Gibraltar Industries, Inc. (ROCK) Earnings Call Transcript & Summary

Let's get started. Good morning, everyone. I'm Carolyn Capaccio from LHA, and I would like to welcome everyone, both online and here at Convene to Gibraltar's Investor Day, Creating Meaningful Value in High-Growth Markets. A couple of notes to begin, during the Q&A sessions, if you're joining online, please see the Ask the Speaker box to the right of your event site screen. And if you're here at Convene, please use the camera app on your phone to capture the QR codes that we will show on the screens. Slido will appear automatically, just click it and you're in. If you have any problems, email it. Another note, please refer to Slides 2 and 3 in the first presentation for the safe harbor statement that covers today's presentation in its entirety. And now it is my pleasure to introduce Bill Bosway, President and Chief Executive Officer of Gibraltar.

Thanks, Carolyn, and welcome, everybody, again. It's great to see some people in person. We were scheduled to be here, I think it was March of 2020, and obviously, that wasn't able to happen. So really appreciate you guys making up, taking the time to come and see us here in person. And obviously, we want to welcome everybody online as well. We have a number of Gibraltar team members that are joining in today and a lot of what you're going to see today, a lot of what we're going to talk about, they're responsible for making it happen as well. So I want to welcome them as we get started. Let me start with just introducing our team. I know many of you haven't met us in person or seen us in a while, but we also have a pretty broad team that I'm showing here on the top of the slide, what you'll see is our corporate leadership team. A few of the folks are here today that you'll see present. So we have Tim Murphy, our CFO; Pat Burns, our COO, they're both here. But I also want to mention Betsy Jensen, our Chief HR Officer; Katie Bolanowski, our General Counsel; Chris Lok, our Chief Digital and IT Officer; and then Debbie Murphy, our Chief Marketing Officer. And then our business leaders on the second row, 3 of those are here today to share with you much more detail about our business. Mark Dunson runs our Agtech business. Gene Laminack is actually going to cover all of our residential business today, and Gene really does focus on our Ventilation, Mail and Package Group, and he's going to represent the entire residential business. And then Ed McKiernan is our President of our Renewables Group. So you're going to get a good detailed assessment of those businesses today. Online with us is John Neil, runs our Building Accessories Group, part of Residential. We have Jeff Bedard, who runs our Home Improvement Group, again, part of Residential Group. And then finally, Scott Jenkins, who runs our Infrastructure business. They're joining us online. What's interesting about this team, with the exception of Tim, that's been with us the longest, everybody on both the top and bottom rows have joined us within the last 3 years or are in a new position running the business in the last 3 years. So it's a good team that's come together, a lot of strengths, a lot of diversity of thought and experience. And we're pretty excited about the organization in general. So you can get this to flip forward. So we're going to talk a lot about this plan today. And effectively, right out of the gate, it's a plan that is going to grow this business to $1.8 billion. It's an organic plan. In other words, our M&A that we're working on is incremental to what you're going to hear today. Now we will talk about our M&A and our focus, but it's not included in the actual numbers that you're going to see. But effectively, this plan is about accelerating the 4 platforms or segments that we have built and spent a lot of time building, not just the last 7 years, but specifically the last couple of years. We're in good end markets. We're in strong positions, and it's really about building engines so we can scale to take advantage of the opportunities that these end markets are presenting. So we're really excited to share with you what that is. This plan, again, has growth that's running at a clip that's almost 2x what we've seen in the back 5. You'll see, again, a plan that drives more improvement in our profitability. And then finally, you're going to see a plan that generates [ a safe ] amount of cash and keeps our balance sheet really strong but gives us an opportunity to deploy capital back into the business as we have been doing. I wanted to spend just a minute thinking about or going back and looking at the transition that we've made over the last 5 or 6 years because I think it does put in perspective about supporting our plan going forward. Another way to think about it is if we've done relatively well over the last 5 or 6 years, it's got to give you some confidence, hopefully, that the next 5 or 6 years are going to be very similar in that way. And so proof is in the pudding, so to speak. If you think about the portfolio, has its transition. You can see back in '14, we were really made up of 2 large segments, our Industrial and Infrastructure Group and then our Residential Group. And subsequent to that, we've invested about $1 billion -- or $0.5 billion in transitioning the portfolio to what you see today, which is really 4 segments driven by Residential, Renewables, Agtech and then we have our Infrastructure business. The idea behind that, obviously, is how do we build this business going forward off of our foundation, which is really 3 pillars. One of those is our obviously, portfolio optimization, we just touched on that. But the idea behind that is how do we evolve the portfolio into higher growth, higher profitable markets for the longer term, effectively driving our performance in a different or an accelerated way. We'll talk a lot about our business system today. Pat is going to share with you not just the system, more importantly, how has it actually worked? What are the real results that have come from the work that's been done in the last few years as we've implemented our business system on a broader scale. And then finally, organization, which historically we haven't talked as much about, but fundamentally, it's key to what we're doing. And whether you're talking about the structure and the design or just the talent level, that's one aspect, I think the most important thing is actually creating an environment where people are going to have the best chance for success. And so we're spending a lot of time on that. We've been working on that pretty hard. It's a never-ending opportunity for us, but it's really, really important. And of course, in this last couple of years, health and safety. When we think about health and safety in facilities, but obviously, with the pandemic, there's health around the virus itself, I think there's even a bigger opportunity to focus on health going forward with the -- I'll say, the outcome of the environment in the last couple of years. I think we're all trying to figure that out. Underneath these 3 pillars, something you might have not seen before, and I'm going to talk about it a little bit later today, is our efforts around corporate social responsibility. Now why is it here? Well, first of all, for us, it's not an extra curricular activity. I really do want to emphasize that. And I'll share with you how we think about it and how we address it every day. And frankly, the punchline is you've got to be driving these efforts through your existing processes and your systems if you're truly going to make a difference, and it's truly going to catch fire in the organization. And so we'll circle back on that in just a bit and talk more about that. Now if you look at the results the last 5 years, not bad, we grew roughly 7% per year. Operating performance improved almost 400 basis points, whether it's adjusted operating margin or adjusted EBITDA. So I feel like the work that's been done prior to me as well as the work that we've been doing since, this transformation has really paid off. It's actually working. And I think having that momentum going into the next 5 years is really important for us. But I think we're off to a good start. We've got a good foundation to build off into this plan that we're going to share with you today. Now we've been very busy in the last couple of years. And I do want to take a few minutes and talk about these next 2 slides because I don't think people have context around the work that's been done in the environment that we've all been living over the last 24 months, whether it's the pandemic or the macroeconomic/pandemic issues now. That in itself has been challenging, as you guys know. And -- but let me take you through a short story about how we've been working to build these platforms so we are in a position to scale and execute the plan that you're going to see today. So if you recall, go back to 2019, about halfway through the year, we decided that we wanted to make sure that we split our Renewables business and our Conservation business into 2 new groups, focus them because they're in 2 distinctly different markets. And for us, strategically, what's really important is we're as close to our markets as possible. Fundamentally, that's what drives our business. Hence, we this year made the announcement and are now reporting Renewables separate from Agtech. Now it's easy to make that decision to report separately. But before you report separately, you've got to be in a position to actually run the business in that way. And so if you think about the things that we've done, those were 9 companies that were bucketed in that group of renewables and conservation. We've separated into 2 groups. 4 companies went in the direction of Renewables and 5 of those companies then went in the direction of our Agtech business. For both of these groups, these types of things that we had to do in the last 24 months, build new leadership teams for both, very important. We've made acquisitions in both groups, 2 in our Renewables space; 3 in our Agtech space. Then we had to integrate those with our existing companies as well as the new companies coming in. We've put in business systems in a bigger way, not just 80/20, which has been out there for some time, but we've added to that a lean quote-to-cash capability. Those 2 businesses, in particular, need that when you think about the type of work we do in those 2 segments. We've both -- both companies launched new brands. Terrasmart came out last week, Prospiant came out a few months ago. And you might say, well, that's kind of interesting. If you think about brand in and of itself, it's a reflection of what we do every day. You can't go launch a brand and tell people that you're going to do something if inherently you're not in a position to do it. So the last 12, 18 months is about putting ourselves in a position and then bringing those companies and those different groups together under 1 umbrella. And really, the reality is for brand, it's really done mainly for your own organization. It's the way you galvanize what you say you're going to do and then deliver day in, day out. So we've gone through that process. And then finally, I just want to remind people, particularly in renewables, all this has been ongoing to an incredibly high growth period for us. In some of our businesses, we didn't have a chance to catch our breath. We didn't slow down and we actually sped up. And so the last 12, 18 months, it's been about investment. It's about building the organization. But we've had to do all this in these 2 groups while growing at a very rapid rate. We're not complaining about that, but it's been a heck of a ride the last 2 years, if you think of it that way for the work that these 2 groups have done. Same kind of story with our Residential business. 9 companies have historically made up this business. Back in 2019, we recognized we had a group layer of management, and we decided, let's remove that. Again, back to the thought process. You got to get closer to your customer. And we really have 3 distinctly different groups within Residential. So we have the Building Accessories business which is -- plays around the roof, if you will. We have our Mail Solutions business, and then we have our Home Improvement Group. In each of those businesses, we put in new leadership, with the exception of Home Improvement. We had a strong leader there, but we combined 2 of our businesses in Home Improvement. But if you look at Building Accessories and Mail Solutions, we added new leadership. We did a lot of integration around these disparate groups on the management team. And then we've been working really hard on our business systems so we can scale accordingly. In our Mail Solutions group, we actually made an acquisition during the same time period and went through that integration process as well. And ultimately, you'll hear today that we have ongoing investment in digitizing the business. We started that process back in 2019 across the organization. So whether it's internal IT systems or better ways to connect with our customers, we've been making more and more investments in that. And I think that's really important. And you'll see how that plays for us in our strategy for each of the businesses as well. So a lot of work. I think as a result of the last 2 years, we're in a pretty solid position in the markets where we participate. What I'm telling you here today is I think we've made progress. I'm not telling you we're there. We have a lot of work to do. That will never stop. But what I do believe is we have a secret sauce for each of the businesses. The business leaders are going to tell you about that today and how that applies to our strategy and support the plan. But a lot of good work has been done, more to come. Now when you think about the 2025 plan, let's kind of shift focus on that. So we've shifted our portfolio the last couple of years. We've built on that shift the last couple of years. In 95% of Gibraltar is our Renewables, our Agtech and our residential businesses. We've spent the last 18 or 24 months building out those segments, getting in a position where we can scale into something much bigger that you're going to see today. Without that effort, it had been very difficult to take a lot of, really, frankly, smaller private companies and be in a position to take advantage of the end markets that we're now in. These are really good companies. They have a great entrepreneurial spirit. What we've been trying to do is just give them a few tools and allow them to get to the next step. And that's really what this work has been done in the last couple of years. So I feel like we've got a platform, or a set of platforms to really move forward. So performance, we talked about, that's the plan. The transformation continues. Think of this as the next phase and the journey that we started in 2014. We do have a strong foundation. The 3 pillars mean a lot to us. It's not just speak. It's how we actually operate. It's what we talk about every day, and we're going to continue to do that. I do think we're positioned to scale in a better way than we were before. I think the end markets that we're in are very sustainable. Yes, it's a little choppy right now because of a lot of stuff going on, but at the end of the day, they're good end markets that have long runway. And we're excited about that. And as I mentioned earlier, M&A is incremental to everything you're going to see today, which I think is also important to note. And we do have a balance sheet, and we're generating a ton of cash that we can continue to drive investments in the business. Still going to come down to execution. You got to do what you say you're going to do. You got to put up, you've got to shut up, one or the other. And so 80/20 is the foundation of what we built on. That doesn't stop. We've added our quote-to-cash lean efforts as well, which I think is really important when you think about getting to the next level. We've been digitizing the business, as I mentioned. We've got more investment to make there. I think that's really important for us. If you think about how do we interact with customers is one aspect, how do we operate our facilities. You think about labor in the future, none of those issues that we're all dealing with today are going away tomorrow. So how do we invest to actually mitigate those being issues in the future? So we started that journey a couple of years ago. I mentioned earlier, Chris Lok, our new Chief Information Digital Officer. We never had one in Gibraltar. Chris came on board 2 years ago. We now have a road map. And we know how we're going to proceed, and we're making those investments. So that's really important to us. I think new products, you'll hear about today that I think also are going to be very impactful for us. You'll see that in each of the businesses. And then finally, we talked about corporate social responsibility. It's about how we execute every day. Then finally, the team, I talked this -- about this a little bit earlier. I do have -- I do believe we have a strong operating team in place. We're going to continue to add competency and skill, that never ends. Ultimately it comes around -- comes down to the environment, how do we make the environment such that people can be or have the best chance for success. And then ultimately, at the end of the day, it's just doing things the right way every day, pretty simple, not rocket science. So here's the plan in a little more depth. On the left-hand side is the revenue. We have some key drivers there. If we're going to grow 11% to 12% per year, you can see where it comes from, Residential, our Renewables as well as Agtech and Infrastructure are all listed here. You see very high growth rates around Renewables. There's a little bit of an anomaly there. We bought Terrasmart, yes, technically in 2020. It's in our 2021 plan. So I think our actual growth rate on an organic basis will be somewhere -- it will be double digit, but it's not 25% per se. But remember, that's why we bought Terrasmart, add to the Renewables platform. So it's part of the strategy. But good end markets support this as well as you'll find participation gains built in, which we continue to be fortunate to have, including as we move forward. And then you'll start to see momentum really pick up for Agtech and you'll hear that plan today. And you'll see continued momentum in Residential, which you'll hear a lot more about today as well. On the margin side, again, not rocket science, Agtech and Renewables continue to get better. And you'll see the bridges from where we are today and what drives those pieces to drive the margin enhancement. Our residential business, which is a little bit muted this year on margins relative to what we had the previous year is really related to this price input cost alignment with our customers. We've talked a lot about that publicly. That will correct itself. We feel really good about how the business is running and the position we're in going forward. And then finally, back to 80/20, digitizing business in 80/20. It's fundamental to driving our margin improvement as well. So let me switch gears and talk a little bit about M&A. First point I want to make is, in this plan, we've got about $2 billion of capacity to deploy both organically and inorganically going forward. I would tell you today with the activities we have, particularly in these 3 areas, Renewables, Agtech and Residential, we're quite active, a lot of discussions ongoing. I think thematically, there's some common themes for each of these segments that I would point out. One, a lot more effort going forward relative to generating recurring revenue. It's an important aspect of where we're spending time and effort to do that. Obviously, you have to be a little bit stronger in the world of AI and software, which we have some capability that has come on board, and that's exciting, but we've got to build that out. I think you also see an expansion effort, whether it's geographically or product or capability in the channel that's different than today. So those segments that we talked about, the 3 here had been built, but they're not finished in terms of where we take them. I'd characterize most of them as kind of bolt-on capabilities that you'll see us build out where it gives us more relevance and a stronger leadership position. Those checkmarks that you saw in the previous slide, where there's one, we have work to do; where there's 2, we need to make 3. And part of that is through our M&A process. Now before I want to show you a short video. So we talked a little bit about Renewables and Agtech going through this transformation, building out these platforms and launching a new brand. At the same time, across Gibraltar, if you think about our history, a lot of really great small private companies that have come together over a period of time, across Gibraltar, we also need to galvanize around where we're going and who we are and what we mean to ourselves as well as our customers. So what I want to share with you is something we're launching here shortly with our own organization at the Gibraltar level. So let's turn this on and take a look and then we'll finish up. [Presentation]

It's always fun to have a video like that, right? But there's much deeper meaning for having it than what may be on the surface. When I started a few years ago, almost 3 years ago now, I remember that in our first town hall, which we do once a quarter, we will bring everyone online around the company and we talk about what's going on with the business and so forth. I remember the first town hall we had, we featured -- we started featuring different parts of Gibraltar to get people to understand who's part of Gibraltar. And the number of e-mails I got from people suggesting, "Hey, I didn't realize this -- I've been with Gibraltar for x number of years, and I didn't realize this -- we even did this." And so when you think about starting -- that starting point, maybe 3 years ago and trying to find a common galvanizing way to get the team excited about the future. That's what this is about. It's not about having a shiny video that we can show to a lot of people and go look at us. It's actually for our people. And it's really important for us, and we spend a lot of time engaging our organization to figure out how do we actually build this engine going forward because ultimately, remember, at the end of the day, one of our 3 pillars is about our organization. It's about our team. So we do spend a lot of time and effort, and this is something we're pretty excited about to roll out for the organization. And we've involved a lot of our organization actually creating this. It's not myself making a video, it's actually been built from the organization up. So we're excited about that. So to summarize, before we get on to our first business segment, which will be renewables. Again, this is about -- what you're going to see today is about accelerating the 4 platforms that we've been working hard to build out the last couple of years. We're in good solid end markets, and we're well positioned. And I think that puts us in a position to deliver the plan that we shared with you. But ultimately, let's not forget it comes down to executing every day. It's not rocket science. It's putting one foot in front of the other. It's doing what we say we're going to do and doing it as well as we can. In this kind of environment we've been in the last 2 years, yes, that's been a little bit challenged. But at the end of the day, we're getting there, and I think we're ready for the future. So with that, I'm willing to introduce Ed McKiernan, who runs our Renewables business. And then after Ed finishes, we'll go through our first Q&A session for that specifically. And we'll do that for each speaker. And then at the end, I'll come back up with Tim and the entire team. And we'll have 20 minutes or so for additional questions that may come throughout the day. So look forward to the rest of the day. Ed?

Thank you, Bill. Good morning. Again, I'm Ed McKiernan, I run the Renewables business for Gibraltar. And we go to market under the Terrasmart brand. That brand came from one of our acquisitions. We've rebranded the entire business. I'll get into that a little bit in my presentation. Today, this business is $238 million, had a solid back 5, double-digit sales growth and 600 basis points of improvement in adjusted operating margin. But today is about the future and the plan that we're laying out to drive this business to $700 million in sales and approximately 15% in adjusted operating margin. Now that's the same plan that we shared with you when we acquired Terrasmart back in January, not changed. And even though we've gone through a protracted pandemic and an all-time tough operating environment, hyperinflation, supply chain challenges, what have you, the plan hasn't changed. We're just as confident in it now as we were then. So what I want to do is briefly reset you on how we view the market, talk about our position and then take you into the strategy and the initiatives that drive this growth plan. What I want to do first is level set everyone on how a solar plant comes together. I know some of you are deep in the space, some aren't. I just want to make sure we're on the same page. So the design and feasibility phases first. And what you need to imagine is if you are a developer, you're looking at a specific piece of land, 1 piece of land. You're evaluating all kinds of things, starting with how much sun shines on that land historically. But you're also looking at things like wind and snow loads. You're looking at soil composition, rocks under the soil, proximity to transmission lines and a myriad factors that you need to evaluate in order to figure out what design is going to make the most sense for this specific piece of land. Once you've done that, of course, you enter procurement and construction. You're going to start at the bottom, install your panel racking. Maybe you're putting in a tracker, which, of course, in that case, the modules track the sun versus fixed tilt, which stay just that, the module stayed a fixed angle, or you're putting solar over a canopy and parking spots around an office space or maybe on the roof. Once you've done that, you're putting your modules on top, you're connecting to the DC electrical balances system. And through the inverter, you're servicing the AC demand. And once you've done all that, of course, now the fun starts. You get to operate and maintain this asset over several decades, typically a 25-year design life. Now there are at least 3 tiers of this market. There can be more. You can think about things in terms of Residential, Commercial and Industrial or C&I and utility. We really historically have focused on the C&I space. We've done some what others would consider utility scale work. In many cases, we're following our existing customer relationships, I'll talk more about that in a minute. But for that C&I and utility space, in 2020, that was a $14 billion total market, growing to $22 billion in 2025, really driven by all the fundamentals that all of you read in the newspaper like I do. The levelized cost of energy for solar makes it very good for the bottom line. And of course, I don't have to talk about the sustainability angle. For us, we're focused on the addressable piece that you see in the upper left, 4 segments: design software, upfront, looking at that feasibility of that specific piece of land as well as racking and field installation, electrical balances systems and operations and maintenance. All told, that was $4.8 billion in 2020, and we expect that to grow double digits to top $8 billion in 2025. So I don't think it's news to anyone that solar is a large, fast-growing lucrative space. I think the question is, how are successful companies staking out a leadership position. And again, for us, that comes to -- back to that specific piece of land. And based on the portfolio that we have put together, we are the only company that can start in that design and feasibility phase and run from left all the way to right to talk about the infrastructure, the field operations to put in the ground and how it's going to be operated and maintained. We're also the only company that can go deep, that can give our customers the optionality of a variety of foundations, racking systems. In most cases, our customers are dealing with the brand when they're not dealing with Gibraltar where they get pigeonholed very quickly. With us, we're there to solve problems, not sell products. So the breadth and the depth of this portfolio is the beginning of our strong leadership position. Now I would add to that, at the bottom, we were really a founder in this U.S. solar industry. Back in the late 2000s, we started in this industry. And the other 3 companies, SolarBOS, Sunfig and Terrasmart, in their own way, really brought together some very proud heritage, a lot of domain knowledge, a lot of installations and certainly, a lot of strong customer relationships. But we can't position ourselves as a problem solver if we're coming across to our customers in a fragmented way. So putting that together under 1 brand, first, as Bill talked about, for employees but, most importantly, for our customers to give 1 experience, 1 point of contact so that they can harness the power of this portfolio. So let's go to the video and show you our new brand. [Presentation]

So the power of that portfolio has now been put under 1 brand for 1 experience for our customers. And you can see a representative list of our customers on this slide, many logos along the bottom that you're probably familiar with. In total, we served about 200 unique developer or EPC customers in 2000. And again, the benefit of this portfolio is for them, to help them solve problems. We were just given a Project of the Year award last week. It's a very interesting project. And I think it illustrates why that portfolio is so important. This was a very challenging site. In the Bahamas, the wind gust go up to 230 miles an hour and the solar array had to be able to withstand all of that. The more difficult challenge were the logistics of landing people and equipment at the right time to get the project started earlier this year. And if you dig into that project and the video that's online, they really talk about how Terrasmart helped them to solve a number of those logistical problems. We also help them upfront when they were just looking at all of their options, what's going to make the most sense for this very challenging site. And so that example really shows you why we put this portfolio together to solve those challenging problems. And when I talked about that specific piece of land, remember the amount of flat, easy land to put solar on in the United States is only dwindling. So that really plays into why this portfolio is so important. It's also why NextEra, for example, has named Terrasmart Vendor of the Year because of the way that we've been able to help them solve problems. And so these are the kinds of customer relationships we seek. We don't get into chasing a certain size of project per se, now we do have a sweet spot. But we're looking for customers that value what we bring, which is the portfolio, which is an integrated approach, which is the ability to move upstream in the project and down and execute. That's what we bring, and those are the customer relationships we're focused on. So again, strategy and the growth plan is to take this business to $700 million and 15% in adjusted operating margin. And you can see the mix along left, really 5 initiatives drive this plan. And I'm going to dig into the first 2 under revenue and the first one under scale and execution. Scaling that field operations is very important to us. Before I leave the chart, I do want to just mention the growth in Canopy. Canopy is something that makes us different. You're not going to see that in many of the competitors that my bet is are the folks you might think are our competitors, you're not going to see Canopy but very lucrative for us, good business, growing faster than market in the last few years, aligns with a lot of corporate sustainability goals where they want to put solar panels around an office building over top of the parking spaces. We like that business. Okay, but I've only got so much time today. So I'm going to drill first into Tracker. Again, it's about that specific piece of land and the challenges that it presents. So in a challenging environment, first, the mechanical adjustability of the rack that you're putting in place is crucial. And ours has a variety of features, some of them patented, that give really a lot of adjustability to our tracker frame. Secondly, it's about intelligent operation. Things like when you've got a cloudy day and you've got diffused light, what's the right algorithm, where should those modules be tilted? Or you're thinking about backtracking because your panels are starting to shade one another. And if you're aware of that situation on a given day, you might backtrack. There are a variety of algorithms that you'll see out there. What is most important for us is, again, the fact that we can drop this tracker on any terrain for any project, and our customers value that, which is why we've got momentum right now. Right now, in 2021, we've got momentum. Our plan is to quadruple this part of our business. Here in 2021, our order rates are up double digits. And as we enter 2022, we've just signed the largest tracker project in our history, almost 90 megawatts in the Northeast, very challenging project. And while I can't share the name of the customer, I can tell you that it is an existing long-standing relationship, where our ability to perform and leverage all the things that I've talked about matter to them. So we weren't beating our brains in. Of course, they looked at options. But again, they came to us. So we're very excited about the momentum we have, and that's a big part of why we're so confident in this plan. Secondly, when we started with our tracker platform or I should say, the tracker platform that we have right now, we have a 2 in portrait form factor, it's what you see on the lower left. These are 2 modules sitting on top of each other, pivoting back and forth, sitting in portrait. Now that's very good for complex and odd terrain because you really maximize the amount of energy that you can capture and create in a given space. And it sits on top of different facets of different topography, if you think about it that way. But there are parts of the market that want a one in portrait, single module tracker for longer roads, flatter terrain, something we're developing right now and we will launch during 2022. And then last, continuing to build out the sophistication of the control algorithms and the way that you operate all the sensors, controls and cloud that sits on this site and is connected, of course, remotely is a big part of what we see building out. So we are very excited about this plan and very excited, frankly, about the momentum we've got going into 2022. Now we are not going to scale this part of our business or, frankly, all of our business to $700 million without scaling our field operations. Now again, field operation is a big deal in our portfolio. Our ability to put it in the ground for their certainty and, honestly, our profitability is a big deal in our portfolio. You can see some of our field results listed for 2020, and this is a big differentiator for us. Scaling our field operations for the future is a big lever, both to enable the growth and enable the profitability improvement. It starts with automating some of the steps that you see on site. That's why we're using autonomous robotic drilling units. That's why we are, right now, piloting the use of drones, for example, to do progress tracking of our crews, so they're going to count the number of grounds crews that have been put in the ground in any given day and then integrate that back into our billing systems. That's what we need for scale. That's how we drive some of the productivity beyond the labor challenges we have. But really, it's about scale so that we can enable that growth. Of course, scaling our teams, both the self-performed teams, the in-house teams as well as the partner teams is important. And then last, I would say, if you think about it, we're going to do -- we're going to support 700 projects in this business; 500, including labor this year. But that number is only going up. And it takes a lot in terms of the scalability of our processes to handle that amount of volume for that many customers. We don't see anyone else do that. And we think there's an opportunity to deploy in our electrical balances system into those work streams to create another growth path for us. So that's my last growth initiative that I want to talk about. And first of all, just again, level set you. On the electrical balances systems side, again, this is the wire solutions that take the DC load and combine it from the modules, put it through something called a combiner box, which is just a way to, again, create a node to combine the load, create a disconnect point, put it on the DC trunk and out to service the AC demand. And we make wire solutions and combiner boxes today. That capability came to us through our SolarBOS acquisition. And we service primarily with that technology, the utility space. You can see the example of Robins Air Force Base, South America and Georgia, and the high-volume of products and opportunity that, that created for us. Now historically, in the utility space, they've used prefabricated factory manufactured products like you see from us in the utility space. Down in C&I, because of the volume of small projects, it's really been more of an approach where you have, for example, an electrician, going out with wire and fabricating wire -- a wire solution in the field. We see an opportunity to leverage the business process scale that I mentioned before that's been created to both enable the racking business that we have today and our plan to continue to digitize and automate that and scale it and take our factory fabricated solutions and unlock what we think is about a $100 million opportunity to provide those prefabricated wire and box solutions, leverage our processes, and we're excited to start piloting that at the beginning of 2022. But again, eBOS for us, that business has been growing, much like my comments on Canopy, faster than market and has been a very strong business for us. So the momentum of that business is what gives us confidence in the doubling of the plan, that plus the innovating into the C&I space really underpins our plan. So I'll say in summary, again, I won't repeat the statistics on the market. It's big and lucrative. I think you all get that. I would just repeat on our position that the breadth and depth of that portfolio, the domain knowledge, the customer relationships that are extensible, the technology, the field operations, which make us very different and our ability to bring it all under one brand is the power of Terrasmart. That's why we're confident in the $700 million plan, the 15% operating profit margin. And again, it's about execution. We understand that. So with that, I think we will move to the Q&A section.

[indiscernible] capture QR code. As noted, please use your cell phone in the room to capture the code. Slido will open automatically if you click on it. So our first question for Ed comes for the tracker business, how have industry product delays due to WRO enforcement or anti-SIRC-limiting modules impacted your tracker business? Can you comment on this for Q4 and first half of '22?

Yes, I would say WRO is an impact for our entire business, not just tracker. And as you heard in our Q3 release, Q3 was challenging. While WRO enforcement and the related delays were not the primary driver in our release, they were a factor. And so they've been there and underlying. I think today, our assessment is we do see projects that have been sliding a little bit but no worse or better than we've been seeing over the last 100 days. Right now, access to modules, our customers able to find some stockpiles, and we haven't seen any major disruption yet so.

Next question is your growth plan leans heavily on tracker. How is tracker doing now? What stage are you at in development? And what did you do with the sunflower product?

Yes. Sunflower has really folded into the platform I just showed you. We really -- when we acquired Terrasmart, we evaluated both. We like Terratrak. We've collapsed those teams into one team, that know-how into one team. And again, I'll just reiterate, we're so excited about our tracker platform because of the -- I should say, our tracker plan because of the momentum we see right now and examples like the 90-megawatt project that I walked you through during my remarks.

Okay. Next question is for the renewables business, how do you plan on maximizing the potential of the BBB plan? How much of your content can be or is U.S.-sourced?

Yes, we're interested to see the BBB plan be finalized and get into the particulars. We are staying close to where that's going. I think in general, the fundamental drivers of solar are only enhanced by the build back better plan. Certainly, it will create some -- once it lands, we'll get into it and crack it open. But right now, we don't see it really changing this outlook or plan.

Okay. Your next question is your expansion to the utility space, who are you competing against? Is this a primary focus going forward? And are you adding new customers and utility?

Yes. Again, I would go back to the customer slide that I showed. That's our focus, those customer relationships. And by the book, if you look at some of the megawatts of the projects that those customers execute, they might fall in some definition that someone could use of the utility space. But honestly, that's not the focus of our strategy. Our strategy is on leveraging the portfolio which matters to the customers that I walked through and how we grow with them. So our plan primarily is built on them being successful so their wallet gets bigger and, of course, maintaining and growing our share of that wallet.

Can you break out revenue by end market, community versus utility versus C&I? Are there any differences in projected growth rates and/or margins?

Yes. So the business, I think, by most definitions would be seen as primarily a C&I business. But in 2020 -- or excuse me, 2021, we executed projects from 2 to 60 megawatts. By most definitions, the high end of that range would fall into utility. But the majority of the business is in the C&I space. And so we don't see any major change in that mix over time.

Next question is discuss the operating leverage in Renewables. The 2025 goal implies 22% incremental margins. What impact to volatility, product size, project size, product mix, et cetera?

Yes, really, obviously, it's a difficult operating environment. Our focus is on controlling what we can control. How do we drive improvement in margins by doing that. So some of that comes from the ongoing Terrasmart acquisition, reiterating that, that activity is on schedule, some in-sourcing involved with that. Scaling our field operations, that digitization and automation work is very important to us, again, both to enable the growth and the margin expansion. And we think focusing on that road map gives us confidence in that plan.

Why can your perceived competitors not do what you do in community C&I?

Well, I would say, again, we've learned a lot over 12 years -- 11 years since we started down this path. When I say 11 years, I'm talking about the RBI acquisition. But Terrasmart is just as -- they've been around just as long. And you think about the thousands of projects. So we've installed 19 gigawatts capacity and 4,600 systems in the United States, as I said in the video. There's a lot of learning in that. And the ability to do that at that size project efficiently, get your materials, align your factory in the field, both for materials and for your work crews is know-how that we have built up over time. And I think that's just difficult to replicate. We've managed through it. I think the challenge the pressure it puts on us is if we didn't have the disruption in the supply chain and materials and labor were aligned, it would be maybe a little bit less challenging. It puts even more pressure on us. But as I think our results have shown, we've been able to work through those things. They do create pressures on us that pressure some of our results. But I think we've shown that we've been able to command that activity.

What steps are you taking to reduce the lumpiness or volatility in consolidated renewables margins over time?

Well, I would say 2021 makes you stronger. And I think if you look at the fact that margins are up in our legacy business, and while the acquired Terrasmart business margins have not been what we had hoped they have shown sequential improvement, and it comes back to the basics. It comes back to 80/20. It comes back to lean, focusing on the process, aligning your quote to cash, driving those cost reductions and having that daily discipline.

Can you talk about what your average contract size is now? And do you expect it to rise as you get more into utility?

I think it could. That's not really what our plan is based on. Again, I think our plan has been clear based on the investing in the customer relationships that value the portfolio we provide. We are seeing some increase in average contract size. I think it's natural as the industry gets bigger. And again, as the availability of flat easy land dwindles, it plays more into the favor of people looking for help. And when we deliver on a project, in some cases, they're taking us up in scale. But no explicit element in our plan that drives average contract size to some step function level.

Okay. In terms of M&A, what's missing in your product line?

Well, I would say, organically, you can see where we're investing, but we continue to look at opportunities for our ground mount infrastructure. You saw that on Bill's slide. The O&M space, this is largely a project-based business. So we think O&M is an interesting space. Data and AI, obviously, as the amount of infrastructure gets built out, how to operate that in the most intelligent fashion are all opportunities that we look at.

4x the growth in tracker based on the investor deck 20 level -- 2020 level is approximately $75 million of the $455 million incremental revenues in the plan. What gives you confidence in the rest?

Yes, the -- I mentioned eBOS, I mentioned Canopy. Those are strong businesses. They do make us different, got strong underlying fundamentals. We've been happy with how they've performed this year. So I think that while tracker is certainly the biggest growth and the biggest opportunity, we see opportunities across our entire business.

And we probably have time for one more question. With all the input cost inflation, how have the economics of adding solar changed for your customers or are economic secondary?

I would say economics for them are primary. They look at those return calculations very closely and is some of the reason that I think you've seen some of the industry point to delays in projects. But again, that's why buying the feasibility software company, Sunfig, was so important to us because it gets involved in that upfront discussion. Maybe there's a piece of our optionality that we can open up for our customers and take a project that didn't -- that was marginal to maybe in the money and help them execute.

Thanks, Ed. Good questions. A lot more, I'm sure, out there. We'll ask -- we'll circle back again a little bit later. Just a couple other comments on the business, and some of these questions, I think, are at the heart and center of what we're trying to do. We talk a lot about utility or it gets put out there as a specific market segment. I guess at the end of the day, what you're hearing is because the way land is moving, the availability of where solar is going with population centers around the U.S., it lends itself going into areas where there are not large swaths of flat land. That's what we do. We attack those areas where solar hasn't been possible in the past. Now we know how to do that in a much more effective way. And I think that's going to be really important as you think about the build-out in North America, particularly the U.S. So at the end of the day, whether our developers that today may have done 200 megawatts and want to do 500 megawatts, whether it's a 500 megawatt project or a series of 5 or 6 projects that make up 500 megawatts, it's 500 megawatts. And we have the ability to do either. And we'll choose, and we'll select what makes most sense for our customers. And I think the last thing I would reinforce that Ed said, is we're not here to sell you what we make. We're actually here to drive returns for that piece of land that you have bought. It's as simple as that. And I think one of the things you think about relative to others in this space, very narrow product lines selling what they make. [Audio Gap]

Thank you, Bill, and good morning. I'm really excited to be here today to talk about the platform that we've built and the exciting opportunities ahead of us, really around a transformation that's been taking place in the agricultural industry. And that transformation is really around the moving of field growing into what we call controlled environment agriculture. So it's not about necessarily developing a new market. It's about the transition of a market based on some technology developments and things that have been happening over a number of years. That really stems for us from a greenhouse, which we've been in that business for over 80 years. But that greenhouse today is markedly different than maybe something you've experienced at your local garden center or maybe seen on a small scale. These are 60, 70 acre facilities under glass with a tremendous amount of technology and equipment inside of them. And so it's an evolving industry with a lot of innovation, which we'll talk through and exciting for us as it sort of plays into our core capabilities in greenhouse building and growing domain knowledge. We have a pretty significant growth plan, which we'll talk through. But more importantly, since we built the platform and done our homework and heavy lifting, we have pretty significant margin expansion now to get our business on the trajectory that we want. So we'll talk through that today. I'm going to start by sort of giving you a little color with the intro video to Prospiant, which is how we've brought together those businesses to reflect our capability as a single brand to the market, much like Ed talked about with Terrasmart. [Presentation]

So hopefully, that's given you a little color of how we've come together as Prospiant, and we'll talk through that a little bit further in a few minutes. But I wanted to take a few minutes and just talk about this market in general. You'll hear a lot about CEA or controlled environment agriculture. In it's most basic sense, it's controlling the environment, obviously. But if you think about a plant, you start with the genetics of the plant, but there's really 4 factors which drive its productive growth, which is water, environment, which would be the air, and CO2, temperature, humidity. It's fertilizer or nutrients and water. And effectively, you're taking multidisciplines of science and engineering and technology coming together with decades of research to really drive productive growth for quality, for taste, for yield and for year-round capability and resiliency. So it's really become a very scientific approach and high-tech and not just taking a tomato plant and putting it in a greenhouse, which you might be envisioning as sort of the basic step of doing that. There's really -- obviously, we talked about several drivers of the market from consumer preference. Legalization of cannabis is driving an element of this, sustainability. But it is a substantial market with a lot of runway. Today, there's roughly 20,000 acres of greenhouse growing in North America. That's between Canada, Mexico and the U.S.. About 1/4 of that, 5,200 acres, is what we call high-tech greenhouses. That, for us, represents a $1.6 billion addressable -- or served market, sorry, which really affects the greenhouse technology, the processing technology and design services. And I'll show you there's a much broader value chain there to go after. It's growing at a significant rate. And by all practical means, when people research the market, there is significant runway for further development as we look at population and the flow of products today. Again, this is not about developing a new market. In cannabis, it is a new market. But in produce, it's taking places which were driven by climate and labor cost, but those happen to be in faraway places which require us to import products and moving those into a local environment, which reduces transportation. It allows you to pick product very close to ripeness and get it into stores very quickly, which drives more shelf life. So there's a lot of dynamics behind this, and then you talk about sustainability and use of resources, which this drives as well. Really 2 innovations around this product to talk about. One is on the product side, where it really starts with seed breeders who think about specific varieties, not only for yield and resilience, but if you've been to your supermarket in the last 5 or 10 years, you've probably seen the proliferation of the amounts of leafy green packages or the number and types of tomatoes or peppers. You can even buy snacking cucumbers now, which are little bite-sized cucumbers you can eat as a snack. So that whole proliferation driven by consumer demand and retailers' interest in becoming differentiated, drives a product development cycle which is pretty sophisticated. That drives a lot of innovation, which is also driven by this controlled environment agriculture approach. Secondly, to support that, there's these high-tech growth factories which are coming up, if you will. Over the past 20 years through a lot of innovation, yields have increased dramatically. Depending on the crop and situation, we see about a 10x yield versus field grown, but a lot of activity coming in from introducing lighting, which both increased yield, but also extended the grow life in the greenhouse to almost the entire year. So you can serve products to consumers almost year round from a single facility. Then you introduce LED lighting, which is reducing the energy consumption and then, of course, much less water and land use and then even recycling of water and fertilizer to help drive no runoff from the facilities and better use there. So really a ton of innovation happening in the space, which is appealing to us because that's the way we're coming to the market with a full service of solutions. Here's the value chain, which is very similar to what you saw from solar in the way we approach it, from really a conception phase, building and integrating and operating the facilities. That represents a $4.6 billion total addressable market, obviously, including a lot more equipment than we have today, additional services and other types of things, but that presents to us a pretty significant runway to develop over time. We actually, as you'll see here, as another cut of this market, we do interact with that entire value chain, although we don't own many of the technologies. We do support them with service -- with experts in those areas, partnering with third parties to design, to specify, to recommend all those technologies which go inside a greenhouse in order to develop a turnkey project and submit that to a customer. That's really kind of come together over the last 5 or 6 years as we brought these companies together, each one of them adding a certain element to this, concluding with our last acquisition, Thermo Energy, which brought this large-scale produce capability, enhancing that to us. This market really developed first in the Netherlands. It moved to Canada, Southern Ontario and now is accelerating in the U.S. as that momentum starts to build, which plays into our position and our footprint as a company. Just to reflect, again, we talked a lot about produce today, a little about cannabis, but we serve the full complement of greenhouse markets. Starting with research facilities and institutions, that's where a lot of this technology is coming to bear from the plants. So we do have full exposure and coverage, which we bring to our customers and markets. This represents the culmination of Prospiant and those 5 companies coming together, a tremendous amount of domain knowledge, a tremendous amount of project experience, both in the growing side of the business and the processing side, where in cannabis, we sort of extend our view to a soiled oil strategy, being able to service customers who are developing products for the legalizing cannabis market. But there's just a tremendous amount of domain knowledge here. Our task as a team over the past 2 years has been to bring this together and organize it in a way to leverage it for scale. Probably what we're most proud about is the customers that we serve. And across all segments, you see a representation of our customers. These are long-standing relationships, many of them we've done multiple projects for. We continue to do expansions and phases for them, and they are the blue-chip top customers in each of these segments. So Bill talked about this earlier in his slide, and I think I want to spend a minute on this just because it's -- this is really the basis of why we believe our plan is deliverable. And we have built a significant platform of scale, a leading platform of scale, and we've done a lot to bring that together, both across our structure, our business system and people. Bill talked about getting closer to customers. We've taken those 5 companies and we've organized by market vertical. So we now have teams focused specifically on produce, specifically on cannabis and specifically on commercial. We've taken our operations teams and other functions and leveraged those across all the businesses in order to drive scale, efficiencies, effectiveness. We've combined systems, both on the back end of the business and the front end of the business and of course, embraced a lot of the tool sets that we use across Gibraltar, 80/20, the quote-to-cash process and those types of things, which are showing performance. We clearly are not where we wanted to be this year, but we are seeing sequential improvement as we move through the year, and we believe we'll exit the year on the right trajectory to deliver our plan that we put forward. The plan represents about $100 million of growth and significant expansion in operating margin, really driven by 4 key areas: accelerating value creation; expanding our share of wallet; of course, our business systems; and our team. When we talk about value creation, there's obviously revenue growth, which I think is supported strongly by the markets that we serve. But also how we organize to deliver to these customers in a way which brings this full-service approach in and drives what the customers are looking for, especially in markets like cannabis and produce, where you have new investors and new people entering the market who don't necessarily have the tens of decades of [Audio Gap] just to help them drive their business plan and drive their investments. On the operating margin side, we've done a lot of a number of things, which really build off of the capability we already have in place. A lot of that has to do with digitizing some of our processes, taking those sort of start-up processes and developing new markets and building those into modularized repeatable systems where we can reuse things that we've done in the past and then also continuing to expand our portfolio. As you saw that we serve a fairly focused part of the market around our structures and our equipment, but there is opportunities to expand our portfolio and deliver more of those solutions to our customers. So in closing for me, I think we have strong markets to participate in. We've done a lot of work to create a leading position, both in building that position but also setting our foundation. And I think we -- for us, it's a lot about execution and how we drive that forward, both in our systems, our people and expanding our capability.

Okay. So let's start Q&A. You're looking to get over 800 percentage points in margin expansion. What were the top pressures on margins? And are they solved?

Well, I think as you've listened to our earnings announcements as we've gone through the year, you've heard about some of those pressure points a lot with supply chain and project maneuvering. Glass is a pretty significant part of our material intake, and that comes from China, and we've been faced with a tremendous amount of, I'll say, logistics maneuvering in order to get that to projects on time. When that does not come on time, that compresses our project schedule and forces us to do a lot of managing with our labor to drive the projects on time. Our customers need their project delivered on time. That's very important to them because if it's not, they miss their planting schedule and then their whole business plan starts to get off track. So it's critical for us to be able to deliver the projects on time, and we do everything in our power to make that happen. So I would say that was one key point. The other part was we know that as we brought in some of the acquisitions, there are some things that hit us from a market standpoint, especially in the cannabis market. We were addressing that and moving through those, and we expect those margins to start to rebound now, and we put the changes in place and the work we've talked about to really drive that going forward.

Okay. Capital markets have been wide open for indoor produce growers. How dependent is the plan on that remaining open?

Well, I would say that when you talk about capital markets, that's a U.S. phenomenon. If we look at the business over time, this has been a business which has been growing for 20-plus years. In Canada, we see consistent CAGR growth year after year. We're firmly positioned there. We're expanding into the U.S. as that starts to accelerate. So I would say our plan is not necessarily based on having a completely fluid capital market, obviously, continued investment, but we expect that to continue at a steady pace.

Okay. How much of the existing growing market is converting to controlled environment? And how is Gibraltar acting as ambassador for this?

I would say the -- I don't have the exact rate of conversion, but it's still fairly low today. There's still a tremendous amount of product which is grown both in the field and grown in low tech greenhouses outside of the U.S. So we see a tremendous amount of potential there. We serve, obviously, as a technology enabler to help our customers, to help investors understand the ROI and capability or the ROI and the ability to sort of put these projects together and what their payout will be over time. And that's how we're helping to drive the industry forward.

Can you explain where you are positioned in the market relative to players like Hawthorne and Hydrofarm?

Yes. I think for us, we are a direct-to-end-user business and primarily around the build-out of facilities. I won't comment too much on those competitors, but they're following more of a distribution model, and they're serving probably a different set of customers, which are more small-scale customers who are buying a lot of the materials and a lot of the equipment through the distribution market. We serve customers directly from our large-scale projects.

Okay. Do you have a competitor who comes at you across the board? Or is it competition at the specific product level?

I would say it's not specific competition in the product level but at the crop level or project type level. So in commercial, we have a certain set of customers -- competitors. In produce, a certain set of competitors and in cannabis, a certain set of competitors.

Can you discuss the expected growth rate by Agtech customer categories? For example, how much sales in cannabis and what is the expected 5-year sales growth?

I think if you saw my bridge slide, it showed a representative sort of rough amount of how those businesses break down and their growth in the next 5 years, and that would be how we're representing that plan going forward.

Okay. What do you think is the real-world time line for realization of your opportunity in cannabis growing and processing?

Well, I think for the cannabis market, that's obviously a question which is always asked. It's clearly a bumpy road. It's really a state-by-state plan. I will say that of the states that came online, we saw a lot of robust growth from those. A lot of new states have legalized. What's happened recently is that the -- so you have the state legalizes first. Then they will go to building the infrastructure, the legislative infrastructure, then they issue a license -- they go for the licensing -- issue the licenses, and then the process starts. We would say that for the new states, that's probably about a year behind where we thought it would be, but it will continue to come, and we continue to see more states lining up for legalization. So I think we don't expect it to be a sort of smooth joyride in cannabis, but it will be a steady growth with a few lumpy places in between, and we're prepared to deal with that.

Mark, like solar, you're a solution provider. How do you think the solution value comes from being a manufacturer, material supplier, for example, glass design service provider?

Well, one thing, I think, is that we are a manufacturer, but that's actually a very small percentage if you look at our project value when we go to market. I mean our value really comes from all of the domain experts that we have on staff. I talked about the hard work we've done and we've put in a new leadership team. We've added some growing experts to our team who are people who actually own greenhouse businesses in the past. It's that domain knowledge which customers need to help sort of conceive and drive their project forward with the right capital investment, with the right technology selection for what they're trying to do because everybody is trying to do something a little bit different in terms of what their outcome is.

What supply chain challenges do you need to get solved to remove barriers to growth in produce?

I don't think we have a barrier to growth at the moment because of supply chain. It's making life very painful. It's creating some operating challenges, but it's not a barrier to growth. We are continuing to grow and land new projects. We don't see that as the main barrier to growth. We do see some things like material prices causing people to pause a little bit and think about their projects. We do see things like water rights and other types of things happening, which slow down projects. But I wouldn't say supply chain is the place which is limiting our growth. It's putting a lot of stress in our business but not limiting growth.

So on that note, update -- can you update us on your progress procuring alternative sourcing options for architectural glass? How long do you expect margins to be impacted?

I would say on the glass situation, what has impacted margins as of late is what Tim talked about in the Q3 announcement. It's much -- it's more about the shipping of the glass than the glass itself. Obviously, that's a supply chain challenge. We are looking for alternate sources. It's not a product where you find 20 or 30 or 50 sources globally. There's a handful of sources. We are out meeting with different sources and trying to get those in place. But I think if you look at our current ability to perform, we adjust our project quotes and those types of things based on if we're able to maintain our competitiveness as we do that. So what it does is it helps us going forward as we do that. So what it does is it helps us going forward in terms of less stress on our supply chain and the ability to be a little bit more flexible with our customer base.

Can you discuss the economics of a greenhouse developer, example, contracts with retailers, time and ROIC?

Well, I would say if you look at a grower, typically, there's 2 types of people in this market. You have marketers and you have growers. Some of those are integrated. The big players like Mucci and Mastronardi, they're integrated marketers and growers, but they're also buying product from a whole host of contract growers. So we serve both of those groups of people in terms of contract growers and marketer growers. They basically have a continued set of contracts, which are creating flow of product. And as those continue to develop, they continue to increase capacity as their capital allocation allows and their operating capability allows. So you might think, oh, just add another block of capacity, but the growers do that on a very measured basis because they want to make sure that their operations are successful.

What are the key things that you've accomplished in the past 2 years that give you confidence that you can accomplish your plan?

Well, I would say between my slide and Bill's slide, there's a tremendous amount we've accomplished both in bringing a leadership team of seasoned executives, organizing our systems, coming to the market in a very specialized way by market segment, centralizing our operations. There's just a ton of those things, which have now started to get traction. So if we look at from the beginning of this year until now and as we exit Q4, we're starting to see -- we've seen sequential performance each quarter. Not exactly what we wanted, but we're seeing performance, which shows that the steps that we've taken are taking hold. We're also over 20% above last year in terms of our backlog development. And we expect that to also continue to develop as we exit the year as well. So I think we're seeing the signs. We've got the right people and processes in place, and that gives us confidence to deliver the plan that we have in place. The last thing I would add to that is that many of these businesses are stand-alone businesses, have demonstrated performance that we're targeting. So it's just a matter of we know how to do it. We know it's required. We've made those steps, and we're going to execute and make it happen.

Okay. That's all the time we had time for questions. We'll take a break now.

Thank you. [Break]

Welcome back, everybody. We're going to switch gears now and talk through our residential business, and Gene Laminack is going to take us through that. So Gene, take it away.

Thank you, Bill. Again, my name is Gene Laminack. I'm a GM within the Residential Building Products group. So I'm proud to represent the whole group today and talk to you a little bit about some of the things we've been working on and what our plan is for the future. What we'll do is we'll talk a little bit about past performance, and then we'll go into a little more about what our markets are. We'll do that with a video, and then I'll come back and talk about some specifics in the markets that we participate in, in what is a pretty broad category of residential building products, so we'll narrow down to where we play. And then we'll talk a little bit about how we're going to grow and how we're going to continue to expand our margins in the future. So first, let's talk a little bit about past performance. So we've had a nice run, 2% growth in revenue, which is a little misleading. The 2015 numbers include a sizable contract that expired in 2016 with an international government in our mail and package portfolio. So if you pro forma that business out, which ended in 2016, then you end up with something closer to a 5% growth rate over time. What I'm really excited to talk about is the 740 basis points of improvement within this group of companies over the last 4 or 5 years. Now there's a myriad of activities that occurred, but we can pretty readily and easily attribute them to the 80/20 toolbox. Most of these companies have been in the Gibraltar portfolio longer than some of the other businesses that you heard from today and have had more time to benefit. So we can be a little bit of a testimonial for what can be done with 80/20 and with some of the other business systems that we have. When I talk about 80/20, I'm talking about reducing complexity in the business and improving efficiency and driving value. So to date, that's been mainly internally focused. But as we talk -- we'll go forward, we'll talk about how that can be external as well. Okay. So first, let's go to a video to give you a little more of a flavor about who we are, and then I'll come back and talk about the markets. [Presentation]

Okay. Great. So let's talk a little bit about the markets. So if you think about residential building products, we really participate in 3 segments within that. So I'm going to go through each one of them briefly. The first one is really roofing accessories. So think in terms of the kind of products we're talking about here: ventilation, trims and flashings, connectors, that sort of thing. There are some small categories that we participate in that are below the roof, but that's really what this segment is. These are essential products that go on the roof. They're there for the comfort and efficiency of your home, but what I really want to just spend a second on is it's also a safety issue. The average family in America today generates between 2 and 4 gallons of water vapor a day living in their home -- 2 to 4 gallons. That's in the form of breathing, showering, washing clothes, dishwasher, cooking, all of those things. That water vapor has to go somewhere. And if it doesn't get ventilated out of the home, it goes into the walls and the ceiling and that creates mold and mildew. So sometimes, we don't think about how important our products are, but they're essential to the safety of a home. Now so that makes it interesting to us because they're so critical. The other thing that's interesting about this market is it has an enormous installed base. Some accounts are there's 130 million to 150 million homes in America. That's multifamily. I think single-family is probably 2/3 of that so maybe 100 million homes. And so the market is 80% repair and replacement. So that creates almost a built-in recurring revenue stream for our business because there's going to be a certain amount of repair and replacement every year. That can be through age-related deterioration or it can be weather related. And I just think of weather related as accelerated age, right? That would be hailstorms, other weather events. It's a pretty steady market. It's grown at GDP pretty much for the last 10 years plus. We will see some variability from year-to-year because of those weather patterns, so you can have some ups and downs. But over the long haul, it's pretty, pretty steady. The other thing that's interesting about this market that creates opportunities for us is that it's very regionally fragmented, and that's for 2 reasons. One is pretty intuitive. In the United States, there are a number of different climate zones. And so based on the climate zone that you may live in, some products work better than others. But what's really interesting is it's also regionally focused because of the contractor base. This is a contractor-driven business. They make the decision 99% of the time of what goes on someone's roof, not the homeowner. Most homeowners don't know what's on their roof. So the contractor decides that. And they do that based on their preference for what they've always put on the roof, for what they like to put on and what's worked for them. And we'll talk a little more about how that plays into how we approach these markets. From a channel perspective, so typical channels were wholesale distribution and big box retail typically. And then we try to spend time with those contractors. I just mentioned, they're really important because they make the decision. So we have the typical pull-through programs to help incent them, but what we really do to differentiate ourselves is we have an education program. So we have a program called Ask the Expert, touches well over 2,000 contractors a year, provides continuing education credits for architects. And what it really does is it provides an education for roofing professionals and also allows them to better sell and differentiate themselves from their competitors because they have knowledge about ventilation and can sell that to their constituents. So that's the first segment. The second segment is mail and package. Our mail and package business is both mail and then package. We'll talk about the mail first. These are mailboxes. Now here's what's interesting about this market. There's 141 million USPS delivery points in America today. And here's what's really interesting. Believe it or not, it's growing. So the demise of mail in America is greatly exaggerated because not only is it staying steady, but it's actually growing. And we're the leaders in this market, both single-point delivery and centralized mail. So we like that, obviously. Again, enormous installed base, lots of opportunity for replacement every year, which keeps this almost recurring revenue theme for us. The other thing about the mail business is that there are some barriers to entry that help protect us. In order to participate on the centralized mail side, in particular, you have to have a license from the USPS to deliver the flagship product, which is the picture in this, which is called a CBU. That design is owned by the USPS. As an aside, Florence Corporation, our business won the award on that 15 years ago for the design and then gave it to the USPS as part of the contest. So we work closely with USPS, but you have to have a license to do that. In order to get a license, you have to have quality programs, the ability to manufacture, ability to create and meet performance standards with the industry. Even on the single-point delivery side, there are no mailboxes that are legally sold in America that have not been preapproved by the USPS engineering group. So barriers to entry that make it a little harder to get into the business, you might think. So we have this little growth business, little growth market, huge installed base, opportunity to continue to be successful. And then package delivery is quite different from that. Package delivery is still a bit of an emerging market for us. We entered this business in 2016 and -- through the acquisition of Package Concierge, and it really serves the multifamily market today. However, there are some really interesting dynamics. We're all aware of e-commerce growth. We're all aware of package theft and all that stuff. But there are some really interesting micro market segments that I'm going to talk about shortly that make this market and this business even more interesting. The other key component here is that there's a SaaS revenue stream. So not only do we have recurring revenue in some remarks -- but in some respects with these other businesses, but we have an actual SaaS recurring revenue stream in this business, and it makes about 1/3 of this business today. Modest overall size but growing rapidly. We go to market, again, on the mailbox side, big box retailers and dealers. Just as an aside, a growing occurrence of online sales for mailboxes, single-point delivery. So that creates some more opportunities for us because that means we need more support and more effort around marketing online for our channel partners. And then we go direct to the end user typically or the owner on the package delivery. Then the third segment is home improvement. So home improvement is a very large marketplace. I think you heard Jeff Bedard, our GM in this area, talk about how large the market is. We participate in that market in 2 ways, the outdoor protection and outdoor living. Outdoor living, think of it in terms of shades and awnings. And that's really important because when you look at home improvement return on investment, typically, you think about kitchens and that sort of thing. Well, the outdoor living spaces, including the products that we offer are routinely in the top 5 or 10 as far as home improvement projects that homeowners can do, they can add to their home to add value to it. Again, compelling dynamics in this marketplace. We have an aging population in America, the 55 and older crowd is growing as a percentage. And that 55 and older crowd is investing in their homes, aging in place. Additionally, we have seen an acceleration in interest in these products because of the pandemic, where people are now starting to do more stay, play, learn, work, everything at home. So we see those dynamics continuing to drive it. Now the lifeblood of this business is lead generation. And today, we spend a certain amount of our effort and time on lead generation, and then we go to market primarily through a dealer network who also spends time and effort there. In order to continue to grow in this area, we have launched an early-stage initiative around direct-to-consumer, and that's really focused on going into underserved areas where we don't have strong dealers and continuing our efforts around lead generation and growth. And we'll talk a little bit about that lead generation again in a few minutes. So that's our 3 segments that we participate in. So if we switch gears and think about the future now, our intent is to continue to grow the business at around 6%, again, on a pro forma basis; trailing 5, we were at 5%. And we believe there's still opportunity to expand margins. So we think we can get to 20%. And I can tell you that even though we've had tremendous success with 80/20 and some of the other toolbox efficiency items that we have implemented, there's still more opportunity there. And there will be. You never get finished with that. It's kind of a cliche to say, continuous improvement. But the 80/20 process does cycle back around, and there's lots of opportunity remaining. So we'll continue to do that, and that will help shore up and maintain our margins and even expand. And then what I really want to do is spend a couple of minutes giving you examples about how we think we can also improve margins and grow through channel efficiency, market expansion and some new products. So I'm going to just skip to those. The first one of these is this notion of channel efficiency. And I'm going to try to give you an example of what I'm talking about here, but I want to preface it by saying that we've made these -- we've made some significant investments in systems within this group. You heard Bill talk about it earlier. We've invested in ERP systems. We've invested in some CRM systems. We have online configurators, online support, data mining tools. And that's really important because we have, in our group, 50-plus years of knowledge about some of those very regional markets. So how can we combine the technology that we've used and that we've implemented with our deep understanding of the markets to help a customer? And so I'm going to use one example of big box retail. So big box retail in these markets, and in this particular example I'm talking about, the roofing accessories market, is very focused these days on the pro. They want to grow those sales and they want to be more important to the roofing contractor. So what we've done, keeping in mind that this is a very regional business. So we've done 2 things. One, we have -- and I'll give this through an example. So out on the West Coast, our building accessories group partnered with one of the big box retailers and brought a logistics team together to help optimize logistics around our factories and how we deliver and how those products are delivered to the big box retailer to better serve and better have availability for their -- of the products and their customers. So this was a team effort between both customer and our business, generated $4 million of savings, just removed excess cost from the process and improved efficiency and deliverability of the products. So right out of the gate, we were able to share -- our take on that was $4 million. We shared additional savings with our big box partner. At the same time, we're able to take our systems and our processes and data mine out these regional preferences and give them guidance on how to better arrange the assortment through their planograms for their regional businesses so that they're not just offering the same products across their whole network. The combination of this kind of effort and teamwork with this particular retailer resulted in substantial award of additional business and market share and wallet share within the business. So just one example of how to leverage both systems and our deep knowledge, and we think that can be repeated across multiple channels. Now we'll move quickly to expanding into attractive markets. And I just -- I got 2 examples of different kinds of expansion that I want to just share with you. One of them is really just continuing this theme of lead generation. So again, lead generation being the lifeblood of the home improvement group and trying to -- and making sure that we're expanding into markets that are underserved by our products today. We partnered and we have representation in right now, a little over 170 Costco stores. This gives us the ability to reach straight out to consumers and homeowners, generate very quality leads. We've been very successful with this program, and it's growing now to over 200 stores in 2022, and we'll continue to expand that. We can take those leads and depending on the market that they come from, they will either go into our direct-to-consumer initiative or they'll be shared with our channel partners where we had good representation and strong markets. So one example of how we would geographically expand. Another interesting one that's near and dear to my heart is the expansion of electronic lockers into micro markets. So if you think about our rubric and our strategic playbook and how we work -- and Pat will talk a little bit more about that in a few minutes -- one of the things we like to do is not chase revenue but chase profit pools. And so our team here, our locker team has done an excellent job of doing segmentation into the electronic locker market and finding some interesting problems that we can address. So I've listed 2, I'm only going to talk about 1 today, but happy to talk about the other off-line. I'm going to talk about this notion of the public library market. So this market is $200 million to $300 million of opportunity for us. That's our -- that would be ours, if we got it all. The challenge for the public library market in America is that, as you might imagine, they have limited staffing and limited budgets. There actually is increased traffic [Audio Gap] in public to provide a seamless solution. What this allows us to do is to offer a product to -- like the one you see in the picture here, which is Brown County right outside of Cincinnati, to provide a locker solution for retrieval and return of books to that library, making their staff more efficient. And again, it's great for us. We can introduce hardware, and we can also establish a SaaS fee, which helps us from a business perspective, while we're providing a benefit to the community. And then the third item that I want to talk briefly about is new product development. Now when we think about new product development in this group, it's generally speaking, hitting a lot of singles and doubles, right? And the way we go about doing that is through a disciplined stage gate process where we use voice of customer research, identifying pain points within the industry that would create authentic demand and then how do we address that? So the first 2 items on here, improved added ventilation in the structural attachment of clay and concrete tiles, really address the same challenge within the roofing industry, and that challenge is this. In the most expensive part of putting a roof on a home is the shingles, right? So the covering and in most cases, a shingle. So pretty easy to understand. The second most expensive part of putting a roof on a house is the labor to do it. And third is a distant third. So when roofing contractors need to make -- need to protect their margins, they need to be successful, they have to have several things happen. First, they can't have inefficient people on the job. They have to be able to roof the house. And they cannot -- and I repeat, cannot have a callback or their margin is gone in that roof. So these 2 products. The first is an improved added ventilation solution. It's really a roll vent, which you can see the uninstalled version on the lower right. The installed version is actually that center picture. If you look closely, you'll see that on the very ridge of the roof, there's a -- you can see a little bit of a line. That's actually the rolled ridge with shingle over, cap shingles on top. So very aesthetically pleasing. It's the best form of ventilation. Our newer product rolls out very quickly, very straight, no recoil and easy to nail on, very effective, and there are no callbacks. So we're excited to be introducing this product in 2022. And it falls into the category within the ventilation business of -- it's the largest single category there, this notion of ridge vents versus other types of vents. We could say the same thing about the clay and attachment of the clay and concrete tiles attachment. These are products that have been developed to both more securely and more efficiently attach clay and concrete tiles to the roof, making the roof -- the contractor more efficient, more effective and no callbacks. So again, singles and doubles being hit here, but very important to the supply base and to the contractor base in general. And then the final item I'll just briefly talk about is this roof venting solutions. This is the #1 leaking item on a roof. It's called a pipe boot. It's the lower left-hand corner there. That product typically leaks because the rubber seal around it hardens and cracks and then water gets in. Our team in the roofing accessories division or segment has developed a new product that has some patent pending on it, some IP pending on it that will help channel water away from those items and avoid a visit from the contractor and help the homeowner. So again, we have very high expectations. Each one of these products should generate 7-figure revenue numbers over the plan. So in summary, we like the businesses we're in. They are all growing. The markets that we're in are growing, and the opportunities are broad and deep for us to improve and to continue to grow with it. I'll reiterate that we intend to grow -- continue to grow at around 6% a year, and we think there is still margin opportunities within this business. So with that, I'll conclude and open it up for questions.

Thanks, Gene. The first question is, what are you assuming about market growth given that you've grown nearly 21% this year and your next 4 years CAGR is only 6%?

Yes. So that's a good question. So as I said earlier, keep in mind these markets generally grow at GDP rates. Some grow a little faster, maybe some a little slower, but that's generally the market. What we've seen over the last couple of years in this growth rate is somewhat unique and has a price component to it and also a market. But if you look at it over time, these markets are going to grow at GDP, which means that we still expect to increase wallet share within the markets.

Next question is, can you really achieve and sustain 20% margins?

Well, we think we can, and the reason we're confident around that is because of the 80/20 toolbox. I mean that's the first and foremost, I think you can -- hopefully, you can tell, that's near and dear to my heart. That has -- that's what's driven us. So between the growth and value-add that we add through our products, new product development margin, they're coming up -- expansion in markets and the ongoing opportunities that exist within the 80/20 toolbox, automation, supply chain initiatives, those sorts of things, yes, we believe that 20% is sustainable.

The next question is demand for new homes is far outpacing supply. How significant an impact might that pent-up demand have on your mailbox business?

They're -- as I mentioned, on the central -- let me break that apart a little bit. On the centralized mail side, about 50% of our business is a replacement and about 50% is new construction. So from a centralized mailbox side, to the extent that there's pent-up demand and there's increased activity within new construction, then that can impact that part of the business. The remaining part of our business, the rest of that portfolio is predominantly a repair and replacement business, so it has less of an impact.

How are you managing through materials inflation and availability? And how do you visualize the margin recovery curve?

Yes. So it's been challenging. I think you heard both Mark and Ed talked about the challenges in their marketplaces. We've seen no fewer challenges in ours. What we do to manage through that is work tirelessly on supply chain to make sure that we have availability of materials. And then we're in constant conversations with our partners in the marketplace around pricing. That's been a challenge only because of the rate of increase and the speed with which it went up to create some timing issues. But we've, in some cases, implemented 6 price increases this year. And we expect over time, as materials moderate and flatten out that those price increases will catch up.

Of the drivers of revenue growth, how much comes from market growth, how much from pure execution and systems, and how much from new market entry and new products?

I think it's a combination of all 3. The market growth, if you think in terms of GDP being 2%, 3%, then you could say we're going to grow at 6%, about half of it is market lift within the business. And then the rest of it is around those 3 initiatives that I've just outlined, -- which we are already -- these aren't future initiatives. There are things that are going on right now. We're earning business from our partners right now. We are installing in these new markets products that we are already introducing. So I mean we have a good start to make sure that, that happens.

Can you talk more about how you are in de-risking the systems implementation? How are you avoiding execution hiccups, or worse, blowups?

Yes. It's always the nightmare for companies, isn't it? This notion of putting in new systems. So we spend a lot of time. We've taken our time in this implementation. We have our A players involved in it. We've had extensive training. We've done dry runs on taking a full run through order to cash to manufacturing and all those things. And we feel confident that when we go live, we'll be in good shape.

What is worse, the supply chain or the labor shortages? Are materials getting delivered on time? Is the labor issue due to COVID sick time?

Yes. It'd be tough to try to flip a coin between labor challenges and supply chain over the past year. What I would say is that both have been challenges, and I'm very proud of the way the teams have responded to each. On the labor issue, we haven't had significant COVID sick time. We have strong protocols within our factories and within our offices, so that we're very fortunate that we've not had a significant disruption from those kind of things as -- so that's not really been an issue. Labor availability has, in some cases, how we are addressing that, is that we challenged our groups to look at automation, efficiency and how do we -- and in some cases, outsourcing into other areas that allow us to look at our revenue growth plans over the next 5 years and not increase labor content within them so that we're able to assure ourselves that we'll have labor available to meet the demand.

Can you speak further to solving the e-commerce puzzle for multifamily? And is there any of this built into your 6% revenue CAGR goal?

Well, I'm not sure there's a puzzle. We're strong and we're a leader in multifamily when it comes to -- and I think this is probably referring to electronic lockers. The challenge, if there is a challenge in that business is that during the pandemic, as you might imagine, some of the multifamily owners and property managers had challenges that they had to deal with themselves around rents and availability and those sorts of things. So we saw some pushback there. What we like is the fact that we've looked at these micro market segments and that we can find very clear problems and very clear solutions to those problems that we can participate in. And again, we're shipping on those now.

What areas would you look to expand into inorganically?

Well, we're always looking -- as Bill mentioned, there's the ability to do acquisitions. We look at that. We have a rubric that we use to assess attractiveness. And I'd be hesitant to say too much about where we might look and what we might do, but it's certainly available to us, and we know that there are some attractive areas.

Gene, can you talk about how share gains enable margin confidence and competitive landscape other than the mail category?

Sure. Yes. So we -- I think the example -- the classic example that I gave around that big box retailer out there and how we can add more value to the process rather than just providing a product to a channel partner, that we can provide insights and we can provide ease of doing business with, that gives us the ability to earn share within these different categories as well as to expand our reach. In doing so, we protect ourselves because it gets harder for someone else to displace us, and that allows us to maintain margin.

And then our last question, Gene, how do you see the competitive landscape changing over the next 4 years?

Well, I think we'll see many of the same things that we've seen over the last few years. Let's take the pandemic a little bit out of it. But there will be this ongoing growth in e-commerce, and e-commerce has a share of retail sales. So we'll see that. There's no sign that because of the installed base, if there will be any change in the base markets. So what we need to strive and what we continue to work on is this notion of partnering with our channel partners, partnering with our customers and our end users and then driving these growth initiatives around direct-to-consumer and growing our recurring revenue, be it through repair and replacement or through SaaS revenue, and we don't think that changes. All right. Thank you.

All right. Thanks, Gene. So I wanted to circle back with everybody and talk a little bit about our corporate social responsibility work that we've been embarking on the last few years. And there's a couple of things I want to emphasize. If you go back to that slide we showed early on about our 3-pillar foundation around optimizing the portfolio, our business system and our team. Underneath that, there's a foundational block that spans across all 3, we term it corporate social responsibility. And it's really fundamentally for us, 2 things. It's how we operate every day doing it the right way each day. And the other thing I would really want to emphasize to everybody, it's actually ingrain in how we operate each day. It has to be part of our existing business systems, our existing operations for it really to take hold and move forward. And we talked a little bit about that. So I want to share with you today a little bit how we think about this, some of the work that we've done and how we think about the next steps. So let me start with our commitment. And we've always centered around our people and our communities as well as the world. So if you think about the people, I've mentioned this before, it's about creating the best environment for our people to have success. That drives into a lot of different things, as you might imagine, as you all view the organization. The communities we operate in, we know exactly how we're supporting each of the communities, each of our locations where we have presence, and we want to continue to do that. We've always done that very well. We're going to continue to support that. Maybe we can do that more and more as time goes on. And then finally, the world. If you think about the world, for us, if you think about putting your money where your mouth is, we've been evolving the portfolio accordingly to focus on what driving renewable energy, growing food much more effectively and home efficiency. That's 95% of Gibraltar. It's a little different story than a few years ago. So if you think about that portfolio shift, as shown here, we've invested, as I mentioned earlier, $0.5 billion in getting the portfolio where it is today. And 40-plus percent of our portfolio today is focused on renewable energy and growing food differently. That's going to continue to grow. But as you just heard from Gene, the importance of home efficiency is not going to go away. In fact, if anything, it's going to go up, and we want to be right at the forefront of that as well. So it starts with the overall portfolio. Secondly, it starts at the top. So if you look at how our Board has evolved over time, it's been a really interesting story. This is our Board that you see here on the left. It's a fantastic Board. I'm super excited to have this group with us today. The amount of experience and domain knowledge on a diverse front that we have with this Board is really fascinating. You can see some of the types of domain knowledge we've been adding to the Board. There are 4 new board members, too, which were added in 2020, and 2 more that were added this year. And you can see how that's translated into the diversity of thought and diversity of experience and general diversity of the Board in the last 7 years. We're not done. We've made some announcements during our Q3 call, which will take the Board another step further. And what you'll see in 2022 is our Board will be 50% diverse. And when I think about diversity, my first thought is diversity of thought because I always bring it back to inclusion, diversity of experience, diversity of domain knowledge and then, obviously, diversity of our individuals. So a lot of work has been ongoing here. I give a lot of credit to our Chairman of our Board, Bill Montague. He's really architected this as we started our transformation in 2014 to where we are today, just building this Board of these individuals. I think we're just in a great position to have the oversight that we're looking for, particularly given the plans that we have put in place. It's not just about having a Board that's evolved in the way that we just shared with you. It's about the alignment of the Board with the management team. I know that sounds commonsense, but it's also expanding the role of the Board in some of the areas that we're focused on now as it relates to corporate social responsibility. So we have 2 committees that we show here that really now have an expanded role in providing guidance and strategic oversight. One is our Nominating, Governance and Corporate Social Responsibility Committee that's on the left. And on the right, our Compensation & Human Capital Committee. And you can see the expanded role that we list here where that oversight now is in those committees, and that is something that's on the agenda every quarter. Really, over the last 3 years, it's been an agenda item in our Board anyway. So it's not new to us. It's just we want to integrate more into our committees to provide even stronger oversight than we've had. The second point here is it really does matter what goes on inside our 4 walls day in, day out at how we operate. So I am part of our overall CSR Committee. You can see the members of that, which include our business leaders, but also a group of others that we think can help provide the vision and create the road map so we can actually implement, integrate into our -- how we run the business. So those 2 things are really important. Now I said earlier, one of our 3 commitments is our people. And this is -- it said how we think about this. And I think this is really important for us, at least internally, and we talk about it a lot. So if you go back 3 years, trying to understand kind of who we are, what does our organization actually look like? The pie on the left is our diversity statistics for 2020. And if you compare that relative to the U.S. Census, you'd say, "Hey, you're pretty diverse. In fact, you're more diverse than the country is, and those are just published statistics." And you might conclude something from that. But what I'm here to tell you is our approach is to peel that back. If you start moving to the right, there's a real example of a group of companies or a company that has multiple sites. If you take what our team looks like in each of those sites and you add it up, and you take the local census for each of those sites and add it up, you could conclude, hey, we're pretty representative of the communities where we operate in, you could draw a conclusion. Let's take it a step further. Let's go down to every one of our sites, and we've been doing this the last couple of years. All 30 of our sites, what's it look like? In this particular case, we have a site where we're not necessarily representative of our community. And that doesn't mean good or bad, right or wrong. What I'm getting at is for you to really drive this day in, day out to build the environment where our people feel like they can have success. There's not a peanut butter being spread across a big swath of bread. It's very surgically, and it's very prescriptive around each individual site that we have. That's what builds it up from the bottom. And that's the way we take it, whether we're talking about diversity, which you see here, our environmental initiatives or anything else that's captured under E, S or G. And that's philosophically really important for us for you to know because I don't think it's a check box kind of thing. Otherwise, I wouldn't be spending the time here talking about it today. It's how we operate. So ultimately, at the end of the day, if you take this diversity example and say, well, okay, that's cool, though, well, what are you doing with that? If you really want to get it into the organization, then take your top 40 leaders, which are business leaders, and their respective staffs, and put them on 8 different teams and assign them the opportunity to go out and figure out what's the best way to drive inclusion to create the best environment for us to run the business day in, day out, and that's what we've done. And so for the last 6 months, our top 40 people are cross-pollinated across function as well as business. They're on these 8 teams, and they have responsibility over the next 2 years to drive this. Now why would we do it this way? Because if you want to get it done, you've got to put ownership in the business. It's not about me just talking about it. It's not about me talking externally to you and everybody else. It's about what we do every day. And that's the best way I can demonstrate kind of how we think about this. I'm not saying we're better or worse than anybody else. I'm just saying this is the way we're doing it. So anything that we're going to invest in going forward as it relates to improving in this area is going to follow the same process of any other investment that we make. The discipline around that, the returns, whether they're financial or otherwise, for our different stakeholders, all of that needs to be taken in consideration when we're allocating time, talent, energy and money. Just an equally playing field with everything else we do. So philosophically, that's the way that we're running it. These are the realities of how we're approaching it. And I think about how to summarize this for you, we went out about 6 months ago and did a priority assessment with all our constituents. So our group of our investors, our customers, our suppliers and most importantly, our people and asked, what do you think are the highest priority things that we should be working on for Gibraltar? That feedback has come back. We've sat down with a number of those constituents. And the input from all of this discussion is about, it's just another piece that's going to help us drive and build the road map that we're moving on going forward. So we have a number of things ongoing right now. You'll see that in our upcoming corporate social responsibility report. It's our first one. It'll be annual. And you'll see the types of things we're doing across E,S and G type of categories and how that fits into how we run the business. Ultimately, at end of the day, it still comes back to the same fundamentals of the foundation. It comes to the team. We've got to engage our organization. That's why we took our top 40 people and made this something that we want them to drive and work on. And the education piece of this is really important. Three years ago, we launched an initiative every employee, including our Board of Directors, is responsible for completing 12.5 hours of online training every year associated with ethics, compliance, D&I, cybersecurity and so on. That's not going to stop. It's going to continue to accelerate. It's about 25,000 to 30,000 hours we invest per year in this, which we weren't doing before. So I feel like we're still building. I feel like it's part of do. And you're not going to hear me day in, day out talk about the CSR initiative. You're going to hear me talk about how we're improving the opportunity for our people to have success, number one, and being responsible on how we run the business every day, number two. If we do that well, I think we'll accomplish everything that we need to as a business in supporting our plan. And then finally, I mentioned this before, the discipline around looking at these investments. I don't want to minimize the importance of everything by calling an investment. But the reality is, yes, it's an investment. There are returns. And every stakeholder has a view of what those returns should be. We just want to make sure we have a disciplined understanding before we make that investment, what kind of returns are expected and then deliver on them. But every initiative we have associated with this is going to be treated no different than any other investment we make. And I think that's really important because, culturally, it's got to be part of your annual operating plan. It's got to be part of your CapEx plan. It's got to be part of your long-range plan or it's just talk. So I'm not saying we're perfect at it. I'm just saying this is the approach we're taking, and I just want to share that with you today. So I'll stop there. Any questions?

So we do have one -- the first question is, what caused you to being working on CSR and DEI?

Well, DEI, in particular, I mean, it's one of our pillars is our organization, right? So ultimately, at the end of the day for us to execute things, we have to have not only the talent and the competency, but we have an environment where people can be successful. So that's something we've been engaged in the last 3 years, and I think we've made progress last year. And again, it wasn't a target. It just works this way. 50% of our new hires at the management level last year were all diverse. I'm not -- we're not looking for attaboy or, hey, congratulations. It's not about that. Those are the right folks with the right diversity of thought, experience, domain knowledge, et cetera, that fit what we needed to move forward. And it's worked out really well. So it's always going to start mainly with D&I. And I'll break it down even further, diversity is not so hard to go out and change the game. Inclusion is what makes or breaks. And that's where a lot of our focus is. Now how do you create an inclusive environment so you can have a diverse group of folks that can cohabitate and collaborate to drive forward? And that's the hardest thing for people to deal with and for organizations to deal with, and that's where most of our focus is. And if we get that right, or as we continue to evolve that, I worry less and less about executing the plans, honestly.

Next question is, how are you engaging with employees in your diversity efforts? And what is the reaction at the employee level?

Well, we -- I mentioned the 40 we've engaged. We have a quarterly town hall. It's sustaining agenda item. So we're updating our entire organization every 90 days about the progress we're making on the various initiatives. We've been very open about where we're spending our time and effort. We've been -- as I talked about, the education program started 3 years ago. Everybody -- it's a condition of employment. If you want to know how serious we take it, if you don't do your training, you're not part of the team. Board level across the entire organization, as simple as that. So when we start that education program, obviously, there's a lot of communication and a lot of feedback as to how to go about doing that. So I would say we started the journey a few years ago, and you never really get there per se. It's just about making progress each day.

Next question is, have there been any dissenters?

I'm sure there have been and there always will be because we are all different, and we all think differently. And that's why I said earlier the most challenging aspect of this for most companies and for us is how do you create the most inclusive environment where people can have success. The beauty of it is we are diverse. And how do you take advantage of that? The challenge is we are diverse. And that's why it's so difficult for a lot of folks to kind of embrace this in a way that it becomes positive. And I would tell you, listen, you don't get there overnight. There's no silver bullet for wherever you think the answer is. It's a constant, continuous movement.

Next question is, what are your objectives at the Board level with respect to skills and diversity composition?

So this past year, as I mentioned, we've added 4 new Board members over the last 2 years. One of our Board members, it really comes with a strong background with corporate social possibility. That is her full-time job for a large organization. And so that has really brought a unique perspective relative to what we thought we were -- the path we were on and how we're thinking about it. And so I think bringing that at the Board level really amps up our game relative to oversight and how to think about some of these challenges, and that's been a nice addition to the Board. So that's just one example of that. Secondly, if you look at the representation of our Board relative to females, we have, as we move into next year, almost 40% of our Board will be represented by female. And if you look at our ethnicity, that is going to get close to 30%, almost 1/3 of our people. So I do think those perspectives are very valuable for us, and we're starting to see that. And that's also one reason why we expanded the roles of those 2 committees I mentioned earlier. We now have talent on the Board or experience in the Board that allows us to do that as well.

And the last question is, can you tie the CSR program back to core business objectives?

Yes. So I mentioned earlier -- and I'll give you an example. We just went through our annual operating plans. Just went through building this plan, went through our CapEx plans. And every business, as they pull out of those plans have objectives around attacking opportunities that exist in this area. What's really interesting at the end of the day is how do you measure which drives behavior day in, day out. So you'll see a number of thoughts around what metrics -- people talk a lot about metrics for CSR. My point for that is if you look at those metrics and you really drill into them, they really shouldn't be whole lot different than what you should be using day in, day out to run your business. Just think about the some of the categories around health and safety, think about turnover and retention, just around people itself. Well, isn't that kind of ultimate at the end of the day, either you have good inclusion or you have a good work environment or you don't. People go somewhere else. So ultimately, they do converge. And I think a lot of the metrics that we've had in place are very much aligned with what you see published a lot today. And I think that convergence will continue. So I would say that we're getting closer and closer to where -- and my point earlier is it's how you run the business. The metrics we have in place are behavior-based type metrics, and those will converge, and they're starting to in a big way. All right. So that was it on that. So we're going to switch gears, and we're going to talk a little bit about the business system. And Pat Burns, our COO, is going to come up and talk about that. I am reaffirmed how important the foundation of these 3 pillars are. This piece of our foundation, the business system is something that I truly believe is a leverageable tool set, and we're going to show you some of the real results that have come from it, but it's foundational going forward. So Pat, all yours.

Thank you, Bill. I'm Pat Burns, Chief Operating Officer. Happy to be here. And as Bill mentioned, we're going to take 10 minutes and talk to you about one of the 3 pillars we have in our strategy, our business systems. This is one of my favorite charts. I've been instructed not to spend a lot of time on it, but you guys will get this very quickly. This has been the backward look in terms of our performance. And what you pick up is we've created intrinsic value. We have created intrinsic value at a rate superior to most of these 200 industrial companies here -- U.S. industrial companies. And that's our objective to do that every year. What you're here today is to find out whether this team can deliver the same type of performance over the next 5 years. And hopefully, we've done a good job of explaining to you what we're going to do. The business system that I'll get into, we'll tell you a little bit about how we're going to go do this. The foundation of our business system. Well, it's similar to many others that you might see presented by other industrial companies is better thought through rather than a collection of best practices than a collection that there's method you want to follow as you work through your business system, starting with our rubric. Now rubric is not anything -- it's not rocket science. It really is commonsense applied with data. We break down markets. We use this rubric to evaluate our own portfolio to understand where we had opportunity to create value and where we didn't. But you have a dozen criteria to tell you how attractive a market is. Another dozen criteria to tell you how capable we'll be at extracting value on that given market. Using those, it tells us what good looks like in our own portfolio and the adjacencies and potential new platforms you might enter in the future. You then work to -- once you know where you want to play, you got to figure out how you're going to win. And that's our strat guide. That's one of the tools in our toolbox that we use to help our teams develop and understand what a good strategy looks like. There are many different frameworks and tools used within that toolbox, and it's broken down into 7 steps, everything from setting your aspiration to drive your execution through Hoshin Kanri X matrix. What it really does is helps the team focus on how to outperform. As you've mentioned in some of the Q&As picked up, our expectations for each of our business is to outperform our markets 1.5 to 2x. It's the tools and the strat guide and the overall business system that will help you do that. So once you understand where you're going to play and how you're going to win, then it's all the various tools within our toolbox that'll help you go execute. And that's what you see on the right. That's the comprehensive listing of our best practices and our business system. They break down to 3 categories: tools that drive growth. You've picked up that we've had better than market growth in many of our businesses. A lot of that is due to applying tools to get better growth than our competitors by being smarter and leveraging data. Micro market segmentation was referenced by [ Gene ]. If an industry is growing at 3% and you play in the segments of the industry growing at 6%, you'll outperform the market. That's an example of how to use the strat guide. Another big benefit of using the strat guide, not just growth and profitability. Gene mentioned we want to focus on profit pools. So how we segment our market and understand where the value creation is, is really key. And then what's also important to understand how to focus our resources on what's most important and decide what not to do. Finally, really, is about developing our people. It all comes down to the talent we have in our team and the principles we use to drive our execution. A couple of principles and some of these tools I'm going to highlight is some following examples of applying these tools to create value for our shareholders. This first example is our solar platform. Now everybody knows the solar industry is a really attractive industry. But we don't stop there. We applied our rubric to the entire value chain, the solar value chain, starting with civil works and ending with operation and maintenance. And using those criteria assessed where we, Gibraltar, can apply our capabilities and create the most value. And so you see highlighted here in the dark circles, those are the segments of the U.S. market where we participate. And as Ed described, it's not just participating in the best segments. It's also how we execute our strategy for execution and bringing all these capabilities together to solve problems for our customers where our competitors can't. Our competitors generally make products and sell products. We help our customers develop a site and make it the most productive site as possible. So we also take the strat guide. We're not making trackers just to make trackers. We're making trackers to help our customers develop and generate the greatest return on their projects as they can. Electrical Balance of Systems, again, solving a problem for our customers. We've talked about the design software to help our customers optimize their land. We've had customers who have been stuck for years on parcels, they can't figure out how to lay out their project best to get a return. And when we've taken them through the SIFT platform from Sunfig, within minutes running hundreds of thousands of iterations that come up with a handful of optimal designs. The panels use, the inverters to use, the orientation to the sun tracker, fixed-tilt, all these problems solve for our customers to help them make the best return as possible. We will win through our customers. This slide that Bill shared with you, I'm going to take you through an example of one of these businesses and the value we created in building accessories. We had 5 companies come together under one. Previously, they had been run very independently and autonomously with no scale and leverage. And we had a problem with that business. It really didn't score well in our rubric, and we weren't executing well. So we put a new team in, one very skilled with 80/20 lean principles and turn them loose on this business using some principles of empowering the business unit team to make their own decisions, have execution at the business unit level. That business last year delivered some amazing numbers. 19% revenue growth, employing our business system and top line growth tools, adjusted operating income up over 100 basis points and adjusted operating income up over 120% and adjusted operating margin up almost 600 basis points in 1 year. Now they had a long way to go, and there's still a lot of opportunity, but this business was our star for the year. Some of the projects that they worked on, the freight savings that Gene mentioned, that's a concept -- you think about lean terminology is lean enterprise. When you step out of your own business and look up and down the value chain to drive improved efficiency and drive out the 8 waste out of the entire value chain. We also did a lot of work within our walls, SIOP, that's sales, inventory operations and purchasing. That's a team sport, which has been incredibly important in the past 2 years because of supply chain, labor and all the challenges. But this team has been able to improve their on-time delivery performance by 11 percentage points, getting up to 98% on-time delivery across their entire network. That alone has driven share gains. They've won $10 million -- they won $10 million of revenue in '20, and just last week, were awarded another $13 million of revenue simply because, it wasn't because of price, this team has been very aggressive on the price and actually expanded its margins this year. It's been because they can deliver. We're competing more on just products. We've got exceptional products, but we're also competing on service. And what Gene described as our ability to be the category captive for our customer. We've also picked up a significant amount of savings in our factory with in-lining and eliminating touches. A lot of these products are very low value, a gutter hanger or something like that, where if you had -- translating that coil -- steel coil through roll form, slitting and roll forming, stamping it into a box of a dozen of gutter hangers, you can't touch that too many times or you'll be losing money. We eliminated the 33% of the steps in our factory out west and dramatically lowered the cost, creating $3 million of savings through product line simplification and customer line simplification, combining that lean and simplified process with a simplified set of products and customers. Our team just did their quad analysis again earlier last week, and they -- we have over 90% of our sales going to our top 25% customers. We have a tail to work on to improve our profitability. Again, we've got further work, but it's a significantly powerful tool we've applied to a market that is really GDP. It's not driven by exceptional and intellectual property. But because of our team's ability to apply these tools driving above-market growth and above-market profitability. So in summary, we've had a very disciplined process to determine where we play. We've got another disciplined process to tell us how we're going to win. And then we've got a significant number of tools to help us execute. And those tools develop great teams. Thank you. Take questions.

Thanks, Pat. The first question, how much have you invested in systems since Bill became CEO? And what is the ROI of the systems investments you have already made?

Good. Okay. So we'll break that out. Systems -- business systems, that's largely free. That's all intellectual property. So there's no cost there. But in terms of technology and IT systems, we've invested between $5 million and $10 million. A significant amount of that was what we call our technology deficit. A lot of the businesses that we acquired had outdated and old ERP systems or were leveraged completely. So we did have to play some catch-up. Cybersecurity investment has been very important to us, that's been part of our investment. But when you really think about it, these tools require information and data to help you make good decisions, 80-20 analysis, for example. The return in the business I just went through is in part driven by the systems investments we made. And that business, in particular, will drive significant part of its future value from back-office efficiency because those 5 factories aren't currently tied together through one ERP system.

Next question is, how much revenue growth are you expecting to generate from just systems and process improvement over the next 4 years? And how much margin expansion?

The simple way to look at that in terms of how much additional revenue, literally, that 50% better than market to 100% better than market should come from the application of our business system tools. We expect our people to be outstanding, but we can't expect them to be superhuman, right? So expect the business team to outperform just because that's what we want. It's a little unreasonable. We have to give them the capabilities to drive that outperformance. In terms of margin expansion, a significant amount of our margin expansion will come from our business system tools. As a matter of fact, what you see embedded in our M&A pipeline typically buying businesses that have industry or less than industry performance, and we apply our tools and take them up to top industry performance.

Okay. How important is 80-20 to the ROCK business system? Is there a business or businesses within ROCK that still have to do 80-20?

80-20 is critical. If you think about our business system, if I laid out all the different tools, you'll see what we're doing is we're laying on top of our legacy 80-20 capabilities and adding best practices to make it a much more comprehensive toolkit. So 80-20 is incredibly important. And as we say, it's really impossible to drive lean savings if you haven't already simplified your process. And 80-20 is exceptionally good at simplifying back to your product line simplification, customer simplification, and then you lean out your process, that's the best way to get the best return.

What hiccups have you encountered and solved in your investment and implementation in systems conversion? How are you mitigating risks going forward?

Systems -- I'm assuming you're defined here by IT and ERP. We haven't really had any hiccups. And I'd say that's been due to our Chief Digital Officer, Chris Lok. He's exceptional, but also the method and diligence that he and his team and our business teams are applying. We're not trying to do the system upgrade all in 1 year. We're very methodically going business to business, site-by-site and doing it the right way. So we've had no disruptions, and we don't expect to have any disruptions.

Do you have pricing power when your customers in renewable and agtech are so ROI-driven?

We do. We do have pricing power. And one of the things that just see the turnkey nature of the strategies in both agtech and renewable, they generate, in many cases, a premium margin because our customers -- that's a significant pain point as these industries are relatively new for our customers to have a partner that can show up and basically go from ground to production with one partner ends up there's a high percentage of value there, especially when it comes to new markets like cannabis.

What aspects of the business system are deepest engrained in the organization? And which are still taking hold?

That's a good point. It takes -- it can take decades to build a proper business system. We're not going to take that much time, but we've still got a lot to build. The 80-20 tools are largely well established across Gibraltar. All teams have been exposed to doing their quartile analysis annually, driving -- we report to our Board the 80-20 results quarterly. It's more of some of the newer lean tools and more complex strategy type tools that we've got some work to do.

How has the previous management team able to achieve margin expansion and still run over a dozen systems given the amount of consolidation you've done?

Well, it really comes to the starting point, right? We had a lot of businesses that really didn't score well in the rubric. So portfolio management was a big part of the margin improvement initially and then driving 80-20 through the legacy businesses. But we've got a lot of new businesses that we've acquired that we have a lot of opportunity to improve.

The 80-20 success in residential is very clear. How can these process improvements be applied to dynamic high-growth renewables?

So I'm going to define 80-20 as our broad business system. We've gone through a number of processes this year on some of our newer businesses. Bill briefly mentioned it, our quote-to-cash process. We've done quote-to-cash Kaizens with each of our businesses and identified areas of inefficiency. It's kind of a classic value stream map process where you see handoffs between design teams and quoting teams, the field installation, and you see any inefficiencies there to tighten those up. So we have a significant amount of opportunity to improve there.

In terms of M&A, do you prefer to pay lower multiples for assets you can apply 80-20 to or your business improvement systems to drive margins? Or do you prefer assets with above corporate margins?

Both. Obviously, we look where we can get a good return, right? And Tim talked about our metrics, 16% IRR, year 3. One of the nice things about being in the multi-industrial is we have many areas to deploy capital. And so because the solar market is hyper valued, which it's been. We've taken a number of passes at some very strategic targets that just would never have a return. Obviously, we don't want to apply a bunch of money into markets that are not going to continue to be stable and grow. So when we do take an opportunistic stuff like we do with our architectural mailboxes, we want to see a very significant return.

What percentage of your management level open jobs are filled internally?

I don't know the exact percentage off the top, but what we've seen historically here in the recent history isn't going to be indicative going forward. This transformation required and still requires a significant improvement of talent. And you can see most of the management team here has been added in the past several years. Our goal would be longer term as we develop our people and they know our business systems, it's going to be in our best interest to hire from within and promote from within because there's going to be a Gibraltar way of running businesses and executing that we can't water down.

And then our last question, what do you anticipate your total systems investment to be over the next 4 years? And what is the projected ROI from new investments?

I'll interpret this in 2 ways, IT systems and then our business system tools, again, which are largely free because they're intellectual property. Our IT systems will be another $5 million to $10 million.

Yes. I would just say that it's in our capital plans. And our capital spend will be pretty consistent on the front look as it was historically. So it's going to depend on what businesses are in our portfolio, and quite honestly, what system improvements we identify that we can drive value from.

It's not a big investment. You look at -- our businesses are not capital-intensive. That's a factor in our rubric. We will not get into large capital-intensive businesses. And so the systems investment we'll make will not be very significant in terms of capital. Our capital into -- our plant property and equipment and M&A are going to be the majority of our capital deployments. Thank you.

Thanks, Pat. So we're going to have Tim finish up. We'll go through the financials, and then we're going to circle back and come back up here. I'll do just a quick summary, and then we're going to bring everybody up. And we'll just do a live Q&A. We'll have, obviously, Q&A coming online. And then if you guys set to using your phones and you just want to ask questions, we're just going to open the floor up. We'll spend 20, 25 minutes there, whatever, if that fits everyone's need. We'll try to answer whatever questions you have beyond what we've already answered, okay? So Tim, why don't you take us home, and then we'll wrap up after that.

Thanks, Bill. So I'm going to start out with just a little look back. You've heard this before, but about 7% growth in the historical period, '15 to '20, just under 400 basis points of margin improvement, and we've tripled our EPS. And when you drill into that, what did we do at that time, we really implemented and started to build out the business system, right? That was -- we started with 80-20. Pat talked about we're now expanding that beyond simple tools, but that was the start. When you look at our plan we put together what we think is a solid plan, very achievable, really based on our strategic intent and our proven ability to improve our businesses. There is no M&A in the plan. We'll talk about how there's a lot of opportunity to grow faster when we include M&A. A little background on the plan assumptions, just a few really high-level ones. Tax rates stay consistent. We didn't bake in different tax rates. So obviously, if there's change in Washington, we'll adjust. And our estimate is that material prices remain pretty high through 2022 and then we think there'll be some level of moderation. We don't project that they'll get back to pre-pandemic levels. We think there's been a reset in some of the commodity markets that we participate in. And certainly, labor will remain elevated, maybe with labor shortages pretty persistent through the period. So the revenue growth, those are compound annual growth rates. Renewables, 24% to 25%. This is from 2020 to 2025, right? So the last day of 2020, we bought TerraSmart. So we got a really good head start on this. So if you think about the revenue growth rate ex that acquisition, it's about half that, right? So we're saying about half of that growth rate is what we have to achieve in the market. we already took care of half of it by the acquisition. Residential, 5% to 6%. We've talked about the -- there's a little bit of front-loading there. We do expect, as materials begin to moderate, we will have to give back some prices. We always do. And so we're making some of that up with growth. So net-net, we think that's the growth rate. Agtech, 8% to 9%. Mark talked about the controlled environment agriculture market. That's a 9% growth rate. If you look at some of the other markets we play in, they're probably not 9%. So that's sort of a composite, and that's us getting back a little bit with cannabis and other things. Then Infrastructure, 5% to 6%. The infrastructure bill got signed Monday. That won't really show up in our numbers until 2023. Yes, it will take a year, it might take 1.5 years to really notice it because we do expansion joints and bearings for bridges there at the end of the project right before you open the bridge. And so there's just a delay. We'll start to see backlog build 6 to 9 months. We'll see some impact at the end of next year on some stuff, but the real growth will be probably 2023 and beyond in that business. Adjusted operating margins, Renewables getting up to 15%. We've said that's our goal. We've got plans to get there, the quote-to-cash process, simplifying our manufacturing and field installation will help. Resi, up 180 basis points getting back to 20%. Agtech is the biggest one, getting to 15%. But if you look historically, that business in our portfolio in '19 was almost 17%. The mix of the businesses we've brought in, we think mix is down a little bit but the scale is certainly worth it. And then Infrastructure approaching 15% by the end of the period. On revenue, what are our assumptions? So we think panel supply is challenged through 2022. Input costs remain high, I've talked about that. Stabilized, though. We're not seeing continued inflation at the rate that we saw in 2021. And then we think ITC, the net benefit to ITC through this period will stay pretty consistent. So the ITC that's out there now is scheduled to expire at the end of next year. But everything that we're seeing in Washington is extension and it just depends on exactly what and exactly how, but we think the net benefit to us will be about the same. In Resi, new construction and R&R remains steady. We got new products driving some participation. That direct-to-consumer business and our recurring revenue grows. Those are both nice margin businesses. They're small, and we intend to continue to grow them. And then continue digitizing that front end. We talked a lot about reducing friction with our customers. And that, in this business, especially really gives us a competitive advantage. In Agtech, the produce market expansion in the U.S., which we're seeing just has to continue. The cannabis license delays that we experienced really around the pandemic, and New York is a great example, last November legalized cannabis. I think 2 weeks ago, they named the members of the commission that are actually going to write the rules. So where -- prior to the pandemic, we would see about 18 months from legislation to maybe shovels hit in the ground. New York is 18 months away from that a year in. And it's -- there's a lot going on in New York, but many states had that same thing. They just had other things to work on in the last year. And then in the Agtech business, that's scalable processes and supply chain improvements to minimize some of the disruptions. Infrastructure, the new bill will help. We've got some really nice products in the rubber space in that business. And then on the margin, we've talked about this simplification process standardization in some of these front of the house, the engineering design. There's opportunities to lean that out. We have some manufacturing still to bring in-house. When we bought TerraSmart, they were a complete outsourced model and we've ordered equipment. So we'll start seeing benefits of that next year. Field simplification, automation, we talked something about automating some of the install, some of the robotic equipment we can use to drive foundations and then scaling eBOS. Resi, still a lot of 80/20 opportunities there, blocking and tackling stuff in the factories around in-lining and automation. And then the digitization is the other side of that. And some of those new products are pretty helpful also. In the Agtech, it's the same, right? Field simplification, integration of the businesses. We're still -- we're not done yet building out the process. And in infrastructure, they've got some manufacturing simplification left, some new products. When we think about capital in the plan. If you look at the prior 5-year period, we generated about $600 million from operations. And about $60 million of that was from working capital. So when we started, we probably had an excess investment in working capital. And so we've leaned that down and then the rest we generated from operating profit. We spent about $74 million on CapEx, which is a little less than 2% of revenue. A lot of that went around 80/20 initiatives, in-lining, automating. We spent some on health and safety. We're -- one of the things we did last year is put air movement in many of our plants to keep our employees safe during the pandemic. But things like shielding, air curtains, just the simple stuff. Our teams basically are empowered to go spend money on safety. We don't -- the investment always pays off. Everybody goes home with their fingers and toes every day. We started spending on IT digitization more, more towards the end, and then maintenance. And we also spent $510 million on acquisitions. I've got the 6 most recent here. We actually did 10 acquisitions during this period. Think about going forward, we think we'll generate about $750 million from operations in the next 5 years. There's not a drain of working capital. Our working capital today is a bit elevated really around trying to hold inventory to make sure that we have it for customers, a little fear of hiccup to the supply chain. So safety stocks are up. I don't know that we'll ever go back to thinking that on Tuesday and Thursday the screw supplier is going to show up and give us screws, so we only have to have 2 days' worth. We probably will, I'm not comfortable with that yet. I haven't built that into the plan. So I have about 2 days of working capital coming out over the whole period. Some of that's around inventory. Some of it is really with the digitization for our customers and our supply chain. So nothing crazy in working capital. I actually have a modest investment to support the growth from where we are today. So the cash flow is really generated from earnings. CapEx, still plan on less than 2% of revenue. We have some internal targets, 20% internal rate of return. We try to get a 2-year payback. Sometimes on a larger project, we'll go 2.5, 3, but just like our M&A, we're looking for a return on these investments. Same categories, I don't expect us to spend differently. So there's a lot of questions about systems. We've been investing in systems if it makes sense. We'll continue to if it makes sense. But we're not going to do a $70 million ERP and [ scrub ] the business for you. This is not how we operate. And then M&A. So there's no M&A in the plan. I just did some modeling on the cash flows and said, look, if we buy things at a 10x EBITDA margin -- 10x EBITDA multiple, keep our leverage at 3x or less and then take the cash we'll generate and borrowing capacity, sort of dry powder analysis, we could spend up to $2 billion during this period. And that -- if we did that, the model works perfectly right, then we'd have about 3x leverage at the end and we'd maintain around 3x leverage. So our plan, 11%, 12% growth. I mentioned when I started around the Renewables business that we bought TerraSmart during this plan, not before it. So if you take about 3% off that growth rate, we've already put that in the bank by buying TerraSmart. So instead of 11% to 12%, 8% to 9%. To do that, solar market has to perform as we expect. Agtech and Resi are critical to hitting this. And then we've got to get participation gains across our new products and working with our customers. And we've been successful in that already. So it's a continuation of that. Margins. Op margin, consolidated, up to about 14%; EBITDA margins, up to about 16%. And again, it's the improvement in the businesses, Renewables and Agtech, Resi, really getting that material cost alignment back with their pricing, which we believe the pricing is in place. It's just the passage of time to get rid of the higher cost inventory and then continue to drive execution. With that, I'll take questions.

Okay. Tim, what assumptions on macro environment are in your DSO decrease and other working capital planning? When do we -- when do you assume supply chain and inflation improve?

So I talked a little bit about the DWC assumptions. It's a little bit across everywhere, right? We'll get a little bit out of inventory. We're a little closer to our customers. Supply chain will give us a little. I think we're -- we think 2022 is going to remain a challenging environment to operate in from a supply chain perspective. I think there'll be inflation but not at the rate we saw it I think is the way I think of that.

You're building out recurring revenue as part of the plan across segments. Where are we today? And what are tangible examples of where you want to go?

Yes. So recurring revenue is a goal of ours. It is not a material part of our portfolio. Today, in the Residential business, we have a small portion from the locker business that we get recurring revenue. It's actually a lot bigger than it was 3 years ago and it continues to grow. We like that. In the Agtech business today, we don't have recurring revenue, but there's a portion of the business that's -- you got to go win a project. That's the bulk of that businesses. We're building growing environment for somebody. But there is a portion of that business that's really around repair and maintenance of either the retail garden centers or these big institutional botanical gardens. So it's not like one customer is giving us a check every month, but it's a little bit more of a recurring revenue stream, maybe like the building products are where we're going to just sell so many mailboxes a year. And in Renewables today, very little. There's our SIFT software, the design software. We do have developers that pay a monthly fee for that.

Did you say $2 billion for M&A? Is your pipeline robust enough to put that much money to work?

So $2 billion for M&A is available over the period, yes. So I couldn't point today to $2 billion of spend. We have a pretty robust pipeline. As always, we have businesses that we think would really fit well in our portfolio that are owned by somebody. And the first time you knock on the door and ask them if they're ready to sell, the answer is always no. And so we've got relationships with a bunch of people that are always working. Over the period, we'd like to think that we could put a good portion of that to work. It's -- there's no commitment to put $2 billion to work to be clear. It's just an availability.

So you'll see a step down from 2020 to 2021. Does this derisk the 5-year plan?

I think this question is about operating margin because we announced last quarter that we'd have a lower operating margin for the year than we did last year. And I think that's really related to the current environment with supply chain disruptions and escalating material costs throughout the year where we're behind on our price increases. I don't know how that derisks the plan. I think that our ability to be closer to our customers and our ability to operate our businesses better is really what gives me the belief that the plan doesn't have that much risk in it.

What are the wage growth assumptions embedded in the plan?

They are embedded in the plan. We don't discuss individual components, but certainly, it's a competitive labor environment and we're going to have to maintain our labor force and attract new people as we grow.

What is the chance you'd beat your Q4 outlook?

We just gave our Q4 outlook 2 weeks ago.

What makes you beat the 5-year plan? And what makes you miss it?

First of all, our 5-year plan doesn't have acquisitions in it. If you look at the back 5, we spent over $500 million in acquisitions. I would expect that we will do an acquisition at least in the next 5 years, right? It's part of our culture. It's part of our strategy. So I think there's opportunity there, certainly. What makes us miss it? We don't have a global recession forecast in this period. And I don't know that we can overcome a global recession.

The 5-year revenue target you reiterated today was set before the current inflationary outbreak. Should the $1.8 billion be adjusted for inflation?

The plan we presented today is current. It's based on where we are at the end of the third quarter. It's not a plan that was set 2 years ago.

And that was our last financial question.

Thanks.

Okay. Before we open up for Q&A or bring everybody back up, we do have to take 1 minute to change the view, if you will, before we do that. But I just wanted to quickly summarize, I think, some key points for today. You just heard everything about the plan. I think it's pretty well understood. What's important for me today, as you guys walk out, I get the question all the time, hey, you guys got a lot going on. It's a pretty complex business and so forth. If you step back and when you think about 80/20 and the fundamentals behind it, think about the portfolio that we shared with you today and how it's evolved, we still have 4 segments, but we had 18 companies 2 years ago that have now been moved into basically 5. So we consolidated Renewables and split that out for a better focus, better transparency. We've done the same thing with Agtech. And in that process, we integrated those 9 and turned it into 2. In Residential, we started out with 9, we've turned that into really 3 businesses. So in terms of simplifying the portfolio, as the portfolio has evolved in total, inside the portfolio we've done a lot of work to simplify. So in its true sense, our 80/20 foundation is going to work in a number of different ways. And it's important for us to keep simplifying so we can focus. We can't be leaders in everything. But as you see us continue to move and evolve the portfolio, you're going to see a simplification and a laser focus in the markets that we're in, which kind of leads me to the next point, which we have 4 platforms right now. Three represent 95% of what we do. Infrastructure, really good team, really good business, has worked really hard the last 3 years to put ourselves in a position to take advantage of this opportunity now that infrastructure bill is coming. I'm not suggesting we have to have the infrastructure bill to be successful. I'm just saying that's a great opportunity in that we're in a position to scale up and take advantage of. So that's really good news for us. If you look at the other 3 we spent a lot of time on today, the reason we did is because I wanted everyone to understand the transformation inside Gibraltar to set those 3 platforms up in these markets where we think we have strong positions. It's not rocket science. We're pretty simple, but it comes down to simplifying, focus, execution, good end markets that we think we can take advantage of. And I think the last thing, there's a common theme that maybe you picked up on. We kind of grew up selling what we make. You've got to be good at that. But that is today's table stage, right? I mean that's pretty cliche to say that. I think what you heard a lot of today is we're not necessarily selling what we make. We're actually driving returns. And 2 of our 3 portfolios are about driving returns for customers that are very easy to measure and very easy to impact because we're dealing with them directly. And so our portfolios within those businesses, the breadth and the depth you've heard a lot, about are really critical. And in the renewables world, remember the fundamental thing people forget about is the flat land where transmission lines are in the U.S. becoming less and less. Look where the population is. It's on the coast. Look at the land around that. What kind of portfolio is going to drive renewables into that space? That's us. That's what's behind the breadth and depth of what we can do. Anywhere, anytime, any size, it doesn't matter. So common themes around there. I think you'll see more and more effort towards our recurring revenue opportunities. We have work to do there, but we've got starts. We've got starts in the renewable space. We have starts, obviously, now 4, 5 years in our residential space. And I think you'll see the same kind of approach in ag tech. So when we land this ship 3 or 4 years from now, my expectation is we'll be much further along in that front. So we have more than 1 or 2 approaches to how we're going to serve this market. We're just in markets right now that are building out infrastructure at a pretty rapid rate. That's not going to slow down in the next 5 years. But we want to be more than just that because at some point in time, that infrastructure is going to be built and then someone has to take care of it and you've got to optimize it. Pretty basic stuff, again, there as well. So you'll see us build more and more of that capability over time, which I think is really important. Not so much built in this plan in terms of financials. But in terms of effort, investment that we'll be making, absolutely, the foundation will be built. Kind of like we didn't share a lot with you the last 2 years about all the work we just did in those 3 major segments. Same kind of work has to happen as we build out our recurring revenue models, et cetera, going forward. And we'll make that happen. That's part of the investment we'll make on an ongoing organic basis, okay? So we'll stop there, and we just need 2 minutes. So if you need the restroom and if you're quick, you get a shot. But we'll change the view here, and we'll bring the team up and then we'll just open it up for questions. [Break]

Welcome back. We thought we'd wrap up with a Q&A session. I think we're going to go live here if you're in the room and then obviously, online, we'll do as we were before. So anyone want to start here?

So capital structure. You circled a 3x leverage as maybe optimal or at least possible. Will you go there only via M&A? Or if the acquisition prices are maybe a little bit too rich for your 16% IRR target, would you consider other past to get a more efficient capital structure?

Yes. So our plan doesn't have any dividends or buybacks in it. It is something we talk about with our board regularly. And I would be surprised if we generate $750 million of cash and don't do anything with it if we won't have more discussions about that. But nothing in the plan today.

Maybe just talk about how your compensation is tied to the plan and how far down the organization those incentives go.

I can -- yes. So if you look at our proxy, the corporate team is revenue, EPS, working capital on annual basis and we're ROIC on our long-term comp. When you drill into the business, the businesses we usually hold revenue, operating margin and days working capital. And then the leadership team would also have ROIC targets in the long term. Those targets go down pretty far. I think where you -- where there's some separation from that would be right in the plant. Sometimes they'll have on-time delivery and some other components that aren't necessarily directly tied to financial performance. But they support financial performance, but the operator really can't control operating margin. It doesn't link to him. So we will drill down into something more throughput.

So with your potential for M&A going forward, I mean, I don't know how best to say this. But so like not everything goes as well as planned sometimes and you guys talked about TerraSmart, where you are today. Will you execute on M&A before you finish kind of fixing some of the issues that are kind of not working today as well as supply chain concerns? Do you want to do all that at the same time?

I would suggest that it really depends on what part of the business where the opportunity is and when it presents itself. So unfortunately, we don't dictate the timing of everything. But as Pat mentioned, we have passed on some things partly because the valuations were not necessarily in line with what we thought they should be. And frankly, the other piece was we've been heavily involved in what I described. So there's a capacity with every organization, right, to deal with integrations and acquisitions and running the business every day. And then on top of that, a pandemic, yada yada yada. So we've been trying to meter and focus the -- what we bought into the platforms you've seen. I do think there's an opportunity in the type of acquisitions that may come more near term than longer term could be more bolt-on like. But those systems are now in place versus a year ago that makes it a little bit easier to bring them into the family. So we'll be smart about that. It's an ongoing discussion. Frankly, it's part of a diligence process now that we talked through. But we are very sensitized in this environment to our organization capacity to pull off the things that we want to do next and the order of which we want to do it. I just wish we had more control of telling people when exactly we want to do the deal, but it doesn't work that way, unfortunately. But yes, it's a good question, and it's a good observation, and that's how we're working it.

Could you speak more to M&A to improve supply chain resilience? And what part of the product portfolio could benefit from M&A-related supply chain?

It's a good question. From an M&A perspective on supply chain?

Acquiring maybe some suppliers or anything...

Yes. I would say it this way. We would think more about that from a perspective of the toolbox that we want to build out as more so reacting to the current situation that exists. Solving the supply chain issue right now isn't necessarily related to whether we own it or not. It's as much related to all the other things that people have talked about ongoing, access to labor, it's getting the raw materials and so on and so forth. We are doing some in-sourcing, but that was part of our M&A strategy with TerraSmart. So we'll be bringing that in. Fortunately, we're -- that still stays on schedule. That will impact us in 2022. But from a supply chain perspective, I don't think M&A is really strategically what we're focused on. But I will say there are technologies in the markets that we're in that I think we want to own going forward that will enhance some of the value propositions we've talked about. Now we are, and I will say, for Renewables and Agtech, what people oftentimes may not know is that we do manufacture. We're the only ones in the renewable space that actually do our own manufacturing. So I think that gives us a much closer relationship with our raw material suppliers. There's much more control around the supply chain because there's not a bunch of steps in it, and I think that inherently serves us well in those 2 businesses in particular. And obviously, in Renewables, we manufacture everything that we sell for the most part.

Just on the solar side, you guys talked about how kind of there's increasingly going to be going towards the coast and less flat land and yet you're coming out with a product that's geared towards flat land situation. So can you kind of just explain the juxtaposition there?

Yes. Well, again, first point, we started with a 2 important tracker because it fits a terrain, which really solves the toughest problems. There is flat terrain today. There are a lot of 1P trackers in the market today, and it's an important part of our portfolio to build out. So I wouldn't want you to leave with the impression that there's no flat land, but it is in -- it is becoming increasingly short supply. And that's only going to accelerate as we go through the planning period. So that was really the point on the tracker. There is still room for a 1P tracker in the market, no question.

I would add one other thing to that. It's a multi-varied equation in a sense. It's not just those 2 variables. So as an example, when you start seeing solar going to places like Texas or parts of the U.S. where there is flat land, there's very tough soil conditions, very rocky, or in some cases, very soft. Oftentimes, we get brought in for the foundation. And oftentimes, then we'll be asked to put the interface up, but it'll still be a 1P solution, which we haven't had. So if we're doing the foundation and we're doing the interface with the panel, now we can have the 1P. So where there is that opportunity, I think we'll be in a better position. And I would say that there will be combinations of 1 and 2P. There'll be combinations of fixed-tilt and tracker in different parts of the U.S. as well. That's the breadth part and the depth part.

Thank you, everybody. It really helped understanding the business, especially Ed and Bill, in the Renewable section. Could you talk -- if we look at the fast-growing addressable markets, the operations and maintenance is by far the highest organic growth area. Could you guys maybe relay how your current outlook in renewable is tied to your, I think, shared experience kind of in prior companies and categories as you think about systems being maintained and efficiencies of those because that seems -- I know though in the past, we've talked a lot about that renewable -- or not renewable, but recurring business model rather than just the new side.

So I'm going to let Ed answer the bulk of the question, but I'm going to set it up because what you don't know about Ed and I haven't talked about is he came from an industry where it's all about taking existing infrastructure and optimizing performance on an ongoing basis, and frankly, a much more complex environment than solar. So he's got 10 or 15 years of building those businesses, acquiring companies, building the software capability and pulling that together so we can actually go execute. So with that, I just set you up. Don't screw this up. Go ahead.

Yes. Thank you. No, I mean that's exactly it. So the tracker platforms, the control sensor software that's embedded in those platforms today are absolutely the toehold we look at when we think about our plan and think about our options in O&M. And there are inorganic options as well. But organically, bringing in the team, honestly, it was a big part of the TerraSmart acquisition, not just the product line, but it's the team behind it. And right now, those teams are working very earnestly on developing a backlog of new feature ideas, new algorithm enhancements that we can develop because as we watch these trackers operate in real time, you're seeing options for optimizing those. So I think the software and the investment in software teams that we have today is -- if you looked at the amount of revenue that we generate from it, would indicate that we see big opportunities to help serve our customers with more intelligent ways to operate their tractor -- tracker as well as identify opportunities for us to maybe serve them better. There is a lot of additional value you can drive by cleaning these modules, by clearing out vegetation, by doing a number of things over the 25-year life. And as Bill said, I've been part of the business for the last decade that was absolutely involved in that. It does come down to real tangible value. There are no -- shiny objects don't create value for our customers, and they're not going to pay us for that. So we've got to create real value. But the platforms that we're embedding in these platforms today give us the jumping off point to add that value.

I'd say the one thing to always remember about that portion of the market again is you only get paid for your domain knowledge, period. Anyone can monitor anything. You can step up and go, look, what I can do, and that's cool. But what can you do about it? So when we think about building out O&M space, it's really about what truly will customers value, what will they pay for. But they're really only going to pay for your ability to keep things on a real-time basis from not performing well or from having a problem. And remember, the biggest issues that this industry sees right now is really related to things like weather events where a tracker gets stored the wrong way and when event comes through, and boom, you're offline for 9 months. We had a customer here just recently come visit us. Long-term development, been in this industry for 12 years. So he's done with tracker because the real total cost of ownership is really tough for their part of the country where they, too many events. They can't get their arms wrapped around it. And so as I said earlier, the breadth and depth, having fixed-tilt, having tracker, having different types of tracker, combining those types of things together, there's a lot of creative ways to take your domain knowledge, apply it differently, prevent some of the issues. And then when they do have them, stay in front of them on a real-time basis. That's ultimately what the game is.

And I apologize. But can I ask a follow-up to that. Is the degradation of a solar field, could we assume it's like 10% over a decade? And then...

It really depends. I know you don't want that answer but...

That's fine.

But it really does. And you can see that in our history of our experience where site to site really does matter because everyone that invests in anything, just like we do in our own cars, our bodies, our homes, whatever, we all take care of them differently. It's related to behaviors. Do you have time? Do you have this? Do you want to spend the money, et cetera? And developers are no different. So the level -- the starting point is different for everybody and how much time and effort they put in keeping it optimal is really up to them. And our job is to try to keep that optimal line where it was designed to be, what ends up happening. Does it shift down, and all we're really trying to do is push it back up. It can't be better than what it was designed to be, but what shifts it down are simple behaviors and/or events in control or out of the control of the developers' control. So that's one aspect. I think the other thing to think about is not every developer that builds a field is going to own the field. So there's turnover of that field to the next person. And sometimes, the folks that are putting those designs in aren't necessarily thinking about the impact of total cost of ownership that you could design into it or they're not thinking about the investment required to run it. So you really have to stratify the customer base and see who you're working with. And we have a good understanding of that within our developer base, but you'll see degradation. That could be 5% in a given year. But well-run fields, it's going to be a slower degradation over a period of time in general. I think the industry is so new I don't know if there's an industry statistic, frankly, that tells you what the average is. And we've seen it from small to big, short period of time, longer period of time. But the industry is only -- we're really in scale maybe 10 years old. These are supposed to last for 25. I do think one other point. There will be change-outs of things like panels, in the course of that 25 years. The panel technology continues to accelerate. So every time that happens, that's another opportunity, I won't call it recurring revenue, but you're going to go back to the folks that kind of built the field in the first place more than likely to actually make that happen. So there will be upgrades. There will be change-outs. Some of that's related to not taking care of it. A lot of it's related to new technology advancement. And panels are really continuing to go down that path.

Just a quick question on Agtech relative to the core versus the acquired businesses. The deck implied growth in 31% incremental adjusted op margins from here. So I'm curious what the path forward looks like.

Yes. I can -- do you want to take that or do you want me to?

Tag team. You start and I'll...

So the core business has cannabis in it, and that's been negatively impacted. There's been supply chain disruptions throughout all the business. So a little bit of it is taking that core business and just recovering, right? That pulls up part of it. When we bought Thermo, the produce business, remember, we paid $7 million for that. We bought what we knew needed work. Great domain knowledge, not great process, and we're really good at the process. We know how to design, build -- manufacture, interact in the field to get our customers what they need at a price -- at a profit margin we like. So we worked through all the stuff that we bought. Even after we bought it for a little while in the integration. We weren't perfect. We spent -- we talked a lot about systems people. The backlog that's in that business now significantly improved. And then I think the other piece of that business that's been negatively impacted is processing. We bought that the first piece in October, November of '19, second piece in February of '20. Pandemic hit, go home, cannabis producers qualify for no PPP, basically no federal support. So what was a pretty fast-growing market really hit a pause. We're starting to see that recover on the processing side. We did restructuring. We looked at those businesses and we got to figure out a way to bring them together when we bought them. We adjusted our plan during the downtime. So we've close-sourced basically everything in one facility, all the manufacturing in-house in one location. So that's set up with some volume to recover. So I think those are the 3 things. And then, honestly, 80/20 on everything else we do, right? There's still a lot of opportunity to improve how we operate each of the businesses. There's in-sourcing opportunities to bring in some stuff today. During the processing, we'll do some steps of the processing, send it out. So you've got transportation costs. You've got scheduling. If we bring in some additional capability in-house, then we avoid that, reduces cost. It doesn't change the selling price. It just reduces our cost. So we've got some of those investments baked into.

Just to add 1 or 2 more points to that. I think in our plan, every part of the business is contributing both to revenue and to margin enhancement. We do have some of the basic 80/20 things in the core business like product line simplification, standardization, and product designs and those will allow more efficiency in those core businesses. We have some parts of the business, which are -- I'll say newer. They're requiring more elements on the commercial side as well as the field execution, those types of things, especially as we bring produce business into more of the U.S. we will be working to build out much more...

I don't think your mic's green.

My mic wasn't working, sorry. A much stronger footprint in the U.S. to execute those projects.

Okay. So we're -- as we're almost over time...

We have another one. One more question over here. Is that all right? It's not all right.

It's not all right.

We'll catch you.

We'll catch you, sorry. Okay. So as we're over time, we're just going to take a couple more from the online audience. What is your primary metric to evaluate success? Is it backlog, margin, ROIC growth?

Yes. Gross margin, ROIC, our backlog, ultimately today is an important metric to watch. It's indicative of where we're going. But it really comes down to how that translates into actual real growth in margin and ROIC.

This is a question for Gene. How does the retailer success mentioned spread into new regions? Or are you limited by your manufacturing footprint?

I would say we're not limited by manufacturing footprint. We have facilities pretty much across the country. So we'd have to -- depending on the product, you have to look at what capacities are, but I don't think we're limited. So in that regard, because of, again, what we talked about earlier with our knowledge around the products and the regional nature of many of those products, I think there's plenty of room for us to grow and serve.

Okay. And then our last question of the day. Bill, what is the ideal portfolio for Gibraltar in your mind?

I kind of touched on it a little bit earlier. I mean the effort has been, up to this point, simplification and focus. Clearly, we're investing heavy in our Agtech and Renewables and Residential business and -- but as I said earlier, Infrastructure done a lot of really good work there and I think that has an opportunity to spread its wings. But I think our portfolio, as it stands today, is in a really good position to now scale up off of. And I think we're pretty solid with where we are right now. All right. So that brings us to an end. And for those of you that are here in person, we'll be around for a few minutes if you want to talk some more. And those that are online, sorry, we can't talk to you in person. So thanks for -- I really do want to say thanks to everybody that's joined us here today and everyone who's taken time online. I know everyone's busy, but we do appreciate the opportunity to share kind of what's going on and where we're going. And hopefully, it was helpful. And look forward to have some more follow-up discussions. So thanks again.