Greetings, and welcome to the Gibraltar Industries Q1 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the conference over to your host, Carolyn Capaccio of LHA Investor Relations.

Thanks, Operator. Good morning everyone and thank you for joining us today. With me on the line is Bill Bosway, Gibraltar Industries' Chairman, President and Chief Executive Officer; and Tim Murphy, Gibraltar’s Chief Financial Officer. The earnings press release that was issued this morning, as well as the slide presentation that management will use during the call are both available in the Investor Section of the company’s website, gibraltar1.com. As noted in the earnings press release issued today Gibraltar has reclassified the processing equipment business in the Agtech segment as held-for-sale with the first quarter 2020 results and has removed the related revenues and expenses from the processing business from its adjusted results. Gibraltar's earnings press release and remarks contain non-GAAP financial measures. Tables of reconciliation of GAAP to adjusted financial measures can be found in the earnings press release that was issued today. Also as noted on slide 2 of the presentation, the earnings press release and slide presentation contain forward-looking statements with respect to future results. These statements are not guarantees of future performance and the company's actual results may differ materially from the anticipated events, performance or results expressed or implied by these forward-looking statements. Gibraltar advises you to read the risk factors detailed in its SEC filings, which can also be accessed through the company's website. Now I will turn the call over to Bill Bosway. Bill?

Hi, good morning everybody and thank you for joining today's call. We'll start with an overview of the first quarter results, the current operating environment and Tim will review our financial performance. We'll then talk to our current trends some of the key initiatives and guidance for the year and then we'll open the call for questions. So let's turn to slide 3 of our first quarter results. We got off to a solid start to the year. We delivered double-digit revenue and earnings growth in the quarter especially given the headwinds from solar panel supply issues, persistent inflation, labor availability and general supply challenges facing our end markets. Revenue reached $316 million, up 10.5% on a reported basis, 11.8% on an adjusted basis, all of which was organic growth. Adjusted operating income grew 17%, adjusted EBITDA grew 12.1% and adjusted EPS grew 11.1% to $0.60 per share. Customer order activity remained robust with total company backlog reaching $433 million at quarter end, up over 23% versus prior year, driven really by a broad-based end market demand across the world. As mentioned in our Q4 2021 earnings call, 2021 was tremendous albeit tough learning environment. But the experience really forced us to challenge many of our internal and end market operating paradigms. I think as a result, I believe we are in a much stronger position today to deal with current market dynamics and we were able to demonstrate some of that strength in the first quarter. Let me share a few comments about our segments and we'll start with renewables. In renewables as I communicated during our Q4 2021 earnings call, we expected a challenging Q1 due to ongoing industry panel supply issues, subsequent field project inefficiencies and additional structural steel inflation. But admittedly our results were less than…

Thanks Bill, and good morning everyone. I'll take you through our consolidated and segment results starting on Slide 7. As a reminder, my discussion will cover results from continuing operations and also excludes the related revenues and expenses from Agtech segment's processing equipment business, which has been removed from the adjusted results for both 2021 and 2022, as we classified this business as held for sale with this quarter's results. A summary of the 2021 adjusted results recasted to reflect the removal of the results of the processing business is available on the Investor Relations portion of our website at www.gibraltar1.com. Adjusted first quarter revenue increased 11.8% to $316 million and this growth was purely organic was driven by participation gains and price management in the residential segment partially offset by continued supply chain challenges in the renewables segment. Backlog at quarter end approximated $433 million, up over 23% from first quarter 2021 driven by solid end market demand. Adjusted operating income and adjusted EBITDA increased 17.2% and 12.1% respectively in the first quarter with adjusted EPS up 11.1%. Margins in the quarter were driven primarily by profitability expansion in the residential segment through participation gains, price management and 80/20 initiatives and in the Agtech statement segment through 80/20 and lean enterprise initiatives supply chain optimization activities and favorable business mix. Renewable margins were pressured as we had expected by the carryover supply chain challenges that affected the industry in 2021 and also by the project inefficiencies resulting from severe winter weather in January and February. Infrastructure margin was impacted by steel inflation, labor availability and second shift start-up inefficiencies to support demand in the fabrication business. Our income tax rate in the first quarter increased over the prior year rate due to lower excess tax benefits from stock compensation…

Thanks, Tim. Let's turn to slide 14 for an update on key trends, as well as our initiatives for each of the businesses. We'll start with renewables. Despite the current challenges facing the solar industry, our customers remain very active. New bookings are on plan and backlog increased 41% by quarter end. We have four key initiatives for the business. First, as discussed, we're working diligently with customers on panel availability and project execution plans. Secondly, we're upgrading our operating systems and processes to support growth and improve execution performance. Third, we're supporting the ramp-up of the TerraTrak tracker platform, as well as the development of our new 1P product line for launch in Q4. And fourth, we're implementing the TerraSmart acquisition in-sourcing and supply chain cost synergies originally planned for 2022 in both Q3 and Q4. Switching to residential. The market remains relatively strong, both the remodel and repair, as well as new construction. Demand for single-family homes continues to outpace supply and there is a large inventory of existing homes that are aging out and in need of repair and upgrades. While we expect multiple interest rate increases to have some impact going forward, we've not seen a material impact to date. We also continue to gain participation, a focused initiative we've had success with over the last five quarters. We delivered strong revenue and margin performance in Q1. Customer backlog and order activity are solid as we entered the second quarter, and our outlook is positive for growth and margin expansion in 2022. Our four initiatives for the residential business also remain on track. One, expanding participation gains further through new products and services, key customer expansion and geographic expansion. Secondly, continue our price management discipline and proactively partner with customers as market dynamics evolve. Third, execute…

Ladies and gentlemen, we will now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Daniel Moore with CJS Securities. Please proceed

Thank you. Good morning, Bill. Good morning, Tim. Thanks for taking the questions and all the color. Start with renewables. You mentioned, obviously, you expect significant sequential margin improvement in Q2. Can you provide a little more specificity or maybe a range you're targeting? And maybe a bridge of the key factors that are changing or abating giving you that confidence, whether it's revenue less how much from what less severe weather, supply chain customer, supply chain disruptions, just sort of how does the math add up and what does it add up to from your perspective? Thanks.

Yes. Thanks, Dan. So if you remember going into the year, we have a plan for renewables to run double-digit margin. And we still feel solid about that plan despite the start of Q1. And a lot of it has to do with our confidence in what we started to see in March as things abated. But this DOC investigation is actually driven everyone to be much more in-depth -- have much better in-depth understanding of what panels are available, which ones are not. And that actually provides a benefit in terms of having a little bit more straightforward planning associated with how we execute our projects. So as tough as the investigation has been on the industry in the short-term for a lot of folks. For us, it's actually creating more visibility as to what we do and do not have such that we don't deploy in an inefficient way if you will. So we expect and see pretty good momentum going into Q2 and significant improvement based off what we saw in March and what we're seeing now and we think that will continue to accelerate into Q3 and Q4 as well.

And so not to get too precise, but should we think about double-digit margins in the back half of the year versus the full year relative to what we saw in Q1?

Yeah. We're still planning on and we still have a target to hit double-digit margins for the year, which implies that Q2, Q3 and Q4, obviously, we have improvement that we're expecting to bleed through.

Got it. So overall the guide, obviously, hasn't changed. And so what I'm hearing is coming out of Q1, I would have expected maybe a little bit more strength out of resi in the plan and a little less out of renewables. But it doesn't sound like that's the right takeaway from what you're saying.

Well, it's -- on the renewable side it's kind of interesting now because as I mentioned we've had three projects that have been delayed that customers are telling us about. It's a little over $1 million impact. And I think a lot of our customers as we talked about we talk to 95-plus customers and said look what are you seeing? What do you have on hand in possession? And there's a very large percentage of those that feel pretty good about the projects they have planned for 2022. If you think about it if you're in a project right now, you have to have a panel in Q2, right? I mean that panel had to be here some time ago you would think. So I think as you get further out in the year there may be some news. But at the same time, I think the administration and the DOC and everybody involved in this will bring those things to a conclusion one way or the other. And that will be helpful as well. But right now our outlook for the business hasn't changed a whole lot relative to the DOC investigation. We do think there'll be some impact. And what we've done is in thinking about our guide for the year taking that into consideration that there are some scenarios that could occur and we feel pretty strongly we can offset the different scenarios accordingly and still deliver a full year through the strength of the rest of the business, residential, Agtech and infrastructure.

That's helpful. Maybe one more and I'll jump back in queue. You -- in terms of participation gains, which seems to have been accelerating through the back half of last year, you talk about specific product solutions where you've taken the most share? And what your confidence that those gains are permanent versus temporary over the longer term? Thanks again for the color.

Yeah. Well, market share gains are as permanent as you prove them to be right? I mean, it's based on our performing and satisfying in delivering value to customers, we don't get a chance to lose them. But in general I think they're pretty sticky as long as we continue to perform and the proof of that is the fact that they continue to grow. But in terms of what types of gains, I'll give you a couple of different examples. It's a variety of things whether it's been through geographic expansion. We've had some new products that have come out, we've actually broadened our base with existing customers. And frankly a lot of that is related -- we've earned that right to have that conversation because we've been able to deliver in a pretty tough 2021 supply chain environment. In fact just last week we were awarded a significant amount of business because we stepped up in 2021 and that was verbalized in front of a large team from our customers. So it's those types of things that I think are really important. I think the other thing that we've invested a lot in is digitizing the front end connectivity with our customers. So taking out that cost of doing business with us, not talking about pricing of the product but taking out the business cost or lowering that business cost has been pretty impactful and that's why we've been serious about investing in our IT systems to change the game in this traditional more commodity like marketplace. So those investments we started making in early 2020 and continue I think they're also paying off on top of the other things I mentioned.

Very helpful. I’ll jump back if any follow-ups. Thanks.

Yeah. Thank you.

Our next question comes from Julio Romero with Sidoti & Company. Please proceed.

Hi guys. This is Noah [ph] on for Julio. Thanks for taking the questions. I had one on Agtech. Could you speak to how you view the Agtech business going forward and talk about some of the organic and inorganic opportunities for the segment?

Yeah. On the organic side, if you think about the process equipment coming out of the portfolio we're kind of back focused on the roots we've been in for 80 years and over the last couple of years, we've added more emphasis on produce in particular, which is a relatively fast-growing end market with a lot of investments going in, in North America particularly in the US here in the last year but continues in Canada as well. And we're in a really good position to take advantage of that. And we made an acquisition to put ourselves in that position that was the Thermo acquisition a couple of years ago that we have since integrated. And the demand profile that business continues to grow. The number of projects in flight the backlog etc. So we're really excited about the investment dollars going in the end market to build out these structures. We feel like we're in a much better position to support that today going forward. So we're very bullish about that with the trends going on in market, all the way through our ability to now support that in a pretty significant way. Our commercial business, which actually is our historical business, today is actually our biggest segment. So if you look at our three segments, commercial is number one and produce is a close second and then cannabis is our smallest, but an important segment as well. But that commercial segment covers everything from flora culture to retail to research facilities with universities to carwash initiatives, botanical gardens and so forth. Surprisingly, that business remains very strong and very active and there's a lot more funding flowing there as well. And so we're quite excited about that and that's a business that has historically performed very well…

Okay. Perfect. Thank you for that color. And I just had one more circling back around to renewables. You kind of touched on a little bit some of the challenges you had in the quarter. Would you say that weather supply chain was a bigger factor? And do you see supply chain getting better or worse?

Well, weather was a big impact in January and February. I mean, we have a if you think about the population in the US and you think about where C&I solar installations are heavily oriented, traditionally it's been in Northeast which is highly populated and unfortunately the projects that were supposed to be done in Q4 of 2021 because of panel supply and other supply chains got pushed into January, February timeframe and then we got into some unfortunate weather and that was a problem. And that can be very impactful, if we haven't priced for that. And typically, projects that go into heavy weather months like that are priced differently than they would be for those that we know are going to land in other quarters where the weather isn't so extreme and we just didn't have that advantage because of delayed projects. So we kind of got double-whammy there, if you will. So I think that was a big incremental impact in Q1 that was unfortunate. The supply chain relative to panels, which has been an issue for three quarters now has gotten a little bit better, but I don't think it's because it just gotten better. I think it's because frankly there's been so much emphasis on it that we as well as I'm sure others have really had to sit down with customers and talk through what they actually have in hand in possession versus what they think they may be able to get. And that's been a challenge in the last few quarters. Now that we have this new development in the industry with the DOC investigation, it's actually forced us and our customers for every project that's in flight or in plan to understand what is already in hand because if you have -- if you don't have your panel before March 22, then depending on the outcome of the investigation, if it goes in favor of the complainant and you bought your panel after March 22, you have risk of these retroactive duties. So everybody in the industry in the last four weeks is really trying to hone into what they have. And that makes it actually easier for us to execute around knowing what is there versus what may or may not be there. And that's really been the last three quarters in a lot of ways in the industry that we're dealing with. And we're not unique to that, but that's kind of more of an industry situation. So we're actually a little more confident knowing what's out there than we were in the last three quarters despite the supply chain for panels not actually being a whole lot better if that makes some sense.

Yeah. That make sense. Thank you very much. I'll go ahead and hop back in queue.

Our next question comes from Ken Zener with KeyBanc Capital Markets. Please proceed.

Good morning.

Good morning.

Quite the quarter. So, I have some broad questions just to put the actions of the quarter and the choices you're making kind of within the context or a bridge from the Analyst Day if that's okay with you just to kind of see how these things are shifting given the landscape. So, just looking at Agtech in your Analyst Day presentation cannabis was kind of about 30%. It was supposed to grow to about 30%. You mentioned it's about 10% of sales that you're divesting today but that was a large piece of that growth platform when you think about the 2022 targets. Could you maybe just give us a little sense of how this decision kind of impacts the 2025 goals that you laid out just so we could have a better interpretation of that presentation?

Yes. So, Ken good question. It was 10% of 2021 sales. So, call that $19 million. What you saw in the Investor Day was still heavily oriented on cannabis with growing was the structures piece. That's the bigger piece that always has been of that business. So, we don't really see that impactful in 2025. And the other thing I'd say is the produce business is just over the last six months we're seeing accelerated at a faster clip than we probably thought then and will more than offset the $19 million that we're talking about today.

Good. And let me just keep drilling down I apologize. I just think it's this is actually a very interesting quarter for you guys to highlight the details of your business which are not easily understood. That vegetable in last quarter this came up in conversations I had. I had really had prior to last quarter approval of vegetables right the greenhouse. Could you go into that whole approval process? Because on the residential side that I cover we hear about approvals and that type of stuff. But can you -- last quarter was really the first time I heard about delays due to approvals and stuff. Could you give us a little more understanding of that given the increasing importance of this business given the divestiture?

Yes. Ken a lot of permit delays that we're seeing it's in one region just across the border and it's around water rights. There's an area in Canada where a lot of these greenhouses go. They have a significant amount of water committed to people who apply for the right to use water and aren't using them using that water. And so the locality is working on saying, hey use it or lose it. And we have customers that need water and/or need to move so they're a little bit in a different location where they have access to water. And so that that's been going on for probably three quarter-ish. And so it's being fixed. It's just -- it moves at a slower pace. And then I think the other impact on sort of scheduling permits is really still around the states that legalized cannabis like New York State. So, New York State in the last I'm going to say month, but it's pretty recent, allowed I think 46 people who had a license to do that might have been hemp to grow cannabis for the recreational market. They still haven't selected the licensees for dispensary side nor have any of the licenses that they just granted been permanent. They're sort of for a year, I think it goes through next December. So, still some of that legislation delay from the states that legalize. It's starting to move but it's just a little slower. So, we've got some projects that are people won't invest until they have a permanent license. And New York State being an example it could be another three to six months before we see some activity there.

I appreciate it. So, the vegetable related to the water in Canada, why do you see that as a perhaps near-term cycle issue as opposed to a secular issue you given something else if it wasn't anticipated?

Yes, it's one region where we operate. If you go get land 15 miles away, you're not stuck with that. Or if you're close enough to the lake where you have water rights directly from the lake and you're not dependent on the municipality. So, what we've seen is growers that we work with shifting their location a little bit. You need 30, 40 acres or whatever you're going to need, land is available, but it just is the process yes. So, it's not -- it's a very specific.

I think that it's important to remember, too, is our expansion in produce, the vegetable fruit side has traditionally been inside that region we talked about. A lot of our growth and backlog going forward is expansion into the US where there's a lot of investment going in as well. So, we're not as dependent on a single pillar foundation or the industry is not as expanding in the US where you don't have some of those stipulations or challenges.

Really appreciate that detail because that was below surface. Second, and Bill, this is more for you, and I guess, discussions with the Board, given you're making a call on the divestiture. Obviously, that was -- we'll have to see how that clears out. But at least that's a clear decision that you've made. But given the buyback in conjunction with that, given the right you're in high-growth industries as opposed to the residential look, there's a lot of hiccups that you've been facing. Maybe some have been self-created, but more so just exogenous events. And it seems as though the broader goals that you might have discussed at the Analyst Day as well, given the activities challenges you're facing, how has that shifted? It seems like you're much more comfortable saying, look, we have a lot of cash. We have an un-levered balance sheet. We're going to put some of this capital back to work in the company. You've created these growth platforms, which you invested in, some worked out, some haven't so far. Really just this idea of organic growth and share buybacks. Has that -- because you have a platform now that seems to offer sufficient activity. Does that really reflect a shift in terms of your discussions with the Board about what you control and what you guys know as your organic platform is so strong now that you just think you can be spinning out the cash as you execute around these 2025 goals?

No, I don't think it's that? I don't want to say black and white. I don't think it's that black and white, and I would suggest that you think about we're going to generate a lot of cash this year as well as the next -- up through 2025 for the plan. You got in industry in solar right now that's working through some big issues. So, in the short term, we want to have flexibility to try to drive equitable returns for our investors, while we're waiting to see how some of these industries are going to evolve in the near term because of some of these unique circumstances. They're going to get cleared out, they're going to get dealt with. But I don't want -- we have an opportunity here to help our shareholders, and so we want to have that flexibility to do that. And it doesn't mean that our plan overall has changed. We feel like we're going to put money to work over the next three years and a combination of M&A like we have to build out the platforms further. We've got organic growth. As you saw this first quarter that grew double digits. That's going to continue to drive the platforms, and I think we have some other opportunities for capital in the near term as well. So, I don't think it's a wholesale change by any way by any means. I just think it's demonstrating some flexibility on behalf of our shareholders to react to a situation in a couple of more markets that we want to take advantage of in the near term as much as anything else.

Thank you, very much.

[Operator Instructions] Our next question is from Walt Liptak with Seaport. Please proceed.

Hi. Thanks. Good morning guys.

Hey Walt.

Hey Walt. Good morning.

I wanted to ask about the processing divestiture. What do you envision for the timing? And I think you said it was $19 million of sales. What should we be thinking about for cash inflow from it, or is it immaterial?

Yes. I would say, Walt, both timing and value are a little bit TBD, right? Where we've publicly announced today, we've had some conversations, and we're going to continue that. So, we'll keep you updated as it moves. It's not going to be years, but I don't think it's also a month, right? So, it's somewhere between those two brackets and more to come.

Okay. When you were thinking about that divestiture, I understand that some of the growth came out of it. But I had thought about all the cannabis businesses as sort of a complete package like a system and having a broad range of products. Why keep the grow part of the business? Why not put them all together as one business and exit that one completely. Because certainly, there's -- that one seems to be one that's been lumpy in terms of timing on revenue and fits, et cetera.

Yes. So, Walt, I'll clarify for everybody just a little bit. When you get into the growing business, we fundamentally -- it is fundamentally one business. If you think about our history, we've been in these growing structures, and they serve so many different end applications. From a go-to-market perspective, as we talk to customers, what we found these segments a little bit different. But if you look at the back end of how you support a cannabis growing site, a tomato-growing site, our carwash side a retail site. The business has very common processes across the back end from estimating to design to manufacturing to stick them in the ground and field execution. So it's – I would characterize, this move is getting back to our growing structures core that we've been in for 80 years. We just now have an opportunity where there's some market segments that evolve that have unique customer sets. So it's kind of come out of one group. It's just selling to the three or four different buckets. If I give you the commercial market as an example, there's six or seven segments that have always been there. So think about this as a commercial growing structures business with nine segments, instead of seven, produce being one and cannabis being one. And so we've been in the cannabis growing business for three or four years that was the Nexus acquisition. But Nexus also makes structures for flora culture and other types of greenhouse structures. It just happened that they were – had more domain experience in how to do a structure for cannabis. That's all. They do other stuff as well. So it's not as separated in the back end as maybe we kind of?

Okay. All right. Fair enough. Yeah. Okay. Great. Thank you. And then I want to try and drill down a little bit about the solar comments. And I understand that, your customers are telling you that hey we got the panels for the second quarter so these projects should be on track. I wonder, if you could tell us how deep did you go down into the conversations? Can you talk to? Were you able to audit it? I mean, were you able to physically see or – because we've heard some of the stuff before where customers were saying, hey, we had our permits or we're going to be able to get these panels and then they weren't there. How deep did you drill down with some of your top customers to understand that they were going to be able to get these projects moving in the second quarter?

Yeah. So the second quarter projects obviously we're in flight. Remember, we're kind of POC accounting. So those projects were starting in Q1. We're getting some of that revenue etc. flowing through Q2. So sitting down with every customer a lot of it has been face-to-face obviously lots been on the phone. But being able to audit warehouses and things of that nature for these folks I think that we've not been able to do per se. But the difference is this, our incentive before was we need to understand, if you have panels or not. And if the answer was yes, the answer could be couched around the perspective of yes we have the panels on order they're coming and they'll be here in the next 30 days. We've submitted a PO form. Now, it's different. Now you physically have to have the panel in hand, because if we don't or if we haven't bought it, now you have this risk, it's a huge risk. So I think the mentality of the industry us, including our customers when we talk about you have panels, physically do you have your hand on panels? It's in their best interest to verify that a much different way than it was just five weeks ago. And that's the difference. And that's why you hear, if you're listening to the press, or you're seeing a lot of information flow in this there's some – there's a lot of disruption right now, because people are having to go back in and see what they physically have and to verify to determine whether or not they can move the project forward, because that's going to deteriorate, if they have the business the next nine months. And so it's a much different set of circumstances than it was over the last three quarters in terms of verification of the panels. And I'm not saying industry is perfect. Look, we're four weeks into this, it's a shock to the industry. And but over the last four weeks we've talked to a lot of customers face-to-face and that's the difference. So right now, we're out in the field and we see the panels in the projects that we're involved in. I think the question's going to be what does Q3, late Q3, Q4 look like? And that's what a lot of – I think the customers are trying to figure out at this stage. But like I said earlier, we factored in some disruption in the second half relative to our full year performance guide and looked at a couple of different scenarios. But yeah, it's going to be an ongoing situation for sure. And I think we feel good about Q2, and we're working on everything for Q3 and Q4 as we speak.

Okay. Okay. Thank you for that. Really appreciate that explanation. Maybe one last one on solar, the loss that you did this quarter of $7 million. I wonder, if you could help us understand where – was that under absorption of your installation teams, or why was that loss there? Was there extra costs in the quarter related to some of these project delays -- and how I guess, I'm looking for some confidence that, the first quarter is a onetime thing and there's not kind of lingering costs that are going to significantly impact second quarter or the full year?

Yes. Well, it's -- the GAAP loss is 7% adjusted is $4.3 million just to be clear. Yes. So, look, the big two things in the quarter, or the costs, let's say. It's not necessarily a huge fixed-cost issue. It's more of project and efficiencies. So we have people -- when we talk about the severe winter weather, imagine going and putting foundations in the ground that's the first step of a field. And then weather comes through and you get ice on the ground and you have teams in the field chipping ice away from the foundations so that you can attach the racking system to that. We thought that work was going to be done in October, November, December and you don't run into that. Normally, we don't schedule nearly as much work in the Northeast in the middle of the winter. And when we do there's a different cost to our customers to account for this kind of stuff. That was tough. I mean, that drove a fair amount of our loss. A little volume right impacted it. And then always some material cost alignment less impactful, but it's there. I would do those three things. So the weather's gone, because of this DOC, but also because for the last two quarters we've been working with our customers before we start full forming a racking system and schedule our projects in the field, we make sure we know what panels are going to show up and when, because it can't really manufacture the racking system efficiently until you know what panel is going to be on that job. And if we manufacture for one panel and a different panel shows up, we have to charge our customers to drill holes on each early in the field. So it's just -- we don't want to ever have to do that. because of all the delays we went into last year our process got tighter around ensuring we knew what it was before it goes to production.

Walt, one other thing I'll mention what's different today versus just five weeks ago the financial risk for a customer developer in the field by not knowing what's going on with the panels is much greater today than it was. They cannot afford to take the risk of buying something they don't have. If they don't have it and they know they can't get it right now without taking that risk. So when you get down to the conversation, do you have it in possession, yes or no? And was it bought before March 22, yes or no? It's in their best interest and they're telling us that, and that makes sense, right? So that just kind of -- it forces a different discussion than over the last three quarters on panel supply, because the risk has shifted significantly to them on the potential penalties that come with doing the wrong thing. So if you don't have it, you're not doing a project. If you have it, you need to verify it before we actually move forward with each other. And they're not going to move forward unless they know, they have -- they bought and in-hand and bought prior to the DOC investigation beginning.

Okay. Great. That makes a lot of sense. I appreciate those answers. And so the three solar projects that got canceled small amount, but it sounds like that was the reason that they didn't want it. Is that fair that they didn't want to take on that risk?

Yes. They didn't have the panels and the panels they had on order they're not going to take the risk of receiving those and putting them in the field, because the risk of potential retroactive penalties. So that's the challenge with this DOC case is the penalties. If the decision is not made until August, the penalties are said to be retroactive back to March. So between March and August, it kind of stymies folks that don't have panels. And if you've got a potential penalty of 250%, the economics that you assumed on your developments and the bank ability that you want to get your financing on absolutely could be much different if you get charged extra 250% on panels nine months later. So the returns it's just not worth the risk. And frankly your financing is not going to line up with you until you have clarity on what your true investment thesis is right? So that's the dilemma that I think a lot of those don't have panels are dealing with and that's the point that we're trying to make to the administration is you got 230,000 people in the U.S. who work in this industry. We generate over $30 million a year. And effectively, this thing puts a large portion of the industry on pause if they don't have panels. And more importantly, it puts the climate agenda that the administration has in serious jeopardy for the commitments that we've made. And then finally, I don't think people even realize that, solar has been the fastest growing and makes up for the most renewable energy that's been put in the last five years is solar. So it's going to get resolved. It's just right now it's got a lot of people on edge, obviously, because of the DOC investigation the way that those things work. So, that's a forcing function right now. Do you have a panel yes or no? That's different than the last three quarters. Absolutely. Q – Walt Liptak: Okay. Thank you. Appreciate it A – Bill Bosway: Yes.

Thank you. Ladies and gentlemen, this does conclude the question-and-answer session. I'd like to turn the call back to Mr. Bosway, for any closing remarks.

Well, again everyone thanks again for joining us today. We will be presenting at the KeyBanc conference in Boston in June and the CJS Summer Ideas Conference in July, as well as holding a few non-deal road shows. We'll speak to you again in a few months and look forward to follow-up conversations and look forward to talking to you at the end of the second quarter as well. Thanks and have a great day.

Thank you. This does conclude today's conference. Thank you for your participation. You may now disconnect.