Okay, excellent. Good afternoon, everyone, and thank you for joining Sidoti & Company's September 2026 Small Cap Conference. My name is Julio Romero, and I cover building products, industrials, and engineering construction at Sidoti & Company. Really pleased to be able to host Gibraltar Industries. Their ticker is ROCK. With us today is Bill Bosway, Chief Executive Officer, and Joe Lovechio, Chief Financial Officer. Gibraltar is a leading provider of products and services for the residential, agtech, and infrastructure markets. Their 2025 sales were 96% U.S.-based and 100% North American-based. Very pleased to have the company here today. If you do have any questions for Gibraltar management, feel free to type them into the Q&A section at the bottom of your screen. Happy to ask on your behalf if time allows. With that, Bill and Joe, we really appreciate you being here.
Maybe if you want to kick us off with a quick high-level overview of the business for those who are a little bit newer to the story.
Yeah, absolutely. Thanks, Julio. Thanks, everyone, for joining us. Yeah, just quickly, Julio kind of mentioned it, we're really a company focused in three markets. We are in the process of transforming the business, simplifying the business, with a lot of emphasis towards building products. That kind of led us to a recent divestiture of our renewables business, which was really two different transactions. Second one we finished up in July this year. Subsequent to the first sale of renewables, we also announced the acquisition back in November of 2025 of a company called OmniMax. That deal closed February 2nd, and we've been steadfast, working very hard on integrating the two leaders in this space since that time, and so we're about six and a half, seven months into heavy integration and structuring of the business going forward.
If you think of the portfolio today, as we exited the second quarter, a little over 80%, 83% was building products of our revenue, and then the rest was represented by agtech, and then our smaller piece is really infrastructure. We've been pretty open with the Street and transparent with folks about our transformation process, our intent to continue to simplify, which we will do. Not just think about the portfolio, which we get asked a lot about, and we've addressed many times, but also within the businesses, there's a lot of effort going on to simplify and structure the business to skate to where the puck's going to be, so to speak. So we've been very active, being our own activist, if you will, relative to getting ready for how to create even more value in the space that we're in.
We're doing that in a relatively challenging market in the building product space, I think as many of you know. As I said early on in this process, regardless of the market, we're going to do the hard work, the heavy lifting. That's what 2026 is all about, to get ourselves in a position where we're much stronger in January of 2027 than either of us were, OmniMax or Gibraltar, coming into 2026. We're doing that through accelerating a lot of our synergy opportunities. We're doing that through getting the right organization in place, the right structure, and we've got quite a bit done. We got quite a bit more to do, as we finish up the year and get ready for next year.
The other thing we get asked a lot about, I'm sure it may be on your mind as well, is our view of the market and what's going to happen not just in the second half, what's going to happen next year, and I'll just revert back to what we said at the end of Q2. We felt like the market was down 5% or 6% from an end market demand perspective. We said at that time, we expect that to continue into the second half. We didn't change our guide, kept it relatively wide because of, frankly, the unknowns of the macro basis, which has kind of proven out to be continuous from what we saw the first half of the year. But really trying to use our participation gains to offset some of that market degradation, while continuing to do our integration work and our structural work.
We'll see how things evolve going forward. I don't anticipate much change in the market for the rest of this year. You got midterms coming up. I think everyone's aware of what's happening day in, day out. As we get into 2027, the other question we get is: How do you think about the market then, and how are you preparing for that? What I'll tell you is in our philosophy, particularly even coming into this year, is when you think about challenging your paradigms around how to run this business and get ready for the future, that doesn't change for us, meaning that we'll ask our teams to plan on no market volume help, yet you have to deliver incremental margin performance.
We do that regardless whether the market's growing or not, because that's what really forces you to think differently about how you run your business. So we'll do a couple scenarios around flat market, down market, and then we'll have some incremental growth based on participation gains. But we'll focus on making sure that we're executing well in a flat or down market. Anything incremental that comes above that obviously converts at a higher rate because you're going to drive your margin off of fundamental cost structural things that you want to get done. That's really where the effort has been in 2026.
It's not about, "Boy, if I had more volume, I'd get more cost reduction." This is literally about taking costs out of how we run the business that is not volume dependent to start with, and then when the volume comes, obviously you want to convert on that. We've kicked that off. We started that process a couple weeks ago. Over the next two or three months, we'll iterate and finalize what we think is going to be the market. From that, we'll drive our plan as we did going into this year. I'm excited about how much stronger we'll be as we finish this year with all the work that's been done.
I will tell you, we are not done with how we're going to work the business, but also how we'll continue to simplify, as I said right up front, the portfolio, which we've been pretty open to everyone about our intent to get more and more focused on building products. Yeah, it's been busy and we're going to remain busy. I like where we are and like the market to be a little bit better, but I can't control that. We're going to focus on the things that we can and we're going to stick with our plan. I'll stop there, Julio, and I'm sure people want to dig in a little deeper on some of these things, but I'll let you take it from there, ask any questions you might have.
Yeah, absolutely. Good rundown, Bill. Maybe to start off just what's changed in the business over the last seven weeks on the demand side, on the integration side that's maybe tracking a little bit differently than what you laid out on the 2Q call?
Yeah. I don't know if the market's changed dramatically. If you think about it being down versus last year, 5% or 6%, that's what we expected going in. I think, and I know you guys may not watch The Weather Channel like I do every day, but this El Niño effect is interesting in terms of what it's been doing and where some of that activity has been, and it has a twofold impact. You have things that drive damage that has to be repaired, obviously. But when you get a lot of continuous weather pattern around wet weather in particular, it keeps contractors off the roof. Someone asked me earlier today, does that change the seasonality this year, or does people buying ahead change the seasonality this year?
I would suggest, yeah, a little bit on the how do you get on the roof and get work done when you have a ton of rain. Now look at the northeast, going to have this nor'easter hit today or tomorrow, whenever. It's going to have a ton of rain and flooding and all that. People aren't going to be out working in that. But we've got unique weather patterns this year because of this El Niño thing. We're not going to see probably a hurricane hit the continental U.S. this year, and not that we hope for that, but those are things that do impact the business at some point in time. But I would say, it's similar to what we had thought. I do think there's been some interesting weather patterns. It may move some business into a later season or earlier.
If it stays warmer longer like is projected, that could create a later season than normal. So you might have a little bit of that nuance this year. We've seen that in the past, but I'd say overall in demand hasn't really changed a whole lot from what we saw, which we didn't think was overly robust in Q2. From an integration perspective, if anything, we're pushing ourselves to accelerate. If you think that what I just described in the market is what it is and it moves into 2027, then we need to pull forward some things that maybe we planned for later, and we're going to get those done a little bit sooner. So we are going to push ourselves to do some more structural things that we may have earmarked for Q1, Q2, and try to get those done sooner than later.
Those will be helpful as we enter next year. But generally speaking, the integration's gone relatively well. It's not been perfect, as you would expect, but we're seven months into it, fighting through a pretty interesting marketplace and able to get a few wins under the belt. You'll hear about some things here in the next few months too that might be interesting for everybody. But, as we get more of this integration work done and more of the synergies across the finish line, we'll report out. And for those that do follow us, we share every quarter where we actually are, what we've implemented, when it will flow through, and how it's built into the P&L, but we won't put it out there unless it's actually implemented.
As we get through Q3 and Q4, hopefully you'll see more of that work being done, and if you recall, our plan going into this year was $20 million on a full year basis, year one. That's equivalent to $18 million this year because we will own OmniMax for 11 months. Last quarter, we came out and said we're going to do $28 million, $29 million. So we're a little bit ahead of that, obviously. We'd like to finish further ahead of that. So we've got work to do, got a lot of projects in flight. But I'd say, the lift is still there and the opportunities are there, and we're identifying more. As I said right up front, you've really got to be aggressive around how to think about the structure of the business for the future.
This market helps you think even more about it, but we were thinking that way when we jumped in, and that hasn't stopped. I'd say overall, that's going relatively well. Longer list of customer opportunities. It's tough in a down market to pry stuff away, obviously, but we've had a little success in doing that. Ultimately, at the end of the day, the value proposition that we think we can bring to the table, I think is starting to slowly resonate. A lot of good conversations happening, but we've got a few proof points that will help us market that. I'll share more of that as we get into earnings of some things we've been doing in the Pacific Northwest. I shared in Q2 a relatively good size win for us, with one of our largest customers now makes us the sole supplier, which is cool, too.
So one snowflake does not make a blizzard. We're not declaring victory by any means. We have a long way to go, but I'm pleased with the progress so far.
I like The Weather Channel. They've got good music.
Yeah. If you watch it 24/7, it's not great, so anyway.
Before I move on to the two proof points that you said, which are very key, the big supply agreement win and then the
Yeah
the synergy capture, and the run rate you are tracking at, just last one on the residential. I know you mentioned rain, El Niño, et cetera, but, just from a geographical standpoint, is that Southeast, is that Florida? Where are you mostly seeing that weather?
Well, Florida. Let's just go through the regions real quick. Northeast has had quite a bit of weather this year. Wet, but also storms. Midwest, upper Midwest has just gotten hammered. Illinois has set a record for the most tornadoes ever in its history, and it is not far away from the most tornadoes ever for a state, which is held by Texas. This year, over 210 tornadoes have been identified and happened in Illinois. Our average is 66. The El Niño has pushed things up that you normally see in the traditional tornado alleys up to parts of the U.S. that has dealt with a lot of weather. Florida has not seen the storms that, or hurricane probably won't. You think about Hurricane Ian came up through there three or four years ago and did a lot of damage, so a lot was repaired.
If you look at the ARMA data, Florida would suggest that, yes, that has happened, and until you have another event, Florida is going to be somewhat subdued for a while, and we understand that. West Coast, it differs a little bit if you are in the Pacific Northwest, where we have presence, and if you are in California and in the Southwest, where we have presence. As you think about El Niño, you think about how many times you guys seen five or six hurricanes in the Pacific. It is not very often, and there are three or four going on right now. That is going to bring moisture into the West Coast, which is interesting because when they get hit hard with a lot of rain outside of monsoon season, leaks show up. Those types of things matter, when you think about our type of business.
It really does vary by region in that way. Northeast, Midwest, California, upper Northwest, Southwest, all a little bit different. Florida has its own thing, and the rest of the country is what it is. I showed in our Q2 call how the market looked by region, and I laid on top of that how our sales looked in that same time period by region. You will see us do more and more of that. We would love to be able to use more than ARMA data. We are working hard to figure out how to find an industry data point that would make sense to follow. We have POS sales from the retail side of things, but we really do not get anything from the wholesale side or the distribution side.
As we become more national the way we are, it matters to us as we think about the sales-weighted market mix impact of things like weather or just macro things. It also matters as to where we focus our resources and priorities around customer initiatives. You can go work really hard in Florida right now, but you may not get a lot out of it because end demand is down differently than it would be, obviously, in the Midwest. So we would want to spend more time expanding our customer base or within customers in markets or regions where there is a little more activity. So we are trying to get more granular, more surgical on that front.
Between weather and some of the participation opportunities we have had, coupled with some cross-selling things that we have done, have really helped us focus on some areas that had a little bit more end market activity than otherwise would have been a year or so ago when we were on our own. The Northwest and Midwest, or Northeast and Midwest are two areas where we have done quite well this year. There has been more activity because there has been more consistent weather. Sorry for the long answer, but that is really how it is.
No. I will forgive you. One more I just want to throw on the residential what is happened, especially in the second quarter, because I think you said on the August call that you suspected that you did see some pull forward, right?
Right.
Because you had some really strong organic growth, particularly in the building accessories piece. I think it was 15.5% pro forma. Just any additional detail that confirms that pull forward or just commentary on that?
Yeah. I think we said during the call, 9% was related to price. I think that's pull forward. This gets back to this earlier question we got was, is the pricing activity changing the seasonality? I actually think they're disconnected. The pricing activity you see in this space is all related to when commodities move in that timeframe. If they moved in Q3, you'd see it there. If they moved in Q4, you would enact price there. It just so happened that, think about the Mideast situation in February. Prior to that, aluminum was coming up and going through the roof, and you added on that, and that really accelerated more inflation in late Q1 and Q2. So that's where pricing fell. That causes some pull ahead as you go into the season. But they're not necessarily connected in the way that people might think.
I don't think structurally seasonality's going to change just because of where you see pricing fall this year. Now that all being said, I think going into this year with the way the market was, people were not anticipating a lot of pricing. What triggered the pricing activity, obviously, was the spike in inflation that was probably unanticipated. I think as much as we've flushed out inventory in Q4 last year and Q1, if you think of the real numbers of ARMA, you'd think, "Why would we do this to ourselves again by buying a bunch of stuff ahead?" Now, in the world of shingles, it's a little bit different, and I'm not an expert in it, so I'm sure you guys hear from those guys more than I.
I think the way that the manufacturing process is set up and the way they level load their facilities, is part of how product flows into the channels on a shingle, which is different than what we have because we can turn things much quicker. We have the capacity to flex up during seasonal periods. So, we tend to try to match our demand with our capacity as the year goes on. When there's a price increase, though, invariably, anyone's going to jump ahead of that. I just think on shingles, it's more pronounced. That's your most expensive item that goes on a roof. It takes up the most space at your branch or in your store. That's where you're going to spend more of your dollar.
If you have a chance to avoid something relatively large, you're probably going to take it, and that's just been a condition. We've been conditioned to do that forever. I think the industry has. In our space, the price point and the investment is much different. We have many more local facilities that are supporting unique requirements at a particular MSA or market that are set up for that reason. Yes, there'll be some buy ahead, but you won't see our customers stock up with six months of trims, flashings and ventilation. There's no reason to do that because we can support you pretty quickly. Yes, we had some pull ahead, but I think that's around 9% of our 15% growth. The rest came through participation gains. We can track that down to the branch of the store. Think of that as real volume.
We've extracted price out of that. How much does that carry through? Well, it depends on how the market evolves. It'll go with the market, per se, but that's how the game is set up. Then we thought the market was, like I said, down. Those three components, that is how you'd make up our 15% organic growth in the quarter.
Perfect. Thank you for that. Can you talk a little bit about the national supply agreement that you had? 630 locations.
Yeah.
I think more than 1,700 stores, with that customer. Is that still on track to start in late Q4?
Yes.
Maybe if you could help us think about the annualized revenue opportunity to the extent that you could.
Yeah. Some of this I need to hold off sharing until they communicate, because they are going to communicate externally, which is interesting, and we are excited about that. But effectively, Gibraltar and OmniMax as independent companies had 1,100 stores to start with around this product line, which is trims and flashings. Both of us were working on how do we get more before we came together. Then we came together coupled with, I think, some issues that the incumbent was having on a couple of fronts. Allowed us to, over the last six months, to really work hard to get in there and have this opportunity, and eventually win it. It is focused on a few things that we think we can do better, and part of it is because now we have presence in that region, which is a region.
We can do things around things like freight optimization and freight minimums that the incumbent could not do. The other thing that we get a lot of credit for is because we do so much through distribution, that we have a pretty good idea of how to actually merchandise and make sure you have the right stuff in each store. I know that sounds pretty basic, but you would be surprised how often an individual store may not have the right stuff that is coated in that area, or the right color, or the right preferences.
So we lean on our distribution experience to help them. So when you win something like this, a product line review, and you pick up stores at the retail level, you are going to be responsible for the entire merchandising concepts and how to implement that hooked at the hip with your customer marketing group.
So we actually have in a couple of our facilities, we have set up where we can mimic an aisle in any big box. So when we design something and how the product flows in, how a contractor would come in and get it out, how they communicate, how they get knowledge, all that stuff just on that aisle. We do that inside our four walls, and once you win it, now you are in the transition. So we have started transitioning the 600 stores, but you have got to do four or five a week. We said that we would start seeing revenue in late Q4 into Q1.
That's a combination of customers saying, "Here's a priority of each of the 600 stores in the order we want to go in." That is driven by what kind of inventory they have and the position that store is in to start with, because they're not all equal. Then we just work through them, and we go and we turn them over, and get them set up accordingly, and then train the workforce there so they can move on and start selling. Think about it, between now and that timeframe, we've got to do four or five a week, and so we're working in earnest and have been to do that. From a manufacturing perspective, we're set up. We're ready to go. It's easy for us to handle it. We've got capacity, not concerned about that. We've got a couple facilities that will serve the bulk of it.
I think there's three total that are involved. They're all coordinated. We have the specs. We know what we need to do. We know the colors. Looking forward to that. It's a decent size win. Look, it's not $100 million. It's trims and flashings. But I think the important thing that people should walk away with is, again, this is one snowflake does not make a blizzard. But when people ask us all the time, doing this deal and why, and there's a lot of good reasons for it. But one of the things that we always point to as well is, you're taking 1,100 stores and going to 1,700. You're in the swim lane that you've grown up in. You know this business. Organically, how do you actually expand within that customer?
We have trims and flashings, but what about the other 28 product categories do we have with that same customer? You utilize this opportunity to prove to this customer that they can put their eggs in a basket and feel good about it, not just for trims and flashings, but other opportunities, right? I mean, it's common sense. Now, you're still going to have to go win those things by region at the end of the day, but this is a good test for us that we think we'll do well with, but it's going to open doors, I think, within the same customer. As important, it's a way to give your own team confidence that you can have the same conversation with other customers because we do it, and we want to do it well.
That then opens up a different discussion around how do we really transform your supply base now that we've proven we can do this, and that's when you start digging into some of the other value propositions that we've talked about. And that's where a lot of conversations are right now. And we're not where we need to be, I get that. But, again, I don't want to declare victory. I just think it's a good first step. It's a nice addition going into 2027 in a market that's probably going to continue to be a little bit slow. There's more out there, not just in retail, but on the distribution side. Whether it's expanding geographically, expanding within a customer on existing sales, or it's adding product breadth to existing customers, all three of those are in play ultimately over time across distribution retail.
But you got to go out and be great at every location. I'll emphasize one other thing to everybody. This is not about us being bigger. It really isn't. I will tell you there's not a branch manager on Earth that lives in one city and cares about another city across the country because you can serve both. If you're not serving that branch, you're not in, period. If you impact their P&L, you're out, period. This is about a localization strategy on a national basis that allows, I think, these customers to think differently about how they can buy, because they've been forced to buy a certain way because the fragmentation of the base of local suppliers that only serve certain cities. But you think about the cost associated with that across a customer organization that's quite large. We're quantifying that as we speak.
So in the Pacific Northwest right now, it's a live event where we're cutting SKUs in half to a distribution base that we think we're quantifying, obviously, the benefit on our behalf, but we're actually working to quantify the benefit for them. It's not that we'll get credit for 100% of it. That's fine, but it's a nice arrow to have in your quiver if you're a salesperson to go in and have a conversation about how we can actually inherently take the cost of doing business with us down. It's nothing to do with price, because that branch manager is comped on their P&L. So anything we can do to put more money in their pocket is a way to gain more share, assuming you have the service levels and the right products, et cetera.
This will be part of the moat that has never existed in this industry because no one's ever been national to start with. I'm not saying we're there because comp's just going to fight like all get out. You want them to, but, man, we're in a position to at least have that conversation to think about doing this in a way that others have never been able. Well, none of us have been able. Gibraltar couldn't do it on its own. OmniMax couldn't do it on its own. So none of us have been able to do this. None of us have even had this conversation with a customer. That's starting to resonate a little bit more because there are customers now with 50 to 100 to 150 suppliers of the stuff that we make, or stuff like what we make, and boy, that's not very efficient.
So that's what we're going after at the end of the day, is that along with the other things we talked about.
It sounds extremely exciting. Just really quickly, do you think the more near-term opportunity is to continue to grow and add additional product lines within that first customer, or are the conversations starting to be more advanced with some of the other large customers? I think you mentioned you had six large ones.
Yeah
More like.
I think there is a multi-pronged approach here, but the way it is actually going to happen. In the retail world, you are going to have more home runs. It is going to be more home run-like. "Oh, hey, you picked up 600 sites in a region." But that is going to go through a PLR process, and that product line manager is not going to make that decision on his or her own. It is going to go through a series of iterations, and as I said, we took six months, and it is merchandising. It is a whole host of things that you are going to go through to approvals and so on and so forth. When you get into the distribution side, yes, there is a corporate weigh-in effect of that, and across a number of buckets similar to retail.
Think of distribution more as singles and doubles, where you go in and pick up 10 branches because of service levels, or you can pilot some things like we are doing in the Pacific Northwest to see how that works and if that truly does make a meaningful difference. It does not go necessarily all through corporate. There is more autonomy because of the way they are comped on their P&Ls to make decisions around some things. We think of distribution as a lot of singles and doubles. We will work it at corporate as well. We think of retail as you are always going to be at corporate. It is all centralized in terms of that decision. The selling approach or the value proposition will be similar, but how you work it through each of these organizations is going to be a little bit different.
We'll chip away, and that's why in the Pacific Northwest, we start with distribution. It's going to really be at the local level, testing the hypothesis of what we think we can do for them, and then let them have an experience. Hopefully, it's a positive one such that they'll expand whatever they have under their purview, and then we can take that to corporate in parallel and start thinking about other parts of the country. That's how you'd like it to work. It won't always work that way, but that's the way the two channels would actually be approached.
Excellent, and this is a fascinating conversation. I wish we had more than the 30 minutes to go through it. Maybe just quickly the last one to leave off, because everyone is just obviously attending our conference looking for ideas heading into 2027. You haven't guided, but how should folks think about the story? You mentioned the runway for participation gains. We didn't even get into the synergies. There's a lot of good stuff, and your deleveraging path is pretty clear. Just to sum up in a couple of sentences the-
Yeah. Guys, we're going to delever quite quickly. A lot of synergy beyond what we've committed to, we're starting to see that. You never go to the street with a synergy number with only having a little bit more identified. Whether it's cost or commercial, a lot of that's cost and like I said, right up front, a lot of heavy work on that front and let them carry into 2027. There's more opportunity. Ultimately, at the end of the day, our team is going to be laser-focused on driving value creation, and you've got to be able to do that when the market helps you and when it doesn't. We'll set our plan, and we'll force ourselves to go through that exercise.
As we drive more participation, hopefully, we'll be able to take more advantage of that and convert at a higher rate. You've got to be able to convert, you've got to be able to create value in a marketplace that's flat. That's how we're setting up for 2027. I don't have for you right now what I think the market's going to be. I think we'll learn a lot in the next 30 or 60 days based on a lot of these macro activities that are ongoing and will be through the midterm elections. But, I guess what I'd ask you to think about for us is, obviously you decide what you want to invest in, but our strength coming into 2027 is, I think, going to be unparalleled. That's not saying that we're done, and that's not saying that we're awesome.
I'm just saying that I think we're in a really good spot, and I'm excited with being at that spot at this time such that we can go to the next step. In parallel to that, we're going to continue to simplify the core business around what we think matters most to create the most valuable products. We're going to stay in a swim lane that has a $9 billion TAM. We're a little over $1 billion in this space, so there's a lot of runway organically. We'll do that through organic as well as some bolt-on type things. Then I think the rest of the portfolio will continue to manage as we talked about, trying to simplify overall. The priorities of which that we're working right now, get out of renewables, we do that in July, get this started in February.
A lot of heavy lift this year, get it right. It's where we create the most value. Move on to the next step in the sequence. What we've laid out in our roadmap is exactly where we thought we would be and what we said we would do with our board and we're going to continue staying laser-focused to make sure we get through each of these appropriately. So that's what I believe is going to create the most value overall for the portfolio. It's going to give us multiple levers to pull as we go into the next phase of the transformation. But it all starts with we got to really make sure we get across the finish line with the work that we're doing right now. So more to come, pretty busy. It's going to be busy in 2027 as well, but we're good with that.
Excellent. Very exciting. Bill and Joe, thanks so much for taking the time.
Thanks, Julio. Thanks everyone for joining us. Take care.