Good day, ladies and gentlemen and welcome to the Gibraltar Industries’ First Quarter 2016 Earnings Conference Call. Today’s call is being recorded and webcasted. My name is Michelle and I will be your coordinator today. At this time, all participants will be in a listen-only mode. We will be conducting a question-and-answer session towards the end of the conference call. I would now like to turn the conference over to your host for today, Mr. David Calusdian from Investor Relations firm, Sharon Merrill. Please proceed.

Good morning, everyone and thank you for joining us. If you have not received a copy of the earnings press release that was issued this morning, you can find it in the Investor Info section of the Gibraltar website, gibraltar1.com. During the prepared remarks today, management will be referring to presentation slides that summarize the Company’s first quarter performance. These slides also are posted to the Company’s website. Please turn to slide two in the presentation. The Company’s earnings release and slide presentation contain forward-looking statements about future financial results. The Company’s actual results may differ materially from the anticipated events, performance or results expressed or implied by these forward-looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can also be accessed through the Company’s website. Additionally, Gibraltar’s earnings release and remarks this morning contain non-GAAP financial measures. Reconciliations of GAAP to adjusted measures have been appended to the earnings release. On the call this morning are Gibraltar’s Chief Executive Officer, Frank Heard; and Chief Financial Officer, Ken Smith. At this point, please turn to slide three in the presentation. And I will turn the call over to Frank.

Thanks, David. Good morning, everyone and thank you for joining us on our call today. Gibraltar began 2016 with a strong first quarter performance as a result of significant gains from our value creation strategy, including the continued benefits of our acquisition of RBI. A little over a year ago, we laid out a four-pillar strategy at our Investor Day and since then, we’ve been executing on this strategy to transform Gibraltar and have made some excellent progress so far. We’re transitioning resources to our most significant opportunities and achieving a result from operational improvement initiatives across the portfolio. This quarter we reported a 300% increase in adjusted net income on a 17% increase in sales. This quarter’s adjusted earnings per share of $0.24 exceeded our guidance of $0.12 to $0.15 and compares favorably to $0.06 per share last year and $0.05 loss per share in Q1 2014. This was the result of the increased profitability of our base businesses despite market headwinds plus RBI’s solid top and bottom line performance. I’ll speak more about our strategic progress after Ken reviews our financials. Ken?

Thank you, Frank, and good morning. I will start by referring to slide four in the presentation, our consolidated results. As Frank noted, first quarter revenues were up 17% year-over-year. RBI, which we acquired in June 2015, added 27 percentage points to the net revenue increase, while the base businesses have revenues 10% below last year for reasons that I’ll explain, speaking about each reporting segment. Regarding profitability, we certainly had strong bottom line performance from the combined contributions of RBI and our base businesses, which contributed significantly to the adjusted EPS improvement. And although not shown on slide four, the Company’s first quarter consolidated margins improved meaningfully. Adjusted gross margin increased 550 basis points to 21.9%. And as for adjusted operating margin in the first quarter 2016, it grew 370 basis points compared to the first quarter of last year. The profit and margin improvements were the direct results of successful execution on the four-pillar strategy. Internal resources have been and continue to be transitioned to our largest operational opportunities that in combination with 80/20 initiatives have resulted in higher efficiencies in income. And RBI continues to be accretive and contributed this quarter’s higher financial performance. Now turning to slide five, you can see the degree of outperformance of our base businesses compared with the prior period. Represented on slide five are the results of the Company excluding RBI. As expected, revenues were unfavorable due to two factors. First, the sales of industrial and infrastructure markets were weak, affected by lower demand from commodity related markets and the effect of lower average selling prices due to lower raw material costs, primarily steel. And second in our residential product segment, we completed in December 2015, a discrete two-year supply contract for centralized mailboxes. Even with the sales decrease in our…

Thank you, Ken. The strong results that we have delivered during the past few quarters reflect the ability of our teams across the organization to rapidly transform our culture and execute on our four-pillar strategy. The first of these four pillars is operational excellence. We’re reducing overhead, pricing our products more strategically to better support our partners, consolidating facilities, improving our raw material sourcing, and increasing efficiencies across our businesses. We had excellent early results from these initiatives in 2015 and we expect an even better contribution to our income statement and balance sheet in 2016. As Ken cited in the first quarter 2016, our operational excellence initiatives and 80/20 simplification strategy were responsible for a 190 basis points of the 370 basis-point improvement in our adjusted operating margin this quarter. Our 80/20 initiatives also significantly contributed to a $37 million reduction in inventories from our base businesses over the past 12 months. In 2016, the expected results will come from the incremental effect of what we achieved in the second half of 2015 as well as new initiatives that will drive improvements throughout the balance of this year. For example, during the first quarter, we held our leadership meeting to introduce the team to in lining and market rated demand replenishment. These methods which are focused on manufacturing replenishment of our A products based on actual market rate of demand are the next management tools we’re using in our simplification efforts. We expect these methods will yield benefits in the areas of lower cost, lower inventory and an even level of service to our end customers. We also began to work with RBI early in the first quarter to implement operational excellence and 80/20 simplification processes and expect the initial benefits will start to accrue in the back half…

Thank you. We will now be conducting a question-and-answer session [Operator Instructions] Our first question comes from the line of Ken Zener with KeyBanc Capital Markets. Please proceed with your question.

Given the weather that we had in the first quarter, could you describe on the residential the tailwind that [technical difficult] especially in some categories you’ve seen really strong, so we can perhaps understand how that dynamic is impacting the business and the results that you saw?

I think that was certainly a small benefit but historically, and I think it’ll apply currently, is there is a lag to when there is a pull-through of product to take care of all the -- a good weather. And so, it certainly helped the first quarter and I think it to a degree will also help us in the second quarter as well, Ken.

And then obviously just sticking with residential, because that was an area that you guys worked on for a long time. I think you said it was -- how many basis points associated with the 80/20 and in terms of plant and distribution efforts that you began last year?

In the residential segment, it was 300 bps improvement -- the total operating margin improvement, Ken.

So, this 300, so what was other elements that were going into that would you say for the residential side?

We also had I would say some -- we did have challenges in our efficiencies and ramp up for that discrete contract that we talked about that centralized mailboxes. So that’s now a favorable comparison on profitability. And I’d say the final and -- of the meaningful reasons would be lower raw material cost compared to the first quarter…

It sounds like the 80/20 was the number one element, which is obviously sustainable. Was that the absence of mail or lower commodities that is helping round out that 400 basis-point GAAP?

It went from 5% to higher…

It was a material cost or the absence of the cluster mailbox contract more significantly? I am just trying to understand how actually you might swing back.

It’s probably the centralized contract followed by raw material cost.

And then in RBI, could you just walk through perhaps like the seasonality of the margins that we should expect or operating leverage or is the margins really dependent upon the type of contracts that you are working on at any given point?

And this is for the…

RBI.

RBI segment?

Yes. I mean, so if sales go up x million, should it be at a 25% incremental or is it really the margin depending upon the type of contract that you’re working on?

We do outsource a meaningful degree of their cost of goods sold as they rapidly scaled up to meet market demand over recent time periods. So, the flow through leverage on its inside internal fixed structure is not as significant as some of our other segments. So, it’s in the teens, mid to low teens at the moment. And we see that expanding to the supply chain initiatives that we’re helping them procure at more favorable rates, so do see that being expanding and supplemented by specific projects that we’re able to win in the marketplace that could influence that upward.

And then one last question if it’s okay. With RBI, you mentioned senates, are there any outside contract exposures, I guess for suppliers that we should be aware of that might be impacting that still relatively nascent industry in terms of liabilities if there’s anything? Thank you so much.

I would say our guidance includes what we expect to be forthcoming profitability from existing backlog and expected new orders that they’ll win this year. And often times contract up until [ph] the time we quote projects are improved on or not depending on how projects go, I just say collectively we’re still expecting margins out of their business to continue to gradually go upward as they improve their efficiency and take advantage of our procurement power and they become sharper competitors in the market place.

Our next question comes from the line of Al Kaschalk with Wedbush Securities. Please proceed with your question.

I wanted to just to follow up on the renewable side real quick. The $80 million of revenue guidance you’ve provided or the assumption I should say, 9% growth; that’s off of your actual reported in ‘15 or is that a pro forma number.

Off of our actual in 2015.

I wanted to switch over to portfolio management for a second, Frank. If you could -- it’s good to see the industrial piece that you’ve sort of carved out there and exited. Are there still additional chunks or are there similar size, I guess, business units operations that you continue to look at or at a sport where we could see that further in 2016 in terms of potential sale, just want to understand where you’re at them on that.

I think it’s a good question. And I want to emphasize that the divesture we made in Europe was a unique set of circumstances. There was a certain type of business and happened to be in a certain market tied to a very specific industry, we just didn’t see a runway forward as to how we could meaningfully contribute on that basis to the long term sustainable value creation that we’re looking for, so on that basis. We had it on kind of our initial watchlist and we kind of focused on it to see whether or not as we did some 80/20 work and looked at the market dynamics there. We just didn’t see a path forward. At the end of the day, we start with the listing portfolio and we look out on the basis of can we make more money year over year at a higher rate of return, more efficient use of capital and do that in a sustainable way. So, we look at every business in a unique way relative to the types of products, the markets it served and the long term dynamics of those markets. And the balance of the portfolio, I think we’ve said this before that every business from ‘14 to ‘15 made more money at a higher rate of return, more efficient use of capital, in the balance of the portfolio we expect to see that happen again in 2016. So on that basis, we have no businesses that are kind of immediately on the list and we’re using that time. But as we focus on the top customer segments with the key products, we start to spend time at the end markets to see how we can continually innovate and transform those businesses in a more sustainable way. So, early days in the process; I think this one -- it was easy to conclude. So, we thought it was important that we move forward. And to be quite honest, I think from our perspective, they’re in better hands. I think they’ll get more support. They can integrate it with other opportunities that they have in their portfolio, much better than we can. And we appreciate the support that the local management team gave Gibraltar during our ownership period.

To that point, is the -- was the operations integrated or was it, for lack of better word, easier to separate from the footprint of Gibraltar?

Yes. There were standalone right from the market through to on the demand side right through the manufacturing distribution side. So, there is no integration whatsoever.

Okay, great. And if I may transition to working capital and commodity’s question, sort of a two-part here. But I want to focus first, Ken, do you have the contribution from -- on working capital, I think you called out inventory in particular but the split between maybe 80/20 benefit and then maybe the raw material benefit?

I’d say they’re probably equivalent on that $37 million figure that I quoted to everybody. I’d say it’s the portion of equivalent, what drives from lesser quantities from the 80/20 projects and that would balance from a drop in raw material costs.

And, Al, if I recall, I think our target for ‘15 on inventory was about $12 million. And remember, in the last update, I think we came in just around $15 million or so. And I think the balance was, as, Ken said, related to change in raw material cost inputs.

So, I guess what I’m trying to get at is the raw material benefit. I don’t know, if you have a view, I you care to share, do you view this as being more permanent or is it just where we’re adding the cycle of that benefits you’re giving? And then, secondly, maybe just helped up us appreciate what I think is lower -- benefit on lower commodity costs on the margin story, but going forward do you -- do you need to do anything different contractually or with your relationships to support you keeping more of this benefit from a margin perspective in the future?

Al, maybe I’ll speak to the balance sheet side and let Ken speak for the margin side. Clearly, as raw material prices may ramp back up over time, we’ll lose that maybe benefit of $12 million or $15 million on the core inventory values. But our plans, we’re in the early days of the 80/20 process, in terms of the benefits on the balance sheet. And we certainly expect to see a similar type of progress in ‘16 that we made in ‘15 just in general projects. And that’s without the some of the structural changes in the back end of the business as we move into more in line processes where really start to peel out some of the inventories in fixed asset. So, I think that work will far offset any rising tide of raw material input costs.

And part B for the question, as far as its effect on margins, I think there is -- I think about two dimensions going forward, one is as raw material costs rise and they have significantly for carbons in the first four months of 2016, but also the continuing and offsetting influences of continued 80/20 programs that include working capital like inventory, I think will help us sharpen not only our efficiencies internally but as we bring value added programs to our customers and try to be successful partner with them as they sell on to their end users, it will be able to keep a good relationship between our cost structure and our pricing, such that our margins will play into and help us to deliver the guidance that we laid out here for 2016.

The part B of the 80/20 process on the income statement, certainly we made some real progress from an operating margin perspective, as it relates to better strategic pricing to support our key partners, focusing on products and reallocation of overhead, those types of things, and footprint and all those related items. And that’s been material in 2015. As we move into the structural changes, in lining and market weighted [ph] demand replenishment, as we get the key products in line, what we’re going to see is the higher degree of utilization on those fixed assets, lower cost inputs and ultimately lower resulting unit costs, which is going to drive our margins up on the lion share of our key product volumes. And the result of that is we will also see a reduction in working process inventory and higher levels of service for those key items targeted with our closest partners. And byproduct of the higher service and shorter period of time and refurbishment cycles will drive more confidence from those people and ultimately we’ll get a greater share of their proportion of the business, as they serve customers at the user level in the markets. So, there is a phase two of this that really gets tied to some of the structural changes that we’re really going to start implement in the back end of 2016.

Our next question is comes from the line of Daniel Moore with CJS Securities. Please proceed with your question.

You gave a lot of color as it relates to full year guide. Can you just give perhaps a little bit more color on the growth rates embedded in your Q2 guidance for each of the operating segments?

Well, we’re certainly going to have incremental revenue uptick for renewable energy segment because we didn’t have that [ph] for a majority of the second quarter of 2015; continuing in the infrastructure and industrial segment that’s going to be again unfavorable to Q2 a year ago, again for the same reasons as we commented on that segment for the full year of 2016. There is certain markets that are down, the commodity related ones and certainly at the moment with raw materials being cost at so much less than a year ago’s level that influenced signed budget [Ph] now. So that’s second segment, is also expect to have unfavorable comparisons on revenue compared to the year ago. And then for residential, we did have that discrete contract revenues in the second quarter of 2015, recall the same amount of money that we had in the first quarter 2015 of $12 million to $15 million. And market conditions aren’t that strong, are not that strong this year to overcome all of that. So, I am expecting that our residential segment in the second quarter will be unfavorable to the first quarter or our second quarter of the year ago as well.

Very good; it’s helpful, at least directionally. Any remaining receivables on the balance sheet as of March 31st as it relates to SunEdison?

No.

And maybe just talk a little bit, Frank, if you would, about status of the M&A pipeline. I know there is limited amounts you can say, but maybe the nature of the dialogs you’re having today versus six months ago and any likelihood more or less around executing your transaction between now and year-end?

Yes. Well, certainly, it would be our plan and our expectation to move forward in another acquisition between now and the end of the year 2016. If you look at the quality of our activities from a prospecting perspective today versus maybe where we were a year ago, we did a lot of reactive, backend of ‘14, a lot reactive reviewing of incoming books through the banking organizations, certainly well intended. But businesses that looked a lot like what we already looked like from a portfolio perspective and as we educated that group and went through a strategic thinking process ourselves, we identified the market segments that we thought we’d buy into in terms of existing verticals and a couple outside as well. And today, we have dedicated resource, and Paul Plourde, our Corporate Development Vice President here at the office full time working on the new spaces. And then we completed the -- reallocated our group presidents; there is four of them to spend primarily 80% of their time prospecting within their own verticals, partnered with third-party organizations outside. And then Ken and myself spend a good portion of our time as well filtering. So, if you look at the back -- a year ago, we probably looked at 20 incoming books; this year, we probably looked at more of that number from a prospecting perspective, and we bought one business as we filtered them through our process. And I would say that out of that group, we probably had serious interest in about four or five. So, it takes longer. When you’re doing it proactively and you’re cold calling spaces, once you qualify the attractiveness of the space, the industry segment, find a pain point, the value chain, and then go out there and knock on doors and trying to identifying willing sellers. So, it’s a little longer and it’s probably a lower kill rate. But we certainly have an attractive pipeline of opportunities, and we’re working our way through that lesson.

And lastly, and I’ll jump off. Given -- a lot of moving parts obviously, but given the outperformance in Q1, improvement in residential and some of the other factors, RBI still acting very well, would you say you’re more comfortable with full-year guide coming out of Q1 or rest with the same or no comment?

My personal opinion is I am comfortable. We know -- the converse of what we said in our prepared remarks, we now have 25% of the year on the book. So, I know that it’s 25% more short [indiscernible]…

All right, we’ll take it.

So, I think we feel very comfortable with the range we talked this morning, reconfirming what we think we can over deliver compared to 2015.

Our next question comes from the line of Michael Conti with Sidoti. Please proceed with your question.

Questions on the infrastructure side; I know there is a pretty long lead time with The D.S. Brown, but how is the backlog looking on a year-over-year basis for The D.S. Brown? And if you can share with us just quoting [ph] and bidding activity in that space, if you expect that to be more backend weighted for 2017?

I think the latter part of that statement, our expectation relative to the FAST Act that we’ll begin to see a building backlog towards the backend of 2016 and kind of a rising tide of shipments, based on the length of the process in some of these larger projects that in some cases can be six months to two years, from a cycle perspective. So, I think our expectation is for coming off the bottom past years through to the early part of ‘16, we’ll start to see a rising tide of backlog and shipments.

And then switching to the industrial side, how should we think of margin within that segment, just taking in account the upturn in fuel prices, your FICO accounting and then just the just to read some divesture of your two metal operations; would that impact your purchasing power at all on the raw material side?

No, it’s $36 million in revenue and of course a proportion of smaller -- half of that may have been raw material purchases, so very small de minimis effect on our total Company-wide procurement scale we have today. And the other part of your question Mike was that we’re still expecting that this segment even though it’s going to have in aggregate 10 or 12% revenue, unfavorable comparison to all of 2015, we’re still expecting each of the sequential quarters going forward this year, we’ll still have favorable margin comparisons to its comparable period in 2015.

Okay. And then, just last question with the guidance, just backing to the numbers just suggest that the second half EPS is going to be down on a year-over-year basis. What’s driving that earnings decline, any color you can share with us or is that just, just being conservative just given where we are at right now?

I think as we talked about in our -- in Frank’s prepared remarks telling about the guidance and revenue expectations, we -- steel costs have gone up meaningfully and have essentially gone in order of magnitude, the first of this year of $400 a ton and now over $600 a ton that’s of my math, [indiscernible] it’s up 50%, 50. In addition some of the end market conditions, specifically in industrials, some of these still jagged even though we think they flattened out. It’s hard to project what they’ll actually be in August and October this year. So, we’ve got some, in my term, conservatism in what we think the whole year will play out because we’ve got to navigate the waters in those sectors to end up and hopefully in that guidance range that we feel pretty confident of.

Okay, great. And then just last one on the RBI, how should we think about margins? I mean if you’re doing the 80/20 in the back half of this year, I mean any -- what exactly do you plan on doing within that region -- within that space to get margins up and how we should be thinking about that in 2017?

Well, I think you can look at -- when we look at RBI from an acquisition perspective, like all acquisitions, we look for opportunities to get three or four points of margin expansion. And if you look at RBI, most of that will -- in a lot of cases, it comes from the 80/20 simplification process. And the RBI acquisition and what’s playing out is it’s kind of split in thirds. We see some tremendous opportunities in the supply chain freight management side, raw material sourcing and freight management et cetera, and I would say that we’re starting to get some of that early gains, early part of 2016 forward. I think if you look at the other aspect, they had tremendously simple business model to their credit and the byproduct of that, and I think Ken mentioned earlier on another question, was, in our opinion they don’t make enough of their eight items. And they were growing so quickly, they outsourced a lot of their cost of goods sold, so through the investment of some roll forming technology in their core business in Ohio and also on the West Coast, we’ve expanded their ability to service their large customers with the eight products and we expect that to drive some increase, improvements in the margin profile. And then lastly, there are some areas through the 80/20 process that we’re beginning to work with them on that we expect to start to see those benefits in the backend of the operating year. So supply chain is well-underway, make versus buy in terms of the roll forming technology being brought in-house some cases, it’s probably mid-year, that’s in line and then the 80/20 benefits towards the backend of 2016.

Our next question comes from the line of Walter Liptak with Seaport Global. Please proceed with your question.

I wanted to ask about your own internal plans; for this quarter, it’s clearly upside to the consensus numbers and our numbers. Was it better than your own internal plan or was this in line?

This is Ken. It was better than our internal expectations. And from my perspective, the work teams that are executing on these 80/20 programs are finding new ways and more efficiencies and certainly I anticipated, I wouldn’t -- Frank can provide his opinion. The work teams inside the company are pretty amazing in a very favorable way. And what they’re able to do internally is influence order rates to the upside. It’s been very pleasing seeing.

Yes, I would concur. I think the 80/20 process, we’ve got a tremendous amount of transformation going on in terms of the results that as said before, the real pleasant surprise to business is how quickly our culture is changing around the kind of making more money, higher rate of return, more efficient use of capital and here is series of tools that are helping people who’ve always done good work but now have a new way forward. And we just went through a quarterly review on some of -- what we knew were planned target projects. And I was surprised that the number of projects that spread throughout all the businesses that are smaller in nature but when taken in sum of their output are going to be the equivalent opportunities with some of the A projects. So people are really doing some real nice work and we’re no longer having necessarily hold people’s hand; they understand the concepts and they are running with them. And we’re not having to drive it from the corporate office and that’s what you want.

That’s great that the culture your employees have taken to the 80/20 process. Along those lines, in your commentary you said third or fourth inning, I don’t mean to be solely about this but just a couple of months ago you said, first to second inning. Is that because of the employees doing the 80/20 on their own, coming up with these projects, or does that reflect somehow on margins that maybe you are in the third or fourth inning of the margin improvement?

Yes, I think on both of those points, I think culturally we’re shifting faster. And I think we’re getting more benefit sooner. We said $25 million over the course of -- on the income statement over the course of five-year period. Our sense is that that could be a bigger number. And it appears to be happening a little quicker than we originally thought in terms of the rollout plan. And the big part of that is not only our people are getting more engaged earlier, I think by the nature we’ve got more people engaged earlier, they’re finding opportunities for simplification that really wasn’t on the radar screen, as we put the prior program together. And so, I think we’re moving a little bit quicker and we’re starting to move into some of the benefits that I highlighted earlier. When we start to get into in lining an MRD [ph] that’s more structural changes; we’ll start to see some real benefits on the income statement. But as we get focused on manufacturing the A items in a more focused way and more efficient way, we’ll start to see those costs go down; the inventories go down and service go up, which will provide our customers a higher degree of confidence to focus more of the business with us versus some of our other competitors, from the basis of price service and quality. So, I think we’re in third and fourth inning now.

Okay, great. Along those lines, if you’re seeing more benefits from 80/20 earlier, are you going to rethink and reset some of the margin aspirations for us? It seems early to be doing that but if you’re getting more benefits, would you reset the expectations long-term?

Early days.

Alright, fair enough. I wanted to ask about the steel cost and with steel prices coming up; do you feel like you’ve got the ability to pass those prices through? It wasn’t clear to me if that was going to be a headwind or if you were going to try and pass that through?

I’m going to say that we’re working to ensure that we provide the best value for our customers for our products both themselves because they’re larger distribution partners themselves and us to be successful in our markets. And how we navigate through this would be certainly with an to ensuring that customers are fairly treated, and we’re both successful in taking our products to the end users.

And then just one on the RBI business, you mentioned that growth rates were pretty nice in both greenhouse and solar. I wonder if you could break those out for us, how -- especially on the greenhouse side, what kind of a growth rate did you have in the quarter?

Structurally 10%, Walter.

Our next question comes from the line of Yilma Abebe with JP Morgan. Please proceed with your question.

This is Andrew West on for Yilma. Just a quick question, when you’re looking at the M&A pipeline, can you talk about just the relative size; how that might relate to your view on where you would take leverage to the right acquisition? Thanks.

The range of revenues on prospects that we continue to research and think about and come to our attention, range from the double-digit millions to triple-digit millions, I would say the upwards of 250 in revenue size to small as $25 million, $30 million, $40 million on the other end. And as far as leverage, today as people could view it off the earnings press release and its balance sheet, our gross leverage on an LTM EBITDA is probably around 2.0, so very manageable, very modest. And the pro forma with an acquisition of particular size, the higher end of that range, I just cited. Our leverage could get to 3, mid-3 and I still feel very comfortable being able to service our debt loan at that point. Because this -- understand, this [indiscernible] was made in line taken in every year generally averaging 5% to we’ve got to 7% of revenues last year. We’re keen on managing our CapEx closely; the operations continue to produce in aggregate good profitability even in the lean years post 2008. And I only see that expanding as the simplification initiatives continue to increase our profitability, take down our operating assets and anticipating that the recent historical and very effective cash flows, free cash flows out of Gibraltar and we’ll continue to keep overall leverage coming down when we do take on additional debt for acquisitions. This company generates year in and year out positive free cash flow at a very healthy level given its relative small size in revenue.

And what kind of multiples are you seeing in that pipeline; is it -- just for some context? Thanks.

It depends on the seller and their appetite and what’s negotiated. But I don’t think we’re seeing anything that approaches the high tech industry internet company. So, we’re still in single-digit multiples and believe we can still come to agreement with interested sellers. And that’s what we’re interested in, that we’d still be in single digits multiples.

[Operator Instructions] Our next question is a follow-up question from Al Kaschalk with Wedbush Securities. Please proceed with your question.

Frank, just a follow-up; you had in the prepared remarks talked about the Express Locker and the number of units in ‘15, and I think 40 and 16 to-date. Could you -- additional color, you can help us with that? Is there -- do you see that growing in ‘16? And I think that maybe obvious question but how should we think about the expectations there for that particular product category?

I think what we’ve seen and Ken can add some details to this, but certainly the backend of ‘15 and early ‘16, we’ve really seen the front-end side of our business really start to enjoy some -- we’ve actually got to some testing base with some of the big residential players across the country. They’re starting to see instead of buying one test system for a series of properties, they’re now just defaulting the buying systems, sort of every property they start to invest in and build. So, I think our expectation is this is going to continue to ramp up at a quicker rate now as we string out through the seasonality of the year. At this point, I am not eager what those numbers will look like, because as you know, this is a new product introduction that’s gone on over the test market over the couple of years. So, how quickly it’s going to ramp now, I think as people really engage, we haven’t been down this path before, so it’s hard to put a number to it.

Are you able to share or provide some color on the number of customers versus the number of units? In another words, is it one unit for 40 customers, different customers, or did you have some chunkiness to some of these sales?

There are being marketed to largest of the multifamily apartment property owners and managers in the U.S. So, there are several customers that have bought multiple units of these parcel lockers that they’ve installed in a number of their properties that span across the continental U.S. So the number of units that we have installed are owned by a fewer number of actual property owners. It’s the factor of three, so reasonable relationship.

Our next question is another follow-up question from Ken Zener with KeyBanc Capital Markets. Please proceed with your question.

Frank, you said $50 million, was that correct? That’s certainly the first time I heard that number, in your comments. Is that $50 million related to the question of postal; is that correct; did I hear you right?

That was the…

Contract.

That was the revenue in calendar 2015, that discrete contract that we spoke of.

Okay, good. I do appreciate that. So based on that, doing a little math, it seems as though -- what I’m trying to understand here is on your ventilation in your rain, given the results in other roofing categories that were very high. It seems as though -- how would you characterize the residential volume then ex that postal? Because it seems it stayed as though it’s roughly a -- the 10% fiscal year headwind; it seems like it’s running 10-11%, same number for the whole year. So, is your 6% implying really an up 5 in residential? And the reason I say that is that it implies kind of a flat two, three, four tier residential test; if that’s the type of math. I mean is that all the lift we saw from you guys above you’re kind of flat recent forecast.

Yes. I’m saying yes to your 5% statistic.

Yes, okay. And is that -- Owens Corning, DJ and their public companies have reported on the roofing, that deal in that roofing category. Would there be a reason that the -- your volume in residential would not be highly correlated to the 4% or 5% increase that the companies are looking at for asphalt roofing shingle shipments or is there a disconnect or could that be outside; I’m just trying to understand some nuances, considering the heightened margins in that business.

One nuance that comes to my brain is that we do not have buy in programs to speak of. So, channel inventory could be quite different between channel partners for asphalt shingles compared to our roofing related ventilation stocking levels would be. That’ll be my first, the first nuance that I’d offer up, Ken.

Do you guys have views on POS in the inventory levels within some of your customers or is that mostly just what your salespeople are telling you that propos their relationship?

We have that on -- we have that information from retail channel partners…

Okay.

But irregular national wholesalers and contractors that we sell to.

That does seem like -- I mean it just seems like you guys might not embed in guidance; it would be logical to assume that you would follow the activity in the shingles, it seems to me.

I think that’s true Ken over a long multiple quarter time period with a focus on one 90-day period. I think there is...

No, no, that’s understood. You wouldn’t see it come through but it does seem illogical that you would be lagging a market where your product is almost always reset with. Thank you.

Our final follow-up question comes from the line of Walter Liptak with Seaport Global. Please proceed with your question.

Thanks. So, Ken, you mentioned a couple of times, I think Frank you mentioned too, the working capital this quarter, which was in cash inflow, which is I think unique for first quarter. They seem like they typically have cash outflows. I wondered if there was anything onetime in the working capital numbers and then any view of what you think working capital might look like in the second quarter, especially given that tends to be a bigger cash outflow.

The first quarter this year, Walter, benefited primarily from RBIs being now part of Gibraltar and RBI had a really strong sales quarter in the fourth quarter of 2015. And what we saw primarily affecting the positive cash flow here in the first quarter was collections and cash coming in from RBI’s customers. So, I’d like to think in every Q going forward we’re going to have that same circumstance, but that’s the underlying driver for the first quarter’s improvement. And then, the second quarter, to you other aspect of the question, we are going to have some build of working capital, as we’re now getting into the seasonally stronger part of the calendar year. It will influence both the inventories and…

Okay, great. Thank you.

There are no further questions at this time. I’d now like to turn the conference back over to Mr. Heard for any closing or additional remarks.

Thanks, operator and thank you everyone for joining us on our call today. We look forward to speaking with you on Thursday, July 28th, when we expect to report our second quarter results. Thank you, again. This concludes our call.

Ladies and gentlemen, thank you very much for your participation in today’s conference call. You may now disconnect. And have a wonderful day.