Gibraltar Industries Inc
NASDAQ:ROCK

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Earnings Call Analysis

Q2-2024 Analysis
Gibraltar Industries Inc

Gibraltar Industries Q2 2024 Performance and Outlook

Gibraltar Industries had a mixed second quarter in 2024. Adjusted net sales dropped by 2%, largely due to market challenges in the residential and renewables sectors. Residential market sales fell by 6.1% owing to a slower market and channel destocking, but the company expects modest revenue growth and margin improvement in the second half. The renewables sector saw an 8% increase in adjusted net sales, though it underperformed expectations due to trade and regulatory delays. On a positive note, Agtech bookings surged over $90 million, boosting backlog by 32%, which should drive revenue growth in the latter half of the year. Full-year sales are projected to grow 2% to 4%, and adjusted EPS is expected to rise between 12% and 18%.

Second Quarter Performance Overview

In the second quarter of 2024, Gibraltar Industries reported adjusted net sales down 2% year-over-year, affected primarily by market headwinds in the residential and renewables sectors. Specifically, the residential market faced a slow end market and unexpected destocking in retail and distribution channels. Despite these challenges, participation gains from both new and existing customers helped offset some declines. The renewables segment experienced an 8% increase in sales year-over-year, though it fell short of expectations due to project delays linked to trade and regulatory issues.

Segment Highlights and Prospects

In the residential segment, sales declined 6.1% from last year, influenced by destocking and market slowdowns. However, the company foresees modest revenue growth and improved margins in the second half of the year, thanks to geographic expansion and ongoing participation gains. The Agtech segment saw a 32% increase in backlog, with bookings exceeding $90 million in the quarter, providing a favorable outlook for robust revenue growth in the second half. Infrastructure bookings improved 3% sequentially, reflecting solid demand and execution.

Emerging Challenges and Regulatory Environment

The renewables sector contends with significant regulatory challenges and trade issues, which continue to impact project timelines. Out of roughly 200 customers, approximately 20% are facing delays due to these complexities. The company anticipates a clearer landscape as investigations into trade practices conclude, which could improve the situation for both Gibraltar and its customers.

Guidance for the Future

Gibraltar Industries has adjusted its full-year guidance, projecting consolidated net sales of between $1.38 billion and $1.42 billion, representing growth of 2% to 4% over the previous year. The company expects GAAP operating margins to rise between 11.8% and 12.1%, and adjusted EPS is anticipated to be between $4.04 and $4.29, reflecting a 12% to 20% increase compared to the prior year. Free cash flow is expected to remain stable at around 10% of sales, indicating solid cash generation capabilities amidst growth initiatives.

Strategic Priorities and Shareholder Value

Moving forward, Gibraltar remains committed to driving growth, enhancing operational efficiencies, and pursuing strategic acquisitions. The leadership is actively engaged in discussions regarding mergers and acquisitions, particularly in the residential segment, while also maintaining a share repurchase plan with $89 million remaining. The company’s focus on delivering performance the right way resonates with its long-term strategy to generate shareholder value.

Earnings Call Transcript

Earnings Call Transcript
2024-Q2

from 0
Operator

Greetings, and welcome to the Gibraltar Industries Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Carolyn Capaccio of LHA. Thank you, Carolyn. You may begin.

C
Carolyn Capaccio

Thank you very much. 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.

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?

W
William Bosway
executive

Thanks, Carolyn. Good morning, everyone, and thank you for joining today's call. I'll start with an overview of second quarter results, and then Tim and I will take you through each of the segments and we'll give you a financial and operating update, and a closer look at what's happening now in each. Then I'll walk you through our 2024 outlook, and we'll open the call for questions.

So let's turn to Slide 3, titled Second Quarter 2024 Review. Our adjusted net sales were down 2%, driven mainly by market headwinds impacting growth in our residential and renewables businesses in the quarter. The residential market experienced a slower end market and an unexpected channel of destocking, which started really in late May and early June. We offset some of this impact through some participation gains, and these gains actually are going to support us in our residential growth plan in the second half.

Although adjusted net sales for renewables were up over 8% versus prior year, it was less than expected as some customers continued to have project delays related to ongoing trade and regulatory issues in the market.

Backlog for the quarter was down 4%, impacted mainly by the timing of project bookings and renewables and a challenging year-over-year comparison related to a large infrastructure project signed in early '23 that was completed in the quarter.

Infrastructure bookings improved during the quarter, and backlog was up 3% sequentially, and our design and quoting activity remains very strong as well.

Our Agtech bookings surpassed $90 million in the quarter, driving backlog up 32%, and this supports strong revenue growth in the second half. We increased adjusted net income 2.8% and adjusted EPS 2.6% while generating $36 million in operating cash flow.

We continue to work toward achieving growth for the year in all 4 segments, as well as drive additional 80/20 and productivity initiatives, continue to execute our digital transformation plan, and strengthen the organization.

Now, let's dig into the segments. Tim?

T
Timothy Murphy
executive

Thanks, Bill, and good morning, everyone. Let's start with the residential on Slide 4. Residential segment sales decreased 6.1% from last year, driven by a slowing market and channel destocking that began in the second half of the quarter. These factors were partially offset by participation gains with new and existing customers, growth in ventilation product lines, and expansion initiatives in the Rocky Mountain region. Our recent acquisition in that region added about 1% to second quarter sales.

Adjusted operating EBITDA margin of 20.3% and 21.7%, respectively, expanded 100 and 120 basis points through solid execution, 80/20 initiatives, and effective price cost management. And our Rocky Mountain region acquisition is performing to plan. We continue to expect modest revenue growth with continued margin improvement in the second half of the year as the conversion of recent geographic and market participation gains ramp further, contributing to top line and its continued 80/20 in operating efficiencies and the expected improved volumes drive profitability.

W
William Bosway
executive

So let's turn to Slide 5, and I'm going to talk a little bit more about the residential market as well as our market expansion initiatives we discussed in our last call. Let's start with in-market. The market did slow more during the quarter, which is reflected in lower point-of-sale results, down approximately 10% in both retail and distribution channels.

Point-of-sale results can vary significantly by region, by market, customer, and channel, but in general we saw a reduction versus Q1 for the overall market. As well, the point-of-sale results correlated with the Q2 shingle shipment market data published by ARMA, which reflected the market being down almost 10%.

As well, starting in late May and really throughout June, we experienced channel destocking in both retail and distribution channels with inventory reductions up to 3 weeks, which reduced channel inventory from about 12 weeks to 9 weeks depending on the region, the market area, and the customer.

We did see some restocking occur at the beginning of July, which I suspect was in response to a bit of an overcorrection during Q2. We were able to partially offset the full impact of the slow market through participation gains and customer conversions, which resulted in our business being down less than market. These wins and others starting in the second half should also help us continue to outpace the overall market going forward.

On the right side of the chart, our geographic expansion initiatives continue to move forward, and as a reminder, we are serving only 40% of the top 32 markets in the US. Increase in our participation in these markets is important to us, and we have identified our next 8 markets with at least 3 of those locations planned to be up and running in the next 2 to 3 quarters.

There are plenty of additional markets beyond the 32, we are currently addressing as well. And as I have said previously, we will execute our plan through both organic investment and acquisitions.

So with that, let's move to renewables. Tim?

T
Timothy Murphy
executive

Let's turn to slide 6. Adjusted net sales increased 8.2% from last year and 54% from last quarter, driven by strong demand from new and existing customers for the new 1P tracker product. Despite solid growth in the quarter, our revenue and bookings were lower than expected as some customers continued to experience trade and regulatory issues disrupting the timing of signing of their contracts and or locking in their schedules.

As a result, second quarter backlog was down 10%, while the pipeline of late-stage and early-stage projects remains positive. Adjusted operating EBITDA margins decreased 270 and 290 basis points respectively, driven by a mid-shift to our new 1P tracker product and the related new product ramp learning curve.

Our supply chain and engineering teams are making progress in satisfying this accelerated demand. We expect segment net sales to increase for the full year with sequential improvement in 3Q profitability as 1P tracker supply chain continues to mature and the field installation process becomes more efficient.

Let's move to Slide 7 for a quick update on our 1P tracker. Since the fourth quarter of 2023, we've booked over 300 megawatts across 58 projects for 15 different customers, but we booked about 70 megawatts across 13 projects in this last quarter. We're pleased with the ongoing uptake of our 1P technology and our laser focus on executing a controlled launch of new projects we have signed.

At the same time, new and existing customers are inviting us to pursue a pipeline of over 1.2 gigawatts in the U.S. distributed generation solar market. The photos on this slide show 2 1P TerraTra projects we recently completed. The one on the top right of the page is the Wedge Farm, and the one on the bottom is Allis Hill. Bill?

W
William Bosway
executive

Oh, I apologize. So let's start again. Sorry. As referencing the industry, this continues to work through a variety of trade and regulatory challenges, and since our last earnings call, I wanted to highlight some of the changes and our movement for them, which are highlighted on the dotted line boxes on the slide.

Let's start with the first 3 items, which are related to module supply. First, the Presidential Proclamation waiving tariffs, while the Department of Commerce investigated the first AD/CVD complaint, expired on June 6, 2024. So for modules imported without an exemption from the manufacturers that were under investigation during the Proclamation period, customers have until December 2024 to install these modules in service or anti-dumping duties of 240% and countervailing duties of 15% can be applied to projects.

Secondly, a second AD/CVD complaint was filed with the U.S. International Trade Commission and the Department of Commerce on April 24, alleging illegal trade practices by Cambodia, Malaysia, Thailand and Vietnam and is asking both government agencies to apply new tariffs, both antidumping and countervailing duties to imported solar cells and modules imported from these countries.

The ITC launched a preliminary investigation on April 24, and the DOC initiated investigation on May 14. Given the complexity of the case, the DOC is expected to issue a preliminary determination for the countervailing duty complaint by September 23 and for the antidumping complaint by November 20. Final determinations for both aspects of the complaint are expected by April 4, 2025 -- or 2025. And third, on June 26, the Section 201 bifacial exemption was removed for bifacial solar panels. These are panels which have solar cells on both sides and can significantly improve energy production efficiency.

The industry has been given a 90-day grace period before the tariff takes effect, and to avoid a tariff customers who must be able to verify these contracts -- their contracts were signed on or before May 17, 2024, and these panels must be delivered by September 24, 2024.

Lastly, with respect to the 10% domestic content bonus in May in an effort to avoid forcing commercial taxpayers to disclose their direct cost, the IRS created a new elective safe harbor. This allows manufacturers to determine a project's domestic content percentage based on additive fixed percentages for specifically identified U.S. manufactured components or subcomponents. This avoids developers and sponsors of energy projects having to track down all manufacturers' cost and helps manufacturers avoid having to share confidential cost information for their business. This is a positive development for the industry, and we anticipate final guidelines from Treasury to be issued before the end of the year.

So let's move on to Agtech. Tim?

T
Timothy Murphy
executive

Moving to Slide 9. Agtech adjusted net sales increased 0.6%, but were lower than we expected as new projects started later than planned in the quarter. And June sales were up over 30% from May sales. So it's just a leader in the quarter ramp.

Second quarter backlog increased 32% over last year and 95% from the last quarter as new bookings materialized as planned. We remain very active with additional projects and expect positive booking momentum to continue into the second half.

Segment adjusted operating income declined roughly $1 million, impacted by lower volumes in April and May and business and product line mix. This was partially offset by strong execution, particularly on produce projects, and we expect to deliver improved margin performance on stronger growth in the second half of the year. Bill?

W
William Bosway
executive

So on Slide 10, let's move to Slide 10. We are pleased that our Agtech business is beginning to accelerate and grow as we expand our customer base and really help the industry add capacity to bring locally grown high-quality fresh fruits and vegetables to end consumers, provided by both food retailers and food service operators.

Our business momentum is robust with revenue and bookings accelerating month-to-month during Q2. We secured over $90 million in new orders during the quarter, which is a record for the business. Most of these projects started in June and/or are launching now, which supports our second half outlook. As well, we have a number of additional projects currently in the design phase expected to support continued strength in bookings.

We look for Agtech business to deliver both revenue and margin growth in 2024, given our demand momentum and broadened customer base and our healthy pipeline of new projects under design.

Let's now move on to our Infrastructure business.

T
Timothy Murphy
executive

Let's move to Slide 11. The Infrastructure segment sales increased 2.5%, reflecting timing of projects, continued strong execution and market participation gains. Backlog decreased 12% as a very large project book last year reached its final stages. Bookings increased 3% sequentially, reflecting strong customer activity. Design work and quoting activity remains strong.

Segment adjusted operating and EBITDA margins improved 170 basis points, respectively, driven by price/cost alignment, solid execution, 80/20 productivity and improving product mix. We continue to expect sales growth and margin expansion in 2024.

Let's move to Slide 12 to discuss our balance sheet and cash flow. At June 30, we had cash on hand of $179 million and $395 million available on our revolver. During the quarter, we generated $36 million in cash from operations through a strong contribution from operating income and a more modest than average seasonal investment of $7 million in working capital. Our free cash flow generation for the quarter was 9.1% of sales, and our objective for free cash flow of approximately 10% for the year is unchanged. There were no share repurchases in the quarter, and we remain debt-free.

We expect to continue to generate strong cash flow, and our capital allocation priorities for 2024 are to continue to invest in our organic growth and operating systems for scale. We expect capital expenditures between 1% and 2% of sales. Our pipeline of high-quality M&A opportunities is active. We have many discussions in process and our strong balance sheet provides flexibility. We think there's a higher probability in the near term in the residential segment and the medium and long-term in other segments. And finally, we'll opportunistically return value to shareholders through the remaining $89 million authorized under our share repurchase program, funded by cash generated from operations and the use of our revolver, depending on the timing of any M&A or repurchases.

Now I'll turn the call back to Bill.

W
William Bosway
executive

Thanks, Tim. Let's turn to Slide 13. We'll talk a little bit about our priorities for 2024, which really remain unchanged. Our 3 pillars are foundational for what we do and our playbook is consistent. And regardless of recent market movements, we remain very focused on those 5 initiatives. So just as a reminder, #1, continue to look to drive growth, quality of earnings, cash performance and focus on M&A; secondly, executing our 80/20 initiatives, expanding our participation and expanding margin. 3, continue to digitally transform to scale and optimize our operating systems; 4, strengthen the organization; and fifth, as important as anything, conducting business in the right way every day.

Let's turn to Slide 14, and we'll talk about 2024 guidance. We are making a slight adjustment to revenue and profitability measures while maintaining our outlook for EPS and delivering full year sales growth and significant profitability improvement. We look for participation gains and operational improvements to support solid second half and full year margin expansion and cash flow generation.

Consolidated net sales are now expected to range between $1.38 billion and $1.42 billion, compared to $1.36 billion on an adjusted basis in 2023, representing 2% to 4% growth. GAAP operating margin is expected to range between 11.8% and 12.1%, up between 90 and 120 basis points, and adjusted operating margin is expected to range between 13.3% and 13.6%, up between 60 and 90 basis points. Adjusted EBITDA margin is expected to range between 15.9% and 16.2%, up between 50 and 80 basis points.

EPS expectations are unchanged with GAAP between $4.04 and $4.29, compared to $3.59 in 2023, up between 12% and 20%, and adjusted between $4.57 and $4.82, compared to $4.09 in 2023, between 12% and 18%. And we continue to expect 2024 free cash flow of approximately 10% of sales.

So to summarize, our execution performance has been solid, and we feel good about our second half plan and full year outlook. I also want to thank our team for their agility and responsiveness in each of the markets that we serve, and their focused on delivering performance for our shareholders. And as I said earlier, most importantly, doing it the right way.

So, now let's open the call up, and we'll take your questions.

Operator

[Operator Instructions] Our first question is from Dan Moore with CJS Securities.

D
Dan Moore
analyst

Let me start with residential. The -- it sounds like, July, you started to see a little bit of restock, but has the destocking you saw in May and June, do you think that's run its course? And what are your expectations for market growth, not necessarily Gibraltar growth, but market growth embedded in your -- for the remainder of the year embedded in the revised full-year guidance?

W
William Bosway
executive

Yes. So, Dan, I think, we believe we're going to grow this year in residential for the year. It's difficult to predict exactly where the stocking, destocking is landing, but we feel like it has settled in, and that's what we've assumed going forward in the second half. Q1, off to a decent start. Q2 is a bit of a correction.

If you look at, as I mentioned earlier, the point of sale and the ARMA data. But you really need to let that flow out over some period of time, because it really comes down to state-by-state and how well you're positioning each state to see the true impact of what that's going to mean for the market, and how you're related and how you're positioned in each of those states, and therefore, the market.

So, yes, we've gone through that in, I think, great depth by state, and we've built an outlook for the year that we think is still positive year-over-year. And with our participation gains that we referenced and the ones that are in flight now, we feel pretty good about how the plan is rolling out for the second half.

D
Dan Moore
analyst

Helpful. And then shifting gears, renewables. I certainly appreciate the update, as you give every quarter on kind of market conditions. Obviously, a ton of cross-currents. So, what's the punchline? Do we still expect 2025 to be the year when revenue starts to ramp meaningfully? Or is that more uncertain now in your view?

W
William Bosway
executive

Yes. Well, I think the slide that we showed will get less complex over time as some of these things come off the table. And so, we've listed 5 things around module supply as an example. Well, when you look at that slide and you say, well, UFLPA is #1 on that slide, that's going to come off as the industry has gotten used to dealing with that, right?

So it's really, I think, what you're going to find going forward is more around permitting and interconnectivity and transmission, which is still out there that people are dealing with. But as these AD/CVD investigations kind of work through the system, what it's doing right now is just causing some people to pause, and it's chopping us as we have seen. I think that's going to work itself out as we get through this last investigation and some of these things start coming off the table.

The positive development on the IRA piece, if you look at the bottom of that chart 2 of those 3 things are in place and up and running. And this domestic content bonus is getting close now that we have this new elective safe harbor that was put in place by the IRS. That's a big deal.

So if we can get that across the finish line, that comes off the chart. Those 3 things are easy to track and use as an industry. So I think you'll see a narrowing of some of these items. The hope is over time. That doesn't mean there won't be some things in 2025, particularly around permitting, and as I said, interconnectivity and transmission, but we feel like it's moving in the right direction, But in the interim, it's still causing probably 20% of our customers to have a little bit of a challenge with specific projects.

So, hopefully, we'll see that start to be minimized the second half of it as we roll into next year. That's how I characterize it today.

D
Dan Moore
analyst

Got it. And then lastly for me, and I'll jump back in queue. Just talk about margins. So still continues to be, obviously, kind of a tale of 2 cities, resi performing extremely well in a tough environment and renewables and Agtech still well below your longer-term goals. So what are the keys to generating consistent double-digit margins in those 2 segments? And it appears that that's what's likely embedded in your ability to maintain the EPS guide. So just talk about how do we get there and your confidence in that margin uplift in the back half of the year.

W
William Bosway
executive

Yes. The second half for Agtech is obviously driven around the bookings that we generate during the quarter, which have now started to materialize into sales and profitability. So you pick up that volume and the quality of those projects. We feel they're going to contribute nicely in the second half to both top and bottom line.

And sequentially, we believe renewables will obviously continue to improve. Ramping up the 1P tracker in a short period of time is what we're working through now and just getting suppliers from kind of temporary tool to a permanent tool world and then getting these components into the field and getting our teams ramped up in a control launch. It just -- it takes a little bit of time to do that, and that's part of -- we'll get better and better at that in the second half. So sequentially I think you'll see renewables deliver, improved margin, and you'll see Agtech do the same. And Agtech is really driven by the volume that is now in the business in a much bigger way than it was before.

Operator

Our next question is from Julio Romero with Sidoti & Company.

U
Unknown Analyst

This is Alex on for Julio. Yes, so very nice to see Agtech new bookings up significantly this quarter. I saw in the release, you noted strong support for revenue growth in the second half. Could you just walk us through the confidence you have around the timing of the Agtech sales, kind of ramping up in the near term in a meaningful way?

W
William Bosway
executive

Yes. So, Alex, when you sign these projects, they tend not to be signed in the Agtech world until you have most, if not all your ducks in a row, particularly around permitting, because things like gas, water, et cetera, for the town or city that you're in is a big deal, because these are massive structures. So usually when you sign, it's close to go time on getting started.

So the projects that we have signed, they're already active. They started becoming active in June. So you saw that impact with the business being up 30% over April, May. And that momentum will continue based on actual projects that are in flight now. And we'll continue to add more projects, and that will help us build a backlog not just for some portion of revenue that will come into this year, but it will start building up for next year as well. So that's that consistency that we're looking for, that cadence around the projects that we're bringing on path.

And if you look at -- you take $90 million that were signed in the quarter and you were to annualize that, you'd say, well, that would roll out to $360 million, $270 million around there. They're not suggesting that we'll have $90 million every quarter, but as you get that cadence being built, they stack on each other and they bring that revenue and profitability that comes with it in a much more predictable way. But they tend to start pretty soon after you're signed.

So we're active on a number of the projects that are in the $90 million, and that's why our confidence level starting in Q3 is pretty strong for the second half.

U
Unknown Analyst

Got you. Great color on the cadence. And then one follow-up from us. You're still very strong free cash flow in the quarter, and the cash on the balance sheet continues to build. So could you speak to plans to deploy some of that?

W
William Bosway
executive

Yes. So right now we are in a number of active discussions on an M&A front. Tim referenced that a bit. I think you'll see there's probably more of that near-term focused in residential that we're involved in. It's not exclusive to residential, but, our intent is to deploy in M&A. We don't spend a lot, 1% to 2% to run the business. So that doesn't absorb a lot. We have a bit of a buyback. We still have $89 million of buyback approved in our plan, which we may move on as well. But really our focus is, moving forward with the M&A, and it's just a matter of, timing on that front. It is more active in the market today than it was a year ago, not by our choice per se, but just in general, and so that's what has driven some of the activity that we're currently in the middle of.

So I would expect to see us deploy more of that going forward, and the timing of that will depend on each individual case, right? It's a process between a buyer and a seller, and, we'll see how that plays out. But we're excited about what the opportunities are that exist, and the ones that come up, we're in a great position to act pretty quickly.

Operator

Our next question is from Walt Liptak with Seaport Research.

W
Walter Liptak
analyst

I wonder if we could just try and quantify a couple of things, like in Agtech, can you help us understand how much revenue is going to ramp in the second half of the year? Like how much of that 90 million ships in the second half of the year versus 2025, and, what could the revenue look like for the full year?

W
William Bosway
executive

Yes. So, Walt, the way I think about it is you saw what June looked like relative to May. And so you're going to have a pretty big upshot relative to what we've seen in the first half is the way I characterize it for the business.

So, the project's in hand, the project's active. You can do the math that way. If you're thinking about modeling what the second half would look like, it's, you know, we saw June up 30%. And I think that's directionally the way I would think about the second half for this business based on the backlog that we now have.

W
Walter Liptak
analyst

Okay. Great. And then, appreciate the prior question comment about profitability in Agtech. And, but with these projects sometimes there's percentage of completion that you don't book profits until, the thing's almost done. Can you talk about what the second half could look like on the flow through for profits?

W
William Bosway
executive

Yes, I know. I think we'll have a nice improvement there as well. We -- we because it's percentage of complete as a recognizing sales or recognizing profitability hand in hand as we go. So there's not a lot of this that is, recognized at the end of the project, both top and bottom line, they kind of go hand in hand as you go through the project. So again, as that volume starts to materialize in the second half, you should see an impact on both top and bottom line accordingly.

W
Walter Liptak
analyst

Okay. Great. And then, switching over to renewables, can you quantify for us the amount of orders that got pushed out due to the regulatory environment? Like where the orders down year-over-year, how much were they down? Can we get some idea of the magnitude of that?

W
William Bosway
executive

Are you talking about the orders that were pushed?

W
Walter Liptak
analyst

Yes, exactly.

W
William Bosway
executive

I think about -- yes, I would say about 20% of our business continues to be impacted. And think about that as we have -- we serve over 200 different customers. So you've got a chunk of your customer base that's dealing with a variety of projects that are moving around. And that's been pretty consistent over the last year or 2. But I would say that, it's impacted about 20% of our orders. And that's part of the reason, or, bookings and therefore orders, and that's part of the reason that we said, look, we were up 8.2%. We were up 54% sequentially, but we weren't up as much as we thought we -- as we wanted to be or expected to be just because of some of that movement got pushed.

So, I mean, I guess you could back into it. If you had kind of thought about it that way, we should have been up more, if we wouldn't have had that kind of movement. But it -- each quarter it's a little different group of customers and a number of projects. But I would say 20% of the business has been impacted, shifting around, if that gives you an idea.

W
Walter Liptak
analyst

Okay. And just so I understand the slide that you had up on renewables with the regulatory, I think what I heard you saying is that this pause will remain in place probably until September of this year. Is that right or is this moving parts?

W
William Bosway
executive

There's a lot of moving parts. And the point of that is on a module supply, it's just causing, pauses right now, depending on an individual's project situation. So, you can have a number of different examples here, but as an example, if you had panels in your inventory, if you had panels that you had availability to, and they were not brought in on an exemption from during the first AD/CVD investigation. And then you have until December to get those things installed, or they could be subjected to both AD and CVD penalties.

So, on one hand, you've got a lot of folks are trying to stay laser focused on existing projects to get these panels up onto their foundations and racking systems that either have been installed or maybe haven't been installed. But you have a dead line, otherwise you can subject to some very large penalties potentially. So you've got customers laser focused on that right now. They're saying, look, I need to get this done. And so what they're fighting through are things like, well, I got to get make sure I get all my permitting right, so I can actually get my panels on so I don't have these penalties.

And so it is a bit of a multipart equation for each project for a customer depending on where their situation is going forward. And that's that 20% of the business that I think we have customers dealing with. 80% of the business folks are kind of navigating through this. So -- but for us, because our time lines are so short between when you sign a contract and you execute, something like this with immediate grace periods of 90 days or 120 days really changes focus on projects that are in flight right now for customers versus what are they going to do next.

So -- it's a little bit -- it causes a little anxiety right now for the industry, but it will work itself through once this -- I think this last -- or the second investigation finishes up. And the IRA stuff clears off the table, that gives people a little more clarity on what's going on. But yes, we are seeing, I think, the second half is still going to be a challenge in that. But we're going to grow sequentially in both top and bottom line. And as we get through the next quarter, we'll see how this evolves as it relates to planning for 2025.

W
Walter Liptak
analyst

Okay. Great. And the sequential improvement that you're thinking about for next quarter, that's usually the third quarter is a seasonally stronger period, right? That's why -- but maybe not from orders?

W
William Bosway
executive

Correct. Third and fourth quarter are traditionally our strongest quarters for renewables. Yes, we've got bookings now that are pretty solid relative to covering 2024 in terms of revenue, again, because we have a relatively short timeline. So we still have, the ability to take an order in the third quarter and execute that yet in the fourth quarter.

So we got good coverage for sales in the second half. We got a little bit more work to do there, but inherently Q3 and Q4 are the biggest quarters for the business. And that's why sequentially you'll see a better second half and a better Q3 than Q2.

W
Walter Liptak
analyst

Okay. But in terms of orders, it sounds like third quarter, fourth quarter might still be weaker.

W
William Bosway
executive

Maybe not. Let's see. Again, it's -- it comes down to these individual projects and folks getting across the finish line. So if you've got this 20% where people are having some success with what they're going to do and getting on with it, then, yes, the focus can turn pretty quickly towards getting some of these other projects pulled up and across the finish line and contracted.

So we have, a lot of these projects in our late stage, which we have a 7 stage process, but we've got them in late stage. But, they're sitting there now until they're -- some of our customers are sitting in there until they work through the next 90 days on some of these things that they're dealing with.

Operator

There are no further questions at this time. I'd like to hand the floor back over to Mr. Bill Bosway for any closing comments.

W
William Bosway
executive

So again, I want to thank everyone for joining us today. We are planning on to present at the Seaport Annual Summer Investor Conference, as well as Sidoti September Conference. And we've got a number of other investor events.

So I want to thank you again for your ongoing support of us and Gibraltar and look forward to speaking to you again after our third quarter report. Have a good day.

Operator

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