Investor Alert

Aug. 3, 2021, 3:51 p.m. EDT


(EDGAR Online via COMTEX) -- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Certain information set forth herein includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and, therefore are, or may be deemed to be, "forward-looking statements." These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms "believes," "anticipates," "aspires," "expects," "estimates," "seeks," "projects," "intends," "plans," "may," "will" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, competition, strategies and the industries in which we operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in the "Risk Factors" disclosed in our Annual Report on Form 10-K along with Item 1A of this Form 10-Q. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, liquidity and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained herein. In addition, even if our results of operations, financial condition, liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this quarterly report, those results or developments may not be indicative of results or developments in subsequent periods. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statements that we make herein speak only as of the date of those statements, and we undertake no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

We use certain operating performance measures, specifically consolidated gross margin, operating margin by segment and consolidated operating margin, to manage our businesses, set operational goals, and establish performance targets for incentive compensation for our employees. We define consolidated gross margin as a percentage of total consolidated gross profit to total consolidated net sales. We define operating margin by segment as a percentage of total income from operations by segment to total net sales by segment and consolidated operating margin as a percentage of total consolidated income from operations to total consolidated net sales. We believe consolidated gross margin, operating margin and consolidated operating margin may be useful to investors in evaluating the profitability of our segments and Company on a consolidated basis.


The Company operates and reports its results in the following four reporting segments:

The Company serves customers primarily in North America including renewable energy (solar) developers, home improvement retailers, wholesalers, distributors, institutional and commercial growers of food and plants, and contractors. As part of our continuing operations at June 30, 2021, we operated 36 facilities, comprised of 26 manufacturing facilities, one distribution center, and nine offices, which are located in 16 states, Canada, China, and Japan. Our operational infrastructure provides the necessary scale to support regional and national customers in each of our markets.

Table of Contents

While the Company continues to encounter challenges and uncertainty associated with COVID-19, the pandemic did not have a material adverse effect on our reported results during 2021. Our top priority continues to be focused on our organization - keeping our team and their families as safe as possible, maintaining the timely and effective functioning of our supply chain operating and providing a high level of responsiveness to customer needs. We continue to proactively execute our pandemic "playbook" in 2021 and make adjustments to our operating protocols as we navigate forward. The extent to which our operations will be impacted by the outbreak, including but not limited to the current impact of supply chain, transportation and labor challenges, along with new requirements or regulations mandated by government authorities, remains uncertain and challenging to predict, Refer to the Company's Outlook section in this management discussion and analysis for consideration relative to future periods.

Business Strategy

1.Business System reflects the necessary systems, processes, and management tools required to deliver consistent and continuous performance improvement, every day. Our Business System is a critical enabler to grow, scale, and deliver our plans. Our Business System is focused on deploying effective tools to drive growth, improve operating performance, and develop the organization. Our Business System challenges existing paradigms, drives day-to-day performance, forces prioritization of resources, challenges our business models, and brings focus to new product and services development and innovation.

2.Portfolio Management is focused on optimizing the Company's business portfolio and ensures our financial capital and human resources are effectively and efficiently deployed to deliver sustainable, profitable growth while increasing our relevance with customers and shaping our markets. For a description of recent portfolio management activities, see the actions described below in the Recent Developments section.

3.Organization Development drives the Company's continuous focus on strengthening and scaling the organization to execute the Company's plans and meet commitments. The Company aspires to make our place of work the "Best Place to Work", where we focus on creating an environment for our people to have the best opportunity for success, continue to develop, grow, and learn. At core of this pillar is the Company's development process focused on helping employees reach their potential, improve performance, develop career roadmaps, identify ongoing education requirements, and respective succession plans. We believe doing so helps us attract and retain the best people so we can execute our business plans.

We believe the key elements of our strategy have, and will continue to, enable us to respond timely to changes in the end markets we serve, including evolving changes due to COVID-19 and the challenges noted above. We have and expect to continue to examine the need for restructuring of our operations, including consolidation of facilities, reducing overhead costs, curtailing investments in inventory, and managing our business to generate incremental cash. We believe our enhanced strategy has enabled us to better react to volatility in commodity and other input costs and fluctuations in customer demand, along with helping to improve margins. We have used the improved cash flows generated by these initiatives to pay down debt, improve our liquidity position, and invest in growth initiatives. Overall, we continue to strive to achieve stronger financial results, make more efficient use of capital, and deliver higher stockholder returns.

Table of Contents

        Recent Developments
        During the first quarter of 2021, the Company sold its Industrial business as a
        result of its Portfolio Management strategy to focus on participation in higher
        value and faster growing markets. The Industrial business, previously reported
        in the Company's Industrial and Infrastructure Products segment, was reported as
        discontinued operations as of December 31, 2020.
        During 2020, the Company completed the following acquisitions:
                                                                           Purchase price
                                                                                ( in
        Business Acquired                    Date of Acquisition in 2020    millions) 1   Description                                  Segment
                                                                                          Provider of screw-based, ground-mount
                                                                                          solar racking technology, particularly
                                                                                          used for solar projects installed on
        TerraSmart LLC                               December 31           $     223.7    challenging terrain                         Renewables
                                                                                          Provider of software solutions that
                                                                                          optimize solar energy investments
                                                                                          through upstream design, performance
        Sunfig Corporation                           December 11           $       3.8    and financial modeling                      Renewables
                                                                                          Provider, designer, and developer of
                                                                                          decorative residential mailboxes and
        Architectural Mailboxes                       October 15           $      26.9    related products                           Residential
                                                                                          Provider of ethanol-based extraction
                                                                                          systems manufacturer and training and
                                                                                          laboratory design and operations
        Delta Separations                            February 13           $      47.1    consultative partner                          Agtech
                                                                                          Provider of commercial greenhouse
                                                                                          solutions in North America supporting
                                                                                          the biologically grown organic food
        Thermo Energy Systems                         January 15           $       7.3    market                                        Agtech

Note 1: Except for TerraSmart, which was financed through a combination of cash

Table of Contents

        Results of Operations
        Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30,
        The following table sets forth selected results of operations data and its
        percentage of net sales for the three months ended June 30 (in thousands):
                                                                  2021                        2020
        Net sales                                       $ 348,389       100.0  %    $ 255,184       100.0  %
        Cost of sales                                     267,458        76.8  %      189,623        74.3  %
        Gross profit                                       80,931        23.2  %       65,561        25.7  %
        Selling, general, and administrative expense       49,522        14.2  %       34,813        13.7  %
        Income from operations                             31,409         9.0  %       30,748        12.0  %
        Interest expense                                      245         0.0  %          222         0.0  %
        Other income                                       (4,666)       (1.3) %       (1,892)       (0.7) %
        Income before taxes                                35,830        10.3  %       32,418        12.7  %
        Provision for income taxes                          9,457         2.7  %        7,961         3.1  %
        Income from continuing operations                  26,373         7.6  %       24,457         9.6  %
        (Loss) income from discontinued operations           (424)       (0.2) %        2,835         1.1  %
        Net income                                      $  25,949         7.4  %    $  27,292        10.7  %

The following table sets forth the Company's net sales by reportable segment for the three months ended June 30, (in thousands):

Aug 03, 2021


Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

(c) 1995-2021 Cybernet Data Systems, Inc. All Rights Reserved

Link to MarketWatch's Slice.