Greetings. Welcome to the Q4 2021 Gibraltar Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Carolyn Capaccio of LHA. You may begin.

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 Info section of the company’s website, gibraltar1.com. Results of TerraSmart, which was acquired at the end of December 2020, are included in year-to-date 2021 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 two of the presentation, the earnings press release and slide presentation contain forward-looking statements with respect to future financial results. These statements are not a guarantee 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?

Thanks, Carolyn. Good morning, everybody, and thank you for joining us today. We will start with an overview of the fourth quarter as well as full year results, and then Tim will review our financial performance. We'll then pivot and discuss 2022, discuss our plans and guidance for the year, and then we'll open the call for your questions. So let's turn to slide three, titled 2021 year-end review. Our fourth quarter results were within the range that we previewed on January 27, capping off a year of good top-line growth as we continue to build leadership positions in our end markets. The overall business grew 29.8% with organic growth contributing 9%, driven by market price and participation gains across the business. Our acquisitions contributed growth of 21% and continue to support our demand momentum as we enter 2022. Customer order activity remained robust during the year with order backlog up 16%, reaching $344 million at year-end. While margins were lower than expected, we generated positive growth in adjusted operating income, adjusted EBITDA and adjusted EPS despite headwinds throughout the year from accelerating inflation and availability of materials, labor and transportation. We also worked diligently to manage and minimize disruptions from COVID and keep our teams safe, particularly in the first and fourth quarters when COVID infection rates were at their highest. Adjusted operating income grew 7% to $124 million. Adjusted EBITDA increased 9.1% to $157 million, and adjusted net income grew 2.5% to $92 million or $2.78 per share. Although our profitability improved modestly during the year, it was well below our expectations and reflects an environment that, in hindsight, really pressure-tested our systems and processes, our organization and some of our operating paradigms, all of which we have had to modify and improve to drive better performance as we move into 2022. In the fourth quarter, we turned the margin corner in our Residential business. Margin improved 70 basis points over last year, and we delivered revenue growth of 24.4%. In Agtech, margin again improved sequentially and versus last year. We held margin effectively flat on 17% lower volume, while managing through inflation and supply chain challenges. We also made significant progress integrating our business, improving systems and just general execution. In Infrastructure, we delivered strong growth in the quarter and for the year, while improving operating margin for the year as well. And in Renewables, despite a difficult fourth quarter, we fought hard to offset industry supply chain issues and significant inflation in the entire year and executed customer demand, delivering adjusted EBITDA of $44 million, an increase of 31% over 2020. Let's switch gears and turn to slide four and talk a little bit more about inflation in the current operating environment. The fourth quarter marked the fifth consecutive quarter of high commodity prices. The market also experienced price movement across our seven core commodities. While still at elevated prices versus the beginning of 2021, we started to see market price reductions in hot-rolled coil steel, aluminum, polypropylene resin and ocean freight rates during the quarter. Unfortunately, aluminum pricing reversed its course and increased again in January. Structural and plate steel continued to rise during the fourth quarter, and both are currently forecast to remain elevated or rise further in Q1 2022. Over-the-road transportation prices also increased during the quarter, and we anticipate these will remain higher in 2022. Despite an elevated price situation, today's commodity environment is somewhat different. First, we are not currently seeing, nor do we expect to see, severe and rapid price increases like we experienced throughout 2021. For example, starting back in Q4 2020, hot-rolled coil steel increased $25 per ton per week over a 12-month period, creating an incredibly challenging and record-setting situation that we really don't expect to repeat. Second, we expect better supply consistency and have made investments to minimize the type of supply chain disruption we experienced in 2021. Given our learning in 2021, we've had to evolve our operating playbook to manage through a much different market environment, and we continue to focus on five key initiatives, all of which were active or activated during 2021. First, keeping price and cost in balance and continuing to manage in a timely and effective manner. As demonstrated in Q4, the Residential business was able to balance price and cost and generate both revenue growth and margin improvement year-over-year. Our project-based businesses—Renewables, Agtech and Infrastructure—continue to improve their ability to better align project pricing and cost throughout the project life cycle. The teams have implemented various pricing approaches, whether it be increases, surcharges, or demand-shaping strategies for better alignment with customers and projects. Second, continue 80/20 focus on product line and customer simplification initiatives as well as enterprise and system optimization to support our project-based businesses and field operations. Third, introduce new products with enhanced value propositions and cost-reduced products through design modification, alternate materials development and supply chain optimization. Fourth, implement more automation for labor optimization, specifically during times of the year when our markets experience higher seasonal demand. We're launching initiatives in our Residential business and investing in more autonomous installation vehicles to support our renewable field operations business. And lastly, fifth, invest in inventory of key components where we believe there is ongoing availability and price inflation risk. So, 2021 was a challenging year, a year with multiple headwinds converging simultaneously with both speed and magnitude, something I think many businesses have never experienced, including our team. But I am proud of our team. Throughout the year, we enhanced our leadership position across our end markets. We generated significant revenue growth. We remain steadfast and focused on macroeconomic and industry headwinds as well. The long-term fundamentals of our end markets haven't changed; they remain very attractive. Although we expect some short-term industry headwinds, particularly in the solar energy market, the investments and improvements made in both 2020 and 2021 are going to drive better performance starting in 2022, as demonstrated by our progress in Residential, Agtech and Infrastructure businesses in the second half of 2021. With that, I will turn it over to Tim for a more detailed review of our results. Tim?

Thanks, Bill, and good morning, everyone. I'll take you through our consolidated segment results, starting on slide five. As a reminder, my discussion will cover results from continuing operations. Also, we've added adjusted EBITDA and adjusted EBITDA margin to our non-GAAP disclosure metrics set, as these measures afford greater comparability of our segment performance across our sectors. Again, you can find reconciliations of GAAP to non-GAAP measures in our press release issued today. Consolidated fourth-quarter revenue increased 26.1% to $334.4 million. Organic growth of 8.6% was driven by pricing, volume and participation gains in the Residential and Infrastructure segments, despite continued supply chain challenges in the quarter. We generated 17.5% growth from the 2020 acquisitions of TerraSmart and Architectural Mailboxes. Total backlog at quarter-end was approximately $344 million, up over 16% from fourth-quarter 2020, driven by continued end market demand across our business. Adjusted operating income and adjusted EBITDA increased 1.5% and 4.7%, respectively, in the fourth quarter, with adjusted EPS down 8.5%. Adjusted operating margin and adjusted EBITDA margin in the quarter were impacted, as previously announced, by compression in the Renewable segment as well as higher material, transportation and labor costs, more than offset by pricing actions, volume and participation gains in Residential, lean productivity initiatives and favorable product line mix in Infrastructure and lean enterprise initiatives and supply chain improvements in Agtech. Our income tax rate in the fourth quarter increased over the prior year rate due to a difference in the allocation of income to states where we generated revenues, lower excess tax benefits from stock compensation and certain return-to-provision adjustments. Consolidated revenue grew 29.8% to $1.34 billion, with organic growth contributing 8.9% and acquisitions adding 20.9%, as we executed on market demand with growth limited by macro challenges and supply chain disruption. Adjusted operating margin and adjusted EBITDA margin contracted 200 basis points and 220 basis points, respectively, as labor and transportation costs accelerated during the year. Residential achieved positive price-cost balance in the fourth quarter. Renewables, as an industry, struggled with panel and key component availability and consistent project schedules. Agtech margin improved sequentially through the year and Infrastructure delivered margin improvement. Our income tax rate increased over the 2020 rate due mainly to the allocation of income to higher-tax states where we generate revenues. In 2021, we generated more income in higher tax states, mostly the result of the acquisition of TerraSmart, which was strong in the Northeast this year where taxes tend to be higher. 2021 adjusted net income increased 2.5% to $92 million, and adjusted EPS increased 1.8% to $2.78 per share, with adjusted EBITDA increasing 9.1% from $144.3 million to $157.4 million. These results are in line with the preliminary results we issued in January. Demand remains strong in sustainable end markets with double-digit backlog growth. Now let's review each segment, starting with slide six, the Renewable segment. Segment revenues were up 68.3%, driven by the TerraSmart acquisition. Organic revenue decreased 2.3% and pro forma revenue contracted 5.7%, driven by product slippage as supply chain challenges continue to impact field operation schedules, disrupting solar projects. On a pro forma basis, we grew over 9% for the full year. Despite the slippage we experienced, we saw significant growth from our TerraTrak tracker in both the fourth quarter and full year and saw over a 450% increase in subscribers to our Sunfig solar field design optimization tool in 2021. Underlying demand remained strong in the quarter despite the market headwinds I mentioned, with backlog up 27% from the prior year period to $167 million on continued strong market demand. Segment adjusted operating income decreased to $1.4 million and adjusted EBITDA decreased to $3.8 million. Adjusted operating and EBITDA margins contracted to 1.3% and 3.5%, respectively, impacted by two factors we previously disclosed. First, field operational inefficiencies created by panel availability and scheduling management resulted in significant project rescheduling that drove higher cost per unit of revenue and redeployment of install crews to racking field modifications to support panel type and option changes. Second, unanticipated and additional inflation in structural steel impacted canopy racking projects. We expect the margin impacts from affected canopy projects to roll off in the first half of 2022. Our product margin mix was also impacted in the quarter by additional installations of our new TerraTrak tracker product; margins for this product should improve as we build experience and scale. On a full year basis, we grew revenue 81% or 9.3% on a pro forma basis and delivered adjusted operating margin and adjusted EBITDA margin of 8% and 10.2%, respectively. Our integration of TerraSmart into the Renewables business remains on track with organization, process development, information systems, supply chain and in-sourcing activities gaining momentum per plan. We expect to deliver double-digit margins for 2022, with margin recovering as we move throughout the year. Moving to slide seven, our Residential segment: Segment revenues increased 24.4%, our sixth consecutive quarter of double-digit growth. Organic revenue grew 23.7%, driven by increased pricing to combat continued materials, transportation and labor cost inflation, participation gains driven by expanding share of wallet with existing customers and new customer additions, geographic expansion in the Midwest and product wins on both new and existing platforms, for example, an expansion of our metal roofing products with both new and existing customers. The timing of the Architectural Mailboxes acquisition contributed slightly less than 1% of the growth, with integration of this business on track. Segment adjusted operating income and adjusted EBITDA grew 29.9% and 26%, respectively. Adjusted operating and EBITDA margin expanded 70 basis points and 30 basis points, respectively, as price and cost better aligned through pricing actions and slowing inflation for some commodities. We experienced fewer supply chain disruptions in Q4 versus the prior two quarters and the success of additional 80/20 initiatives as well as market and product line mix benefits, along with better productivity as labor management improved. We continue to work with our supply chain partners to support our customers' needs and are maintaining focus on price/cost management, simplification, in-lining and automation. We expect continued top- and bottom-line growth in this business during 2022. Slide eight, Agtech: Segment revenue decreased 16.9% as a result of timing of revenue for produce projects impacted by supply chain disruption and continued delays in Canadian permitting related to water rights. The timing of cannabis projects continues to be impacted by delayed permitting at the state and local level. The commercial greenhouse business, however, continues to experience solid growth across core product lines serving the retail, institutional and carwash markets. Order backlog increased modestly in the quarter, with January 2022 bookings driving backlog as of January 31 up 22% over year-end and up 34% over last January. Segment adjusted operating and EBITDA margin improved 120 and 90 basis points, respectively, over the third quarter despite revenue delays and additional inflation in key input materials through continued execution from lean enterprise initiatives, ongoing integration activities, successful efforts to optimize the supply chain, particularly in sourcing of roofing systems and glass, business mix benefits and improvement in produce margins. The margins were essentially flat year-over-year despite the 16.9% reduction in revenues, which demonstrates the work we've done during 2021 to improve the operating performance of this business. Going forward, we expect positive margin momentum to continue as we convert strong backlog and make additional system improvements and benefit from improved mix. Slide nine, Infrastructure: Segment revenue increased 33.1%, driven by solid demand for fabricated products, given additional availability of funding and by acceleration in demand for non-fabricated products as customers caught up on projects deferred from 2020. We expect to see the impact of incremental government spending on infrastructure toward the end of 2022. Order backlog increased 12% to $47 million with solid demand moving into 2022. Segment adjusted operating margin was up 10 basis points as the benefits of 80/20 and favorable mix offset Q4 headwinds of structural and plate steel inflation and labor availability challenges in the manufactured products, along with the closure for over 100 days of a supplier due to Hurricane Ida, which affected higher margin non-fabricated products. Adjusted EBITDA margin decreased 130 basis points as relatively fixed depreciation and amortization was a smaller percentage of higher revenues. We expect continued improvement in both the top and bottom line for this business in 2022 and expect to begin to see the impact of the federal infrastructure investment JOBS Act toward the end of 2022. Working capital benefited from a substantial reduction in accounts receivable through cash collected, and we paid down $37 million on the revolver during the quarter. At December 31, we had $369 million available on our revolver, cash on hand of $13 million and our net leverage was approximately one tenth of a turn. We expect to pay the outstanding balance on our revolver during 2022 using cash flow generated from operations. We expect to return to more normal levels of free cash flow during 2022, driving strong liquidity for growth. Now, I'll turn the call back to Bill.

Thanks, Tim. Let's move to slide 11, and we'll give an update on our portfolio and our focus for 2022. As I mentioned earlier, the fundamentals supporting our end markets remain robust, and we continue to build and strengthen our leadership position in each of our markets. Over the last two years, we have grown revenue in each business faster than the respective market growth rates. We accomplished this through investment in organic growth initiatives and key acquisitions. Our growth is a result of solid market drivers, participation gains, price management and adding faster growing businesses to our portfolio. Since 2019, we've also simplified our Residential, Renewables and Agtech platforms, taking 18 different operating units and organizing them into five businesses going forward. Our simplification and focused effort covered building and strengthening the organization, consolidating legacy companies, integrating acquisitions, new brand launches and executing day-to-day business during a challenging operating environment. A lot of good work has been completed to strengthen the portfolio, our business systems and our organization. Our Residential and Infrastructure businesses delivered solid adjusted operating margin performance in 2021, while our Renewables and Agtech adjusted operating margins were short of plan. These two businesses experienced industry-specific headwinds in 2021, but we continue to make investments and improvements during the year necessary to help us scale and deliver double-digit margin performance in 2022. So, let's move to slide 12, and we'll discuss our key trends and initiatives for each business. Starting with Renewables: General market activity remains robust in the commercial and industrial market segment, as developers anticipate industry supply chain disruption and inflationary concerns to subside as we move further into 2022. The industry and our customers continue to address panel supply in a variety of ways with the intent of lessening disruption to their projects. Customer order backlog remains strong and is up 27% to $167 million, reflecting general demand strength in the market. Here's a quick summary of what is driving our ongoing panel supply concerns for the industry. First, the Withhold Release Order, WRO, on silicon-based products made by Hoshine Silicon Industry, which is located in Xinjiang province. The WRO was issued by U.S. Customs and Border Protection back in June 2021 as a reaction to allegations of companies in the province using forced labor. Hoshine Silicon Industry is a large producer of industrial silicon and Chinese polysilicon companies use that material to make solar-grade polysilicon. The WRO currently bans any solar panel products containing Hoshine materials from entering the U.S., but the WRO is also starting to allow solar panel products to be imported if the importer can verify Hoshine materials are not contained in the products. Second, the anti-circumvention trade case recently filed with the Department of Commerce focuses on preventing importers from circumventing import duties on solar panels. This is the second petition filed, with the first petition being dismissed in November 2021. An initial response to this claim is expected sometime in March. As both issues continue, we expect companies sourcing panels to continue to evolve supply chain strategies, sustain compliance while finding more consistent sources of supply. General inflation has been substantial in the solar industry over the last 12 months. Effectively, 2021 was the first year the industry has experienced inflation since its inception, creating quite a shock wave for everyone to absorb. The industry has struggled with a rapid and continuous acceleration of input costs in the entire year. That being said, we have recently seen price declines in hot-rolled coil steel, which is a positive development for the industry. We've also seen the rate of price increases for structural steel begin to slow. Although we expect commodity prices to remain elevated, the price stability we are seeing today allows the industry to plan and execute projects more effectively. Finally, as it relates to ITC benefits, we do not expect any change in the current benefit structure during 2022, and we will follow policy discussions as they evolve. To summarize, the solar industry continues to experience headwinds as we move into 2022, mainly panel supply and elevated input costs. While our customers are optimistic, these headwinds will start to subside during the year, with challenges similar to those we faced in the fourth quarter persisting in the early months of 2022. We expect margins to step up starting in Q2 and to continue for the full year, given the customer quoting activity is robust, backlog is solid and assuming more commodity price stability. It's critical we maintain our focus, flexibility and agility in this market and execute on our top five initiatives for the Renewables business. First, we must work closer with customers to understand potential supply chain disruptions earlier in the process and collaborate on supply chain solutions to optimize project management. Second, we must continue to upgrade and scale our systems and process capability to deal with today's market and customer dynamics and support the growth momentum we have. Third, we must continue the growth momentum of our TerraTrak tracker technology and drive margin improvement as we scale and gain experience. Fourth, we must implement the TerraSmart acquisition cost synergies planned for 2022, specifically our in-sourcing and supply chain initiatives. And fifth, we must continue to optimize our go-to-market strategy, engaging customers earlier in the process and helping them to find the right solution set that delivers the best returns for their solar project investment. Staying on slide 12, let's now discuss the Residential trends, our assumptions and some key initiatives for 2022. As with our other end markets, inflation has significantly increased input costs in the residential market and new home pricing has increased substantially. We have a relatively hot market, and inflation is not the only driver of the current situation. We also continue to see a supply shortage for single-family homes driving a favorable demand dynamic for new and existing homes. There is a relatively large inventory of aging homes in need of repair and upgrades over the next few years. While we expect multiple and straight price increases to have some impact on future investments, the fundamental support from the housing market remains positive. We exited 2021 with solid customer backlog and order activity in line with supporting a good start for the year. Our demand is supported by market growth, price management, participation gains and customer inventory management to mitigate potential supply chain disruption going into the second and third quarters, traditionally the peak demand quarters for the industry. We believe the industry is focused on preventing the type of supply chain challenges experienced in 2020 and 2021. There are four core initiatives for the Residential business. One, continue to gain participation through new products and services for new and existing market segments and geographic expansion with customers in new regions. Two, continue our price management initiatives and proactively partner with customers as market dynamics evolve. Three, execute our ERP system upgrade to further advance our digital capability with customers to support collaborative business system optimization; driving efficiency and improving the cost of doing business with us is an important differentiator. And four, accelerate 80/20 and automation projects to lower our labor input per dollar of revenue generated, particularly during our peak demand periods when we require additional labor in our facilities. Moving to slide 13 to review trends and assumptions and key initiatives for Agtech and Infrastructure. For Agtech, we expect investment in the produce industry to grow 7% to 8% in 2022, similar to the annual growth rate over the last five years. Commercial growers continue to invest in controlled environment agriculture for several reasons. First, the economics of large-scale high-tech controlled environment agriculture continues to be attractive. Second, the ability to supply produce across a larger selection of fruits and vegetables year-round via multiple growth cycles is attractive to retailers. Third, the environmental footprint for controlled environment growing operations significantly reduces land and water requirements versus traditional outdoor farming. Fourth, the speed of innovation in both seed development and optimal growing solutions is moving at a rapid pace and expanding the market accordingly. We also expect our commercial business momentum to continue in both retail and carwash segments. In retail, we are expanding with a new customer and our exclusive partner for carwash structures continues to expand nationally. In cannabis, after a year of delays and limited progress, licensing processes should accelerate for states that legalized cannabis back in 2020, and this should start to benefit the sector in these states in the second half of this year. We have three core initiatives for Agtech. First, now that we have worked through the lower-margin customer backlog inherent with the Thermo acquisition, we must execute our new higher-margin produce projects and deliver margin improvement as planned. Second, execute the rollout of our greenhouse structures with our new retail customers and continue to scale and ramp expansion plans with our carwash partner. Third, strengthen our supply chain for roofing structures and glass to eliminate or minimize project disruption in the field and reduce overall project costs. Switching to Infrastructure: As the economy has improved, we expect state DOT budget funding to become more consistent and provide a more predictable cadence. This should drive solid investment in surface protection for bridges, runways and structures, which we started to experience in the second half of 2021. Implementation of the infrastructure bill and directing its funding should drive additional demand starting later in the year. We also expect prices for structural and plate steel, both key commodities used in fabricating our joint and bearing products, to remain elevated. Three core initiatives for this business: mitigate structural steel and plate inflation by improving our quote-to-cash process with customers, accelerate 80/20 and optimize our manufacturing footprint; expand our engineering capacity to support growing demand as the core market recovers and additional funding from the infrastructure bill makes its way to state DOT budgets; and continue to upgrade our systems and manufacturing operations to maintain strong profitability. Now, slide 14, we will review our 2022 guidance. As we enter 2022, our demand and order backlog is solid across the business and the long-term fundamentals supporting our end markets remain intact. We expect the market environment to be dynamic as we move into the year, as input costs remain elevated, and labor, transportation and pandemic challenges remain. Given our learning experience in 2021 and the investments we made in our organization, systems and processes, we believe we have enhanced our ability to deliver full-year growth and margin expansion in 2022 as we continue to execute toward our 2025 objectives. Our guidance for revenue and earnings for full-year 2022 is as follows: Consolidated revenue is expected to range between $1.38 billion and $1.43 billion compared to $1.34 billion in 2021. GAAP EPS is expected to range between $2.80 and $3.00 compared to $2.25 in 2021. Adjusted EPS is expected to range between $3.20 and $3.40 compared to $2.78 in 2021. Finally, thank you again to everyone on the Gibraltar team for their effort and resiliency in 2021. It was a year unlike most of us have ever experienced. Our learning in 2021 has created tremendous opportunities for us in 2022, and we look forward to getting after it. So, with that, let's open the call up and take your questions.

At this time, we will be conducting a question-and-answer session. The operator will now provide instructions. Our first question is from Daniel Moore with CJS Securities. Please proceed with your question.

Good morning, Bill. Good morning, Tim. Thanks for taking the questions. Maybe start with Renewables. Pro forma revenue declined about 6%. What was the volume impact and what was the impact from pricing? Then we'll get into the details a little more.

Dan, there's some pricing in there. It's not as large as some of the other businesses just because of the timing. The volume push was really schedule slip, not a reduction in demand from the market. It's just getting the projects teed up and going.

When I look at the margin impact on a year-over-year basis, how much of it was supply chain and solar panel availability schedule slip versus price-cost timing of raw materials?

I would split it roughly 60/40. About 60% of the incremental costs we experienced related to the schedule disruption in the supply chain and 40% related to material cost, specifically structural steel inflation.

And the 40%, when do we expect to get that back?

We've adjusted all the projects we have, so there will be some hangover as we work through the rest of those projects. We think all of it's gone by the end of the second quarter.

Got it. Maybe same question quickly for Residential. What was the general breakdown of price versus volume and participation gains?

Again, the second half of the year was more price than volume in Residential. We also continue to expand geographically; we picked up additional customers in the Midwest based on work we started over a year ago expanding our wholesale team. We also had wins with existing customers around steel roofing products. Part of our growth is driven by having supply and being able to turn orders quickly—some competitors cannot do that. That's part of the reason we're carrying more inventory today on a days basis.

In terms of the guidance, the EPS and EBITDA are generally in line. The top line implies about 5% growth at the midpoint. How much of that is price given the raw material inflation and pricing actions we've seen, and how much is volume? It seems to imply relatively low volume growth given your longer-term expectations. Any comments about the cadence of volume growth throughout the year?

If you look at Bill's slide on the inflationary environment and our outlook for 2022 material costs, most notably cold-rolled and hot-rolled steel—which we use the most of—have declined a bit since peaking during the fourth quarter. Our plan anticipates some pricing adjustment as that cost flows through our system. It's not one-for-one because transportation and labor costs are up, but we usually adjust pricing when raw materials move significantly. We baked some of that into the plan. Overall, you'll see a little price reduction on the whole business, along with growth to get to the roughly 5% consolidated range.

So mid-single-digit or higher volume growth implied at the midpoint—is that correct?

Yes, that's fair.

Okay. All right. I will jump back for any follow-ups. Thank you.

Our next question is from Julio Romero with Sidoti & Co. Please proceed with your question.

Good morning, Bill and Tim. Thanks for taking the questions.

Good morning, Julio.

Regarding the Renewable segment, I appreciate the guidance and your expectation for double-digit segment operating margin to 2022. What does that assume in terms of the field operation inefficiencies you're seeing now? You mentioned the assumption that renewable supply chain disruptions related to the WRO should continue through Q2. One of your slides mentioned this, but could you talk about the range of outcomes for that WRO issue and what's baked into that assumption?

Julio, the way we've built our plan is based on discussions with our current customers and what they have in hand related to solar panel availability. They don't have everything locked in, but we've spent the last six months working closely with them on projects flowing into this year—do you have those panels in country, are they in a warehouse somewhere, do you have access to them, etc. We're trying to take some of the guesswork out, which is reflected in our backlog and order activity. Those things are built around trying to mitigate project disruption for both our customers and us. The broader industry issues are likely to persist for some time; whether that's three months or six months is uncertain, and things can change quickly. For example, last week a number of panels that were being held were released. The industry is finding ways to navigate these nuances because importers can, in some cases, verify that Hoshine materials are not contained in their products or source polysilicon from other suppliers. That's starting to pick up, and that's why there's optimism in the field. It's not perfect; it will take time and there will be some choppiness, but we're starting to see more positive signs than we did six months ago. Q3 and Q4 of 2021 were probably the most disruptive periods in the industry related to supply chain; projects were being modified in the field based on available panels. I think that will start to settle and you will hear more optimism about it, but it will take time to work through. When the WRO situation gets rectified, we don't know, but assume it stays in play for a while. There's polysilicon sourced in other parts of China not covered by the WRO, and people are tapping into that. The anti-circumvention cases will be known in the next 30 days and the industry will deal with that accordingly. For planning purposes, we don't rely on things we can't control. We sit down with each customer to see what's in hand and how we can mitigate disruption. This has required tightening processes and systems across the industry, and that's what we've worked hard to do in the last six months.

That's really helpful to understand what's baked into your assumption—that it's more based on what's in hand now with regards to panel supply than making a call on when the WRO gets resolved.

Correct. We can't rely on something we can't control. We've tried to sit down and go through every project to see what's there and what's not. It's a constant effort to make sure those things are aligned, and the industry has had to tighten up its processes and systems to manage this.

Are your customers seeing any shortages of material inputs other than polysilicon?

Panels are by far the number one issue on availability. There has been inflation across many inputs used in the field, but panels are the most impactful on availability. Some other components had issues in 2021, but they have been easier to navigate compared to panels. We don't see other items as being nearly as impactful as panel supply.

Understood. Maybe my last question: on the guidance, expecting free cash flow to normalize to about 10% of sales—could you talk about what that assumes from a working capital perspective? Does that assume working capital will be neutral for the year?

There is a slight improvement, maybe a day or two, not a huge improvement. In our plan, you'll see investment in the first half as we build inventory for the busy season in Residential. We're doing that a bit earlier than in the past because we historically used a fair amount of temporary labor, which is harder to get now, so we've added more full-time staff. We're working to build a little earlier to ensure we can supply our customers. We expect some normalization as we move through the year and to reduce days on hand. I wouldn't say back to pre-pandemic levels, but we intend to adjust to the operating environment. We're conservative because we do not want to miss meeting our customers' needs.

Makes sense.

I'd add: of our commodities, aluminum is the one we're most concerned about regarding availability. In Q4 and into this year, excluding any impact from current geopolitical issues, energy prices in Europe have impacted smelting capacity and reduced aluminum supply. That's why aluminum pricing has bounced and why we've locked in supply earlier to ensure availability. Last year we had multiple commodities with inflation and availability issues; this year it's more focused around aluminum and less so on steel.

Got it. I will pass it on. Thanks very much.

We have reached the end of the question-and-answer session. I will now turn the call over to CEO Bill Bosway for closing remarks.

Again, I want to thank everyone for joining us today. We'll be presenting at the Vicinity Spring Conference in March, and we'll be able to speak with you again in a few months when we report our first-quarter progress. I appreciate everyone calling in. Stay safe and healthy, and we look forward to our follow-up calls. Thank you.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.