Greetings, and welcome to the Gibraltar Industries Q1 2022 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Carolyn Capaccio of LHA Investor Relations.
Thanks, operator. Good morning, everyone, and thank you for joining us today. With me on the call is Bill Bosway, Gibraltar Industries Chairman, President, and Chief Executive Officer, and Tim Murphy, Gibraltar's Chief Financial Officer. The earnings press releases that were 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, gibraltar1.com. As noted in the earnings press release issued today, Gibraltar has reclassified the processing equipment business in the Agtech segment as held for sale with the first quarter of 2022 results, and has removed the related revenues and expenses from the processing business from its adjusted results. 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.
Also, as noted on Slide 2 of the presentation, the earnings press release and slide presentation contain forward-looking statements with respect to future results. These statements are not guarantees of future performance and 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 filing, which can also be accessed through the company's website. Now, I will turn the call over to Bill Bosway. Bill?
Good morning, everybody, and thank you for joining today's call. We'll start with an overview of the first quarter results, the current operating environment. Then Tim will review our financial performance. We'll then talk to our current trends and our key initiatives and guidance for the year, and then we'll open the call up for questions. Let's turn to Slide 3, first quarter results. We got off to a solid start to the year and delivered double-digit revenue and earnings growth in the quarter, especially given the headwinds from solar panel supply issues, persistent inflation, labor availability, and general supply challenges facing our end markets. Revenue reached $316 million, up 10.5% on a reported basis, 11.8% on an adjusted basis, all of which was organic growth.
Adjusted operating income grew 17%, Adjusted EBITDA grew 12.1%, and Adjusted EPS grew 11.1% to $0.60 per share. Customer activity remained robust, with total company backlog reaching $433 million at quarter end, up over 23% versus prior year, driven really by broad-based end market demand across Gibraltar. As mentioned in our Q4 of 2021 earnings call, 2021 was a tremendous, albeit tough learning environment, but the experience really forced us to challenge many of our internal and end market operating paradigms. I think as a result, I believe we are in a much stronger position today to deal with current market dynamics, and we were able to demonstrate some of that strength in the first quarter. Let me share a few comments about our segments, and then we'll start with renewables.
In renewables, as I communicated during our Q4 of 2021 earnings call, we expected a challenging Q1 due to ongoing industry panel supply issues, subsequent field project inefficiencies, and additional structural steel inflation. Admittedly, our results were less than favorable or less favorable than we expected. We had a substantial number of projects in process in the Northeast during the quarter, many of which were pushed from Q4 of 2021 due to panel supply. These projects were further impacted by tough weather conditions in both January and February, compounding our challenge with execution. I'll circle back in a few minutes and address the current status of the renewables market and our expectations for our business for 2022. Let's switch to residential, where revenue grew 28%, the seventh consecutive quarter of double-digit growth.
Adjusted operating margin reached 18.8%, up 240 basis points over last year. The residential team has delivered back-to-back stronger performance quarters for both revenue and margin, and we have solid momentum moving into the second quarter. Our participation gains in 2021 and the carryover effect of these initiatives, along with additional participation gains in 2022, continue to drive the business. As well, as much as I am not a fan of investing in additional inventory to run the business, our strategy to invest in it last year and early this year has been beneficial. First, it bolstered our position to support customer demand starting the year right out of the gate. We were able to use some production capacity in Q1 to start building inventory to meet customer demand in Q2.
We created better price cost alignment while we continued to manage commodity price variability. It also mitigated supply issues of key materials, particularly aluminum. Finally, it helped provide better visibility for our customers, suppliers, and our business. Switching to Agtech. In Agtech, margin improved 160 basis points over last year on 2.9% lower volume while continuing to manage through and overcome inflation and supply challenges. We continue to gain momentum from the team's work to build and integrate stronger processes and systems for the Thermo Energy acquisition, which if you recall, is our main operation serving our produce business. Relative to demand, new bookings continue to accelerate and backlog for the business was up 18% at the end of the quarter, driven by strength across all three core greenhouse growing businesses, produce, commercial, and cannabis.
As a result, we expect revenue to accelerate in 2022 and margin to reach double-digit performance for the year. Also, as mentioned at the beginning of today's call, we made a decision during the quarter to exit the processing equipment market, and we've adjusted our revenues and expenses to account for its reclassification. Despite the cannabis retail market growing over 25% in 2021, the market for processing equipment used to extract oils from cannabis and hemp remained flat. More importantly, the market is 50% smaller than it was in 2019. The market reduction is driven somewhat by the pandemic and growing pains of being a new market, the latter of which, in retrospect, contributed to an overbuying of equipment to support hemp processing demand during 2018-2019 hemp gold rush, which really came to an end in early 2020.
Although we expected the hemp gold rush to impact the market, we did not anticipate the magnitude of the oversupply condition. Essentially, we missed it, and I take ownership for that. In summary, the market has struggled to return to 2019 levels, and the current projection for recovery no longer fits our timetable for growth and return generation. Now our Agtech Team is putting 100% of its focus on accelerating our core, faster-growing, and more profitable greenhouse solutions that support our growers in the produce, commercial, and cannabis markets. The infrastructure team continued to drive strong revenue growth in the quarter, but also continued to fight steel price inflation headwinds, particularly structural and plate steel. As well during the quarter, the team experienced labor inefficiencies with the startup of the second shift capacity to support increasing demand.
Finding people in January and February while COVID was peaking, along with general labor availability at that time, added to the challenge. Let's turn to Slide 4. We'll talk about today's market environment. We remain focused on our people, our supply chain, transportation, and the health of our team. Relative to Q4 2021, I think we've made solid progress, but we expect the macro environment to remain very dynamic for the rest of the year. In talking about our people, finding and retaining people continues to be a challenge, but we are in a better position today. In 2021, we accelerated the conversion of temporary employees to full-time positions, which really helped with hiring and retention as we moved into this year. We're also sharing resources across production facilities to help support our businesses with significant demand.
Our supply chain teams are managing well overall, yet we continue to deal with ongoing geopolitical issues and general disruption in the market. Our main concern currently is panel supply for the U.S. solar industry, and I'll address this in a little more detail in a couple slides. In transportation, trucking availability has stabilized as more capacity has come online. However, price continues to fluctuate with fuel prices and overall demand, which remains pretty solid. Finally, COVID. Our infection rates increased in January and February, similar to the general increases experienced across the country, which has somewhat disrupted our suppliers, some of our production facilities, and a number of solar projects in the field. Most importantly, our people have recovered relatively well. Currently, our number of active cases are very low across the company.
Let's turn to Slide 5 for a quick snapshot of what is happening with our core material costs. As a reminder, there are three core materials we use, across the company, steel, aluminum, and resin. In Q1, these materials moved in different directions, driven by some unique circumstances. Hot-rolled coil steel prices began to fall in Q4 2021 from a peak of approximately $2,000 a ton and continued into Q1, with the average price hitting a little over $1,400 a ton at quarter end. Inside Q1, there was quite a bit of price variability of hot-rolled coil steel, which caused short-term pause as the industry searched for more clarity on direction of prices. On the other hand, structural and plate steel, used in both our renewables and infrastructure businesses, continued to increase, setting new highs.
According to the April report from IHS Markit, average steel prices are expected to rise through the end of Q3 2022 and then start to level off and/or decline. I think given today's environment and the unknowns going forward, we'll remain agile and flexible as we see steel prices move. Aluminum prices have been very erratic since Q4 2021, with prices initially moving downward and then quickly increasing substantially as we entered Q1 2022. Now, the initial price increase was really driven by the European energy crisis, both availability of supply as well as cost, causing some of the aluminum smelting capacity in the region to go offline. Prices then further accelerated when the Russia-Ukraine conflict began, given Russia's role in the global aluminum supply chain. Aluminum prices are expected to increase at least through Q3 and remain high throughout the year.
Given that backdrop, here's what we're doing in this environment. Number one, keeping our price and cost inputs in balance with timely price management actions. Secondly, we're accelerating more 80/20 initiatives, specifically product line and customer simplification, to drive more productivity and cost reduction. Third, changing and/or adding terms and conditions to customer contracts in our renewables and Agtech businesses to balance risk and reward, better manage inflation drivers, and support the dynamics of today's environment. Fourth, continuing our new product introductions that are driving more value for customers while improving our margins and profitability. Let's move to Slide 6. We'll give you an update on the supply of panels for the solar industry. You know, coming into 2021, the solar industry was already dealing with general supply shortages as global demand continued to outpace supply.
The industry was also dealing with the impact of COVID across the broad supply chain, specifically in China, where 80% of the key materials and components for panels are produced. To add, early in the fourth quarter of 2020, the industry began to see inflation, which the solar industry had never experienced. In January of 2021, inflation began to accelerate at an unprecedented rate, catching the industry by surprise and effectively pressure testing every business process that no other industry had grown up with. Two additional major events occurred in 2021.
First, in June, the U.S. Customs and Border Protection issued a Withhold Release Order on silicon-based products made by Hoshine Silicon Industry, located in Xinjiang province, as a reaction to allegations of companies in the region using forced labor. 80% of global polysilicon comes from China, with approximately 50% coming from Xinjiang province. The WRO currently bans any solar panel products containing Hoshine materials from entering the US, but the WRO will allow solar panel products to be imported if the importer can verify Hoshine materials are not contained in the product. The second major event was a petition filed with the Department of Commerce claiming Chinese solar panel manufacturers were using assembly operations in Cambodia, Malaysia, Thailand, and Vietnam to avoid or circumvent duties applied to solar panels imported directly from China. This petition was dismissed in November of 2021.
A second petition was filed in 2022, which the Department of Commerce has since accepted, and subsequently launched an anti-circumvention investigation to determine whether Chinese solar cell and module manufacturers in these four countries are avoiding existing antidumping and countervailing tariffs applied to imported solar cells and modules from China. Approximately 80% of panels used in the U.S. in utility-scale projects are shipped from these four countries. If the Department of Commerce finds in favor of the complainant, future panel imports from these four countries can be assessed significant duties, up to 250%, and it is possible the Department of Commerce will make these duties or penalties retroactive to March 22nd, when the petition was accepted, or even earlier.
As a result, it makes it difficult today for a developer or utility to move forward with a solar project until there is a ruling from the DOC. A preliminary ruling is expected in late August, with the final ruling in January of 2023. What does all this mean for our renewables business in 2022? First, before the DOC decided to accept the latest petition, we had been holding discussions with customers to understand their panel supply situation, as we had concerns with panel supply challenges that we've been seeing over the last three quarters. With the recent DOC announcement, we've gone back to our customers for daily and weekly discussions to understand their current and future supply situation and their plans going forward.
We've discussed the situation with 95 of our customers, which represented 83% of our 2021 bookings, and are a good proxy for at least 80% of our 2022 bookings. Of these customers, approximately 70% are fairly confident in their current supply situation, and are assessing potential project impacts for later in the year. Our largest customer has secured and has in possession 100% of the panels needed for their 2022 projects, and is moving forward as planned. There also seems to be other panel sources available to fill the near-term supply requirements.
Panels available via safe harbor inventory, panels for sale from developers that do not have projects scheduled in 2022, and there are panel manufacturers willing to mitigate potential retroactive duty risks for customers by sharing the cost of a duty, if applied in the future, to the panels they supplied. Currently, we do not expect an impact to our business in Q2, given the current status of customer projects in process. We've had three projects canceled since the DOC began its investigation, representing approximately $1.3 million of our planned 2022 revenue. We are monitoring the situation with our customer daily, and will stay nimble to adjust as necessary, and are confident in the strength of Gibraltar's position in the renewables market. What is the potential impact to the industry beyond 2022? Here are my thoughts.
I expect today's situation will get resolved in 2022, and the solar industry will have another strong year in 2023. I also remain very confident in the strength of solar's long-term growth potential. The solar industry is working diligently with the administration to help it understand the immediate and long-term impact of the DOC investigation on the $30 billion U.S. solar industry, which employs over 230,000 people. As important, the impact to the administration's climate agenda over the next three to five years if the solar industry is paused and loses significant momentum in the next 12-18 months.
Everyone should remember that solar energy production has been the fastest-growing and largest source of renewable energy production in the U.S. over the last five years, and it is really, really important for the U.S. economy going forward. The entire administration is now aware of the recent developments, and is working with the industry and other constituents to bring a resolution, and I expect a positive outcome later this year. With that, I'll turn it over to Tim for a detailed review of our results.
Thanks, Bill, and good morning, everyone. I'll take you through our consolidated and segment results starting on Slide 7. As a reminder, my discussion will cover results from continuing operations and also excludes the related revenues and expenses from Agtech segment's processing equipment business, which has been removed from the adjusted results for both 2021 and 2022, as we classified this business as held for sale with this quarter's results. A summary of the 2021 adjusted results, restated to reflect the removal of the results of the processing business, is available on the investor relations portion of our website at www.gibraltar1.com. Adjusted first quarter revenue increased 11.8% to $316 million, and this growth was purely organic. It was driven by participation gains and price management in the residential segment, partially offset by continued supply chain challenges in the renewables segment.
Backlog at quarter end approximated $433 million, up over 23% from first quarter 2021, driven by solid end market demand. Adjusted operating income and Adjusted EBITDA increased 17.2% and 12.1% respectively in the first quarter, with Adjusted EPS up 11.1%. Margins in the quarter were driven primarily by profitability expansion in the residential segment through participation gains, price management, and 80/20 initiatives, and in the Agtech segment through 80/20 and lean enterprise initiatives, supply chain optimization activities, and favorable business mix. Renewables margins were pressured, as we had expected, by the carryover of supply chain challenges that affected the industry in 2021, and also by the project inefficiencies resulting from severe winter weather in January and February.
Infrastructure margin was impacted by steel inflation, labor availability, and second shift startup inefficiencies to support demand in the fabrication business. Our income tax rate in the first quarter increased over the prior year rate due to lower excess tax benefits from stock compensation and a difference in the allocation of income to states where we generated revenues. Now let's review each segment starting with Slide 8, the renewables segment. Segment revenue decreased 7.8%, all of which was organic. As we communicated on our fourth quarter call, the industry-wide supply chain challenges that affected the solar industry throughout 2021 continued to delay and disrupt project schedules in the first quarter, and severe weather in the Northeast in January and February also contributed to project delays and disruptions. These pressures began to abate in March when we saw an improvement in project margins.
We continue to work with our customers to ensure panels are in hand before we begin to manufacture racking and mobilize our field installation crews. Regardless of the revenue decrease, end market demand remained robust, with new bookings up 22% over the first quarter last year, resulting in backlog up 41% compared to the prior year. To date, as Bill mentioned, we have three orders canceled as a result of the anti-circumvention investigation, and our team is in constant contact with all customers to ensure panels are secured for projects. We've talked to customers that make up over 80% of our 2022 planned backlog and bookings, and the vast majority are not currently anticipating impacts to existing projects. Segment adjusted operating loss was $4.3 million, and the EBITDA loss was $1.9 million.
Adjusted operating and EBITDA margins contracted to -5.4% and -2.4% on project and field management inefficiencies related to project delays and disruptions, as I described. Again, these factors began to abate in March, and we expect significant sequential margin improvement in the second quarter, driven by stronger revenues as construction season begins, improved field efficiencies as the severe weather impact has ended, and we have less project disruption from customer supply chain issues. Our integration of the renewables business remains on track, with information systems, supply chain, and insourcing activities gaining momentum per plan. As Bill mentioned, we continue to monitor the impact on our solar customers of the Department of Commerce's panel anti-circumvention investigation. Let's move to Slide 9 to review our residential segment. Segment revenues increased 28% organically, our seventh consecutive quarter of double-digit growth.
Revenue is driven by market, price, and participation gains in building products and mail and package businesses. We're seeing strong traction in participation gains with new customers, additional product offerings, and expanded geographies. There was an impact from the participation gains we achieved in 2021, as well as new wins benefiting first quarter 2022. We expect the momentum in this segment will result in strong growth continuing in the second quarter. Segment Adjusted operating income and EBITDA grew 46.5% and 41.4%, respectively. Adjusted operating and EBITDA margins improved 240 and 190 basis points, respectively, as we achieved improved price-cost alignment, enjoyed the benefits of favorable business, product, and customer mix, and as our 80/20 and product redesign initiatives continued to drive year-over-year margin improvement.
We continue to work with our supply chain partners to support our customers' needs and are maintaining our focus on price-cost management, effective staffing management, simplification, inlining, and automation. As we've previously mentioned, finding temporary employees continues to be a challenge, and we took advantage of the seasonally slower first quarter to increase production to ensure we're able to meet our customer demand as we move into the seasonally stronger period of the year for these businesses. We're also making additional investments in information technologies to increase internal efficiency and support our customers' efficiency. We expect continued top and bottom line growth for this business this year. Now let's move to Slide 10 to review our Agtech segment.
As I mentioned earlier in the call, we've classified the processing equipment business, which accounted for 10% of the Agtech segment's 2021 revenue, as held for sale at the first quarter 2022 results and removed the related revenues and expenses of this business from adjusted segment results. Adjusted segment revenue decreased 2.9% through project delays as states and local agencies continue to work their respective permit backlogs and the scheduled timing of projects. Despite near-term project schedules causing revenue delays, market demand across produce, commercial, and cannabis continues to grow, with our order backlog increasing 18% in the quarter.
Segment Adjusted operating and EBITDA margin improved 160 and 140 basis points, respectively, on improved business mix, continued execution, 80/20 and lean enterprise initiatives, and integration activities. We are investing this year in supply chain optimization projects with a new dedicated supply chain leader, closer relationships with key suppliers, improved material planning management, and transportation logistics and scheduling. We expect positive margin momentum to continue this year as we convert strong backlog, make additional system improvements, and benefit from an improved business mix. Let's move to Slide 11 to review our Infrastructure segment. Segment revenue increased 13.9%, driven by growth in fabricated products. While order backlog declined a few million dollars from last year on timing of orders and revenues, pipeline and bidding activity remains strong.
We continue to expect the positive impact of incremental government spending on the infrastructure business towards the end of 2022. Segment Adjusted operating and EBITDA margin decreased year-over-year, but remained flat sequentially as steel inflation impacted fixed-price projects that were booked in 2020 and early 2021. Margins were also affected by the fabrication business experiencing challenges with labor availability and inefficiencies related to adding second shift capacity to support increased demand. We expect margins to improve through 2022 as incremental capacity becomes more efficient and orders for higher margin non-fabricated product increase as we move into the construction season. Now let's move to Slide 12 to discuss our balance sheet and cash flow. At March 31st, we had $352 million available on our revolver, cash on hand of $16 million, and our net leverage is approximately 0.2 x.
We used $7.8 million in cash from continuing operations in the quarter, primarily in working capital investments. Receivables, as is typical in first quarters, were affected by a seasonal timing of revenue during the quarter, with strongest revenues in March. The investment in receivables normally reverses in the second half of the year as revenues peak and begin their seasonal decline. As Bill mentioned, we invested in inventory to ensure strong customer support during a challenging supply chain and inflationary environment, and shifted some production into the first quarter from later in the year in anticipation of the possibility of temporary employee challenges during the seasonal peak. We don't typically like inventory builds, and we've been heavily invested over the past few quarters to allow us to navigate through the current tough supply chain environment. We have been able to gain participation precisely because of having product.
We are winning business because, among other reasons, we've maintained the ability to deliver at high levels. We're also carrying more finished goods during the seasonally slower first quarter as we built more to avoid having to hire as many temporary employees to ramp production as we have historically. Payables were affected by timing of inventory purchases both in Q4 and Q1, and the growth in other liabilities was driven by an increase in billings in excess of cost, which is the result of timing of billing based on contractual project billing schedules.
If you look back in time, our fee-free cash flow as a percentage of revenues has typically run in the high single digits%, and we expect to return to more normal levels of positive free cash flow during 2022, with a target of generating approximately 10% in 2022 on improved profitability and lower working capital investment. We expect to use generated cash flow to fund repayments on our revolver, investments in growth, including opportunistic M&A, and on our newly announced stock repurchase authorization, with the latter two items supplemented by opportunistic use of our revolver, depending on the timing of any M&A or repurchases during the year. Now let's move to Slide 13 to discuss our new share repurchase program. Our operating plan anticipates that we'll generate significant cash flow this year and through 2025, and we have an unlevered balance sheet.
As we believe Gibraltar's intrinsic value is not properly reflected in the current valuation, and that we'll have sufficient cash to deploy into operations to both strengthen our leadership position in our markets and offer incremental returns to shareholders, we asked our board of directors to authorize a stock repurchase program for the first time in Gibraltar's history. Our board approved a $200 million common stock share repurchase plan ending May 2, 2025. The amount and timing of any share repurchases will depend on market conditions, but we may make limited use of the revolver to capture opportunities to generate incremental returns for shareholders. Now I'll turn the call back to Bill.
Thanks, Tim. Let's turn to Slide 14 for an update on some key trends as well as our initiatives for each of the businesses. We'll start with Renewables. Despite the current challenges facing the solar industry, our customers remain very active. New bookings are on plan and backlog increased 41% by quarter end. We have four key initiatives for the business. First, as discussed, we're working diligently with customers on panel availability and project execution plans. Secondly, we're upgrading our operating systems and processes to support growth and improve execution performance. Third, we're supporting the ramp-up of the TerraTrak tracker platform, as well as the development of our new 1P product line for launch in Q4. Fourth, we're implementing the TerraSmart acquisition in sourcing and supply chain cost synergies originally planned for 2022 in both Q3 and Q4.
Switching to Residential, the market remains relatively strong, both remodel and repair as well as new construction. Demand for single-family homes continues to outpace supply, and there is a large inventory of existing homes that are aging out and in need of repair and upgrades. While we expect multiple interest rate increases to have some impact going forward, we've not seen a material impact to date. We also continue to gain participation, a focused initiative we've had success with over the last five quarters. We delivered strong revenue and margin performance in Q1. Customer backlog and order activity are solid as we enter the second quarter, and our outlook is positive for growth and margin expansion in 2022. Our four initiatives for the residential business are also remain on track. One, expand participation gains further through new products and services, key customer expansion and geographic expansion.
Secondly, continue our price management discipline and proactively partner with customers as market dynamics evolve. Third, execute our ERP implementation and system upgrades. Four, accelerate 80/20 and automation projects to help offset labor and supply chain disruption, especially in our peak season quarters, Q2 and Q3. Let's move to Slide 15. In Agtech, our commercial segment continues to see solid growth across all businesses, with floriculture, research facilities, retail, and car wash leading the charge. We also see solid investment in the produce growing segment that should drive market growth of 7%-8%, similar to the annual growth rate over the last five years, and we expect the cannabis growing segment demand to accelerate as licensing approvals are implemented for states that legalized in 2020.
Our four initiatives in the Agtech business are, number one, execute our order backlog with higher margin produce projects and deliver margin improvement as planned. Execute well on participation gains with our new retail customer, and scale and support accelerated expansion plans with our car wash partner. Strengthen our supply chain for roofing structures and glass to eliminate and/or minimize project disruption in the field. Finally, exit the process equipment business by year-end. In our infrastructure business, we see state and federal Department of Transportation budget funding becoming more consistent and providing a more predictable cadence. This cadence is driving solid investment in bridges as well as surface protection for bridges, runways, and structures. We also expect the implementation of the infrastructure bill to drive additional demand starting later in the year.
Our four initiatives for the infrastructure business are, one, mitigate structural and plate steel inflation through 80/20 and price management initiatives. Secondly, expand our engineering design capacity to support accelerating demand. Third, add and optimize production capacity to support demand. Four, continue process and system upgrades for manufacturing operations. Now let's move to Slide 16, and we'll review our 2022 guidance. We reaffirm both revenue and earnings guidance for the full- year 2022. Consolidated revenue is expected to range between $1.38 billion-$1.43 billion, compared to $1.32 billion in 2021. GAAP EPS is expected to range between $2.80 and $3, compared to $2.25 in 2021.
Adjusted EPS is expected to range between $3.20 and $3.40, compared to $2.86 in 2021. Given our solid start in the first quarter and current demand and outlook across Gibraltar, we are confident in our revenue margin guidance for the year. Renewables is on track to improve in the second quarter, and we have taken into consideration the industry panel supply situation in our current outlook for the year. As well, we see strength and momentum in the residential business with good performance continuing, Agtech's performance improving, delivering solid growth and double-digit margin for the year, and infrastructure having a solid year with favorable business mix, good volume, and improved operating efficiencies.
The broad strength of Gibraltar is absolutely helping us navigate through the current solar industry headwinds in a relatively effective way. With that, I wanna thank everyone on the Gibraltar team for their continued effort, agility, and resiliency in this environment. We are executing well in 2022, and are focused on delivering a great year. Now let's open up the call, and we'll take your questions.
Ladies and gentlemen, we will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Daniel Moore with CJS Securities. Please proceed.
Thank you, good morning, Bill. Good morning, Tim. Thanks for taking the questions and all the color. Start with renewables. You mentioned obviously you expect significant sequential margin improvement in Q2. Can you provide a little bit more specificity or maybe a range you're targeting and, you know, maybe a bridge of the key factors that are changing or abating, giving you that confidence, whether it's revenue, less, you know, how much from what less severe weather, supply chain customer, supply chain disruptions, just sort of, you know, how does the math add up and what does it add up to from your perspective? Thanks.
Yeah. Thanks, Dan. If you remember going into the year, we had the plan for renewables to run double-digit margin, and we still feel solid about that plan despite the start to Q1, and a lot of it has to do with our confidence in what we started to see in March as things abated. This DOC investigation has actually driven everyone to be much more in depth, have a much better in-depth understanding of what panels are available and which ones are not. That actually provides a benefit in terms of having a little bit more straightforward planning associated with how we execute our projects.
As tough as the investigation has been on the industry in the short term for a lot of folks, for us, it's actually creating more visibility as to what we do and do not have such that we don't deploy in an inefficient way, if you will. We expect and see pretty good momentum going into Q2 and significant improvement based off what we saw in March and what we're seeing now, and we think that will continue to accelerate into Q3 and Q4 as well.
Not to get too precise, but should we think about, you know, double-digit margins in the back half of the year versus sort of the ful- year, relative to what we saw in Q1?
Yeah. We're still planning on, and we still have a target to hit double-digit margins for the year, which implies that Q2, Q3 and Q4, obviously, we have improvement that we're expecting to read through.
Got it. Overall, the guide obviously hasn't changed. You know, what I'm hearing is, coming out of Q1, I would've expected maybe a little bit more strength out of resi in the plan and a little less out of renewables. It doesn't sound like that's the right takeaway from what you're saying.
Well, it's, you know, on the renewable side, it's kind of interesting now because as I mentioned, we've had three projects that have been delayed that customers are telling us about, and it's $1 million, a little over $1 million impact. And I think a lot of our customers, as we talked about, we talked to, you know, 95 plus customers and said, "Look, what are you seeing? What do you have on hand in possession?" And there's a very large percentage of those that feel pretty good about the projects they have planned for 2022. And if you think about it, if you're in a project right now, you have to have a panel in Q2, right? I mean, that panel had to be here some time ago, you would think.
I think as you get further out in the year, there may be some news, but at the same time, I think the administration and the DOC and everybody involved in this will bring this thing to a conclusion one way or the other, and that'll be helpful as well. Right now, our outlook for the business hasn't changed a whole lot relative to the DOC investigation. We do think there'll be some impact, and what we've done is in thinking about our guide for the year, taking that into consideration that there are some scenarios that could occur and we feel pretty strongly we can offset the different scenarios accordingly and still deliver a full- year through the strength of the rest of the business, residential, Agtech and infrastructure.
That's helpful. Maybe one more, and I'll jump back in queue. In terms of participation gains, which, you know, seem to have been accelerating through the back half of last year, talk about specific product solutions where you've, you know, kinda taken the most share and what your confidence that those gains are permanent versus, you know, temporary over the longer term. Thanks again for the color.
Yeah. Well, you know, market share gains are as permanent as you prove them to be, right? I mean, it's based on you performing and satisfying and delivering value to your customer. If you don't, you have the chance to lose them. In general, I think they're pretty sticky as long as we continue to perform, and the proof in that is the fact that they continue to grow. In terms of what types of gains, I'll give you a couple different examples. It's a variety of things, whether it's been through geographic expansion, we've had some new products that have come out. We've actually broadened our base with existing customers. Frankly, a lot of that's related. We've earned that right to have that conversation because we've been able to deliver in a pretty tough 2021 supply chain environment.
In fact, just last week, we were awarded a significant amount of business because we stepped up in 2021, and that was verbalized in front of a large team from our customers. It's those types of things that I think are really important. I think the other thing that we've invested a lot in is digitizing the front end connectivity with our customers. Taking out that cost of doing business with us, not talking about pricing of the product, but taking out the business costs, or lowering that business cost has been pretty impactful, and that's why we've been so adamant about investing in our you know, our IT systems to kind of change the game in this traditional, more commodity-like marketplace.
Those investments we started making in early 2020 and continue, I think, are also paying off on top of the other things I mentioned.
Very helpful. I'll jump back with any follow-ups. Thanks.
Yep. Thank you.
Our next question comes from Julio Romero with Sidoti & Company. Please proceed.
Hi, guys. This is Noah on for Julio. Thanks for taking the questions. I had one on Agtech . Could you speak to how you view the Agtech business going forward and talk about some of the organic and inorganic opportunities for the segment?
Yeah. On the organic side, if you think about the process equipment coming out of the portfolio, we're kind of back focused on the roots we've been in for 80 years. Over the last couple years, we've added more emphasis on produce in particular, which is a relatively fast growing end market with a lot of investments going in in North America, particularly in the U.S. here in the last year, but continues in Canada as well. We're in a really good position to take advantage of that. We made an acquisition to put ourselves in that position. That was the Thermo acquisition a couple years ago that we've since integrated. In the demand profile, that business continues to grow, the number of projects in flight, the backlog, et cetera.
We're really excited about the investment dollars going in the end market to build out these structures. We feel like we're in a much better position to support that today, going forward. We're very bullish about that with the trends going on in market all the way through our ability to now support that in a pretty significant way. Our commercial business, which actually is our historical business, today is actually our biggest segment. If you look at our three segments, commercial is number one, and produce is a close second, and then cannabis is our smallest, but an important segment as well. That commercial segment covers everything from floriculture to retail to research facilities with universities to car wash initiatives, botanical gardens and so forth.
Surprisingly, that business has remained very strong and very active, and there's a lot more funding flowing there as well. We're quite excited about that, and that's a business that has historically performed very well, both top and bottom line. If you go back to our 2019 results for Agtech, when that was our core focus, which is what we're now back to, you know, we were running margins in excess of 15%. We know how to do this and do it well, and now that the top line, the backlog continues to build, we feel really good about the demand in the commercial and the produce segments continue to accelerate. That brings me to cannabis.
Cannabis from a growing structures perspective, we've actually been in since 2018 when we acquired a company called Nexus. Nexus is based in the Denver area, and they were really one of the first folks that learned how to build structures appropriately to help grow cannabis in an indoor setting in a controlled environment. We had a very strong year in 2019 and, you know, all the things we talked about relative to permitting and expansion in the last two years for that industry has slowed, but boy, we're really starting to see activity pick up and our backlog has grown in there as well. You'll see a stronger year in cannabis growing structures this year for us as well.
That's why our confidence in Agtech this year as we continue to make progress starting last year. We said sequentially we're gonna get better every quarter on margin, and we have. Not as fast as I would've liked, but we've continued to improve. You'll see us generate double-digit margin performance for the year in the Agtech business this year, and you'll see us grow as well. That's one of the carries, the strength of the team that helps us, this year, particularly if there's something that happens in the solar industry that we're not anticipating, today. It's a long answer to your question about the Agtech business relative to are there bolt-on opportunities. Yeah, there are.
Our key value proposition, though, has a lot to do with our domain expertise, with all the systems that we help customers select and integrate as we design and build and construct, the facilities that we do across our growing sites.
Okay. Perfect. Thank you for that color. I just had one more circling back around to renewables.
Mm-hmm.
You kind of touched on it a little bit, some of the challenges you had in the quarter. Would you say that weather, supply chain was a bigger factor? Do you see supply chain getting better or worse?
Well, weather was a big impact in January and February. If you think about the population in U.S. and you think about where C&I solar installations are heavily oriented, traditionally it's been in the Northeast because it's highly populated. Unfortunately, the projects that were supposed to be done in Q4 of 2021, because of panel supply and other supply chains got pushed into January, February timeframe, and then we got hit with some unfortunate weather, and that was a problem. That can be very impactful if we haven't priced for that. Typically, projects that go into heavy weather months like that are priced differently than they would be for those that we know are gonna land in other quarters where the weather isn't so extreme.
We just didn't have that advantage because those were delayed projects. It got double whammy there, if you will. I think that was a big incremental impact in Q1 that was unfortunate. The supply chain, you know, relative to panels, which has been an issue for three quarters now, has gotten a little bit better, but I don't think it's because it just got better. I think it's because frankly, there's been so much emphasis on it that we, as well as I'm sure others, have really had to sit down with customers and talk through what they actually have in hand, in possession versus, you know, what they think they may be able to get. That's been a challenge the last three quarters.
Now that we have this new development in the industry with the DOC investigation, it's actually forced us and our customers for every project that's in flight or in plan to understand what is already in hand because if you don't have your panel before March 22nd, then depending on the outcome of the investigation, if it goes in favor of the complainant and you bought your panel after March 22nd, you have risk of these retroactive duties. Everybody in the industry the last four weeks is really trying to hone in on what they have. That makes it actually easier for us to execute around knowing what is there versus, you know, what may or may not be there. That's really been the last three quarters in a lot of ways in the industry that we're dealing with.
We're not unique to that, but that's kind of more of an industry situation. We're actually a little more confident knowing what's out there than we were the last three quarters despite the supply chain for panels not actually being a whole lot better, if that makes any sense.
Yeah, that makes sense. Thank you very much. I'll go ahead and hop back in queue.
Our next question comes from Ken Zener with KeyBanc Capital Markets. Please proceed.
Good morning.
Good morning.
Quite the quarter. I have some broad questions just to put, you know, the actions of the quarter and the choices you're making kind of within the context or a bridge from the Analyst Day, if that's okay with you. Just to kind of see how these things are shifting given the landscape. Just looking at Agtech. In your Analyst Day presentation, cannabis was kind of about 30% or was supposed to grow to about 30%. You've mentioned it's about 10% of sales. That you're divesting today. That was a large piece of that growth platform when you think about the 2022 targets.
Could you maybe just give us a little sense of how this decision kind of impacts that 25 goals that you laid out, just so we could have a you know a better interpretation of that presentation?
Yeah. Ken, good question. You know, it was 10% of 2021 sales, so you know, call that $19 million. What you saw on the Investor Day was still heavily oriented on cannabis, with growing, the structures piece. That's the bigger piece and always has been of that business. We don't really see-
Got it.
That being impactful in 2025. The other thing I'd say is the produce business is just, you know, over the last six months, we're seeing accelerated at a faster clip than we probably thought then, and we'll more than offset the $19 million that we're talking about today
Good. Let me just keep drilling down. I apologize. I just think it's this is actually a very interesting quarter for you guys to highlight the details of your business, which are not all easily understood. That vegetable in last quarter, this came up in conversations I had. You know, I really had prior to last quarter approval of vegetable, right? The greenhouse. Could you go into that whole approval process? Because, you know, on the residential side that I cover, you know, we hear about approvals and that type of stuff. The last quarter was really the first time I heard about delays due to approvals and stuff. Could you give us a little more understanding of that given the increasing importance of this business given the divestiture?
Yeah. Ken, a lot of the permit delays that we're seeing, it's in one region, just across the border, and it's around water rights. There's an area in Canada where a lot of these greenhouses go. They have a significant amount of water committed to people who, you know, applied for the right to use water and aren't using that water. The locality is working on saying, "Hey, use it or lose it." We have customers that need water and/or need to move, so they're a little bit in a different location where they have access to water. That's been going on for probably three quarters-ish. It's being fixed. It's just it moves at a slower pace.
I think the other impact on sort of, you know, scheduling permits is really still around the states that legalize cannabis, like New York State. New York State in the last, I'm gonna say month, but it's pretty recent, allowed I think 46 people who had a license to do, it might have been hemp, to grow cannabis for the recreational market. They still haven't selected the licensees for dispensary side, nor have any of the licenses that they just granted been permanent. They're sort of a, it's for a year, I think it goes through, like, next December. Still some of that legislation delay from the states that legalize. It's starting to move, but it's just a little slower.
We've got some, you know, projects that are, you know, people won't invest until they have a permanent license. You know, New York State being an example, it could be another three to six months before we see some activity there.
Appreciate it. So the vegtable related to the water in Canada, why do you see that as a perhaps near-term cycle issue as opposed to a secular issue given something else if it wasn't anticipated?
Yeah. It's one region where we operate. If you go get land 15 miles away, you're not stuck with that. If you're close enough to the lake where you have water rights directly from the lake, then you're not dependent on the municipality. What we've seen is growers that we work with shifting their location a little bit, you know. You need 30 or 40 acres or whatever you're gonna need. Land is available, but it just.
Okay
Delays the process a little bit. Yeah. It's not. It's a very specific thing.
Yeah. I got that. Okay.
One thing that's important to remember too is our expansion in produce, the vegetable-fruit side, has traditionally been inside that region we talked about. A lot of our growth and backlog going forward is expansion into the U.S., where there's a lot of investment going in as well. We're not as dependent on a, you know, single pillar foundation or the industry is not as expanding in the U.S., where you don't have some of those stipulations or challenges.
really appreciate that detail because that was below the surface. Second, Bill, this is more for you and I guess discussions with the board given you're making a call on the divestiture. Obviously, we'll have to see how that clears out. At least that's a clear decision that you've made. Given the buyback in conjunction with that, given these, right, you're in high growth nascent industries as opposed to the residential, but look, there's a lot of hiccups that you've been facing. Maybe some have been self-created, but more so just exogenous events. It seems as though the broader goals that you might have discussed at the analyst day as well, given the activities, challenges you're facing, how has that shifted?
It seems like you're much more comfortable saying, "Look, we have a lot of cash. We have an unlevered balance sheet. We're gonna put some of this capital back to work in the company." You know, you've created these growth platforms which you invested in. Some worked out, some haven't so far. You know, really just, you know, this idea of organic growth and share buyback, has that, you know 'cause you have a platform now that seems to offer sufficient activity. Does that really reflect a shift in terms of your discussions with the board about what you control and what you guys know? Is your organic platform so strong now that you just think you can be spinning out the cash as you execute around these 25 goals?
No, I don't think it's that. I don't wanna say black and white. I don't think it's that black and white. I would suggest that you think about we're gonna generate a lot of cash this year as well as the next, up through 2025 for the plan. You've got an industry in solar right now that's working through some big issues. You know, in the short term, we wanna have flexibility to try to drive incremental returns for our investors, while we're waiting to see how some of these industries are gonna evolve in the near term because of some of these unique circumstances.
They're gonna get cleared out, they're gonna get dealt with, but I don't want, you know, we have an opportunity here to help our shareholders and so we wanna have that flexibility to do that. It doesn't mean that our plan overall has changed. We feel like we're gonna put money to work over the next three years in a combination of M&A like we have to build out platforms further. We've got organic growth. As you saw this first quarter that grew double digit, that's gonna continue to drive the platforms, and I think we have some other opportunities to deploy capital in the near term as well. I don't think it's a wholesale change by any way, by any means.
I just think it's demonstrating some flexibility on behalf of our shareholders to react to a situation in a couple of our markets that we wanna take advantage of, in the near term, as much as anything else.
Thank you very much.
Okay.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from Walt Liptak with Seaport. Please proceed.
Hi. Thanks. Good morning, guys.
Hey, Walt. Morning.
Hey, I wanted to ask about the processing divestiture. You know, what do you envision for the timing? I think you said it was $19 million of sales. You know, what should we be thinking about for, you know, for cash inflow from it, or is it immaterial?
Yeah, I would say, Walt, you know, both timing and value are a little bit TBD, right? We've publicly announced today we've had some conversations, and we're gonna continue that. We'll keep you updated as it moves. It's not gonna be years, but I don't think it's also a month, right? Somewhere between those two brackets and more to come.
Okay. When you were thinking about that divestiture, you know, I understand, you know, some of the growth came out of it, but I had thought about all the cannabis businesses as sort of a complete package, like a system, and, you know, having a broad range of products. You know, why keep the grow part of the business? You know, why not put them all together as one business and exit that one completely? 'Cause certainly there's, you know, that one seems to be, you know, one that, you know, that's been lumpy in terms of, you know, timing on revenue and profits, et cetera.
Yeah. Walt, I'll clarify for everybody just a little bit. When you get into the growing business, it is fundamentally one business. If you think about our history, we've been in these growing structures, and they serve so many different end applications. From a go-to-market perspective, as we've talked to customers, what we found these segments a little bit differently. Look at the back end of how you support a cannabis growing site, a tomato growing site, a car wash site, a retail site. The business has very common processes across the back end, from estimating to design to manufacturing to sticking them in the ground and field execution. I would characterize this move as getting back to our growing structures core that we've been in for 80 years.
We just now have an opportunity where there's some market segments that have evolved that have unique customer sets. It's kind of coming out of one group. It's just selling to three or four different buckets. If I gave you the commercial market as example, there's six or seven segments that have always been there. Think about this as a commercial growing structures business with nine segments instead of seven. Produce being one and cannabis being one. We've been in the cannabis growing business for, you know, three, four years. That was the Nexus acquisition. Nexus also makes structures for floriculture and other types of greenhouse structures. It just happened that they had more domain experience in how to do a structure for cannabis, that's all. They do other stuff as well.
It's not as separated in the back end as you as maybe we kind of pre
Okay. All right. Fair enough.
Yeah.
I understand.
Yeah.
Okay, great. Thank you. I wanna, you know, try and drill down a little bit about the solar comments and, you know, understand that, you know, your customers are telling you that, "Hey, we got the panels for the second quarter, so these projects should be on track." You know, I wonder if you could tell us, you know, how deep did you go down into the conversations. You know, did you talk to, you know, were you able to audit it? You know what I mean? Were you able to physically see or.
You know, because we've heard some of this stuff before where customers were saying, "Hey, we got our permits," or, "Hey, we're gonna be able to get these panels," and then they weren't there. You know, how deep did you drill down with some of your top customers to understand that, you know, they were gonna be able to get these projects moving in the second quarter?
Yeah. The second quarter projects obviously were in flight. You know, you remember we're kind of POC accounting, so you know, those projects were starting Q1. We're getting some of that revenue et cetera flowing through in Q2. Sitting down with every customer, a lot of it has been face-to-face. Obviously, a lot's been on the phone. Being able to audit you know, warehouses and things of that nature for these folks, I think that you know, we've not been able to do per se. The difference is this. Our incentive before was we need to understand if you have panels or not.
If the answer was yes, the answer could be couched around the perspective of, "Yeah, we have the panels on order, and they're coming, and they'll be here in the next 30 days. We've submitted a PO form." Now it's different. Now you physically have to have the panel in hand because if you don't or if you haven't bought it, now you have this risk. It's a huge risk. So I think the mentality of the industry, us including our customers, when we talk about do you have panels, you physically do have your hand on panels, it's in their best interest to verify that in a much different way than it was just five weeks ago, and that's the difference.
That's why you hear, if you're listening to the press or you're seeing a lot of information flow on this, there's a lot of disruption right now because people are having to go back in and see what they physically have and to verify to determine whether or not they can move their project forward because that's gonna determine if they have a business the next nine months. It's a much different set of circumstances than it was over the last three quarters in terms of verification of the panel. I'm not saying the industry's perfect. Look, we're four weeks into this. It's a shock to the industry, but over the last four weeks we've talked to a lot of customers face-to-face, and that's the difference.
You know, right now we're out in the field and we see the panels in the projects that we're involved in. I think the question's gonna be what does Q3, late Q3, Q4 look like? That's what a lot of, I think, our customers are trying to figure out at this stage. Like I said earlier, we factored in some disruption in the second half relative to our full- year performance guide and looked at a couple different scenarios. You know, it's going to be an ongoing situation for sure, and I think we feel good about Q2 and we're working on everything for Q3 and Q4 as we speak.
Okay, thank you for that. I really appreciate that explanation. You know, maybe one last one on solar. You know, the loss that you did this quarter of $7 million, I wonder if you could help us understand, you know, where was that under absorption of your installation teams or you know why was that loss there? Was there extra costs in the quarter related to some of these project delays? And you know, how I guess I'm looking for some confidence that yeah, the first quarter's a one-time thing and that there's not kinda lingering costs that are gonna significantly impact second quarter or the full- year.
Yeah. Well, it's the GAAP loss is $7. The adjusted is $4.3, just to be clear. Yeah, so look, the big two things in the quarter were the costs, let's say. It's not necessarily a huge fixed cost issue, it's more of project inefficiencies. You know, if we had people, you know, when we talk about the severe winter weather, imagine going and putting foundations in the ground. That's the first step of a field. Then weather comes through and you get ice.
On the ground. You have teams in the field chipping ice away from the foundations so that you can attach the racking system to that. We thought that work was gonna be done in October, November, December, and you don't run into that. Normally, we don't schedule nearly as much work in the Northeast in the middle of the winter, and when we do, there's a different cost to our customers to account for this kinda stuff. That was tough. I mean, that drove a fair amount of our loss. A little volume, right, impacted it. Then, always some, you know, material cost alignment, less impactful, but it's there. I would do those three things.
The weather's gone, because of this DOC, but also because for the last two quarters, we've been working with our customers. You know, before we start hole forming a racking system and schedule our projects in the field, we make sure we know what panels are gonna show up and when, because you can't really manufacture the racking system efficiently until you know what panel's gonna be on that job. If we manufacture for one panel and a different panel shows up, we have to charge our customers to drill holes on each purlin in the field. We don't wanna ever have to do that. Because of all the delays we ran into last year, our process got tighter around ensuring we knew what it was before it goes to production.
Hey, Walt, one other thing I'll mention. What's different today versus just five weeks ago, the financial risk for a customer or developer in the field, by not knowing what's going on with their panels, is much greater today than it was. They cannot afford to take the risk of buying something they don't have. If they don't have it, then they know they can't get it right now without taking that risk. When you get down to the conversation, do you have it in possession, yes or no, and was it bought before March 22nd, yes or no, it's in their best interest, and they're telling us that, and that makes sense, right? That just kind of.
It forces a different discussion than over the last three quarters on panel supply, because the risk has shifted significantly to them on the potential penalties that come with doing the wrong thing. If you don't have it, you're not doing a project. If you have it, you need to verify it before we actually move forward with each other. They're not gonna move forward unless they know they have it bought and in hand and bought prior to the DOC investigation beginning.
Okay, great. That makes a lot of sense. Appreciate those answers. The three solar projects that got canceled, you know, small amount, but it sounds like that was the reason, that they didn't wanna.
Yeah.
Is that fair? That they didn't wanna take on that risk of,
Yeah, they didn't have the panels, and the panels they had on order, they're not gonna take the risk of receiving those and put them in the field because the risk of potential retroactive penalties. That's the challenge with this DOC case is the penalties. If the decision's not made till August, the penalties are said to be retroactive back to March. Between March and August, it kinda stymies folks that don't have panels. If you've got a potential penalty of 250%, the economics that you assumed on your development and the bankability that you went to get your financing on absolutely could be much different if you get charged an extra 250% on panels nine months later. The returns, it's just not worth the risk.
Frankly, your financing is not gonna line up with you until you have clarity on what your true investment thesis is, right? That's the dilemma that I think a lot of folks that don't have panels are dealing with. That's the point that we're trying to make to administration is you got 230,000 people in the U.S. working in this industry. We generate over $30 billion a year. Effectively, this thing puts a large portion of the industry on pause if they don't have panels. More importantly, it puts the climate agenda that the administration has in serious jeopardy for the commitments that we've made.
Finally, a lot of people don't even realize that solar's been the fastest-growing and makes up the most, you know, makes up for the most renewable energy that's been put in the last five years is solar. It's gonna get resolved. It's just right now, it's got a lot of people on edge, obviously, because of the DOC investigation, the way that those things work. That's a forcing function right now on do you have a panel, yes or no? That's different than the last three quarters. Absolutely.
Okay, thank you. Appreciate it.
Yep.
Thank you. Ladies and gentlemen, this does conclude the question and answer session. I would like to turn the call back to Mr. Bosway for any closing remarks.
Well, again, everyone, thanks again for joining us today. We will be presenting at the KeyBanc Conference in Boston in June and the CJS Summer Ideas Conference in July, as well as holding a few non-deal roadshows. We'll speak to you again in a few months and look forward to follow-up conversations and look forward to talking to you again in the second quarter as well. Thanks, and have a great day.
Thank you. This does conclude today's conference. Thank you for your participation. You may now disconnect.