a performance end date of December 31, 2021.~~2020.

Equity Based Awards - Settled in Cash

The Company's equity-based liability is comprised of awards under a management stock purchase plan. As of ~~September~~June 30, ~~2020,~~2021, the Company's total share-based liabilities recorded on the consolidated balance sheet were ~~$30.2~~$21.6 million, of which ~~$13.5~~$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 the 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 ~~nine~~six months ended ~~September~~June 30,:


		2020		2019			2021		2020
Restricted stock units credited	Restricted stock units credited	54,974		51,381		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

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(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.

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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 ~~nine~~six months ended ~~September~~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. In conjunction with these initiatives, the Company closed 2 facilities during the six months ended June 30, 2021, and 1 facility ~~and, separately, sold a facility closed in 2017~~ during the ~~nine~~six months ended ~~September~~June 30, 2020. ~~During the nine months ended September 30, 2019, the Company closed 1 facility as a result of these initiatives.~~

The following tables set forth the asset impairment charges and exit activity costs incurred by segment during the three and ~~nine~~six months ended ~~September~~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

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Three months ended September 30,
2020 2019
Inventory write-downs &/or asset impairment charges Exit activity costs Total Inventory write-downs &/or asset impairment (recoveries) charges, net Exit activity costs Total
Renewable Energy and Conservation $ 0 $ 172 $ 172 $ (9) $ 46 $ 37
Residential Products 21 165 186 478 2,937 3,415
Industrial and Infrastructure Products 138 114 252 10 275 285
Corporate 0 17 17 0 246 246
Total exit activity costs & asset impairments $ 159 $ 468 $ 627 $ 479 $ 3,504 $ 3,983

Nine months ended September 30,
2020 2019
Inventory write-downs &/or asset impairment charges Exit activity costs Total Inventory write-downs &/or asset impairment (recoveries) charges, net Exit activity costs Total
Renewable Energy and Conservation $ 72 $ 506 $ 578 $ (9) $ 45 $ 36
Residential Products 21 649 670 478 3,307 3,785
Industrial and Infrastructure Products 412 152 564 10 1,588 1,598
Corporate 0 116 116 0 919 919
Total exit activity costs & asset impairments $ 505 $ 1,423 $ 1,928 $ 479 $ 5,859 $ 6,338

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


		Three Months Ended September 30,				Nine Months Ended September 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	$	325	$	683	$	1,198	$	968	Cost of sales	$	718	$	472	$	5,765	$	541
Selling, general, and administrative expense	Selling, general, and administrative expense	302		3,300		730		5,370		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	$	627	$	3,983	$	1,928	$	6,338	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	1,423		5,859		Exit activity costs recognized	6,208		917
Cash payments	Cash payments	(6,179)		(3,032)		Cash payments	(4,646)		(2,171)
Balance at September 30		$	693	$	4,750
Balance at June 30						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

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~~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.~~

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

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


		Three Months Ended September 30,						Nine Months Ended September 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	$	9,828		$	6,843		$	21,686		$	14,901		Provision for income taxes	$	9,457		$	7,961		$	11,017		$	10,274
Effective tax rate	Effective tax rate	22.5		%	21.8		%	22.9		%	22.7		%	Effective tax rate	26.4		%	24.6		%	23.0		%	23.0		%

The effective tax rate for the three and ~~nine~~six months ended ~~September~~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.~~

~~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~~items due to an excess 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 of the 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.~~The Company determined that the impact of GILTI is not material to the financial statements.~~benefit on stock-based compensation.

~~(13)~~

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(14) EARNINGS PER SHARE

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


		Three Months Ended September 30,				Nine Months Ended September 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		$	33,760	$	24,476	$	73,111	$	50,734
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	32,635		32,470		32,606		32,357		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	32,635		32,470		32,606		32,357		Weighted average shares outstanding	32,790		32,605		32,791		32,596
Common stock options and stock units	Common stock options and stock units	334		300		296		320		Common stock options and stock units	266		255		280		272
Weighted average shares and conversions	Weighted average shares and conversions	32,969		32,770		32,902		32,677		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 9,000~~awards. There were 52,000 and ~~346,000~~77,000 anti-dilutive shares outstanding for the three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019, respectively, and 24,000 and 324,000~~respectively. There were 0 anti-dilutive shares outstanding for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019, respectively.~~47,000 for the six months ended June 30, 2020.

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

~~Table of Contents~~

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

(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.

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

Three Months Ended

September 30, Nine Months Ended

September 30,
2020 2019 2020 2019
Net sales:
Renewable Energy and Conservation $ 128,258 $ 116,771 $ 323,014 $ 261,612
Residential Products 151,718 126,275 394,609 360,417
Industrial and Infrastructure Products 49,767 56,361 147,831 168,096
Less: Intersegment sales (78) (171) (536) (817)
Net Industrial and Infrastructure Products 49,689 56,190 147,295 167,279
Total consolidated net sales $ 329,665 $ 299,236 $ 864,918 $ 789,308
Income from operations:
Renewable Energy and Conservation $ 14,195 $ 19,633 $ 29,082 $ 30,914
Residential Products 32,454 17,012 74,143 49,880
Industrial and Infrastructure Products 5,199 5,462 15,832 13,660
Unallocated Corporate Expenses (7,989) (10,687) (25,417) (25,862)
Total consolidated income from operations $ 43,859 $ 31,420 $ 93,640 $ 68,592


	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

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

Three Months Ended September 30, 2020
Renewable Energy and Conservation Residential Products Industrial and Infrastructure Products Total
Net sales:
Point in Time $ 29,632 $ 150,608 $ 39,251 $ 219,491
Over Time 98,626 1,110 10,438 110,174
Total net sales $ 128,258 $ 151,718 $ 49,689 $ 329,665

~~Table of Contents~~


		Three Months Ended September 30, 2019									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	$	12,682	$	125,350	$	46,781	$	184,813	Point in Time	$	6,049	$	162,978	$	7,388	$	11,637	$	188,052
Over Time	Over Time	104,089		925		9,409		114,423		Over Time	101,702		1,231		46,308		11,096		160,337
Total net sales	Total net sales	$	116,771	$	126,275	$	56,190	$	299,236	Total net sales	$	107,751	$	164,209	$	53,696	$	22,733	$	348,389


		Nine Months Ended September 30, 2020									Three Months Ended June 30, 2020
		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	$	56,636	$	391,227	$	115,925	$	563,788	Point in Time	$	5,512	$	138,288	$	12,088	$	6,549	$	162,437
Over Time	Over Time	266,378		3,382		31,370		301,130		Over Time	50,438		1,184		30,221		10,904		92,747
Total net sales	Total net sales	$	323,014	$	394,609	$	147,295	$	864,918	Total net sales	$	55,950	$	139,472	$	42,309	$	17,453	$	255,184


		Nine Months Ended September 30, 2019									Six 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	$	28,441	$	357,808	$	138,383	$	524,632	Point in Time	$	13,020	$	301,997	$	12,531	$	17,107	$	344,655
Over Time	Over Time	233,171		2,609		28,896		264,676		Over Time	180,243		2,429		87,904		20,750		291,326
Total net sales	Total net sales	$	261,612	$	360,417	$	167,279	$	789,308	Total net sales	$	193,263	$	304,426	$	100,435	$	37,857	$	635,981

~~(15) SUBSEQUENT EVENTS~~

On October 15, 2020, the Company acquired substantially all of the assets of Architectural Mailboxes, LLC ("Architectural Mailboxes") in an all cash transaction for approximately $27 million. Architectural Mailboxes was a privately-held company in the business of designing, developing, and selling decorative residential mailboxes and related products. A preliminary purchase price allocation for the Architectural Mailboxes business has not yet been determined. Architectural Mailboxes will be reported as a part of our Residential Products segment.


	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

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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 ~~September~~our continuing operations at June 30, ~~2020,~~2021, we operated 4536 facilities, ~~which include 32~~comprised of 26 manufacturing facilities, one distribution center, and ~~five distribution centers,~~nine offices, which are located in 1916 states, Canada, China, and Japan. Our operational infrastructure provides the necessary scale to support ~~local,~~ regional and national customers in each of our markets.

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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 nine months ended September 30, 2020. 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

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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 ~~resurgence, 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.

Business Strategy

The ~~Company’s~~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 supported by an execution review~~management tools required to deliver consistent and continuous performance improvement, every day. Our Business System is 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 acquisitions~~For a description of ~~Apeks, LLC ("Apeks")~~recent portfolio management activities, see the actions described below in ~~August 2019, Thermo Energy Systems Inc. ("Thermo") in January 2020, Delta Separations LLC and Teaching Tech LLC (collectively, “Delta Separations”) in February 2020 and, most recently,~~ the ~~acquisition of Architectural Mailboxes, LLC ("Architectural Mailboxes") in October 2020, were the direct result of executing our Portfolio Management strategy.~~Recent Developments section.

3.~~Organizational~~Organization Development ~~- execution of~~drives the ~~Business Systems~~Company’s continuous focus on strengthening and ~~Portfolio Management pillars of our strategy requires a strong~~scaling the organization ~~that must continuously develop~~to execute the Company’s plans 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 with and supporting 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.

~~As a part of our on-going 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.

~~Recent Developments~~

On October 15, 2020, the Company acquired substantially all of the assets of Architectural Mailboxes, a privately-held company in the business of designing, developing, and selling decorative residential mailboxes and related products in an all cash transaction for approximately $27 million. The results of operations for Architectural

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~~Mailboxes will be~~Recent Developments

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 ~~a part~~discontinued operations as of ~~our Residential Products segment and are expected to contribute annual revenues of approximately $26 million.~~December 31, 2020.

~~On February 13,~~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.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 providing growing infrastructure for the plant based 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.

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 of $12 million.~~

hand. The ~~financial results from~~purchase price for the acquisitions of ~~Thermo,~~TerraSmart, Sunfig, and Architectural Mailboxes represents the preliminary allocation to the assets acquired and liabilities assumed in each transaction. The purchase price shown above for Delta and ~~Apeks have been reported as a part of our Renewables Energy and Conservation segment since their respective dates of acquisition.~~

Thermo represents the final purchase price in each transaction.

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Results of Operations

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

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


		2020				2019					2021				2020
Net sales	Net sales	$	329,665	100.0	%	$	299,236	100.0	%	Net sales	$	348,389	100.0	%	$	255,184	100.0	%
Cost of sales	Cost of sales	244,222		74.1	%	222,658		74.4	%	Cost of sales	267,458		76.8	%	189,623		74.3	%
Gross profit	Gross profit	85,443		25.9	%	76,578		25.6	%	Gross profit	80,931		23.2	%	65,561		25.7	%
Selling, general, and administrative expense	Selling, general, and administrative expense	41,584		12.6	%	45,158		15.1	%	Selling, general, and administrative expense	49,522		14.2	%	34,813		13.7	%

Income from operations	Income from operations	43,859		13.3	%	31,420		10.5	%	Income from operations	31,409		9.0	%	30,748		12.0	%
Interest expense	Interest expense	218		0.1	%	17		0.0	%	Interest expense	245		0.0	%	222		0.0	%
Other expense		53		0.0	%	84		0.0	%
Other income										Other income	(4,666)		(1.3)	%	(1,892)		(0.7)	%
Income before taxes	Income before taxes	43,588		13.2	%	31,319		10.5	%	Income before taxes	35,830		10.3	%	32,418		12.7	%
Provision for income taxes	Provision for income taxes	9,828		3.0	%	6,843		2.3	%	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	$	33,760	10.2	%	$	24,476	8.2	%	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 ~~September~~June 30, (in thousands):

Change due to
2020 2019 Total
Change Acquisitions Operations
Net sales:
Renewable Energy and Conservation $ 128,258 $ 116,771 $ 11,487 $ 24,061 $ (12,574)
Residential Products 151,718 126,275 25,443 — 25,443
Industrial and Infrastructure Products 49,767 56,361 (6,594) — (6,594)
Less: Intersegment sales (78) (171) 93 — 93
Net Industrial and Infrastructure Products 49,689 56,190 (6,501) — (6,501)
Consolidated $ 329,665 $ 299,236 $ 30,429 $ 24,061 $ 6,368


							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 ~~$30.4~~$93.2 million, or ~~10.2%~~36.5%, to ~~$329.7~~$348.4 million for the three months ended ~~September~~June 30, ~~2020~~2021 compared to the three months ended ~~September~~June 30, ~~2019.~~2020. The ~~10.2%~~36.5% increase in revenue was driven by the ~~Residential Products~~Renewables and ~~Renewable Energy and Conservation segments. Organic growth accounted for 2.1%, or $6.4 million, the result of increased volume in our~~ Residential ~~Products segment, which more than offset the organic volume declines in both our Renewable Energy and Conservation and our Industrial and Infrastructure Products~~ segments. Sales generated from our ~~first quarter 2020~~prior year acquisitions of ~~Thermo~~TerraSmart and ~~Delta Separations, and the prior year acquisition of Apeks,~~Architectural Mailboxes contributed ~~8.1%~~22.5%, or ~~$24.1~~$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 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 quarter.

Net sales in our ~~Renewable Energy and Conservation~~Renewables segment increased ~~9.8%~~$51.8 million, or 92.5%, ~~or $11.5 million,~~ to ~~$128.3~~$107.8 million for the three months ended ~~September~~June 30, ~~2020~~2021 compared to ~~$116.8~~$56.0 million for the three months ended ~~September~~June 30, ~~2019.~~2020. Sales generated from ~~the current year acquisitions of Thermo and Delta Separations, and~~ the prior year acquisition of ~~Apeks,~~TerraSmart of $49.8 million primarily contributed ~~$24.1 million~~ to the increase in the current year quarter. Organic revenue ~~decreased $12.6 million, or 10.8%,~~increased 3.5% during the quarter 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 headwinds impacting the solar industry including steel inflation, supply chain challenges with solar panels, as well as, a decline in ~~our core conservation business~~safe-harbor related demand due to ~~a slowdown~~the extension of the investment tax credit in ~~the cannabis and hemp markets, partially offset by participation gains in our renewable energy related business.~~late 2020. Backlog improved ~~28%~~120% year over year, or 54% on a proforma basis for this ~~segment, which was the result of strong end market demand in renewable energy, and in conservation, driven by strength in the fruit and vegetable market and increasing activity in the cannabis market.~~

Net sales in our Residential Products segment increased 20.1%, or $25.4 million, to $151.7 million for the three months ended September 30, 2020 compared to $126.3 million for the three months ended September 30, 2019.segment.

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Net sales in our Residential segment increased 17.7%, or $24.7 million, to $164.2 million for the three months ended June 30, 2021 compared to $139.5 million for the three months ended June 30, 2020. The increase from the prior year quarter was largely due to continued ~~solid~~strong activity across all residential businesses along with increased pricing that offset challenges from supply chain dynamics related to material, labor and logistics availability. Sales from the prior year acquisition of Architectural Mailboxes also contributed $7.7 million to the increase in the ~~repair and remodel market, along with participation gains across our various distribution channels.~~current year quarter.

Net sales in our ~~Industrial and Infrastructure Products~~Agtech segment ~~decreased 11.6%~~increased 27.0%, or ~~$6.5~~$11.4 million, to ~~$49.7~~$53.7 million for the three months ended ~~September~~June 30, ~~2020~~2021 compared to ~~$56.2~~$42.3 million for the three months ended ~~September~~June 30, ~~2019. Lower~~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 ~~its core industrial~~fabricated and non-fabricated products ~~resulted in a decrease in revenue in~~from this segment increased as state project funding improved and the Industrial businesses. While revenue in the Infrastructure business was down modestly, as the pandemic affected spending on infrastructure projects in certain end markets, infrastructure backlog grew slightlydomestic economy strengthened. Backlog remained strong increasing 11% compared to the prior year quarter.

Our consolidated gross margin ~~increased~~decreased to ~~25.9%~~23.2% for the three months ended ~~September~~June 30, ~~2020~~2021 compared to ~~25.6%~~25.7% for the three months ended ~~September~~June 30, ~~2019. This modest increase~~2020. The decrease was the result of improved operating execution in all our core businesses compared to the prior year quarter, effective price and material cost management, and benefits from our 80/20 simplification initiatives. Partially offsetting the above improvements were expected lower gross margins generated from our recent acquisitions as we continue to integrate them ~~operationally.~~operationally, along with timing and alignment of higher input costs to 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 our core businesses compared to the prior year quarter.

Selling, general, and administrative ("SG&A") expenses ~~decreased~~increased by ~~$3.6~~$14.7 million, or ~~7.9%~~42.3%, to ~~$41.6~~$49.5 million for the three months ended ~~September~~June 30, ~~2020~~2021 from ~~$45.2~~$34.8 million for the three months ended ~~September~~June 30, ~~2019.~~2020. The ~~$3.6~~$14.7 million ~~decrease~~increase was ~~largely the result~~primarily due to $6.3 million of ~~a decrease in costs of approximately $7.2 million related to exit activities, senior leadership transition and completing acquisitions, partially offset by $3.8 million in~~ incremental SG&A expenses recorded quarter over quarter ~~for~~from our recent ~~acquisitions.~~acquisitions 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. 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 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 deferred treatments due to those closures. SG&A expenses as a percentage of net sales ~~decreased~~increased to ~~12.6%~~14.2% for the three months ended ~~September~~June 30, ~~2020~~2021 compared to ~~15.1%~~13.7% for the three months ended ~~September~~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 ~~September~~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		$	14,195	11.1	%	$	19,633	16.8	%	$	(5,438)
Residential Products		32,454		21.4	%	17,012		13.5	%	15,442
Industrial and Infrastructure Products		5,199		10.5	%	5,462		9.7	%	(263)
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	(7,989)		(2.4)	%	(10,687)		(3.6)	%	2,698		Unallocated Corporate Expenses	(10,419)		(3.0)	%	(9,205)		(3.6)	%	(1,214)
Consolidated income from operations	Consolidated income from operations	$	43,859	13.3	%	$	31,420	10.5	%	$	12,439	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 ~~11.1%~~8.8% in the current year quarter compared to ~~16.8%~~15.1% in the prior year quarter. The decrease in operating margin was partly due to the ~~combined result of~~ expected lower margins generated by our recent acquisitions, the result of backlog amortization and integration costs, as we continue to integrate ~~them operationally and near-term market challenges impacting~~these businesses operationally. Additionally contributing to the ~~conservation business related to a slowdown in the cannabis and hemp markets. Partially offsetting this~~ decrease, was ~~favorable product and services mix and strong execution~~a one-time tariff credit received in ~~our renewable energy business.~~

The Residential Products segment generated an operating margin of 21.4% during the three months ended September 30, 2020 compared to 13.5% during the three months ended September 30, 2019. The increase in operating margin was the result of volume leverage, effective price and material cost management, and continued benefits from 80/20 simplification initiatives, along with a $3.2 million decrease in exit activity costs compared to the prior year ~~quarter.~~

~~Our Industrial~~quarter along with the impact of timing and ~~Infrastructure Products segment generated an operating margin~~alignment of ~~10.5% during the three months ended September 30, 2020 compared~~price to ~~9.7% during the three months ended September 30, 2019. The increase resulted from continued improvement in execution in our industrial business,~~input costs and ~~effective price and material cost management.~~

Unallocated corporate expenses decreased $2.7 million from $10.7 million during the three months ended September 30, 2019 to $8.0 million during the three months ended September 30, 2020. A decline in costs related to senior leadership transition, restructuring and completing acquisitions of approximately $3.2 million resulted in the current year quarter decrease as compared to the prior year quarter.project movement associated

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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 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 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, 2021 compared to 16.0% during the three months ended June 30, 2020. The increase was 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 $1.1 million of higher performance-based compensation expenses as compared to the prior year quarter.

Interest expense was ~~negligible~~$0.2 million for both the three months ended ~~September~~June 30, 2021 and 2020, ~~and September~~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, ~~2019.~~2021, partially offset by interest income. No amounts were outstanding under our revolving credit facility during the three months ended ~~September~~June 30, ~~2020 and 2019.~~2020.

The Company recorded other income of $4.7 million for the three months ended June 30, 2021, compared to $1.9 million recorded for the three months ended June 30, 2020. The $2.8 million increase from the prior year quarter was 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 segment.

We recognized a provision for income taxes of ~~$9.8~~$9.5 million and ~~$6.8~~$8.0 million, with effective tax rates of ~~22.5%~~26.4% and ~~21.8%~~24.6% for the three months ended ~~September~~June 30, ~~2020,~~2021, and ~~2019,~~2020, respectively. The effective tax rates for the three months ended ~~September~~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.

~~Nine~~

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

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

2020 2019
Net sales $ 864,918 100.0 % $ 789,308 100.0 %
Cost of sales 650,830 75.2 % 605,272 76.7 %
Gross profit 214,088 24.8 % 184,036 23.3 %
Selling, general, and administrative expense 120,448 14.0 % 115,444 14.6 %
Income from operations 93,640 10.8 % 68,592 8.7 %
Interest expense 385 0.0 % 2,297 0.3 %
Other (income) expense (1,542) (0.2) % 660 0.1 %
Income before taxes 94,797 11.0 % 65,635 8.3 %
Provision for income taxes 21,686 2.5 % 14,901 1.9 %
Net income $ 73,111 8.5 % $ 50,734 6.4 %

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	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 ~~nine~~six months ended ~~September~~June 30, (in thousands):

Change due to
2020 2019 Total
Change Acquisitions Operations
Net sales:
Renewable Energy and Conservation $ 323,014 $ 261,612 $ 61,402 $ 58,858 $ 2,544
Residential Products 394,609 360,417 34,192 — 34,192
Industrial and Infrastructure Products 147,831 168,096 (20,265) — (20,265)
Less: Intersegment sales (536) (817) 281 — 281
Net Industrial and Infrastructure Products 147,295 167,279 (19,984) — (19,984)
Consolidated $ 864,918 $ 789,308 $ 75,610 $ 58,858 $ 16,752


							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 ~~$75.6~~$165.4 million, or ~~9.6%~~35.1%, to ~~$864.9~~$636.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The 35.1% increase in revenue was driven by the Renewables and Residential segments. Sales generated from our ~~current~~prior year acquisitions of TerraSmart, Thermo, ~~and~~ Delta Separations and ~~the prior year acquisition of Apeks~~Architectural Mailboxes contributed ~~7.5%~~23.0%, or ~~$58.9~~$108.1 million to the growth from the prior year. The ~~$16.8~~$57.3 million, or ~~2.1%~~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 ~~volume~~54% to $403 million up from $262 million at the end of the prior year period.

Net sales in ~~both~~ our ~~Residential Products~~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 TerraSmart of $87.1 million, 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 ~~Renewable Energy~~electrical balance-of-system product solutions serving the community and ~~Conservation segments, which more than~~commercial and industrial market segments. This growth was partially offset by projects impacted by headwinds impacting the ~~volume~~solar industry including steel inflation, supply chain challenges withsolar panels, as well as, a decline in ~~our Industrial and Infrastructure Products~~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 ~~Renewable Energy and Conservation~~Residential segment increased ~~23.5%~~25.3%, or ~~$61.4~~$61.5 million, to ~~$323.0~~$304.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to ~~$261.6~~$242.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The increase from the prior year was largely due to continued strong demand across all residential businesses along with increased pricing and participation gains across that offset challenges from supply chain dynamics. Sales ~~generated by the current year acquisitions of Thermo and Delta Separations, along with~~from the prior year acquisition of ~~Apeks,~~Architectural Mailboxes also contributed ~~$58.9~~$16.4 million ~~or 22.5%,~~ to the increase in the current year.

Net sales in our 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 Delta Separations acquired in the first quarter of 2020, contributed $4.6 million, to the increase in this segment.

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Organic ~~growth of $2.5~~revenue increased $4.3 million, ~~or 1.0%, was~~largely driven by ~~participation gains in our renewable energy related businesses, partially offset by a decline in our core conservation business related to a slowdown~~growth in the ~~cannabis~~produce market along with slower but improving market conditions for commercial, car wash, retail and ~~hemp markets. Backlog improved 28%~~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, ~~for this segment, which was~~due to the ~~result~~impact of ~~strong end market demand in renewable energy,~~re-scoping of projects and ~~in conservation, driven by strength in the fruit and vegetable market and increasing~~supply chain disruptions impacting project scheduling, subsequent order activity ~~in the cannabis market.~~

is accelerating backlog momentum.

Net sales in our ~~Residential Products~~Infrastructure segment increased ~~9.5%~~14.9%, or ~~$34.2~~$4.9 million, to ~~$394.6~~$37.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to ~~$360.4~~$32.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019. The increase~~2020. During the current year, demand for fabricated and non-fabricated products from this segment increased as the ~~prior year was largely due to continued solid activity in the repair~~economy strengthened and ~~remodel market, along with participation gains across our various distribution channels.~~

~~Net sales in our Industrial and Infrastructure Products segment decreased 12.0%, or $20.0 million, to $147.3 million for the nine months ended September 30, 2020~~state project funding improved. Backlog remained strong increasing 11% compared to $167.3 million for the nine months ended September 30, 2019. Lower demand and lower steel prices impacting its core industrial products resulted in a decrease in revenue in the Industrial businesses. Revenue in the Infrastructure business was essentially flat year over year, while its ending backlog improved slightly from the prior year.

Our consolidated gross margin ~~increased~~decreased to ~~24.8%~~22.2% for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to ~~23.3%~~24.5% for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. This ~~increase~~decrease was ~~due~~the result of costs incurred during the current year related to the planned discontinuation of our organic solar tracker solution as we migrate towards the solution offered by our recently acquired TerraSmart business. Additionally, lower gross margins generated from our recent acquisitions contributed to the 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 project timing in the Agtech and Renewables segments. Partially offsetting the decrease was improved operating execution in all of our core businesses compared to the prior ~~year period that included incremental costs for design refinement~~year.

Selling, general, and field improvements for our solar tracking solution, effective price and material cost management and benefits from our 80/20 simplification initiatives. Partially offsetting the above improvements were lower gross margins generated from our recent acquisitions.

administrative ("SG&A&A") expenses increased by ~~$5.0~~$24.8 million, or ~~4.3%~~34.5%, to ~~$120.4~~$96.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 from ~~$115.4~~$71.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The ~~$5.0~~$24.8 million increase was ~~largely the result of $11.0~~primarily due to $12.9 million of incremental SG&A expenses recorded year over year ~~for~~from our recent acquisitions and transaction costs to complete those acquisitions, ~~closed during the year,~~ along with ~~investments~~$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. Partially offsetting these~~deferred treatments due to those closures. Despite the above increases, ~~was decreased spending for exit activity costs of approximately $4.6 million.~~ SG&A expenses as a percentage of net sales modestly decreased to ~~14.0%~~15.2% for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to ~~14.6%~~15.3% for the ~~nine~~six months ended ~~September~~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 ~~nine~~six months ended ~~September~~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		$	29,082	9.0	%	$	30,914	11.8	%	$	(1,832)
Residential Products		74,143		18.8	%	49,880		13.8	%	24,263
Industrial and Infrastructure Products		15,832		10.7	%	13,660		8.2	%	2,172
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	(25,417)		(2.9)	%	(25,862)		(3.3)	%	445		Unallocated Corporate Expenses	(22,983)		(3.6)	%	(17,428)		(3.7)	%	(5,555)
Consolidated income from operations	Consolidated income from operations	$	93,640	10.8	%	$	68,592	8.7	%	$	25,048	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 ~~9.0% during~~4.7% in the ~~nine months ended September 30, 2020~~current year compared to ~~11.8% during~~12.4% in the ~~nine months ended September 30, 2019.~~prior year. The 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 favorable 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 ~~18.8% during~~16.5% in the ~~nine months ended September 30, 2020~~current year compared to ~~13.8% during~~17.2% in the ~~nine months ended September 30, 2019.~~prior year. The ~~increase~~decrease in operating margin was ~~largely~~ the result of ~~volume leverage, effective price~~accelerated inflation, material and ~~material cost management and continued benefits from 80/20 simplification initiatives, along with a $3.1 million decrease in exit activity costs compared to the prior year.~~labor availability

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~~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 ~~10.7%~~1.9% during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to ~~8.2%~~2.3% during the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The ~~increase~~decrease in operating margin was the combined result of the 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 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 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 volumes, along with strong execution on higher volumes and higher revenue and continued ~~improvement~~investment in ~~execution in our industrial business, effective price and material cost management and ongoing benefit from the Company's~~ 80/20 productivity initiatives.

Unallocated corporate expenses ~~decreased $0.4~~increased $5.6 million from ~~$25.9~~$17.4 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 to ~~$25.4~~$23.0 million during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The ~~slight decrease~~increase in expense was primarily ~~due~~the result of $4.2 million of higher performance-based compensation expenses as compared to ~~lower performance based compensation expense.~~the prior year.

Interest expense ~~decreased~~increased by ~~$1.9~~$0.4 million to ~~$0.4~~$0.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to ~~$2.3~~$0.3 million for the ~~nine~~six months ended ~~September~~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 ~~nine~~six months ended ~~September~~June 30, ~~2020 and 2019.~~2020.

The Company recorded other income of ~~$1.5~~$4.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020 and other expense of $0.7~~2021 compared to the $1.4 million recorded for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The ~~change~~$3.0 million increase from the prior year was 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 ~~$21.7~~$11.0 million and ~~$14.9~~$10.3 million, with effective tax rates of ~~22.9% and 22.7%,~~23.0% for both the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, and ~~2019,~~2020, respectively. The effective tax rates for the ~~nine~~six months ended ~~September~~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

The Company ~~delivered~~expects that the current business environment, which has been dynamic since the beginning of the year, to remain so throughout the second half of 2021, and 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 ~~revenue~~end market demand, record order backlog, a very healthy balance sheet, and ~~growth in earnings per share~~strong focus on daily execution, acquisition integrations, and strengthening 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 ~~expects fourth quarter performance to surpass 2019 results. Given the ongoing level of uncertainty related to the pandemic~~GAAP EPS from continuing operations between $2.78 and ~~the economy Gibraltar is maintaining the practice of providing qualitative guidance.~~

Our momentum and end market trends continue to be positive, and we continue to monitor the pandemic's impact on our businesses and potential impact on the U.S. and global economy. We remain focused on executing our operating protocols, maintaining a safe environment for our people, and meeting our customers’ needs every day. We will also continue$2.95, compared with ~~key organic and inorganic investments to strengthen our business platforms for the markets we serve.~~$2.53 in 2020.

Liquidity and Capital Resources

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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)	September 30, 2020		December 31, 2019		(in thousands)	June 30, 2021		December 31, 2020
Cash and cash equivalents	Cash and cash equivalents	$	179,816	$	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
		$	573,916	$	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. After pausing earlier in the year as the pandemic unfolded, we have begun to cautiously re-engage in acquisition processes that are aligned with our strategic initiatives and invest in opportunities that strengthen our business platforms for the markets we serve, while being mindful of the continued impact of the COVID-19 pandemic on our economic outlook. We continue to remain 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.

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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 ~~September~~June 30, ~~2020,~~2021, our foreign subsidiaries held ~~$38.8~~$14.9 million of cash in U.S. 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 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 allowed 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 ~~nine~~six months ended ~~September~~June 30, (in thousands):


		2020		2019			2021		2020
Cash provided by (used in):	Cash provided by (used in):					Cash provided by (used in):
Operating activities of operations		$	56,194	$	72,494
Investing activities of operations		(61,152)		(16,281)
Financing activities of operations		(6,031)		(216,330)

Operating activities of continuing operations						Operating activities of continuing operations	$	12,777	$	(10,967)
Investing activities of continuing operations						Investing activities of continuing operations	30,515		(57,800)
Financing activities of continuing operations						Financing activities of continuing operations	(56,292)		(4,384)
Discontinued operations						Discontinued operations	(2,178)		2,659
Effect of foreign exchange rate changes	Effect of foreign exchange rate changes	(558)		729		Effect of foreign exchange rate changes	87		(12)
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	$	(11,547)	$	(159,388)	Net decrease in cash and cash equivalents	$	(15,091)	$	(70,504)

Operating Activities

Net cash provided by operating activities of continuing operations for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 of ~~$56.2~~$12.8 million consisted of ~~net~~ income from continuing operations of ~~$73.1~~$36.9 million and non-cash net charges totaling ~~$24.2~~ $22.4

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million, which include depreciation, amortization, stock compensation, exit activity costs and other non-cash charges, offset by a ~~$41.1~~$46.5 million investment in working capital and other net assets. The investment in net working capital and other net assets was ~~driven by the investment in net working capital and other net assets was~~ largely driven by an ~~investment of $42.4 million~~increase in ~~Thermo, one of our recent acquisitions, which was undercapitalized at purchase, along with~~inventory due to rising material costs and accounts receivable due to seasonal increases in demand, offset by an increase in accounts ~~receivable due to strong demand~~payable as the result of seasonal increases in ~~our Residential Products segment and a decrease in accrued expenses and other non-current liabilities correlated to the timing of customer billings and payments.~~manufacturing activity.

Net cash ~~provided by~~used in operating activities of ~~$72.5 million during~~continuing operations for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 of $11.0 million consisted of net income of ~~$50.7~~$34.4 million and ~~$28.3~~non-cash net charges totaling $12.8 million, ~~of non-cash charges including~~which include depreciation, amortization, stock compensation, ~~exit activity~~ 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 ~~$6.6 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 ~~nine~~six months ended ~~September~~June 30, 2020 of ~~$61.2~~$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

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capital expenditures of ~~$9.3~~$4.2 million, offset by ~~$2.0~~$0.8 million in proceeds from the sale of a business within the Residential Products segment and ~~$0.6 million in proceeds from~~ the sale of property and equipment.

Net cash used in investing activities for the nine months ended September 30, 2019 of $16.3 million consisted of $8.7 million net cash paid for the acquisition of Apeks and capital expenditures of $7.7 million.

Financing Activities

Net cash used in financing activities of continuing operations for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 of ~~$6.0~~$56.3 million was primarily the result of ~~$6.4~~$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 ~~$0.4~~$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 ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 of ~~$216.3~~$4.4 million ~~consisted~~was primarily the result of ~~the repayment of $210.0 million of 6.25% Senior Subordinated Notes along with $2.0 million in other debt repayments,~~ purchases of treasury stock ~~of $3.5 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 $0.4 million from stock options exercised.~~plans.

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.

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.

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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.

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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 nine months ended September 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 reports for the quarters ended March 31, 2020 and June 30, 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.~~

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.

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Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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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.

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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: ~~October 29, 2020~~August 3, 2021


	Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Revenue recognized in the period from:
Amounts included in billings in excess of cost at the beginning of the period	$	44,723	$	14,137
Amounts included in unearned revenue at the beginning of the period	$	13,614	$	11,052


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Selling, general and administrative costs	$	16	$	470	$	1,564	$	474
Cost of sales	0		134		634		134
Total acquisition-related costs	$	16	$	604	$	2,198	$	608


	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	51,629		0		0		51,629
Adjustments to prior year acquisitions	579		0		0		579
Foreign currency translation	664		0		(150)		514
Balance at September 30, 2020	$	130,474	$	198,075	$	53,878	$	382,427


	Three Months Ended September 30, 2020
	Renewable Energy and Conservation		Residential Products		Industrial and Infrastructure Products		Total
Net sales:
Point in Time	$	29,632	$	150,608	$	39,251	$	219,491
Over Time	98,626		1,110		10,438		110,174
Total net sales	$	128,258	$	151,718	$	49,689	$	329,665