Quanex Building Products Corp Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Steven Ramsey - Thompson Research Group, LLC - Analyst : Maybe to start with US non-fenestration sales showed solid growth. So maybe two questions on that. 2H sales were better than 1H for seasonality, it appears. But would you expect that to be the case again in FY24 as it was in FY23? And then secondly, higher level, what is driving the strength in US non-fenestration sales, and do you have a line of sight for that to continue over the long term? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 07, 2024 / 3:00PM, NX.N - Q2 2024 Quanex Building Products Corp Earnings Call

Question: Steven Ramsey - Thompson Research Group, LLC - Analyst : Excellent. And then wanted to hold in on cabinet margin very strong. Can you talk about the plant closure, what that should do strategically and financially for you in the coming 12 months?

Question: Steven Ramsey - Thompson Research Group, LLC - Analyst : Excellent. Then last quick one for me, your outlook is unchanged, and you said customer conversations. As always, we're a contributor to your outlook. Can you share some color on what they're telling you? It seems that the broader housing outlook may have downshifted a bit in recent months for rate expectations pressuring second-half sentiment. So curious what your customers are telling you and how that aligns or does not align with to make that step broad sentiment?

Question: Steven Ramsey - Thompson Research Group, LLC - Analyst : That's great. Thank you.

Question: Julio Romero - Sidoti & Company, LLC - Analyst : My first question is on Europe. Can you maybe expand on what is the key factor for this European softness? I think you named a couple in the prepared remarks. And then secondly, how prolonged do you think the softness in Europe extends to?

Question: Julio Romero - Sidoti & Company, LLC - Analyst : Got it. That's very helpful. And then, turning to some of your third quarter outlook, you expect EU sales to be up in the third quarter sequentially, 4% to 6%, I believe you said, versus the second quarter. And while I know you gave us the consolidated margin outlook of flat to down, can you maybe talk to how you expect the European margins to trend in the third quarter relative to 2Q?

Question: Julio Romero - Sidoti & Company, LLC - Analyst : Okay, helpful. And then, just the last one for me is, thanks for the good color on the outlook. Can you maybe speak to the free cash flow outlook for the year? And if that's still unchanged from your previous outlook?

Question: Julio Romero - Sidoti & Company, LLC - Analyst : And that would be with 85 to 90, or am I wrong about that?

Question: Julio Romero - Sidoti & Company, LLC - Analyst : Okay. Thanks very much, guys. Appreciate it.

Question: Adam Thalhimer - Thompson, Davis & Co, Inc. - Analyst : Scott, can you pick up there on the transaction fees, how should we model those going forward? And then also SG&A, you had really good control there. Ex the transaction fees in Q2, how do you expect those to trend?

Question: Adam Thalhimer - Thompson, Davis & Co, Inc. - Analyst : Okay. I won't even try. And then, George, I was a little curious, you said signs of optimism for both R&R and new construction. I would say in our shop, we're probably a little bit more bullish on new construction than R&R. Just hoping you could parse the outlook there a little bit?

Question: Adam Thalhimer - Thompson, Davis & Co, Inc. - Analyst : Okay. And lastly, I wanted to follow up on Steven's first question, along those lines. Is there anything interesting on the R&D side or new product development that could drive a little bit of margin improvement ex-macro?

Question: Adam Thalhimer - Thompson, Davis & Co, Inc. - Analyst : Great. Thanks, guys.