The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Steven Ramsey - Thompson Research Group - Analyst
: I wanted to think high level a bit given the market remains pretty stagnant and seems pretty well known out there. I guess my first question would
then be on portfolio adjustment now that you've got Tyman and synergies are coming in at a nice clip, how are you assessing the portfolio broadly?
And basically, are you considering any moves to divest anything that maybe is less core now that you have this bigger foundation?
Question: Steven Ramsey - Thompson Research Group - Analyst
: Okay. That's helpful. Also wanted to think about the EU segment. You've had two consecutive years with margin in the 23%, 24% range, very strong.
Do you view that this kind of the normalized level to operate from or even build off of?
Or would you say there are some -- this is maybe a peak level for current dynamics that's helping that?
Question: Steven Ramsey - Thompson Research Group - Analyst
: No, that's great perspective. Maybe something to quickly ask there, Scott, that you alluded to better volumes and the margin benefits from that.
Can you maybe talk to the kind of historic incremental margins from legacy Quanex. And given, as you put these two businesses together, where
could incremental margins get better as volume starts to improve?
Question: Adam Thalhimer - Thompson Davis & Co. - Analyst
: I wanted to ask first about the Tyman synergies, how comfortable are you getting to the $30 million of synergies? And do you still think it takes
two years to capture those?
Question: Adam Thalhimer - Thompson Davis & Co. - Analyst
: Okay. And George, you talked about sluggish demand over the holiday season and in the winter. I'm curious what -- is that a continuation of the
trends you've seen in fiscal year '24? Or are you contemplating incremental weakness?
Question: Reuben Garner - The Benchmark Company, LLC - Analyst
: To start, tariffs has been a big question of late. I think last go around, you guys might have saw some benefit in your cabinets business from kind
of reshoring opportunities. With the Tyman acquisition coming along, can you just talk about any exposure that they have to imports and whether
or not maybe any competitors that they have would be at risk, I guess, from bringing products in overseas?
Question: Reuben Garner - The Benchmark Company, LLC - Analyst
: Got it. And then from just a big picture pricing perspective for you guys, Scott, I know you gave some pieces about this quarter and this year and
you had a couple of things working against you. Like when we think about the full year going forward, and I know you're not ready to give guidance
yet, but would you expect at this point that pricing would be like neutral to up even? Or is there more kind of headwinds on the way?
Question: Julio Romero - Sidoti & Company - Analyst
: I wanted to ask about the macro a little bit here. Some of your peers have called out affordability constraints. You talked about winning consumer
confidence and kind of mortgage rates kind of persisting higher. Can you guys just talk about what you're seeing on that front? And maybe help
us think about why your viewpoint might be a little nuanced compared to some peers?
Question: Julio Romero - Sidoti & Company - Analyst
: Got it. That's very helpful there. And then can you maybe just compare where consumer confidence is right now in North America versus Europe
maybe compared to like three months ago?
Question: Julio Romero - Sidoti & Company - Analyst
: Very helpful there. Maybe turning to your resegmentation. You've obviously been very thoughtful about the new segment structure. Can you
maybe peel back the onion a little bit about the strategic rationale for the three new segments? And then secondly, in the prepared remarks, I
believe you called out maximizing synergy ops and positioning for growth as two key items there.
Are those two the North Star for the new segments and the new leaders?
Question: Julio Romero - Sidoti & Company - Analyst
: And if I could sneak one more in maybe for Scott here is, I appreciate the first quarter kind of outlook of interest expense of $15 million. Is that kind
of a fair quarterly run rate to maybe assume for now for fiscal '25. And then are you kind of assuming any debt paydown at this point for fiscal '25?
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