Gibraltar Industries' Q3 2025: Contradictions Emerge on Agtech Backlog, Residential Margins, and Wind Growth

Date of Call: None provided

Financials Results

• Revenue: Adjusted net sales growth 13% (full year and quarter); residential adjusted net sales +$20.5M (+9.8%), agtech net sales +$16.1M (+38.8%); residential organic revenue -1%; bookings/backlog accelerating (bookings YTD +121%, organic bookings +44%).
• EPS: Adjusted EPS and operating income came in slightly below prior year, down less than 1% YOY; adjusted EBITDA flat vs prior year.
• Operating Margin: Adjusted operating margin guidance 14.1%–14.2% for 2025 continuing ops (company expects adjusted EBITDA margin 17.1%–17.2%).

Guidance:

• Net sales for 2025 continuing ops expected $1.15B–$1.175B, up ~15%.
• Adjusted operating margin expected 14.1%–14.2%; adjusted EBITDA margin 17.1%–17.2%.
• GAAP EPS $3.67–$3.77; adjusted EPS $4.20–$4.30, up ~10%–12%.
• Free cash flow targeted at 10% of net sales; capex ~3%–4% of sales; $200M remaining buyback authorization.
• Expect agtech backlog to add bookings in Q4 and set up stronger 2026; infrastructure margins to normalize in Q4.
• Residential market to persist with inventory rightsizing; continue to drive participation gains and system integrations.

Business Commentary:

• Revenue and Segment Performance:
• Gibraltar Industries reported a 13% adjusted net sales growth for the quarter, with the residential segment contributing a 2% increase in a soft residential roofing market.

• The growth was primarily driven by the acquisition of metal roofing businesses and increased participation in the U.S. residential roofing market.

• Agtech Segment Dynamics:

• Agtech net sales grew by 38.8%, driven by the acquisition of Lane Supply.

• A delay in a large Controlled Environment Agriculture project in Arizona impacted revenue, while demand remained strong with increasing bookings and backlog.

• Profitability and Margins:

• Adjusted EPS and operating income decreased slightly, down less than 1%, with adjusted EBITDA remaining flat.

• Reduced sales in agtech and mail and package businesses, and integration costs in metal roofing businesses affected profitability.

• Backlog and Customer Expansion:

• Total bookings on a year-to-date basis increased by 121%, with organic bookings up 44%.
• The company expanded its customer base, securing business with 15 new CEA growers and 24 commercial classic growers, which is expected to enhance future performance.

Sentiment Analysis:

Overall Tone: Positive

• Management: "we’ve continued to deliver solid performance" and "on track to deliver good revenue, margin, and cash flow performance"; generated $57M cash from operations (up 39%) and $49M free cash flow (16% of sales); guidance shows rising adjusted EPS (up ~10%–12%) and explicit targets for margins and FCF.

Q&A:

• Question from Walt Liptak (Seaport Research): Is the lower EBITDA margin guidance largely due to Agtech (lower volume) and residential mix, and can you quantify sizes/margins of new Agtech projects and one-time costs at Lane Supply?
  Response: The margin outlook reflects lower Agtech volume plus residential business/product mix and integration investments; management expects Agtech operating margin to trend toward ~15% and said Lane incurred accelerated integration/system costs (not quantified this quarter).

• Question from Daniel Moore (CJS Securities): Can you parse the backlog/bookings growth (70% organic backlog, bookings +44% organic) and what % of agtech revenue is driven by backlog and timing to convert backlog to revenue?
  Response: Roughly ~90% of agtech revenue is backlog-driven; recent bookings (+44% organic) and backlog growth should start to contribute in Q4 with more conversion into 2026 depending on mix (Lane ~weeks, commercial/institutional ~3–4 months, CEA up to ~1 year).

• Question from Julio Romero (Sidoti & Company): Can you discuss residential trends by geography, drivers of margin declines, and how margins should trend as you invest in systems and expand?
  Response: Strength seen in parts of the Southeast and Rocky Mountain region; margin pressure was caused by inventory rightsizing, weaker mail/package demand and accelerated metal-roofing integration costs—management expects margins to improve as markets stabilize, systems are unified by end-2026 and scale/participation gains materialize.

Contradiction Point 1

Agtech Segment Growth and Backlog

It involves differing perspectives on the growth trends and backlog of the Agtech segment, which is a significant focus area for the company's future growth.

Can you explain the backlog growth up 50% in organic Agtech? - Daniel Moore(CJS Securities)

2025Q3: The backlog is up 70% year-over-year in Agtech, with organic bookings up 44%. - Bill Bosway(CEO)

Can you clarify the year-over-year revenue or EPS growth trends in Q3 versus Q4? - Joseph Moore(CJS Securities)

2025Q2: Agtech is up $53 million year-to-date in the first half, and we're up 40% in organic growth in the first half. - Bill Bosway(CEO)

Contradiction Point 2

Residential Segment Margin Trends

It involves differing explanations for the margin trends in the residential segment, which is a key revenue driver for the company.

What caused the decline in residential adjusted operating and EBITDA margins? - Julio Romero(Sidoti & Company)

2025Q3: Margins were impacted by lower-than-planned revenue in core businesses, inventory rightsizing in building materials, and integration efforts in metal roofing. - Bill Bosway(CEO)

Can you provide the Q2 revenue contribution from metal roofing acquisitions and clarify the organic growth? - Daniel Moore(CJS Securities)

2025Q2: The residential segment had a slight organic growth, with metal roofing acquisitions contributing significantly. - Bill Bosway(CEO)

Contradiction Point 3

Agtech Backlog Growth

It highlights a discrepancy in the reported backlog growth in the Agtech segment, which could impact expectations about future revenue and growth prospects.

Can you clarify the 50% backlog growth, specifically in Agtech's organic growth? - Daniel Moore(CJS Securities)

2025Q3: The backlog is up 70% year-over-year in Agtech, with organic bookings up 44%. - Bill Bosway(CEO)

What are the capital allocation priorities going forward? - Justin Mechetti(Sidoti & Company)

2025Q1: The backlog was up 50% versus the prior year. - Bill Bosway(CEO)

Contradiction Point 4

Wind Business Growth and Backlog

It involves the projected growth and backlog of the wind business, which are critical for understanding the company's revenue potential and market positioning in the renewable energy sector.

Can you explain the 50% increase in backlog growth, specifically the organic growth in Agtech? - Daniel Moore(CJS Securities)

2025Q3: We had a good quarter in terms of backlog, up 70% year-over-year in Agtech, with strong backlog growth in our wind operations. - Bill Bosway(CEO)

Can you discuss the wind business' current trajectory, particularly the impacts of manufacturing capacity expansion and labor costs? - Andy Hargreaves(KeyBanc)

2024Q4: The backlog for the year ended October 31, 2024, was $1.6 billion, up $224 million or 16% from the prior year. - Timothy W. Donahue(CEO)