Asher Sohnen

Asher Sohnen inquired about the outlook for natural gas costs for wallboard and cement in fiscal Q4, given recent price increases, and the estimated portion and trends of the wallboard business derived from repair and remodel.

Answer

CFO Craig Kesler clarified that natural gas costs primarily impact wallboard, where a hedging program (over 50% hedged through winter) mitigates spikes from winter storms, with expectations for prices to normalize. He stated that repair and remodel constitutes about a third of wallboard demand, is a meaningful and growing market, and is expected to see low single-digit growth.

Asher Sohnen, representing Anthony Pettinari from Citigroup, inquired about the outlook for natural gas costs for wallboard and cement in the fiscal fourth quarter and the proportion and trends of the repair and remodel segment within the wallboard business.

Answer

Craig Kesler, CFO, clarified that natural gas costs primarily impact wallboard, where a hedging program is in place to mitigate winter spikes, and no structural change is expected. He estimated that repair and remodel constitutes about a third of wallboard demand, describing it as a steadier market with low single-digit growth.

Asher Sohnen asked which product groups are most exposed to residential end markets and if the anticipated residential slowdown in the second half of 2025 would drive any shifts in product mix or inventory strategy.

Answer

CEO Mark Witkowski clarified that most product categories have a standard mix across end markets, with fire protection being more non-residential focused. He explained that resource allocation is adjusted based on market conditions, shifting headcount and resources from softer residential areas to growth areas.