Griffon Corp (GFF) 2024 Q2 法說會逐字稿

Good day, and welcome to the Griffin Corporation Fiscal Second Quarter 2024 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Brian Harris, CFO. Please go ahead.

美好的一天，歡迎參加 Griffin Corporation 2024 年第二季財報電話會議。（操作員說明）請注意，正在記錄此事件。我現在想將會議交給財務長布萊恩哈里斯 (Brian Harris)。請繼續。

Thank you, operator. Good morning. It's my pleasure to welcome everybody to Griffon Corporation's Second Quarter Fiscal 2024 Earnings Call. Joining me for this morning's call is Ron Kramer, Griffon's Chairman and Chief Executive Officer. Our press release was issued earlier this morning and is available on our website at griffin.com. Today's call is being recorded, and replay instructions are included in our earnings release.

謝謝你，接線生。早安.我很高興歡迎大家參加 Griffon Corporation 2024 年第二季財報電話會議。與我一起參加今天早上電話會議的是 Griffon 董事長兼執行長 Ron Kramer。我們的新聞稿於今天早上早些時候發布，可在我們的網站 griffin.com 上取得。今天的電話會議正在錄音，重播說明包含在我們的財報中。

Our comments will include forward-looking statements about Griffin's performance. These statements are subject to risks and uncertainties that can change as the world changes. Please see the cautionary statements in today's press release and in our SEC filings. Finally, some of today's remarks will be adjusted for items that affect comparability between periods. These items are explained in our non-GAAP reconciliations included in our press release. With that, I'll turn the call over to Ron.

我們的評論將包括有關格里芬表現的前瞻性陳述。這些陳述存在風險和不確定性，這些風險和不確定性可能會隨著世界的變化而變化。請參閱今天的新聞稿和我們向 SEC 提交的文件中的警告聲明。最後，今天的一些言論將針對影響時期間可比性的項目進行調整。這些項目在我們的新聞稿中包含的非公認會計原則調節中進行了解釋。這樣，我就把電話轉給羅恩。

Good morning, everyone, and thank you for joining us. first half of fiscal 2024 is off to a great start and has exceeded our expectations. Second quarter was highlighted by continued solid operating performance from Home & Building Products and improved profitability at Consumer and Professional Products. For the quarter, Home & Building Products revenue and EBITDA came in better than expected as the typical Q2 seasonal residential volume simply did not materialize.

大家早安，感謝您加入我們。 2024 財年上半年開局良好，超出了我們的預期。第二季的亮點是家居和建築產品持續穩健的營運表現以及消費和專業產品獲利能力的提高。本季度，家居和建築產品收入和 EBITDA 好於預期，因為典型的第二季季節性住宅銷售根本沒有實現。

For our Consumer and Professional Products segment, second quarter revenue decreased 11%, primarily due to decreased volume driven by reduced customer demand in North America and the U.K., partially offset by increased volume in Australia. EBITDA improved 2% to $20 million in the quarter with the EBITDA margin improving year-over-year, primarily as a result of decreased North American production costs. I'm very pleased to tell you that our previously announced initiative to expand CPP's global sourcing strategy remains on schedule and within budget. We continue to expect the initiative to be complete by the end of calendar 2024.

對於我們的消費和專業產品部門，第二季營收下降 11%，主要是由於北美和英國客戶需求減少導致銷售下降，但部分被澳洲銷售增加所抵消。本季 EBITDA 成長 2%，達到 2,000 萬美元，EBITDA 利潤率較去年同期提高，這主要是由於北美生產成本下降。我很高興地告訴您，我們先前宣布的擴大 CPP 全球採購策略的舉措仍然按計劃進行並在預算範圍內。我們仍預計該計劃將於 2024 年底完成。

Since May 2023, when we announced the initiative, we have ceased operations at all 4 affected U.S. manufacturing facilities and 4 wood mills. These actions have reduced our manufacturing footprint by over 1.2 million square feet. As we've emphasized before, the global sourcing expansion at AMES is a key element of our strategy to improve the margins of CPP.

自 2023 年 5 月宣布此措施以來，我們已停止所有 4 家受影響的美國製造工廠和 4 家木材廠的營運。這些行動使我們的製造佔地面積減少了超過 120 萬平方英尺。正如我們先前強調的，AMES 的全球採購擴張是我們提高 CPP 利潤率策略的關鍵要素。

Turning to our capital allocation. During the second quarter, we repurchased 1.8 million shares totaling $117 million or an average of $65.09 per share. As of March 31, $120 million remains under the repurchase authorization. Since April 2023 and through March of this year, we've repurchased 7.6 million shares at an average price of $44.56 for a total of $338 million. These repurchases have reduced Griffon's outstanding shares by 13.3% relative to the total shares outstanding at the end of the second quarter of fiscal 2023.

轉向我們的資本配置。第二季度，我們回購了 180 萬股股票，總計 1.17 億美元，平均每股 65.09 美元。截至3月31日，回購授權尚有1.2億美元。自 2023 年 4 月至今年 3 月，我們以平均價格 44.56 美元回購了 760 萬股股票，總金額達 3.38 億美元。這些回購使 Griffon 的流通股相對於 2023 財年第二季末的流通股總數減少了 13.3%。

Also yesterday, the Griffon Board authorized a regular quarterly dividend of $0.15 per share, payable on June 20 to shareholders of record on May 29. Marking the 51st consecutive quarterly dividend to shareholders. Our dividend has grown at an annualized compounded rate of 18% since we initiated dividends in 2012.

同樣在昨天，Griffon 董事會批准了每股 0.15 美元的定期季度股息，將於 6 月 20 日支付給 5 月 29 日登記在冊的股東。標誌著連續第 51 個季度向股東派息。自 2012 年開始派息以來，我們的股息以 18% 的年化複合率成長。

Turning to our guidance for the year. Based on our first half robust performance and expectation for the remainder of the year, we're raising our full year guidance. We now expect revenue of $2.65 billion, an increase from previous guidance of $2.6 billion, and we are increasing our segment adjusted EBITDA by $30 million to $555 million. In summary, the increased fiscal 2024 guidance and capital allocation actions reflect Griffin's Board and management's confidence in our strategic plan and outlook as well as our commitment to enhancing long-term value to our shareholders. I'll turn it over to Brian for a little more financial detail.

轉向我們今年的指導。基於我們上半年的強勁表現和對今年剩餘時間的預期，我們提高了全年指導。我們現在預計營收為 26.5 億美元，高於先前指引的 26 億美元，並且我們將部門調整後 EBITDA 增加 3,000 萬美元，達到 5.55 億美元。總之，增加的 2024 財年指導和資本配置行動反映了 Griffin 董事會和管理層對我們的策略計劃和前景的信心，以及我們對提高股東長期價值的承諾。我會將其交給布萊恩以獲取更多財務細節。

Thank you, Ron. Second quarter revenue of $673 million decreased by 5% and adjusted EBITDA before unallocated amounts of $149 million decreased by 2%. Both in comparison to prior year quarter, EBITDA margin before unallocated was 19.9%, an increase of 60 basis points. Gross profit on a GAAP basis for the quarter was $271 million compared to $194 million in the prior year quarter. Excluding items that affect comparability from recurring and prior year periods, gross profit was $272 million in the current quarter compared to $269 million in the prior year.

謝謝你，羅恩。第二季營收為 6.73 億美元，下降 5%，調整後 EBITDA（未分配金額 1.49 億美元）下降 2%。與去年同期相比，未分配前的 EBITDA 利潤率為 19.9%，成長了 60 個基點。以 GAAP 計算，本季毛利為 2.71 億美元，去年同期毛利為 1.94 億美元。排除影響經常性和上年期間可比性的項目，本季毛利為 2.72 億美元，而去年同期為 2.69 億美元。

Normalized gross margin increased year-over-year by 250 basis points to 40.4%. Second quarter GAAP selling, general and administrative expenses were $157 million compared to $160 million in the prior year. Excluding adjusting items from both periods, SG&A expenses were $153 million or 22.8% of revenue compared to the prior year of $150 million or 21.1% of revenue.

標準化毛利率年增 250 個基點至 40.4%。第二季 GAAP 銷售、一般和管理費用為 1.57 億美元，去年同期為 1.6 億美元。排除這兩個時期的調整項目，SG&A 費用為 1.53 億美元，佔營收的 22.8%，而前一年為 1.5 億美元，佔營收的 21.1%。

Second quarter GAAP net income was $64 million or $1.28 per share compared to a loss of $62 million in the prior year quarter or $1.17 per share. Excluding all items that affect comparability from both periods, current quarter adjusted net income was $68 million or $1.35 per share compared to the prior year of $67 million or $1.22 per share. Corporate and unallocated expenses, excluding depreciation in the quarter were $14.8 million, consistent with the prior year.

第二季 GAAP 淨利為 6,400 萬美元，即每股 1.28 美元，而去年同期虧損 6,200 萬美元，即每股 1.17 美元。排除影響兩個時期可比性的所有項目，本季調整後淨利潤為 6,800 萬美元，即每股 1.35 美元，而上一年為 6,700 萬美元，即每股 1.22 美元。本季的公司費用和未分配費用（不包括折舊）為 1,480 萬美元，與去年持平。

Net capital expenditures were $18.5 million in the second quarter compared to $7.1 million in the prior year quarter. Depreciation, amortization totaled $15.1 million for the second quarter compared to $17.3 million in the prior year. Regarding our segment performance, Home & Building Products revenue declined 1% due to unfavorable product mix partially offset by improved volume reflecting increased residential orders in the current year, which more than offset prior year backlog benefit.

第二季淨資本支出為 1,850 萬美元，去年同期為 710 萬美元。第二季折舊攤提總額為 1,510 萬美元，去年同期為 1,730 萬美元。就我們的部門業績而言，家居和建築產品收入下降了1%，原因是不利的產品組合，但部分被銷量改善所抵消，反映出今年住宅訂單的增加，這遠遠抵消了去年積壓的收益。

HBP adjusted EBITDA of $129 million decreased 2% from the prior year, driven by the reduced revenue and increased labor and distribution costs, partially offset by reduced material costs. Consumer and Professional Products revenues of $281 million decreased 11% from the prior year quarter, primarily due to decreased volume, driven by reduced consumer demand in North America and the U.K., partially offset by increased volume in Australia. For the current quarter, CPP adjusted EBITDA of $20 million increased 2% from the prior year quarter, primarily due to improved North American production costs and decreased discretionary spending, partially offset by the unfavorable impact of the reduced revenue.

HBP 調整後 EBITDA 為 1.29 億美元，較上年下降 2%，原因是收入減少以及勞動力和分銷成本增加，但部分被材料成本減少所抵消。消費和專業產品收入為 2.81 億美元，較去年同期下降 11%，主要是由於北美和英國消費者需求減少導致銷售下降，但澳洲銷售增加部分抵消了這一影響。本季度，CPP 調整後 EBITDA 為 2,000 萬美元，較去年同期成長 2%，這主要是由於北美生產成本改善和可自由支配支出減少，部分被收入減少的不利影響所抵消。

Regarding our balance sheet and liquidity, as of March 31, 2024, we had net debt of $1.46 billion and net debt-to-EBITDA leverage of 2.8x as calculated based on our debt covenant. Regarding our fiscal 2024 guidance, our overall strong performance in the first half exceeded our expectations. As a result, we are raising guidance for revenue and segment EBITDA. We now expect $2.65 billion of revenue and $555 million of segment adjusted EBITDA, which excludes unallocated costs and certain other charges that affect comparability.

關於我們的資產負債表和流動性，截至 2024 年 3 月 31 日，我們的淨債務為 14.6 億美元，根據我們的債務契約計算，淨債務與 EBITDA 的槓桿率為 2.8 倍。關於我們的 2024 財年指引，我們上半年的整體強勁表現超出了我們的預期。因此，我們提高了收入和部門 EBITDA 的指導。我們現在預計收入為 26.5 億美元，部門調整後 EBITDA 為 5.55 億美元，其中不包括未分配成本和影響可比性的某些其他費用。

Further, we now expect corporate costs of $59 million, increasing versus prior year guidance of $54 million due to increased employee stock ownership plan expenses driven by Griffin's stock price appreciation. Other guidance remains unchanged for 2024, including amortization of $22 million, depreciation of $41 million, interest expense of $103 million, a normalized tax rate of 28% and free cash flow to exceed net income. Now I'll turn the call back over to Ron.

此外，我們現在預計公司成本為 5,900 萬美元，較去年指導的 5,400 萬美元有所增加，原因是格里芬股價上漲導致員工持股計畫費用增加。2024 年的其他指引保持不變，包括攤銷 2,200 萬美元、折舊 4,100 萬美元、利息支出 1.03 億美元、標準化稅率 28% 以及自由現金流超過淨利潤。現在我會把電話轉回給羅恩。

Thanks, Brian. We had an excellent first half, driven by strong operating performance and better-than-expected residential door volume at HBP, establishing a solid foundation for the second half. As expected, CPP at lower volumes, but is making steady progress with its global sourcing initiative. We're seeing some of the early benefits of this strategy as evidenced by CPP's improving margin. Given the performance of both of our segments, we are confident about raising our guidance for the full year.

謝謝，布萊恩。在惠博普強勁的經營業績和好於預期的住宅門量的推動下，我們上半年表現出色，為下半年奠定了堅實的基礎。正如預期的那樣，CPP 產量較低，但其全球採購計劃正在穩步取得進展。我們看到了這個策略的一些早期好處，CPP 利潤率的提高就證明了這一點。鑑於我們兩個部門的表現，我們有信心提高全年指導。

We will continue to use our strong operating performance and free cash flow to drive a capital allocation strategy that delivers long-term value for our shareholders. Before we turn to questions, I want to acknowledge the effort and commitment, the employees and management teams of our businesses around the world continue to demonstrate. It's because of their dedication and effort that Griffin continues to see strong operating performance. Operator, we'll take questions.

我們將繼續利用強勁的經營業績和自由現金流來推動資本配置策略，為股東帶來長期價值。在我們開始提問之前，我想感謝我們世界各地企業的員工和管理團隊所付出的努力和承諾。正是由於他們的奉獻和努力，格里芬才能繼續保持強勁的經營業績。接線員，我們將回答問題。

(Operator Instructions) The first question is from the line of Tim Wojs with Baird.

（操作員說明）第一個問題來自 Tim Wojs 和 Baird 的線路。

Hey, everybody. Good morning. Nice job on the results.

嘿，大家。早安.結果很好。

Thanks Tim.

謝謝蒂姆。

Maybe just to start, in the HBP business, I know you have kind of talked about 30% plus EBITDA margins for the year, you're tracking kind of nicely above that kind of year-to-date. I guess any changes there in kind of how you're thinking about the business? And maybe what's kind of implied in the back half of the year from a guidance perspective?

也許只是開始，在 HBP 業務中，我知道您談到了今年 EBITDA 利潤率超過 30%，您的追蹤數據遠高於今年迄今為止的水平。我想您對業務的看法有什麼改變嗎？從指導的角度來看，下半年可能意味著什麼？

No, we don't see any change. And the biggest takeaway is the seasonality of the second quarter and the expected residential volume decline that didn't happen. And so we're quite optimistic about what we see going on for the balance of the year and the continued margin improvement story that we've got in the HBP side that's maintaining and CPP continuing.

不，我們沒有看到任何變化。最大的收穫是第二季的季節性以及預期的住宅成交量下降並沒有發生。因此，我們對今年餘下時間的情況以及我們在 HBP 方面保持的利潤率持續改善以及 CPP 的持續成長感到非常樂觀。

Yes. I would just further clarify that we expect the back half of the year to be 30% or better.

是的。我想進一步澄清一下，我們預計今年下半年的成長率將達到 30% 或更好。

30% or better. Okay, good. And then I guess just in the CPP business, I mean, you got back to actually -- I mean, I think EBITDA grew year-over-year in the quarter. I know there's always choppiness with kind of a transition. But do you feel like you've made kind of step function improvements now in that business and we can continue to see improvement kind of sequentially from here? Or do you kind of see it staying at that level the back half of the year and then maybe taking another jump in '25?

30% 或更好。好的。然後我想就 CPP 業務而言，我的意思是，你實際上回到了 - 我的意思是，我認為 EBITDA 在本季度同比增長。我知道過渡過程總是會出現不穩定的情況。但是您是否覺得您現在已經在該業務中進行了某種階躍功能改進，並且我們可以從這裡繼續看到連續的改進？或者你認為它會在今年下半年保持在這個水平，然後可能在 25 年再次跳躍？

Sure. So if we're looking at Q2 to Q3, we would expect the margin to improve sequentially. But the business does have seasonality. So we'll see likely a dip in the fourth quarter, which is normally a low quarter for us. But yes, we are seeing improvement from a margin that will be sustainable and continue to grow into '25 from the actions we've taken. And once the inventory that we're selling that was manufactured that we're currently selling, we work through that, then the margins will improve significantly.

當然。因此，如果我們關注第二季度到第三季度，我們預計利潤率將連續改善。但生意確實有季節性。因此，我們可能會看到第四季度出現下滑，這對我們來說通常是一個低季度。但是，是的，我們看到了一定程度的改善，這種改善將是可持續的，並且從我們採取的行動來看，這種改善將在 25 世紀繼續增長。一旦我們正在銷售的庫存是我們目前正在銷售的製造品，我們就會解決這個問題，那麼利潤率將會顯著提高。

The next question is from the line of Trey Grooms with Stephens.

下一個問題來自 Trey Grooms 和 Stephens。

Ron and Brian, nice work in the quarter.

羅恩和布萊恩，本季工作出色。

Thank you.

謝謝。

So just touching on kind of the demand drivers here, kind of circling back to that on HBP. So residential, still seeing some strong volume versus maybe some weaker demand in commercial. Can you talk about kind of from where we sit today, how you're thinking about those 2 end markets kind of as we look through the balance of the year?

因此，我們只談這裡的需求驅動因素，然後又回到了 HBP 上的情況。因此，住宅市場的成交量仍然強勁，而商業市場的需求可能會疲軟。您能否從我們今天坐的位置談談，當我們回顧今年的剩餘時間時，您如何看待這兩個終端市場？

Sure. We expect residential to continue to be strong and volumes to be better than the prior year. On commercial side, we are seeing some moderation, though that business is lumpy. And I will point out that though commercial volume was down from the prior year quarter. The prior year quarter was a particularly strong quarter for commercial. But that market is moderating somewhat, but we still see pretty strong volume there.

當然。我們預期住宅市場將持續強勁，成交量將優於去年。在商業方面，我們看到了一些放緩，儘管業務不穩定。我要指出的是，儘管商業銷量比去年同期有所下降。去年的這個季度對於商業來說是一個特別強勁的季度。但該市場正在放緩，但我們仍然看到那裡的交易量相當強勁。

Okay. And then on CPP, inventory in the channel had been running high. Any thoughts to where that could kind of shake out, I guess. And I think previously, we had kind of been expecting that it could take another selling season to kind of flush that out. So I guess how is that looking today? And do you still think that we could see the channel inventory kind of normalize this year?

好的。然後在 CPP 上，渠道庫存一直處於高位。我想，任何關於這種情況可能會改變的想法。我認為之前，我們一直預計可能需要另一個銷售季節才能消除這種情況。所以我想今天看起來怎麼樣？您仍然認為今年通路庫存會趨於正常化嗎？

We do expect the inventory to normalize in the channel. We're sort of in the early days here. Spring is just started to spring. So we need to get through the next 2 quarters of selling, which is the high season for that type of product.

我們確實預期渠道庫存將正常化。我們還處於早期階段。春天才剛開始，春天就到了。因此，我們需要度過接下來的兩個季度的銷售，這是該類型產品的旺季。

The next question is from the line of Bob Labick with CJS Securities.

下一個問題來自 CJS 證券的 Bob Labick。

Congratulations on another strong quarter. I wanted to start -- you touched on it a little bit, but the gross margins were either record or near record or pretty darn close, but very impressive. And just -- I know you don't break them out by segment, maybe give us a sense of how they're trending in each segment, how sustainable this based on the revenue level, but the 40% level is? And then I guess how they'll shift going forward as the global sourcing comes to a conclusion as well?

祝賀又一個強勁的季度。我想開始——你稍微提到了這一點，但毛利率要么是創紀錄的，要么接近創紀錄的，要么非常接近，但非常令人印象深刻。只是 - 我知道你不會按細分市場細分，也許可以讓我們了解他們在每個細分市場的趨勢，基於收入水平的可持續性如何，但 40% 的水平是多少？然後我猜隨著全球採購的結束，他們將如何轉變？

Sure. We do expect those margins to be sustainable and actually growing, particularly into '25 as the CPP action is taking hold. And we're seeing pricing in HBP maintaining. And therefore, the month we expect margins to hold there as well.

當然。我們確實預計這些利潤將是可持續的並且實際上會成長，特別是隨著 CPP 行動的實施，進入 25 年。我們看到 HBP 的定價保持不變。因此，我們預計本月利潤率也將維持在該水準。

Okay. That's great. And then as it relates to the global sourcing, I know you said you're kind of on track and in budget and all that. Maybe just what are like the next big steps? Are you done qualifying all the suppliers? Do you have enough capacity now to fully take over? Or kind of what are the next big steps that -- and hurdles for you between now and the end of this year to complete the process.

好的。那太棒了。然後，由於它涉及全球採購，我知道你說過你已經步入正軌並且在預算之內。也許接下來的重大步驟是什麼？您是否已完成對所有供應商的資格審查？你現在有足夠的能力來完全接管嗎？或者從現在到今年年底，接下來的重大步驟是什麼，以及您完成流程的障礙。

Yes. Let's go back and remember that part of our confidence in doing this a year ago as market conditions change. we had an existing global sourcing capability that we're leveraging off of. This is not us going out looking to find suppliers, we already have suppliers. We're a global business. Our Australia business is already sourcing hundreds of millions of dollars of product out of China, Vietnam, so this is about transitioning the U.S. capacity to our existing supply chain relationships.

是的。讓我們回過頭來，記住一年前隨著市場條件的變化，我們對這樣做的部分信心。我們擁有現有的全球採購能力，我們正在利用這項能力。這不是我們出去尋找供應商，我們已經有了供應商。我們是一家全球性企業。我們的澳洲業務已經從中國和越南採購了數億美元的產品，因此這是關於將美國的產能轉移到我們現有的供應鏈關係中。

That is -- was always our strategy. A year later, I'm very proud that we've been able to execute it flawlessly. And the opportunity in front of us, this is a 15% EBITDA margin business 1 or 2 years from now. When it gets there, it will continue to be a U.S., Australia, Canada, U.K. business and we did this with the expectation that this was a long-term strategy to fix a problem around the core U.S. manufacturing business that we have.

那就是——一直是我們的策略。一年後，我非常自豪我們能夠完美地執行它。而擺在我們面前的機會，是一兩年後 EBITDA 利潤率為 15% 的業務。當它到達那裡時，它將繼續是美國、澳洲、加拿大、英國的業務，我們這樣做的目的是希望這是解決我們擁有的核心美國製造業務問題的長期策略。

Yes, I would just add to that, that we are -- our distribution is ready. Containers are starting to come in, in Q3. And as far as the process, we're moving into real estate sale mode selling the assets that no longer are needed for CPP.

是的，我想補充一點，我們的發行版已經準備好了。貨櫃在第三季開始進入。就流程而言，我們正在進入房地產銷售模式，出售 CPP 不再需要的資產。

The next question is from the line of Sam Darkatsh with Raymond James.

下一個問題來自 Sam Darkatsh 和 Raymond James。

Ron, Brian. Terrific quarter.

羅恩、布萊恩.很棒的季度。

Thank you.

謝謝。

A couple of questions if I could sneak 2 in. First, the guidance, and I know you've typically craft your guidance very conservatively, but the guidance seems to imply HBP margin degradation sequentially despite the fact that I know you're coming into a little bit more of your selling season seasonally. What sorts of things would have to occur for there to be margin degradation from where you're seeing margins now? And then I've got a follow-up question, too, if I could.

有幾個問題我可以偷偷溜進去嗎？首先是指導意見，我知道你們通常會非常保守地制定指導意見，但該指導意見似乎意味著 HBP 利潤率會依次下降，儘管我知道你們的銷售季節會隨著季節的變化而有所增加。必須發生哪些事情才會導致利潤率比現在看到的利潤率下降？如果可以的話，我還有一個後續問題。

Sure. So we're still anticipating the 30% plus margin in the back half of the year. And we're not seeing any pricing pressure what could occur is mix. And also, we had some steel costs that will be -- we know will be coming through in the third quarter, in particular, that will hurt margin a little bit from -- sequentially.

當然。因此，我們仍然預計下半年利潤率將達到 30% 以上。我們沒有看到任何可能發生的定價壓力。此外，我們還有一些鋼鐵成本，我們知道這些成本將在第三季出現，特別是，這將依次影響利潤率。

Got you. So that actually segues my next question perfectly. So I think there was -- at least there was an announced price increase in the residential garage door industry in March from 1 of your competitors, and it apparently didn't stick or at least didn't stick yet. Knowing that the steel prices are a little bit of a pressure, Brian, and that volumes residentially are now turning positive, what -- why didn't that price increase get matched? Or why doesn't the market bear that right now?

明白你了。所以這實際上完美地解決了我的下一個問題。所以我認為，至少在三月份，你們的一個競爭對手宣布了住宅車庫門行業的價格上漲，但它顯然沒有堅持下去，或者至少還沒有堅持下去。布萊恩，知道鋼材價格有點壓力，而且住宅銷售現在正轉為正值，為什麼價格上漲沒有得到匹配？或者為什麼市場現在不接受這一點？

We focus on our structure of costs and what we feel is good value to our customers. I can't really comment on why someone else's price increase didn't stick. We see a good market. We will continue to monitor costs and take actions.

我們專注於我們的成本結構以及我們認為對客戶有價值的內容。我無法真正評論為什麼其他人的價格上漲沒有持續下去。我們看到了一個很好的市場。我們將繼續監控成本並採取行動。

The next question is from the line of Julio Romero with Sidoti & Company.

下一個問題來自 Sidoti & Company 的 Julio Romero。

On CPP, can we maybe talk about the inventory levels by geography across your U.K. and U.S. customers compared to 3 months ago, how are those levels doing right now? And do you think the spring summer selling season kind of helps flush out the remaining inventory levels there? Or is it more of a longer time frame in your view for inventory to normalize?

關於 CPP，我們能否談談您的英國和美國客戶與 3 個月前相比按地理位置劃分的庫存水平，這些水平現在表現如何？您認為春夏銷售季是否有助於消除那裡的剩餘庫存水準？或者您認為庫存恢復正常需要更長的時間？

Yes. So inventory positions at our customers are improving, though there is still some work to do. We do expect that to normalize by the end of our fiscal year. as we get through the Q3 spring selling season and into Q4, particularly on the fan side, a lot sells in Q4 and our internal inventories have decreased. So the U.S. inventory -- that applies to the U.S. when those U.K. inventory still is a bit high. That may take longer. Their economy has been a more difficult to spot, but there -- that part of our business is not so large, it's not affecting us too much. And Canada and Australia are fine.

是的。因此，我們客戶的庫存狀況正在改善，但仍有一些工作要做。我們確實預計這種情況將在本財年結束時恢復正常。隨著我們度過第三季春季銷售季節並進入第四季度，特別是在風扇方面，第四季度銷售量很大，我們的內部庫存有所減少。因此，美國庫存——這適用於美國，而英國庫存仍然有點高。這可能需要更長的時間。他們的經濟更加難以發現，但是我們這部分的業務並沒有那麼大，它對我們的影響並不大。加拿大和澳洲也不錯。

Okay. That's very helpful. And then for my follow-up, just staying on CPP. Curious how you guys are doing in regards to your distribution centers on the East and West Coasts? Are they still kind of maintaining those high service levels as you're getting further along in your global sourcing strategy?

好的。這非常有幫助。然後我的後續行動就是繼續使用 CPP。好奇你們東岸和西岸的配送中心做得怎麼樣？隨著您的全球採購策略取得進一步進展，他們是否仍保持著高服務水準？

Absolutely. Yes, no change in our service levels. We're able to provide our customers everything they need.

絕對地。是的，我們的服務水準沒有改變。我們能夠為客戶提供他們所需的一切。

Our next question is from the line of Justin Bergner with Gabelli Funds.

我們的下一個問題來自 Gabelli Funds 的 Justin Bergner。

Ron, Brian, good quarter. First question is just on the residential HBP volumes. What are the underlying drivers that you think are behind the more positive demand there? And is there any kind of offset from commercial being weaker than expected or is that just softening as you expected a couple of quarters ago?

羅恩、布萊恩，幹得好。第一個問題是關於住宅 HBP 的體積。您認為需求更積極背後的根本驅動因素是什麼？商業業務弱於預期是否有任何抵消作用，或者只是像您幾季前預期的那樣軟化？

On the residential side, we have continued to come out with great products that people are taking to very well. We had the best service, the best lead times, the best dealer network, the best production. I might have skipped 1 or 2. I don't know, best quality. And that's showing in the marketplace. Overall, an investment in a residential garage door is a good investment. There was a recent survey done by Zonda, or recent reports on By Zonda that shows that the ROI on putting a new garage door is about 200%.

在住宅方面，我們繼續推出人們非常喜歡的優質產品。我們擁有最好的服務、最好的交貨時間、最好的經銷商網路、最好的生產。我可能跳過了 1 或 2 個。不知道，品質最好的。這在市場上得到了體現。總的來說，投資住宅車庫門是個不錯的投資。Zonda 最近進行的一項調查或 By Zonda 最近的報告顯示，安裝新車庫門的投資回報率約為 200%。

Okay. And any change to your capital allocation priorities? Are you going to continue to repurchase shares? Or you're going to look at bolt-on M&A?

好的。您的資本配置優先順序有何變化？是否會繼續回購股票？還是您打算考慮補強併購？

I'd say that we're in a very luxurious position that our businesses are performing well. Our cash flow gives us optionality. Our stock remains a compelling value. And while it's clearly outperformed any index over any period of time in any peer group competitor, it's still undervalued, and we have and we will continue to take advantage of that. Separately, the M&A outlook for us is a robust pipeline of things that we think are value-enhancing and possibly additive particularly on the HBP side, but the predictability of what we're going to be able to do and when we're going to be able to do is always the uncertainty of looking at M&A.

我想說，我們的業務表現良好，我們處於非常有利的地位。我們的現金流給了我們選擇權。我們的股票仍然具有令人信服的價值。儘管它在任何時期內的任何同類競爭對手的表現都明顯優於任何指數，但它的價值仍然被低估，我們已經並將繼續利用這一點。另外，我們的併購前景是一個強大的管道，我們認為這些事情可以增加價值，並且可能會增加，特別是在 HBP 方面，但是我們將能夠做什麼以及何時去做的可預測性能不能做始終是看待併購的不確定性。

As far as capital, we can buy back stock and do M&A. We've said that our leverage is 3.5x is an outer limit of anything that we would ever consider doing on the M&A side. But we're down to an investment-grade credit that is going to continue to free cash flow. If we don't do M&A and find things that we can add to what we already have. So the ability for us to manage both stock buybacks and M&A is part of what we think the next year is going to look like.

至於資金，我們可以回購股票，併購。我們說過，我們的槓桿率是 3.5 倍，這是我們考慮在併購方面採取的任何行動的外部限制。但我們的投資級信貸將持續釋放現金流。如果我們不進行併購並找到可以添加到我們已有的東西中的東西。因此，我們管理股票回購和併購的能力是我們認為明年會是什麼樣子的一部分。

This concludes our question-and-answer session. I would like to turn the conference back over to Ron Kramer for closing remarks.

我們的問答環節到此結束。我想將會議轉回給羅恩·克萊默（Ron Kramer）致閉幕詞。

We had a great quarter. We're going to be hard at work to finish the next and make it a great year. So look forward to speaking to you all in August.

我們度過了一個美好的季度。我們將努力完成明年的工作並使其成為美好的一年。因此，期待在八月與大家交談。

Thank you. This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

謝謝。本次會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。