Quanex Building Products Corp Q3 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 : Hi, good morning. Maybe wanted to start with the legacy company, full year outlook being unchanged. Wanted to think about this in the context of many building product companies in our coverage and more broadly who reduced their outlook for fiscal -- for calendar '24 for lower demand. You guys are keeping your legacy outlook. Can you talk about maybe why you are able to hold that outlook and then looking within your different end markets and products, did you adjust anything up or down by market or by product in results or your outlook? Thanks.

Question: Steven Ramsey - Thompson Research Group, LLC - Analyst : Okay. That's helpful. And then maybe to get you to build more on the potential share gains you've gotten in winning business. And can you go into more detail on maybe where that has come from and then maybe put this business that you've won, put it into context into prior years and maybe if it's a comparable or even superior to prior years in winning business at this point in a calendar year?

Question: Steven Ramsey - Thompson Research Group, LLC - Analyst : Okay. That's helpful. And then one more for me. One of the positive aspects of the Tyman deal was the limited product overlap between the two companies and another positive feature was time and greater mix of highly engineered products that carry better pricing. Can you talk about if there is any overlap on products where Tyman's mix of highly engineered products is better than yours and maybe where you see that evolving strategically over the next year as you put the companies together and go to market?

Question: Steven Ramsey - Thompson Research Group, LLC - Analyst : Excellent. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 3:00PM, NX.N - Q3 2024 Quanex Building Products Corp Earnings Call

Question: Julio Romero - Sidoti & Company, LLC - Analyst : Thanks. Hey, good morning, guys. I wanted to stay on Tyman for a little bit. -- Good morning. Can you maybe just talk about how the reception has been from employees, customers, suppliers, et cetera, given the first month of our integration post-close?

Question: Julio Romero - Sidoti & Company, LLC - Analyst : Absolutely. Really helpful color there. And then Scott, you talked about give some physical inventory counts and the cost impact related to that. Do you also lose any days of operations to do that and if so, how many days? And then secondly, do you expect maybe to implement a new ERP, you have some data tracking and maybe reduce that physical inventory count impact over time?

Question: Julio Romero - Sidoti & Company, LLC - Analyst : Got it. How does the SKU count for timing compared to legacy Quanex? Is it meaningfully different or how would you describe that?

Question: Julio Romero - Sidoti & Company, LLC - Analyst : Okay, I'll pass it on. Thanks very much, guys.

Question: Reuben Garner - The Benchmark Company, LLC - Analyst : Thanks. Good morning, everybody. So just to follow up on Julia's question about the Tyman deal and customer conversations. I think revenue potential synergies or cross-selling opportunities was something mentioned around the initial announcement of the deal. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 3:00PM, NX.N - Q3 2024 Quanex Building Products Corp Earnings Call I was just curious what your kind of feedback was from customers on that front. Are there any dis-synergy risks, any customers that maybe don't want to get overly exposed to one supplier? Any other kind of thoughts there would be helpful.

Question: Reuben Garner - The Benchmark Company, LLC - Analyst : Got it. And then switching gears. Any signs, -- it's been a few years since we've had really a ton of focus on affordability, but just wanted to hear what you're kind of seeing from a trade down standpoint, whether it's in windows or on the cabinet side. Any -- has that picked up at all? And can you just remind us how that kind of impacts you on both the spacers front and in the cabinet business.

Question: Reuben Garner - The Benchmark Company, LLC - Analyst : Great. I'm going to sneak one more in. I know it's still a little early for an initial '25 outlook, but just kind of big picture, your revenue guide for the fourth quarter implies some improvement on a year over year basis, maybe kind of starting to flatten out. Is it too early to expect that maybe we've turned a corner in growth can resume in '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 3:00PM, NX.N - Q3 2024 Quanex Building Products Corp Earnings Call

Question: Reuben Garner - The Benchmark Company, LLC - Analyst : Great. Thanks. (multiple speakers)

Question: Reuben Garner - The Benchmark Company, LLC - Analyst : Thank you, sir. Congrats, guys. Thanks.

Question: Adam Thalhimer - Thompson, Davis & Co., Inc. - Analyst : Hey, good morning, guys.

Question: Adam Thalhimer - Thompson, Davis & Co., Inc. - Analyst : Congrats on the quarter and closing Tyman early. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 3:00PM, NX.N - Q3 2024 Quanex Building Products Corp Earnings Call

Question: Adam Thalhimer - Thompson, Davis & Co., Inc. - Analyst : And given it's a full quarter of Tyman that's pretty cool.

Question: Adam Thalhimer - Thompson, Davis & Co., Inc. - Analyst : Nice and clean. Kind of in line with Ruben's last question, I was wondering if you guys are seeing any green shoots in the EU.

Question: Adam Thalhimer - Thompson, Davis & Co., Inc. - Analyst : Got it. Okay. Scott, what was the net debt after the close?

Question: Adam Thalhimer - Thompson, Davis & Co., Inc. - Analyst : Okay. And then if I'm doing this correctly, the Q4 tax rate jumps up a little bit to call it, 24%.Is that right?

Question: Adam Thalhimer - Thompson, Davis & Co., Inc. - Analyst : And is that like a good tax rate to use going forward.

Question: Adam Thalhimer - Thompson, Davis & Co., Inc. - Analyst : Got it. And then what share count are you using for Q4, not that you gave EPS guidance, but --

Question: Adam Thalhimer - Thompson, Davis & Co., Inc. - Analyst : Okay. And then do you have any sense for go-forward CapEx for the combined company or thoughts on Q4?

Question: Adam Thalhimer - Thompson, Davis & Co., Inc. - Analyst : Okay, got it. Great. Thank you, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 3:00PM, NX.N - Q3 2024 Quanex Building Products Corp Earnings Call