Greetings. Welcome to the Gibraltar Industries First Quarter 2024 Financial Results Conference Call. Please note, this conference is being recorded. I will now turn the conference over to your host, Carolyn Capaccio of LHA Investor Relations. You may begin.

Thank you, operator. Good morning, everyone, and thank you for joining us today. With me on the call 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 a slide presentation that management will use during the call are both available in the Investors section of the company's website, gibraltar1.com. 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. Further, please note that adjusted results exclude the net sales and operating results of the Japan renewables business that was sold on December 1, 2023. A PDF containing 2023 quarterly and annual consolidated and renewable segment results recast for the sale of the Japan business has been posted to the Investors section of the company's website, gibraltar1.com. Also, as noted on Slide 2 of the presentation, the earnings press release and slide presentation contain forward-looking statements with respect to future financial 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'll turn the call over to Bill Bosway. Bill?

Good morning, everyone, and thank you for joining today's call. We're going to do this a little differently this quarter. We're going to start with an overview of the first quarter results, and then Tim and I are going to take you through our segments, giving you both a financial and operating update, along with a closer look at what's happening now in each of the segments. Then I will walk through our 2024 outlook, and then we'll open the call for questions. So let's turn to Slide 3, our first quarter 2024 review. We had a good first quarter in line with our plan. And on an adjusted basis, net sales increased 1%. Operating income increased 4%, EBITDA increased 6% and EPS increased 13%, all while absorbing a $4 million or $0.10 per share headwind associated with performance-based compensation. We also generated $53 million of operating cash flow through margin expansion and better working capital performance, which resulted in a free cash flow rate to sales of 17%. Overall demand was in line with plan, with net sales up 1% despite renewables being down 10% as planned going into the first quarter. Residential, agtech and infrastructure businesses collectively generated 4% revenue growth, reflecting solid end market activity as well as additional participation gains. Total backlog for Gibraltar was impacted at quarter end by both agtech and infrastructure businesses. The agtech backlog was down 21% at quarter end, but this does not reflect the current strength of the business. We signed over $40 million of new orders in April, which were previously expected in the first quarter, and we will start these projects in Q2, and they will accelerate in Q3 and Q4. Obviously, we're very excited about our additional pipeline of projects as well. The infrastructure backlog was impacted by a significant year-over-year comparison, which was driven by a large project signed in late 2022 and started in early 2023. We expect infrastructure backlog to turn positive during the year as bookings in Q1 were up 18% versus Q4. Backlog was up 2.6% versus Q4 and the overall strength of design and quoting activity. So at quarter end, total backlog was down 3% versus last year, but we are confident backlog and sales will grow as planned in 2024. For the full year, our outlook remains positive and unchanged, and we continue to expect all four segments to deliver revenue and margin growth as well as strong cash flow performance. Now let's review the segments and Tim will take it from here.

Thanks, Bill, and good morning, everyone. Let's start with renewables on Slide 4. As expected, segment net sales, which have been adjusted for the divestiture of our Japanese renewables business decreased 10.1%. The decrease in sales is the result of a delay of revenue as a number of customers started switching their technology preference in late 2023 from fixed tilt racking to our recently launched 1P TerraTrak tracker technology. This transition has created some iterative redesign work and additional time to rescope and finalize projects for customers and, therefore, pushed revenue into the second quarter and second half of the year. We're excited to see the rapid uptake of our 1P tracker, and we're working diligently with suppliers to ramp capacity sooner to support customer demand. Backlog in the renewables business finished up 8% at the end of the quarter, and we continue to have an active pipeline of projects across our TerraTrak, fixed tilt, Canopy and EBOS product lines. At the same time, customers continue to experience permitting delays and the industry is still waiting on final domestic content tax credit guidance from the Department of Treasury. Adjusted operating and EBITDA margins decreased 80 and 40 basis points, respectively, versus the prior year as volumes in the quarter were lower because of the product line mix shift associated with the ramp-up of the 1P tracker product line. We continue to expect momentum to build throughout the year, assuming continued improvement in permitting and relative timeliness in the Department of Treasury guidance on the ITC tax credit. Bill?

Staying with renewables, let's take a closer look at TerraSmart's TerraTrak technology on Slide 5. TerraSmart introduced our 2P tracker product in late 2021 to provide our C&I customers an additional technology option to meet growing demand in existing as well as new parts of the country. In late 2023, we further expanded our tracker offering with the introduction of our TerraTrak 1P tracker product line. Like our 2P technology, our 1P can be applied to different foundations, making it adaptable for use in any terrain. It's also controlled and managed through our peak yield operating system. Our peak yield continuously manages yield and uptime and also boosts energy production with backtracking guided by machine learning and employees on-site smart weather stations and weather forecasting, all in a very secure way. Effectively, the addition of the TerraTrak tracker platform provides customers with a broader suite of options to ensure project performance and returns regardless of the terrain, topography, soil conditions, weather environment and other local variables. To date, we have installed over 500 megawatts of tracker, both 2P and 1P, with 18 C&I customers across 84 projects. While our average project size has been around 6 to 7 megawatts, we have larger projects in our backlog, the largest to date being 97 megawatts. In regard to the size of the project, we typically have the opportunity to provide turnkey design, engineering, manufacturing and field installation services for foundations, racking systems and EBOS systems. On the left side of the slide are a couple of pictures of what we refer to as a Solitude 2 project located in Illinois. This is a 3-megawatt community solar project, where we installed our screw foundations, the 1P tracker and modules. More and more developers continue to view Illinois as a key growth market, given its consistent runway of new capacity blocks, i.e., land and favorable incentives through the state's primary incentive program called Illinois Shine, and we look forward to doing many more projects in the state. Let's turn to Slide 6, and I'll give you an update on the overall solar market, and we'll start with the status of the 10% domestic content tax credit. The industry continues to wait for final guidelines from the Department of Treasury. Given the additional 10% can greatly influence project returns and financing, obviously, the delay continues to cause customers to pause and/or delay moving forward on some of their new projects. The industry continues to expect guidelines to be finalized at any time. Jumping to permitting, customers continue to experience delays, and we are working closely with them to effectively improve planning and scheduling so that revenue recognition expectations better match project execution schedules. Earlier this month, the Solar Energy Industry Association, referred to as SEIA, sent a letter on behalf of 200 companies to the House and Senate leadership asking Congress to step in and resolve challenges with permitting, siting, transmission and public land access for solar. I think the industry is very hopeful congressional leadership will respond and accelerate the necessary changes to resolve these core issues facing the industry. There has been a new development in the U.S. solar industry. A second antidumping countervailing duty complaint was filed on April 24. A new petition was filed with the U.S. International Trade Commission and the U.S. Department of Commerce, alleging potentially illegal trade practices by Cambodia, Malaysia, Thailand and Vietnam and asking them to apply new tariffs, both antidumping and countervailing duties to imported solar cells and modules from these countries. The language in the new petition excludes products covered by the China CBD orders to avoid doubling tariffs on an import. The DOC now has 20 days from April 24 to decide whether to open an investigation. While this complaint is new, the industry has been anticipating it for some time, and in discussing the situation with customers, many are now much better prepared to manage their business in the event another investigation takes place. For example, we have a number of customers who have established panel supplies outside of China and Southeast Asia. We'll continue to assess the situation. But as of now, we do not expect a new DSC investigation to have a significant impact on the industry in 2024. Let's move on to residential.

Residential segment sales increased 3.1% from last year. Organic growth was 2.4%, and our recent acquisition added 0.7%. Organic growth was driven by participation gains with new and existing customers and through additional geographic expansion in the Rocky Mountain region. Customer demand continues to follow historical seasonality, and our most recent acquisitions are performing to our expectations. Adjusted operating and EBITDA margins of 18.5% and 20.1%, respectively, both expanded 200 basis points through solid execution, effective price/cost management versus last year's quarter and leverage of higher volume. We're on plan to move additional locations to our common ERP system this year, and we expect to continue to leverage our investments made to date. We continue to expect modest revenue growth with continued improvement in margins this year as increasing market participation gains and contributions from recent acquisitions drive profitability. Bill?

All right. Let's switch to Slide 8. We have two important residential initiatives I want to share with you, expanding our market presence and the launch of two new product lines. Let's start with expanding our market presence. From 2019 to 2023, the residential business has grown over 15% per year, with revenue increasing over $350 million to more than $800 million in 2023. During the same period, operating margins increased 370 basis points. Our performance has been driven by 80/20, more consistent execution, better overall service and participation gains. What's most interesting is we accomplished this despite only serving 40% of the top 32 markets in the U.S., which provides even more opportunity for expansion and growth going forward. In 2023, we continued our expansion initiatives by becoming more local in the Denver market, where we are leveraging an existing Gibraltar facility and are now supporting wholesalers serving this market. We acquired a company based in Salt Lake City serving wholesalers in this market and surrounding region. Both of these locations provide us with flexible and cost-effective operations supporting the demand with a goal to serve customers within 24-hour lead times. We will continue to expand into the 32 major U.S. markets and drive growth and higher margins accordingly. We're also launching new products in the third quarter of 2024, which I referred to during our Q4 call. Our new shingle vent roll, for which we have applied for design, utility and process patents, creates a simpler and more cost-effective installation process for contractors versus the 4-foot stake ventilation products traditionally used in roof installation. We will also launch our next-generation patented mailbox, recently approved by the U.S. Postal Service. This is the first of its kind to market. It is consumer assembled, and the packaging for this product has been reduced by 60%, eliminating waste and helping optimize shelf space for our customers. Given the packaging footprint, freight costs for this mailbox will be lower by up to 50% versus standard factory assembled mailboxes. Let's move on to agtech.

If we move to Slide 9, agtech's adjusted net sales increased 2.1%, and as mentioned, new bookings accelerated significantly in April with over $40 million of new projects signed. If these projects had been signed in Q1 as originally planned, the quarter-end segment backlog would have increased over 30%. The increase in bookings was mainly driven by demand in produce projects, but we also had some good order activity in our commercial business. We'll start these new projects this quarter and then accelerate execution in the third and fourth quarters. We're engaged in additional design-build contracts, and we expect bookings to increase further in the coming months. Segment margin was impacted as adjusted operating and EBITDA income decreased less than $1 million due to start delays of some higher-margin refurbishment service work and market mix across the business. We expect volume leverage on stronger sales growth as we move through 2024. Bill?

Let's move to Slide 10. I'd like to provide some background on our Hi-Tech CEA business, which stands for controlled environment agriculture, and why we are so enthusiastic about our position in this market and our future going forward. As mentioned in our last call, we are experiencing good demand momentum driven by accelerating investment for CEA growing capacity in both the U.S. and Canada. CEA growers continue to expand capacity to meet retailer and consumer demand. We also see outdoor growers moving additional production into indoor environments. Our growers are mostly focused on growing high-quality fruits and vegetables, localizing the supply chain for end consumers, minimizing the potential impact of disruptive climate-related events on production, and doing this in a much smaller and efficient footprint versus outdoor farming. A prime example is Boem Berry Farms, which is quickly becoming the largest high-tech strawberry farm in North America. Together with our customer, we have completed four phases of design and construction, covering 80 acres of strawberry growing production. We're currently building an additional 40 acres and with the final 55-acre phase planned for 2025 and 2026, a total of 175 acres will be producing 100,000 pounds per acre or 17.5 million pounds of strawberries per year by 2026. In this market, we are the leading turnkey provider in North America of large-scale controlled environment growing facilities, commercial greenhouses, and cultivation structures. We oversee every aspect of structure and systems design and engineering. We manufacture structures and systems. We integrate systems, both manufactured and sourced, and we construct and install the entire facility. Our strength lies in our organization. We have significant growing experience, expertise and strong domain knowledge in design, engineering, manufacturing, integration and construction management. With our current demand momentum as well as our design activity across a broadened customer base, we expect to deliver both revenue and margin growth in 2024. Now for our infrastructure business.

Let's move to Slide 11. Infrastructure segment sales increased 17.1% on strong execution, continued solid end market demand and market participation gains. Backlog decreased 10%, which was expected due to our continued progress on a large project that was booked in mid-2022 and began work in 2023. Driven by strong funding for infrastructure product projects, demand, project design and quoting activity remains strong, and we expect order flow to increase progressively over the course of the year. Segment adjusted operating and EBITDA margins improved 790 and 710 basis points, respectively, driven by volume, price cost alignment, ongoing strong execution, 80/20 productivity and improving product mix. We expect continued sales growth and margin expansion in 2024. Let's move to Slide 12 to discuss our balance sheet and cash flow. At March 31, we had cash on hand of $147 million and $396 million available on our revolver. During the quarter, we generated $53 million in cash from operations through a combination of margin improvement and counter seasonal generation of about $17 million from working capital. As a result, our free cash flow generation for the quarter was very strong at 16.7% of sales. Our objective for free cash flow of approximately 10% for the year remains unchanged. There were no share repurchases in the quarter, and we remain debt-free. We continue to expect to generate strong cash flow driven by revenue growth and margin expansion in 2024 and beyond. Our priorities in capital allocation this year are to continue investing in our organic growth and operating systems for scale, with capital expenditures planned between 2% to 3% of sales. At the higher end, assuming we're able to realize cost savings, we anticipate a number of opportunities to in-source manufacturing to improve profitability. We also remain focused on high-quality M&A. We're equipped with a strong balance sheet to pursue opportunities with a higher probability in the near term in the residential segment and in the medium to long term in other segments. We'll opportunistically return value to shareholders through the remaining $89 million authorized under our repurchase program, but via cash generated from operations and supplemented as needed by the use of our revolver depending on the timing of any M&A and repurchases. Now I'll turn the call back to Bill.

Thanks, Tim. Let's move to Slide 13, and we'll talk about our 2024 priorities. Our five core areas of focus for 2024 really are unchanged, and they've been pretty consistent over the last year or two. #1, just continue to focus on driving growth, margin improvement, and strong cash performance. Secondly, continue focusing on our 80/20 initiatives, expand our participation and presence in the marketplace and drive service levels higher with speed and agility. We're going to continue to invest in digital transformation to scale the business, connect better with our customers, suppliers and our organization and optimize our operating systems. Obviously, we will continue to focus on strengthening the team, adding the right experience and competency, and finally, conduct business the right way and do it every day. Now let's turn to Slide 14, and we're going to review our 2024 guidance. Our first quarter results and momentum to date validate our full-year expectations for positive performance in all four segments, and we are reiterating our 2024 outlook. Consolidated revenue is expected to range between $1.43 billion and $1.48 billion compared to $1.37 billion in 2023, up between 4% and 9%. GAAP operating margin is expected to range between 12.1% and 12.4%, up between 120 and 150 basis points, and adjusted operating margin is expected to range between 13.5% and 13.7%, up between 80 and 100 basis points. Adjusted EBITDA margin is expected to range between 16% and 16.3%, up between 60 and 90 basis points. GAAP EPS is expected to range between $4.04 and $4.29 compared to $3.59 in 2023, up between 12% and 20%. Adjusted EPS is expected to range between $4.57 and $4.82 compared to $4.09 in 2023, up between 12% and 18%. We expect free cash flow of approximately 10% of sales for the year. 2024 is off to a good start with our first quarter performance and current momentum supporting our full year expectations. We look for renewables and agtech to accelerate top-line growth during the year in all four businesses, improving revenue, expanding margins and delivering strong cash flow performance in 2024. Our performance, frankly, is simply the result of a great team effort, and the ownership our people take each and every day for making things happen. Our team knows that each day truly does matter. I want to say a big thank you to everyone in our organization. Now let's open the call up, and we'll take your questions.

And our first question comes from Daniel Moore with CJS Securities.

Obviously, congrats on a solid start to the year. Maybe start with RASM. We've heard a little bit of incremental choppiness from some other building products companies. Clearly, you're more tied to R&R, but just curious if you're seeing any change in order patterns or demand over the last, call it, 90 days. And then perhaps more importantly, when we think about the expansion into the Rockies area and you're quoting only serving 40% of the top 32 markets today. How much incremental TAM is there to go after both with this initial initiative and then kind of longer term from a geographic perspective?

Yes. Dan, thanks. On the last part of your question, obviously, we'd like to see ourselves at 80% of those top 32 markets. Theoretically, if you can take your business and do something pretty significant with it, I guess, is the answer. We're learning every day as we expand into several of these markets that we haven't been in what the possibilities are. I think Salt Lake and Denver were really eye-opening opportunities for us. We were trying to serve those markets from afar. The more local we became, the more success we had on both top and bottom lines, serving wholesalers in particular with quick service. You will see us continue to expand this year in a number of other locations. That will be a combination of both organic and inorganic efforts, but we have a pretty good roadmap for where we want to go and how we're going to go about doing that. So more to come on that front. As it relates to just demand, we're in the lowest period of time, as you know, seasonality-wise for the industry. I would say if you look at POS sales that we see from some of our big box guys, it's slower now than it was a year ago. We actually grew during the same time period in the first quarter. That goes back to, as you know, our playbook has a lot to do with how do we drive participation. When I talk about, as an example, Salt Lake and Denver, that's participation gains in the existing marketplace. Even if those two cities were down a bit or those two markets were down. For us, it's new and for us, it's share gains. We will continue to drive that path. Our plan going into this year was built on the assumption that the market would not be robust. It was going to be more of the playbook of driving participation. That's how we have seen the first quarter materialize and that’s the game plan going forward.

Very helpful. I might jump around a bit. So forgive me but moving to renewables. Just remind us of any delta, any meaningful delta in price and/or margin for the 1P tracker line? And what does the eBOS attachment rate look like for that line relative to the prior tracker line and/or fixed tilt before that?

Yes. So on the second part of that, I'll circle back. We're taking eBOS with all of our racking opportunities regarding fixed tilt, canopy or tracker. So getting our eBOS business, which we've talked about in the last couple of years in a position where it can support a customer base that's made up of a lot of opportunities, a lot of projects per week, that's really working on the design, estimating, manufacturing, and getting that capability in place. Now that we feel we're in a better position to do that, we're actually out talking to customers more and more about that. We're getting more and more uptake. So it's still in the early stages, but we're experiencing more of that success, which is helpful. But it's not really tied to one of our racking technologies more than the other. It's actually a customer initiative. The biggest challenge we've been dealing with is actually customers buying from us differently because since the inception of the industry, they only had one option: buying from a separate company for racking and EBOS solutions. They're incentivized that way and structured that way. Now we have some of our larger customers that we're working with who are starting to look at that collectively, and that's been very helpful for us. You will see more and more of that happen. From a margin perspective, we're in the ramp-up of 1P. So we're going to have a bit of that ramp in margin that will take place over time. But effectively, when you get to the ramped-up state, our margin profile is not too dissimilar from what we see in our core business, whether it’s fixed tilt or otherwise. Remember, we're not selling the technology per se. We're selling a return on that project. We do have projects that will use a mix of different racking technologies on the same land, or we could be doing multiple projects with the same developer that are using different technologies based on location. It ultimately comes down to the return profile for us, effectively. The more we can package in, including field services, the better.

Very good. Maybe one more, I'll jump back in queue. But on the agtech side, if you look at a project like Berry Farms, how do we think about the upfront revenue opportunity of a project of that size and scale? And what does ongoing maintenance and repair opportunity look like relative to the initial investment?

Yes. Good question. When we sign a contract, there are some renewals where we will get a deposit upfront. Once we get that deposit, we will start issuing POs simultaneously. That then triggers the flow of revenue pretty quickly thereafter. These projects, as long as they're permitted and ready to go, can start pretty soon after they come into the books. For the ones we have signed recently, we are ramping up quickly, and you'll start to see some flow in Q2, but it's really going to ramp up in Q3 and Q4 since they're ready to roll. That’s what's exciting about the $40 million that’s come in so far. We also started about nine months ago, and the team has done a fabulous job of getting into the refurbishment aspect of the business where we’re helping customers either convert or fix or optimize something that was designed and built for them some time ago. This has led to some new design deal contracts for new facilities that are yet to come into the pipeline in terms of backlog that we’re actively working on. These refurbishment projects can carry better margins, but we view it as a different revenue source, which has broadened our customer base versus where we were three or four years ago.

Our next question comes from the line of Julio Romero with Sidoti & Company.

Bill and Tim, I appreciate the updated slides. Maybe to start on renewables, anything in the first quarter that kind of changes the way you're thinking about the cadence of renewable sales growth momentum expected throughout 2024?

No. I think we came into the year knowing Q1 was going to be slower because of this transition. Just to remind everyone, the transition is not purely about delay. A lot of our key customers were thinking fixed and moved to tracker, which was somewhat correlated with moving to different states where tracker was more comfortable for them as they considered weather patterns and different environments versus what they either grew up with or were used to using. That's why Illinois, as an example, is so important. It was our first 1P job that we recently completed with one of our customers who grew up mainly with fixed tilt because of the weather conditions. As we move more towards places like Illinois that present different land mass and weather patterns, we saw incentives from Illinois Shine becoming more attractive, where permitting was less challenging. This migration was relatively quick. The result is that the bookings are there; it’s just a matter of changing from fixed to tracker, which leads to a revision of designs and other preparations. It drives a lot of different things. We see this as a good news story; it does involve some short-term delays for us, but we'll take it because of the rapid uptake we've seen. We had 30 developers in Florida at our tracker engineering location to look at technology for two days back in March, which is typically a longer process. A combination of factors has helped our customers move a little bit quicker, and that caught us a little off guard. We’re ramping up as quickly as we can with our supply chain and will get a good grip on it, but that has pushed more revenue into the second half related to that and some of that Q1 into Q2 as well.

Yes, good color and good reminder that the 1P tracker and the longer lead times caused that expected dynamic in the first quarter. Just on that point, how much revenue do you expect from the 1P tracker in the second quarter and maybe for the full year?

Yes, it's hard. I don't have an exact number for you. Our backlog on 1P has increased significantly. It's coming off a very small base. It will depend on our projects flowing, given permits and other factors. However, it will become a bigger piece of what we're doing this year than it has been, obviously, because it's new. Once we get this base year behind us, I think it will be easier for us to estimate the mix going forward between fixed, Canopy, tracker and both Insight Tracker 1P and 2P. We’re assessing all five and how they're moving; although it is accelerating for sure. Just to clarify one thing, it’s not the lead time from the supply chain that's the problem. It's the fact that we switched from one technology to another in a short period. Had we anticipated transitioning to 1P, we would have brought in inventory much sooner to facilitate the start-up.

It does. And that's helpful. Maybe just last one for me: You had a really good cash flow quarter. You talked a bit about the M&A pipeline, and I think you said better probability of near-term deployment towards some inorganic growth in some residential tuck-ins. Is that a function of valuations more than anything? Would those residential tuck-ins be more inclined to focus towards either your initiatives of either geographical expansion or new product?

Yes. When I was talking about the expansion, I mentioned in Denver, we're leveraging an existing Gibraltar facility to get into the wholesale market, where traditionally we were not active. There are opportunities like that that exist for us, which would be more of an organic play. There are parts of the country where we're just not present, and there are companies similar to what we just described that are serving, say, Denver and Salt Lake that may be available to join forces with us. Those are the tuck-ins that would help us with our expansion initiative, as we focus on driving the wholesale business, which is critical for remaining service-oriented within 24 hours. If we can consistently deliver that, we can grow, and the margin profile of that business will differ from otherwise. There's also other M&A activity. I think Tim mentioned in his comments that we're seeing more activity developing in the residential space than we have in the last year or two. These opportunities would be separate from the initiatives I discussed. We are in a favorable position to act on some of the available options. There's more activity, and we will see how things evolve as the year progresses. I hope we can see opportunities to bring some of these efforts to fruition.

Our next question comes from Walter Liptak with Seaport Global Securities.

Good quarter. I wanted to ask about the bookings in the renewable segment. How are bookings looking? And how is the funnel looking? I know you went into it in the last question, but can you provide a little more detail?

Yes, I would say despite the new AD/CVD potential investigation, we still have ongoing permitting issues that we’re working through as an industry. The market is as active as it has ever been — if not more so. I think the industry has been relatively resilient, even without the extra 10%. When you get to a point with the 10% domestic content credit, the effect shows up when you engage with customers at the later stages of the sales process; they may pause on moving forward. The activity across the seven gates we measure in our sales process is pretty filled up — probably as much as it ever has been. Part of that is attributable to a great deal of activity surrounding both 1P and 2P as they have come out. The larger projects I mentioned take longer in the design cycle versus our traditional 6 to 7 megawatts. So, we have a lot going on internally around demand profiles and customer activity, overall looking fairly positive despite some macro challenges in the industry.

I wonder if we could just talk about the 1P tracker versus some of those macro factors like the IRA tax credits. What do you believe will be the bigger catalyst for future orders? Will it be getting the 1P tracker ramped with your customers? Or getting this tax credit situation resolved?

I think ramping with our customers is the bigger catalyst. Everyone has been waiting for the tax credit for a couple of years. I think people are anticipating it's coming, and it will be helpful. Cash flow tied to an extra 10% of the total project significantly matters, particularly since a large portion of these projects are financed through tax equity. But I don't think it's hampering what we're observing with 1P. We're ramping up as discussed, and our order board continues to grow in that space. The potential tax credit will likely prevent some of the iterative pauses that have been occurring and may enhance our developers’ confidence to expand their pipelines.

Okay, great. Switching gears to corporate expenses, which ran a bit higher than I was thinking of. Last year's first quarter was lower, and you were at about a $10 million quarterly run rate. Was there something in the corporate expenses that was one-time in nature? What do you think corporate expenses will be for the full year?

Not necessarily one-time, but our performance-based compensation increased by about $4 million or $0.10 per share in Q1. I think it's primarily timing rather than a significant difference. Part of it is tied to stock price and our deferred compensation plans, and part relates to last year's good performance. Some costs get spread out over a period, while last year, we had one tranche of equity pay that wasn’t earned. We may see that normalize as the year progresses, but in this quarter, it was rather noticeable.

I just wanted to touch a little on infrastructure, which doesn't get quite as much attention but is certainly a bright spot, and 22% might be a record margin after revisiting it. What drove that? How sustainable is it near term? Please discuss pipeline along with reasonable longer-term expectations for margins.

Yes. We've been on this trajectory for a while, Dan. I think we’ve got a strong foundation now, linking our supply chain to the business more effectively. If you recall a few years ago when supply chain disruptions created challenges for this business, at that time we weren't linked closely enough with contracts and supply chain management. Our input costs were aligned with pricing, so we had some challenges to manage. This business had seen significant changes as we introduced contract locking for the supply chain. We’ve refocused to manage the variability and surprises effectively, allowing us to shift our focus toward increased productivity through our 80/20 initiatives. Additionally, we've invested in new automation that has positively impacted our margin profile. Our approach to customer evaluation has also helped to hone in on where we’re generating profits. We now have more favorable top-line growth opportunities than we had in the past. The infrastructure bill has provided our customers with visibility beyond one year due to federal funding. Overall, we have a pretty solid outlook for the end market, and we're optimistic about maintaining our strong performance.

If you look sequentially last year, our second quarter margins were much higher than our first quarter last year. We'll see improvement, but I wouldn't expect 800 basis points off of what we did last year for the remainder of the year just to set that expectation.

That makes sense. Lastly, just going back to M&A, it sounds like the residential space is more likely to see opportunities near-term. It seems like dialogues are picking up. Is that a function of availability or is there a strategic aspect as well with the goal to enhance your geographic penetration?

I’d characterize it as mainly strategic. There will be both organic and inorganic initiatives as we expand into the highlighted markets I mentioned earlier. We're also pursuing opportunities that we find interesting, some of which have been in process for some time. I've indicated previously that some processes stalled and are now restarting. We are hopeful regarding those efforts and will engage in opportunities that make the most sense for us when accessible. There's definitely more activity now, particularly in residential than there has been in the last 12 months or so. It’s primarily due to the dynamics and valuation changes impacting ag tech and renewables.

And we have reached the end of the question-and-answer session. I'll now turn the call back over to Bill Bosway for closing remarks.

Great. Again, thank you, everyone, for joining us today. Coming up, we plan to present at the Seaport Third Annual Growth Discovery Conference and the CJS Summer Conference. Thanks again for your ongoing support of Gibraltar, and I hope you all have a great day and a good rest of the week. Thank you.

And this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.