Gibraltar Industries, Inc. 2026 Q2 Earnings Call

Good morning, everyone, thank you for joining us today. With me on the call is Bill Bosway, Gibraltar Industries Chairman, President, and Chief Executive Officer, and Joe Lovecchio, Gibraltar's Chief Financial Officer. The earnings press release that was issued this morning, as well as the slide presentation that management will use during the call, are both available in the investors section of the company's website, www.gibraltar1.com. Gibraltar's earnings press release and remarks contain non-GAAP financial measures. Tables of reconciliation of GAAP to adjusted financial measures can be found in the earnings press release that was issued today. Further, please note that continuing operations exclude net sales and operating results of the renewables business, which was classified as held for sale and as a discontinued operation with second quarter 2025 results, the divestiture of which was subsequently completed on July 15th, 2026.

The acquisition of OmniMax International closed on February 2nd, 2026. As noted on slide two of the presentation, the earnings press release and slide presentation contain forward-looking statements with respect to future financial results. These statements are not guarantees of future performance, the company's actual results may differ materially from the anticipated events, performance, or results expressed or implied by these forward-looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can also be accessed through the company's website. Now I'll turn the call over to Bill Bosway.

Bill? Thanks, Carolyn. Good morning, everyone, thank you for joining today's call.

We're going to review our second quarter results, which include our first full quarter of OmniMax operations. We'll review the reporting segments, the balance sheet, our full year 2026 guidance, which we are reiterating today. We'll open the call for your questions. Let's start with turning to slide three, we'll discuss the second quarter. It's been a very busy time for us, we delivered solid second quarter results with our residential business delivering strong organic growth and participation gains in a flat to down market. Our residential and agtech segments both delivered organic growth, all segments delivered sequential margin expansion as well. Our building products business grew 12.7% organically.

Now, if you assume we owned OmniMax in Q2 2025, the combined business actually grew 15.5%, showing the strength of this combination in the marketplace. In line with our long-term strategic plan for our residential business, continues to become a larger part of our overall portfolio and represented 83% of our total revenue in the quarter, with segment EBITDA margin improving 340 basis points sequentially to 19%. OmniMax integration continues to accelerate as our leadership team and integration management office drive our top 11 critical work streams and synergy capture. We are also excited to announce we were recently awarded an additional 630 locations, now making us the supplier of trims and flashings to sell to more than 1,700 locations across the country for one of our key customers, validating our ability to support our customers locally on a national basis with a value proposition that makes sense for them.

We believe the combination of Gibraltar and OmniMax and our product portfolio was instrumental in receiving this award, and I give our team a lot of credit for staying focused on executing well while simultaneously managing through today's dynamic geopolitical situation, as well as an ongoing inflationary environment. Including a full quarter of OmniMax, total Gibraltar net sales increased 64.6% to $510 million on total Gibraltar organic growth of 5%. Our residential segment delivered organic growth of 5%, and agtech delivered organic growth of 8.7%. Adjusted operating income reached $66 million. Adjusted EBITDA increased 59.7% to $88 million, and we delivered adjusted EPS of $1.11, which included a net interest impact of $20.6 million. GAAP results include $5.8 million or $0.15 per share of OmniMax acquisition, integration, and restructuring costs.

Overall, we managed relatively well through a slower residential market, along with inflationary headwinds, by executing price actions, generating more participation wins, and executing synergy initiatives. As a result, adjusted EBITDA margin expanded sequentially 350 basis points to 17.3%. We generated $45 million in operating cash from continuing operations, including acquisition, integration, and restructuring costs related to OmniMax. We have now completed the divestiture of the Renewables business, including the eBOS sale in Q1 and the racking business sale in July. Now let's turn our attention and we'll review the business segments, and Joe will start with residential.

Thanks, Bill, and good morning, everyone. Let's start with residential on slide four. Net sales increased $195.6 million to $425.9 million, which is up 85%, driven by the inclusion of a full quarter of OmniMax results of operations. OmniMax contributed $182 million. A metal roofing acquisition that we completed in July of last year contributed $2.5 million, and the residential segment organic growth was 5%. As Bill mentioned, if you assume we owned OmniMax in Q2 2025, the combined building products business grew 15.5%.

Driven by price realization and participation gains in the Midwest, Northeast, and Texas, which helped to overcome a flat to down end market. Turning to margin, adjusted EBITDA margins accelerated sequentially 340 basis points to 19%, as our executed price actions offset ongoing commodity and fuel inflation. On a year-over-year basis, adjusted EBITDA margin was down primarily due to price cost alignment, business and product mix, and some inefficiencies with the integration. Our cost and commercial synergies through the OmniMax integration started contributing in Q2, and we expect those to continue to ramp going forward. Now let's move to slide five, and let's talk a little bit about the U.S. residential roofing market. I'd say overall market demand in the quarter versus prior year, based on the ARMA data for shingle shipments to distributors and retailers, was flat.

The story varied greatly by region, with positive growth in shipments to the Northeast, Midwest, and West, while shipments to the Southeast, Southwest, Florida, and Texas were down in the quarter. Sequentially, shipments total were up 17.6%, with just two of the seven regions not experiencing growth, which would be the Southwest and Texas. We do believe Q2 shipments were driven by restocking in the distributor channel and customers buying ahead of shingles manufacturer price increases. For the first half of the year, ARMA shipments were down 4.7% year-over-year, with similar demand patterns across the regions. In the retail channel, volume remained soft, with point-of-sale results down anywhere between 8%-10% in the quarter, as customers remain concerned about the ongoing geopolitical situation impacting consumer sentiment, interest rates, and overall affordability. POS for the first half were also down roughly 8%-10% versus prior year.

Based on ARMA and POS data to date, we believe the actual end market demand for the quarter and the first half was down mid-single digits and will probably remain so for the rest of the year. Now that we have broader presence across the U.S., we have more visibility to the market in total and by region, which provides a stronger foundation to build and execute more effective local and national growth initiatives with our customers. Despite today's slower market, we were able to generate positive organic growth in the quarter. As I mentioned earlier, if you assume we owned OmniMax for Q2 in 2025, the combined building products business actually grew 15.5% organically, with price and mix accounting for 9.7% of that, participation gains 7.1% of that, and the market being down 1.3%.

Relative to channel, sales to wholesalers were up 25.1%, and sales to retailers were up 8%. By region, the Northeast was up 43.6%, the Midwest was up 54.5%, the Southwest up 17.5%, and the West up 1.7%, and the Southeast down 11.1%. Effectively, we were able to outperform the market in each region, and our strength in four of the five regions helped offset a slow market in the Southeast. We do believe that having more presence across the country does provide more leverage to us in managing our business. We have the ability to better align with local and regional markets, which creates an opportunity to better optimize and align customer and revenue initiatives with end market demand situations. Our playbook is going to remain similar going forward as we expect the market to remain slow given the ongoing headwinds I mentioned.

We will continue to identify and execute participation opportunities to help us in the second half and going into 2027. With that, let's turn to slide six to talk about an exciting and big customer win for the team that happened here recently. If you remember, one of the core tenets of our strategy with the addition of OmniMax is to find a way to simplify our customer supply chain and become the easy button for them while also reducing the cost of doing business with each other. We believe we do this through great service and quality, local capability on a national basis, a harmonized and simplified product offering through 80/20 efforts for each region and location, optimizing our manufacturing and transportation logistics, and the ability to simplify and cost reduce transactions with our customers.