GIBRALTAR INDUSTRIES INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)BASIS OF PRESENTATION

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 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 the Company's annual report on Form 10-K for the year ended December 31, 2024.

The consolidated balance sheet at December 31, 2024 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.

Recent Accounting Pronouncements

The Company evaluated all recent Accounting Standard Updates, including those that are currently effective in or after 2025, and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company. There have been no material changes from the recent accounting pronouncements previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

(2)TRADE RECEIVABLES, NET

The following table provides a roll-forward of the allowance for credit losses for the three month period ended March 31, 2025 that is deducted from the amortized cost basis of trade receivables to present the net amount expected to be collected (in thousands):

(3)REVENUE

Sales includes revenue from contracts with customers for roof and foundation ventilation products, single point and centralized mail systems, trims, flashings, metal roofing, rain dispersion products and other accessories, retractable awnings and gutter guards; designing, engineering, manufacturing and installation of controlled environmental agriculture, custom greenhouses and structural canopies; designing, engineering, manufacturing and installation of solar racking and electrical balance of systems; structural bearings, expansion joints, pavement sealant, elastomeric concrete and bridge cable protection systems.

Refer to Note 13 "Segment Information" for disclosures related to disaggregation of revenue.

As of March 31, 2025, the Company's remaining performance obligations are part of contracts that have an original expected duration ofone year or less.

For the three months ended March 31, 2025 and 2024, respectively, there were no changes to estimated total costs to be incurred related to any individual contract that materially impacted the Company's consolidated financial statements.

Contract assets consist of net costs in excess of billings, classified as current assets in the Company's consolidated balance sheets. Contract liabilities consist of billings in excess of costs, classified as current liabilities, and unearned revenue, presented within accrued expenses, in the Company's consolidated balance sheets. Unearned revenue as of March 31, 2025 and December 31, 2024 was $2.1 million and $3.1 million, respectively. The Company recognized revenue of $26.2 million and $27.7 million during the three months ended March 31, 2025 and 2024, respectively, that was included in the contract liabilities balance of $44.8 million and $48.7 million at December 31, 2024 and 2023, respectively.

(4)INVENTORIES, NET

Inventories, net of reserves, consisted of the following (in thousands):

(5)ACQUISITIONS

During the quarter ended March 31, 2025, the Company acquired three businesses in separate transactions all of which were funded with cash on hand. One acquired business is included within the Company's Agtech segment and the other acquired businesses are included in the Company's Residential segment.

On February 11, 2025, the Company purchased all the outstanding stock of Lane Supply, Inc. ("Lane Supply"), a privately held company that designs, manufactures and installs structural canopies serving the convenience store, travel center, food retail, and quick serve restaurant markets. The results of Lane Supply have been included in the Company's consolidated financial results since the date of acquisition within the Company's Agtech segment. The preliminary purchase consideration for this acquisition was $117.1 million, which includes a preliminary working capital adjustment and certain other adjustments provided for in the stock purchase agreement.

On March 31, 2025, the Company acquired two privately held businesses within its Residential segment that primarily specialize in the manufacturing of metal roofing systems, along with metal wall panels, siding and trim products. The Company purchased all the outstanding stock of one of the businesses and substantially all of the assets for the other business for a combined preliminary purchase consideration of $90.2 million, which includes preliminary working capital adjustments and certain other adjustments provided for in the purchase agreements.

The purchase price for these acquisitions were preliminarily allocated to the assets acquired and liabilities assumed based upon their respective fair values estimated as of the date of acquisitions. The Company has commenced the process to confirm the existence, condition, and completeness of the assets acquired and liabilities assumed to establish fair value of such assets and liabilities and to determine the amount of goodwill to be recognized as of the date of acquisitions. Goodwill recognized in these acquisitions are primarily attributable to factors such as future economic benefits arising from other assets acquired that could not be individually identified including workforce additions, growth opportunities, and increased presence in domestic agtech structures and metal roofing markets, respectively. Due to the timing of these acquisitions, 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 dates 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 acquisitions. 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.

For the acquisition of Lane Supply, the preliminary excess consideration was recorded as goodwill and approximated $38.2 million, none of which is deductible for tax purposes. The final purchase price allocation will be completed no later than the first quarter of fiscal year 2026.

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):

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

For the acquisition of the two metal roofing businesses, the preliminary excess consideration was recorded as goodwill and approximated $48.9 million, all of which is deductible for tax purposes. The final purchase price allocation will be completed no later than the first quarter of fiscal year 2026.

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 acquisitions (in thousands):

The intangible assets acquired in these acquisitions consisted of the following (in thousands):

In determining the allocation of the purchase price to the assets acquired and 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 Company recognized costs related to recent acquisitions comprised of legal and consulting fees within selling, general, and administrative expense of $2.6 million for the three months ended March 31, 2025. No acquisition costs were incurred in the three months ended March 31, 2024.

Pro Forma Information (Unaudited)

The results of Lane Supply (from January 1, 2025 through February 10, 2025) and the two privately held businesses (from January 1, 2025 and March 31, 2025) have not been included in the Company's consolidated statements of income as the Company acquired Lane Supply on February 11, 2025 and the two privately held businesses on March 31, 2025.

The following unaudited pro forma financial information represents a summary of the consolidated results of operations of the Company for the three months ended March 31, 2025 and 2024, assuming these acquisitions had been completed on January 1, 2024 (in thousands):

These pro forma amounts have been compiled by adding the historical results of these businesses to the results of the Company after applying accounting policies and pro forma adjustments primarily for amortization that would have been charged assuming the preliminary fair value adjustments to intangible assets had been applied from January 1, 2024.

The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had been effective as of these dates, or of future results.

(6)GOODWILL AND RELATED INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the three months ended March 31, 2025 are as follows (in thousands):

Goodwill is recognized net of accumulated impairment losses of $133.2 million as of March 31, 2025 and December 31, 2024.

The Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing. The Company determined that no triggering event had occurred as of March 31, 2025 which would require an interim impairment test to be performed.

Acquired Intangible Assets

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

The following table summarizes the acquired intangible asset amortization expense (in thousands):

Amortization expense related to acquired intangible assets for the remainder of fiscal 2025 and the next five years thereafter is estimated as follows (in thousands):

(7)LONG-TERM DEBT

The Company hadno outstanding debt as of March 31, 2025 and December 31, 2024.

Revolving Credit Facility

On December 8, 2022, the Company entered into a Credit Agreement (the "Credit Agreement") which provides for a revolving credit facility and letters of credit in an aggregate amount equal to $400 million. The following table sets forth the Company's availability on the revolving credit facility as of (in thousands):

The Company can request additional financing 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 Credit Agreement. The Credit Agreement containstwo financial covenants. As of March 31, 2025, the Company was in compliance with all financial covenants. The Credit Agreement terminates on December 8, 2027.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at a rate equal to the applicable margin plus (a) a base rate, (b) a daily simple secured overnight financing rate ("SOFR") rate, (c) a term SOFR rate or (d) for certain foreign currencies, a foreign currency rate, in each case subject to a 0% floor. The Credit Agreement includes an applicable margin which ranges from 0.125% to 1.00% for base rate loans and from 1.125% to 2.00% for SOFR and alternative currency loans based on the Company’s Total Net Leverage Ratio, as defined in the Credit Agreement. In addition, the Credit Agreement is subject to an annual commitment fee, payable quarterly, which ranges between 0.20% and 0.25% of the daily average undrawn balance of the revolving credit facility based on the Company’s Total Net Leverage Ratio.

Borrowings under the Credit Agreement are secured by the trade receivables, inventory, personal property, equipment, and general intangibles of the Company’s significant domestic subsidiaries. Capital distributions are subject to certain Total Net Leverage Ratio requirements and capped by an annual aggregate limit under the Credit Agreement.

(8)EQUITY-BASED COMPENSATION

The Gibraltar Industries, Inc. Amended and Restated 2018 Equity Incentive Plan (the "Amended 2018 Plan") which includes a total of 1,631,707 shares available for issuance, allows 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.

The Gibraltar Industries, Inc. Amended and Restated 2016 Stock Plan for Non-Employee Directors (the "Non-Employee Directors Plan") which includes 200,000 shares available for issuance, allows the Company to grant awards of shares of the Company's common stock to current 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.

Equity-Based Awards - Settled in Stock

The following table provides the number of stock units granted during the three months ended March 31, along with the weighted-average grant-date fair value of each award:

(1) The Company’s performance stock units (“PSUs”) represent shares granted for which the final number of shares earned depends on financial performance.

(2) The PSUs granted in 2024, based on the Company's return on invested capital ("ROIC") for the performance period ended December 31, 2024, earned 45.0% of the targeted PSUs awarded. Therefore,26,363 units will convert to shares and be issued in 2027.

Equity-Based Awards - Settled in Cash

The Company's equity-based awards that are settled in cash are the awards under the Management Stock Purchase Plan (the “MSPP”) which is authorized under the Company's equity incentive plans. The 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 deferred compensation.

The deferrals and related company match are credited to an account that represents a share-based liability. The portion of the account deferred to unrestricted investments is measured at fair market value of the unrestricted investments, and the portion of the account deferred to restricted stock units and company-matching restricted stock units is measured 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.

Total MSPP liabilities recorded on the consolidated balance sheet as of March 31, 2025 were $22.9 million, of which $4.2 million was included in current accrued expenses and $18.7 million was included in non-current liabilities. Total MSPP liabilities recorded on the consolidated balance sheet as of December 31, 2024 were $23.7 million, of which $3.2 million was included in current accrued expenses and $20.5 million was included in non-current liabilities. The value of the restricted stock units within the MSPP liabilities was $17.0 million and $18.1 million at March 31, 2025 and December 31, 2024, respectively.

The following table provides the number of restricted stock units credited to active participant accounts and the payments made with respect to MSPP liabilities:

(9)PRODUCT WARRANTIES

The Company generally warrants that its products will be free from material defects in workmanship and materials. Warranty reserve estimates are based on management’s judgment, considering such factors as historical experience, anticipated rates of claims, and other available information. Management reviews and adjusts these estimates, if necessary, based on the differences between actual experience and historical estimates.

The reserve for product warranties is presented within accrued expenses on the Company’s consolidated balance sheets. Activity in the product warranties is summarized as follows (in thousands):

(10)EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS

The Company periodically undertakes restructuring initiatives as part of its focus to improve operating performance and optimize its business portfolio. These initiatives have led to outsourcing or discontinuing low-volume, low margin products, selling or exiting less profitable businesses or product lines, or reorganizing the Company's manufacturing footprint. As a result, the Company has incurred costs related to discrete restructuring events for moving and closing facilities, severance, inventory write-downs, and warranty costs associated with discontinued product lines during the three months ended March 31, 2025.

The following tables set forth the exit activity costs and asset impairment charges (recoveries) incurred by segment related to the restructuring activities described above (in thousands):

The following table provides a summary of where the exit activity costs and asset impairments were recorded in the consolidated statements of income (in thousands):

The following table reconciles the beginning and ending liability for exit activity costs recorded in current accrued expenses on the consolidated balance sheets relating to the Company’s restructuring efforts (in thousands):

(11)INCOME TAXES

The following table summarizes the provision for income taxes for continuing operations and the applicable effective tax rates:

The effective tax rate for the three months ended March 31, 2025 was greater than the U.S. federal statutory rate of 21% due to state taxes and nondeductible permanent differences partially offset by benefits related to tax credit generation or utilization and favorable discrete items due to an excess tax benefit on stock-based compensation. The effective tax rate for the three months ended March 31, 2024 was greater than the U.S. federal statutory rate of 21% due to state taxes and nondeductible permanent differences partially offset by favorable discrete items due to an excess tax benefit on stock-based compensation.

(12)EARNINGS PER SHARE

Weighted average shares outstanding for basic and diluted earnings were as follows (in thousands):

The following table provides the potential anti-dilutive common stock units not included in the diluted weighted average shares calculations (in thousands):

(13)SEGMENT INFORMATION

The Company hasfour reportable segments: Residential, Agtech, Renewables and Infrastructure. The Company's reportable segments are each managed separately because they design, engineer, manufacture, and where applicable install, distinct products with different production processes.

•Residential consists of operating segments that sell the following products and services to major retail home centers, building material wholesalers, building product distributors, roofing distributors, residential contractors, property management companies, manufactured housing dealers, postal services distributors and providers, and online direct to end consumers: roof and foundation ventilation products, single point and centralized mail systems and package solutions, outdoor living space products (sun-shading), rain dispersion systems, metal roofing job site services, and other construction accessories.

•Agtech consists of an operating segment that sells the following products and services to large-scale indoor commercial growers, agricultural research, development facilities, as well as convenience store, travel centers, food retailers, and quick-serve restaurants: design, manufacture and build controlled environmental agriculture, custom greenhouses and structural canopies.

•Renewables consists of an operating segment that sells the following products and services to developers, EPCs and owners / operators of solar fields: design, manufacture and install solar energy mounting systems including foundation, racking, and electrical balance of system.

•Infrastructure consists of an operating segment that sells the following products to commercial and transportation contractors and fabricators: expansion joints, structural bearings, rubber pre-formed seals and other sealants, elastomeric concrete, and bridge cable protection systems.

The accounting policies of the Company's segments are the same as those described in Note 1 "Summary of Significant Accounting Policies" included in the Company's annual report on Form 10-K for the year ended December 31, 2024. The following tables illustrate certain measurements used by management to assess the performance of the segments described above (in thousands):

Footnotes:

(1)The significant expense category and amounts align with the segment-level information that is regularly provided to the CODM.

(2)Operating expenses for each reportable segment includes inventory and manufacturing expenses, employee compensation, depreciation and amortization, freight services, other costs of sales expenses, and other selling, general and administrative expenses.

The following tables are the reported segment’s and unallocated corporate reported depreciation and amortization (in thousands):

The following table is the reported segment's and unallocated corporate assets as of (in thousands):

The following presents disaggregated revenue by timing of transfer of control to customers by reported segment (in thousands):

(14)SUBSEQUENT EVENT

In April 2025, the Company's Board of Directors authorized a new share repurchase program of up to $200 million of the Company's issued and outstanding common stock. The new program has a duration ofthree years, ending April 30, 2028. Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations. Any such repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The repurchase program may be suspended or discontinued at any time at the Company's discretion. The Company has not made repurchases under the new repurchase program as of April 30, 2025.