Daniel Moore

Daniel Moore inquired about the drivers behind LSI's high EBITDA margin, its sustainability, and the key factors for its market growth. He also asked about the organic growth in building products, distinguishing between pricing and volume, and the confidence in demand drivers for the seasonally stronger period. Additionally, he sought details on ClarkDietrich's performance, including top-line versus cost impacts and strategies to protect margins, and Worthington's capital allocation priorities post-LSI acquisition.

Answer

President & CEO Joseph Hayek attributed LSI's strong performance to its market leadership, resilient retrofit demand, long-standing reputation, and innovative solutions in standing seam metal roofing clips and retrofit systems. CFO Colin Souza noted that building products' organic growth was primarily driven by strong volume contributions across heating, cooking, water, cooling, and construction, with wholly-owned EBITDA margins up 300 basis points year-over-year. Hayek emphasized that the growth was more volume-driven due to market share gains and innovation. Regarding ClarkDietrich, Souza explained margin compression due to a challenging new construction environment and increased competition, with a shift in mix towards larger, lower-margin projects. He expects no worse than flat sequential performance. Hayek stated that capital allocation would remain balanced, prioritizing growth, strategic M&A, and opportunistic returns to shareholders.

Daniel Moore asked for more details on the organic growth drivers within the building products segment, distinguishing between market growth and share gains, and the potential to outpace the market. He also questioned the progress of new consumer product lines like Balloon Time Mini and HALO griddles, focusing on retail penetration and growth runway. Moore sought an update on ClarkDietrich's performance, asking if its reduced contribution represents a new normal. Lastly, he inquired about the M&A pipeline and capital allocation priorities given strong free cash flow.

Answer

CEO Joe Hayek explained building products' growth as a mix of market normalization and share gains, particularly in heating, cooking, and cooling/construction, with refrigerant shifts driving the latter. For consumer products, Hayek highlighted new customer wins for Balloon Time Mini (e.g., Walgreens) and expanded distribution for HALO griddles, noting that lower interest rates could further boost growth. Regarding ClarkDietrich, Hayek indicated that its performance is tied to new construction, which has softened, suggesting flat to slightly down results for the next few quarters. Hayek and CFO Colin Souza affirmed a balanced capital allocation strategy with a growth bias, emphasizing a solid M&A pipeline focused on niche market leaders and adjacencies to recent acquisitions like Elgen.

Daniel Moore asked for more details on the pockets of strength driving organic growth in the building products segment, distinguishing between market growth and share gains, and the potential to outpace the market. He also questioned the progress of new product lines like Balloon Time Mini and Halo griddles in the consumer segment, focusing on retail penetration and growth runway. Additionally, he sought an update on ClarkDietrich's contribution and the M&A pipeline, including capital allocation priorities and future opportunities.

Answer

Joe Hayek (President and CEO) indicated building products growth was a mix of market normalization and share gains, with cooling and construction benefiting from refrigerant shifts. For consumer products, he highlighted strong performance in celebrations and new customer wins for Balloon Time Mini (e.g., Walgreens) and expanding distribution for Halo griddles. Regarding ClarkDietrich, Joe noted its dependence on new construction, which has softened, leading to margin compression, expecting flat to slightly down performance. Joe Hayek and Colin Souza (CFO) affirmed a balanced capital allocation with a growth bias, emphasizing a solid M&A pipeline focused on high-margin, niche leaders, with Elgin Manufacturing as a prime example.

Daniel Moore asked for more details on the pockets of strength driving organic growth in building products, distinguishing between market growth and share gains, and the potential for Worthington to outpace the market. He also inquired about progress in new consumer product lines like Balloon Time Mini and Halo griddles, focusing on retail penetration and growth runway. Moore then asked about ClarkDietrich's contribution, whether its current lower levels represent a new normal, and the outlook for the next few quarters. Lastly, he sought an update on the M&A pipeline, capital allocation priorities, and potential bolt-on opportunities.

Answer

Joseph Hayek (President, CEO & Director) explained building products growth as a mix of market normalization and share gains, particularly in heating, cooking, cooling, and construction, driven by the shift to environmentally friendly refrigerants. For consumer products, he noted revenue growth despite tariff impacts, strong performance in celebrations, new distribution wins for Balloon Time Mini (Walgreens), and expanded Halo griddle presence. Regarding ClarkDietrich, Hayek acknowledged its dependence on new construction, leading to margin compression, and projected flat to slightly down performance for the next couple of quarters, while remaining optimistic long-term. Joseph Hayek and Colin Souza (VP & CFO) affirmed a balanced capital allocation strategy with a growth bias, a solid M&A pipeline focused on high-margin, low-asset intensity niche leaders, and opportunities around Elgin Manufacturing.

Daniel Moore of CJS Securities asked for the specific revenue and EBITDA contributions from the Regasco acquisition and questioned the outlook for organic top-line growth in fiscal 2026. He also requested more detail on the recently announced Elgin acquisition, including its strategic fit, customer base, and potential synergies.

Answer

CFO Colin Souza reported that Regasco contributed approximately $16.5 million in revenue and $2 million in EBITDA. CEO Joseph Hayek refrained from giving specific FY26 guidance due to macro uncertainties but expressed cautious optimism. Regarding Elgin, Hayek described it as a strong strategic fit, highlighting its leadership in a niche market (HVAC components), its use of roll-formed steel (a core competency for Worthington), and its similar go-to-market channels, which present significant synergy opportunities. Souza added that the softer M&A market contributed to an attractive purchase price.

Daniel Moore asked about the drivers behind the spike in consolidated gross margin to over 29%, its sustainability, and the mix between restocking and end-market demand in the Consumer segment's volume growth. He also questioned the outlook for free cash flow conversion and the cadence of share repurchases.

Answer

CEO Joseph Hayek explained that the 620 basis point gross margin expansion was partly due to the deconsolidation of the lower-margin SES business (~300 bps) and positive mix shifts. He noted the goal is to sustain margins in the high 20s. Regarding consumer volume, Hayek indicated the company worked to prevent overstocking and that point-of-sale data is tracking with orders, though weather likely provided a small positive impact. Hayek also stated the capital allocation strategy remains balanced with a bias toward growth, with buybacks used to offset dilution and opportunistically. He mentioned a significant CapEx project will continue for 6-8 quarters, with the bulk of spending in fiscal 2026.

Daniel Moore with CJS Securities inquired about Wiley's research revenue growth, specifically the potential for incremental upside given strong article submission trends. He also sought clarification on the $6 million AI licensing revenue, the pipeline for repeat LLM customers, and the implied full-year AI licensing forecast. Additionally, Moore asked about the primary drivers of the learning segment's decline, distinguishing between end-market demand and Amazon's inventory management, and the expected moderation in the second half. Finally, he questioned Wiley's capital allocation strategy, particularly the balance between accelerated share buybacks and deleveraging, given the strong free cash flow outlook.

Answer

President and CEO Matt Kissner and Executive Vice President and General Manager Jay Flynn indicated that Wiley expects to grow at the top end of the research market, potentially outperforming due to strong article growth, with Q2 research publishing up 7%. Executive Vice President and CFO Craig Albright and Jay Flynn confirmed the $6 million AI licensing deal was with a repeat customer, noting the lumpiness of such deals but reaffirming the 'moderately up year-over-year' guidance for AI revenue, emphasizing a focus on recurring revenue and corporate R&D. Matt Kissner and Craig Albright attributed the learning segment's challenges primarily to cyclical factors like Amazon's inventory adjustments and soft consumer spending, expecting moderation in the second half. Matt Kissner also detailed Wiley's disciplined capital allocation approach, balancing internal growth, leverage management, and opportunistic share repurchases, especially when share prices are attractive.

Daniel Moore of CJS Securities asked about Wiley's fiscal 2026 revenue guidance, seeking clarity on the drivers for organic growth excluding AI and the factors influencing the high versus low end of the range. He also inquired about the potential future contribution from recurring corporate AI partnerships, the disparity between strong article submission growth and output growth, the company's planning amidst macroeconomic uncertainty, and the capital allocation strategy following the collection of divestiture proceeds, particularly regarding share buybacks versus deleveraging.

Answer

President & CEO Matthew Kissner, Interim CFO Christopher Caridi, and EVP & GM for Research & Learning Jay Flynn collectively addressed the questions. They attributed the organic growth outlook to continued strength in Open Access, solid calendar 2025 subscription renewals, and growth in Learning's inclusive access and courseware. Regarding AI, they positioned the current $1 million in recurring revenue as the start of a strategic shift to SaaS-like models, emphasizing the value of learning from these early partnerships. Jay Flynn explained that high submission growth supports the value of subscriptions and has a natural lag before impacting output. On the macro environment, management expressed confidence due to global diversification, recurring revenue, and cost discipline, while actively modeling scenarios. Christopher Caridi stated that capital allocation will be a 'mixed approach,' balancing investments with shareholder returns, and noted that buybacks remain opportunistic.

Daniel Moore inquired about Materion's capital allocation priorities, particularly how share buybacks fit into the rank ordering alongside organic growth and balance sheet management, given the new authorization.

Answer

Shelly Chadwick, VP and CFO, reiterated that organic growth remains the top capital allocation priority, with investments in high-growth areas yielding strong returns. She clarified that the $50 million share repurchase program is an opportunistic tool, not actively pursued, and was re-authorized after the previous one was nearly depleted.

Daniel Moore questioned the sustainability of Precision Optics' double-digit adjusted EBITDA margins, seeking granularity on cost and operating improvements. He also asked about potential detractors to year-over-year growth in 2026, the timeline and incremental contribution from the Conisol acquisition, and the rank ordering of capital allocation priorities, including the new share repurchase authorization.

Answer

CEO Jugal Vijayvargiya expressed satisfaction with Precision Optics' progress, citing market upticks and significant cost structure improvements, aiming for continued sequential progress towards the 23% midterm EBITDA target. He identified the auto market as a challenging segment. He confirmed the Conisol acquisition was on track, with qualifications ongoing and sales expected to start in 2026. CFO Shelly Chadwick reiterated that organic growth remains the top capital allocation priority, with share repurchases serving as an opportunistic tool.

Daniel Moore of CJS Securities asked for more details on the Conasol acquisition, including its capabilities and financial opportunity. He also inquired about trends in the China semiconductor market and sought an update on the timing for the Phase II Precision Clad Strip project related to Philip Morris International (PMI).

Answer

CEO Jugal Vijayvargiya described the Conasol acquisition as a strategic expansion of its semiconductor footprint in Asia, providing a full value stream for its tantalum business. He noted that customer qualifications will take 6-12 months, with sales expected to begin in 2026. Regarding the China semi market, he acknowledged that China is developing its own supply chain, creating local competition, but noted Materion is seeing strong growth in semi subsectors outside of China. For the PMI project, he stated the full-year outlook is unchanged and that Materion is fully prepared to support increased volumes upon potential FDA approval for its customer's product.

Dan Moore of CJS Securities asked about the new 23% adjusted EBITDA margin target, questioning the expected timeframe and the level of organic top-line growth needed to achieve it. He also requested more details on a new deposition material being developed in partnership with an equipment manufacturer.

Answer

President and CEO Jugal Vijayvargiya stated that reaching the 23% midterm EBITDA margin target will be achieved over the next several years through organic growth outpacing underlying markets by 200-300 basis points, potential bolt-on M&A, and continued disciplined execution on cost and operational excellence. Regarding the new material, he described it as a partnership with a leading equipment manufacturer to support a next-generation deposition technology beyond PVD and ALD, which could provide meaningful growth if successful.

Daniel Moore of CJS Securities asked for the 2025 outlook for the semiconductor market, inquired about milestones for the next phase of the Precision Clad Strip product ramp, and questioned if other non-core businesses might be divested.

Answer

President and CEO Jugal Vijayvargiya described the semiconductor market recovery as slower than expected and difficult to forecast, with potential improvement in the second half of 2025, but noted they are monitoring it month-by-month. He identified potential FDA approval in late 2025 or 2026 as a key milestone for the Clad Strip product's entry into the large U.S. market. He also stated that while the company is happy with its current portfolio alignment to megatrends, they will continue to study it for minor changes.

Daniel Moore inquired about Simpson Manufacturing's Q3 2025 revenue growth, specifically seeking details on organic volume declines in North America and volume growth in Europe, and later asked about the macro housing market outlook for 2026, the drivers behind strategic cost actions, the regional breakdown and timing of these cost savings, and whether the $30 million in savings is earmarked for bottom-line improvement or reinvestment.

Answer

CFO Matt Dunn explained that Q3 global sales growth was driven by pricing (5+ points), foreign exchange (1+ point), and acquisitions (less than 0.5 point), with global volume down 1%. CEO Mike Olosky clarified North American year-to-date volume was down 1.4%. Regarding the macro outlook, Mr. Olosky noted 2025 housing starts are expected to be down mid-single digits, with 2026 forecasts generally flat, citing affordability issues and the need for strategic cost savings to maintain a 20% operating income level. Mr. Dunn added that $30 million in annualized cost savings are expected in 2026, with $9-12 million in one-time charges in 2025 ($3 million already in Q3, $6-9 million expected in Q4), primarily impacting SG&A. Mr. Olosky confirmed the savings are aimed at maintaining the 20% operating income target.

Daniel Moore of CJS Securities inquired about the key drivers of Q2 revenue growth, the apparent conservatism in the full-year operating margin guidance despite a strong first half, the reason for an expense reclassification, and the outlook for working capital and share repurchases.

Answer

CFO & Treasurer Matt Dunn confirmed that revenue growth was driven by $9 million from acquisitions, $7 million from favorable currency exchange, and pricing, with volumes being largely flat. CEO Michael Olosky explained the margin guidance reflects significant second-half uncertainty, including the impact of new tariffs. Matt Dunn clarified the expense reclassification was an internal 'housekeeping' change with no impact on overall spending. Regarding capital allocation, he noted the company remains opportunistic with its buyback authorization and manages working capital by using inventory to hedge steel prices.

Daniel Moore asked about pet care volume trends, the potential for the pet care business to return to mid-single-digit growth, and the overall increase in capacity after current investments. He also inquired about momentum in the environmental and infrastructure segment and the higher decremental margin in the Q4 guide.

Answer

CEO Douglas Dietrich and Group President D.J. Monagle explained that pet care has grown organically at a 9% compound rate over five years, despite recent market dynamics. They detailed adjustments made with private label partners and significant investments in Dyersburg, Tennessee, Brantford, Ontario, and a new facility in Chaoyang City, China, which will enable over $30 million in growth starting in 2026 and provide capacity for the next 5-10 years. Douglas Dietrich noted strength in offshore water treatment for environmental and infrastructure, expecting improvement when interest rates ease. CFO Erik Aldag attributed the Q4 decremental margin to seasonal mix shifts, particularly in high-margin foundry and residential construction products, and the absence of equipment sales seen in Q3.

Daniel Moore requested an update on the two smaller acquisitions made last quarter (one modular, one portable storage) and the outlook for the M&A pipeline over the next two quarters.

Answer

Joe Hanna (CEO) confirmed that the Q2 acquisitions in the Southeast are integrated and contributing, with no issues. Keith Pratt (CFO) added that the M&A pipeline remains active and encouraging, forming a key part of their growth strategy.

Daniel Moore asked about the sequential cadence of inquiries and order rates for Mobile Modular and Portable Storage, and the company's strategy regarding capital expenditures versus utilizing existing fleet.

Answer

Joe Hanna, Chief Executive Officer, reported healthy, double-digit booked order volumes for Mobile Modular, consistent with prior quarters, and stable inquiry levels for Portable Storage. Keith Pratt, Chief Financial Officer, clarified that lower fleet utilization in modular and portable storage allows meeting demand from existing equipment, reducing CapEx, while TRS-RenTelco's higher utilization warrants selective capital spending.

Daniel Moore asked for an assessment of Enerpac's pipeline of opportunities entering fiscal 2026, comparing it to the start of fiscal 2025, and requested geographical insights. He also sought clarification on the expected cadence for fiscal 2026, specifically asking if Q1 growth would resemble Q4's organic decline or align with the lower end of the full-year guidance. Additionally, he inquired about the gross margin and SG&A assumptions embedded in the fiscal 2026 guidance, the strategy for deploying capital between M&A and buybacks, and whether potential M&A sellers are now more willing to engage at rational multiples. Finally, he asked about the outlook for Cortland, specifically if continued double-digit growth is reasonable and factored into guidance.

Answer

Paul Sternlieb, President and CEO, stated the macro outlook for FY2026 is similar to the prior year, citing ongoing uncertainty but cautious optimism for infrastructure. Darren Kozik, CFO, emphasized infrastructure as a bright spot. Mr. Kozik noted that significant margins and free cash flow come in the second half, expecting Q1 margins to be pressured by tariff costs and growth to depend on Europe's momentum, with Q1 potentially looking similar to Q4. For gross margin, Mr. Kozik indicated it would be similar to recent quarters with potential upside from service business improvements in H2, while SG&A is expected to rise slightly in H1 due to lower volume before coming down in H2. Mr. Sternlieb added that Q3 restructuring benefits would impact SG&A in FY2026 and that PEP initiatives offer midterm gross margin improvement opportunities. Regarding capital allocation, Mr. Kozik stated they are opportunistic with buybacks and will balance M&A and buybacks equally. Mr. Sternlieb reiterated a balanced approach, prioritizing business investment, disciplined M&A, and opportunistic share repurchases. On M&A, Mr. Sternlieb noted a mix of new, interesting opportunities entering the funnel and ongoing dialogue with past contacts, while Mr. Kozik added that increased M&A resources are being invested. For Cortland, Mr. Sternlieb expressed bullishness, viewing it as a strong, margin-accretive growth engine with exposure to high-growth markets, expecting continued positive performance.

Daniel Moore asked for a comparison of the pipeline of opportunities and backlog entering fiscal 2026 relative to fiscal 2025, seeking color by geography. He inquired about the expected cadence for fiscal 2026, specifically regarding Q1 margins and overall growth, and how it might compare to Q4 fiscal 2025. Mr. Moore also asked for color on the assumptions for gross margin and SG&A embedded in the fiscal 2026 guidance. He inquired about the company's willingness to be more aggressive with the new $200 million share repurchase authorization, balancing it against M&A opportunities, and if potential sellers were now willing to engage in dialogues at more rational multiples. Finally, he asked about the outlook for Cortland Biomedical, specifically if double-digit growth was reasonable and embedded in the fiscal 2026 guidance.

Answer

Paul Sternlieb, President and CEO, indicated a similar macro uncertainty level to the prior year, leading to a wider guidance range, but expressed cautious optimism for infrastructure. Darren Kozik, CFO, projected Q1 margins to face pressure from tariff costs and expected Q1 growth to resemble Q4 fiscal 2025, with Europe being a 'wild card.' Mr. Kozik stated gross margins are expected to be consistent with recent quarters, with potential upside from service business improvements, and SG&A optimization is a laser focus. Mr. Sternlieb added that Q3 restructuring benefits would play out in fiscal 2026. On capital allocation, Mr. Kozik stated buybacks are opportunistic, and M&A is a strong focus, with Mr. Sternlieb noting an increased funnel of opportunities. Mr. Sternlieb expressed bullishness on Cortland Biomedical, viewing it as a strong, margin-accretive growth engine with continued investment and new product development.

Daniel Moore of CJS Securities inquired about real-time customer reactions to tariffs and macroeconomic uncertainty, asking about project delays or cancellations. He also questioned if there was any revenue pull-forward into Q3 ahead of tariffs, the current state of channel inventory, and sought details on the recent restructuring actions and their anticipated cost savings.

Answer

CEO Paul Sternlieb responded that while the environment is dynamic and some customers are cautious, Enerpac has not seen any meaningful project cancellations. He noted that pricing actions to offset tariffs have been accepted by the channel and there was no significant revenue pull-forward. CFO Darren Kozik added that the restructuring was a proactive measure to right-size the cost structure amid global uncertainty, with three-quarters of the charge related to severance and the remainder being a noncash lease impairment.

Daniel Moore of CJS Securities inquired about real-time customer reactions to tariffs and macro uncertainty, potential Q3 revenue pull-forward, channel inventory levels, and details on recent restructuring actions.

Answer

CEO Paul Sternlieb noted that while customers are cautious, there have been no significant project cancellations, and tariff-related price increases are being accepted. He also stated there was no meaningful revenue pull-forward. CFO Darren Kozik explained the restructuring was a targeted response to global uncertainty, with three-quarters of the charge being severance and the rest a noncash lease impairment.

Daniel Moore of CJS Securities inquired about real-time customer reactions to tariffs and macroeconomic uncertainty, asking about project delays or cancellations. He also questioned if there was any revenue pull-forward into Q3 ahead of tariffs, the current state of channel inventory, and sought details on the recent restructuring actions and their anticipated cost savings.

Answer

CEO Paul Sternlieb acknowledged a dynamic environment with some customer caution but reported no meaningful project cancellations. He noted that pricing actions to offset tariffs have been successfully passed through the channel and that there was no significant revenue pull-forward. CFO Darren Kozik explained the restructuring was a proactive measure to right-size costs amid global uncertainty, with about 75% of the charge related to severance and the remainder a noncash lease impairment.

Daniel Moore of CJS Securities inquired about real-time customer sentiment regarding tariffs and macroeconomic uncertainty, asking about potential project delays, order cancellations, and any revenue pull-forward into Q3. He also asked for details on the recent restructuring actions and their anticipated cost savings.

Answer

CEO Paul Sternlieb noted that while customers are cautious, there have been no meaningful project cancellations, and pricing actions to offset tariffs have been accepted by the channel. He stated there was no significant revenue pull-forward. CFO Darren Kozik explained the restructuring was a targeted response to global uncertainty, with three-quarters of the charge related to severance and the remainder to a non-cash lease impairment, setting a good foundation for the future.

Daniel Moore of CJS Securities inquired about real-time customer reactions to tariffs and macroeconomic uncertainty, asking about potential project delays, order cancellations, and any revenue pull-forward into Q3. He also sought details on the recent restructuring actions and their anticipated cost savings.

Answer

CEO Paul Sternlieb noted that while the environment is dynamic and some customers are cautious with large capital investments, there have been no meaningful project cancellations. He added that pricing actions to offset tariffs have been successfully passed through the channel and that any Q3 revenue pull-forward was not significant. CFO Darren Kozik explained the restructuring was a proactive measure against global uncertainty, with three-quarters of the charge related to severance and the remainder a noncash lease impairment, establishing a solid foundation for the future.

Daniel Moore inquired about the recent uptick in Advanced Process Solutions (APS) orders post-quarter, asking for specifics on end markets and the backlog outlook. He also questioned the demand drivers in the Molding Technology Solutions (MTS) segment and the company's path to cash flow normalization and debt reduction.

Answer

CEO Kimberly Ryan confirmed the recent large APS orders were primarily in plastics from the U.S. and Asia, which provides confidence for Q4. For MTS, she highlighted new product momentum in India and China. Interim CFO Megan Walke and CEO Kim Ryan both addressed cash flow, stating debt paydown is the top priority and that cash flow should normalize as order advances are collected. They noted leverage improvement also depends heavily on returning EBITDA growth.

Daniel Moore of CJS Securities asked if sales had slipped from Q1 into Q2, questioned the sustainability of strong retail store sales, sought clarity on gross margin dynamics, and inquired about the ongoing strategy for share repurchases.

Answer

President & CEO Duncan Bates acknowledged some community-side orders slipped from Q1, but the Q2 strength was genuinely driven by the dealer channel. He described the strong retail performance as representative of the company's potential, stemming from improved systems and personnel. Bates clarified that while overall gross margin was impacted by SG&A accruals, the core product gross margin actually improved. Regarding capital allocation, he stated that share buybacks will be opportunistic and weighed against other opportunities, such as lending.

Daniel Moore from CJS Securities asked for a breakdown of the revised sales guidance into volume and price components and inquired whether the company might slow the pace of future integration phases given the recent challenges.

Answer

CFO David Hass explained that Q2 volume was negatively impacted by the tornado and delivery disruptions. He expects to exit Q4 with a more balanced volume and price mix. Hass stated that instead of slowing down, the company will proceed more cautiously by building up inventory (days on hand) ahead of future facility transitions to prevent similar product supply disruptions.

Daniel Moore asked about the expected revenue growth cadence for the year, particularly Q2, given the competing effects of the Easter benefit and the Hawkins facility disruption, and also inquired about the pace of deleveraging.

Answer

CFO David Hass indicated that Q2 and Q3 are seasonally stronger quarters and sales will build, but maintained the annual guidance. On deleveraging, he reaffirmed the goal of reducing leverage by half a turn, noting that adjusted free cash flow generation accelerates in Q2 and Q3 and that Q1 was impacted by a one-time refinancing interest payment.

Inquired about the potential for offensive revenue synergies, whether they would be quantified, and asked for clarification on the components of the adjusted free cash flow guidance for 2025.

Answer

The company sees significant revenue synergy opportunities from expanding premium and regional brands into new channels and formats, and will share more at the upcoming Investor Day. The free cash flow guidance is driven by base business performance and after-tax synergy capture, but does not include proceeds from final international divestitures. Capital priorities are top-line growth, the dividend, and opportunistic buybacks.

Daniel Moore inquired about the progress and potential quantification of revenue synergies and sought clarification on the components of the 2025 adjusted free cash flow guidance.

Answer

CEO Robbert Rietbroek detailed revenue synergy opportunities, including expanding premium brands into new channels and formats and leveraging the combined distribution network, stating more details would come at the Investor Day. CFO David Hass clarified the free cash flow guidance is driven by after-tax synergy capture and base business EBITDA, and confirmed the primary capital allocation priority is top-line growth, followed by the dividend.

Daniel Moore of CJS Securities asked for more detail on Government Solutions margins, specifically the impact of mix pressure and setup costs for new programs. He also inquired about the timing of the New York City contract finalization and the company's capital allocation priorities, particularly regarding M&A versus share buybacks.

Answer

CFO Craig Conti detailed the 250 basis point year-over-year margin decline in Government Solutions, attributing 100 bps to product mix, 100 bps to ERP costs, and 50 bps to incremental setup costs for new programs. CEO David Roberts addressed the New York City contract, stating they are working toward a resolution and will update the market upon finalization. Regarding capital allocation, Mr. Roberts noted that M&A activity is increasing, but the company will remain opportunistic with its share repurchase program if a suitable deal does not materialize.

Daniel Moore from CJS Securities asked whether the cautious guidance was due to a real-time slowdown in travel or the anticipation of future softness. He also questioned if the outperformance of RAC tolling revenue versus TSA volume growth would continue and inquired about the long-term margin expansion opportunity in the Government Solutions segment.

Answer

CFO Craig Conti clarified that the guidance reflects anticipation of future softness based on airline forecasts more than a current material slowdown, though a very small decline is beginning to be visible. Regarding RAC tolling, he noted that outperformance versus TSA volumes can be inconsistent as Verra's revenue is concentrated in states with toll roads. CEO David Roberts added that strong legislative tailwinds and an expanding market set up the Government Solutions business for significant opportunity over the next few years.

Daniel Moore inquired about the expected growth ranking for business segments in 2025, the impact of new red light camera legislation in New York, and capital allocation priorities as leverage approaches 2x.

Answer

Executive Craig Conti projected Government Solutions to grow at the high end of its long-term guide, with Commercial Services at the lower end. Executive David Roberts stated that New York City will likely finalize its new camera plans after the current RFP process concludes. Roberts also affirmed that growth, both organic and through M&A, remains the top capital priority, with Conti adding that the long-term net leverage target is still 3x.

In a follow-up, Daniel Moore of CJS Securities questioned the long-term strategic fit of the Infrastructure business and asked for guidance on the quarterly revenue and earnings cadence for the second half of the year, post-renewables divestiture.

Answer

Chairman & CEO Bill Bosway stated that while the Infrastructure business's future role could change, the current strategy is to continue improving its strong performance. CFO Joe Lovechio guided that Q3 and Q4 would see normal seasonality in residential, with AgTech revenue being more weighted to Q4 due to project timing. Bosway added that long-term seasonality will likely mirror that of the building products market.

Daniel Moore inquired about the anticipated moderation in the community channel, the outlook for backlog levels in Q2, the sustainability of the recovery in Canada, and the financial contribution of the Eiseman Homes acquisition.

Answer

President & CEO Tim Larson clarified that the community channel's robust Q1 growth rate is not expected to continue into Q2, though business remains steady. He anticipates backlogs will stay within the normal 4-12 week range. EVP, CFO & Treasurer Lori Hough noted the Eiseman acquisition contributed one month of revenue and, as a retail operation, does not impact the manufacturing backlog.

Daniel Moore asked for more detail on the anticipated moderation in the community channel, the outlook for backlogs based on the Q2 guide, the sustainability of the demand recovery in Canada, and the financial contribution from the recent Eiseman Homes acquisition.

Answer

President & CEO Tim Larson clarified that the robust community order rate from Q1 is not expected to continue at the same pace, a trend seen across multiple geographies, and that backlogs should remain within their normal 4-to-12-week range. EVP & CFO Laurie Hough stated the Eiseman acquisition contributed one month of revenue in Q1 and, as a retail operation, does not impact the company's manufacturing backlog.

In a follow-up question, Daniel Moore of CJS Securities asked about the company's M&A pipeline and the level of discussions with other regional dealer groups.

Answer

President & CEO Tim Larson declined to comment on specific discussions but reiterated that the company's M&A strategy and capital allocation are guided by its five key strategic priorities. He stated the immediate focus is on the successful execution and integration of the recently announced Eisman Homes acquisition.

Daniel Moore of CJS Securities asked about the confidence in order rate trajectory for Q4 and early fiscal 2026, plans for managing backlog, and trends in penetrating large community developers. He also questioned the increase in SG&A and its expected run rate.

Answer

CEO Tim Larson expressed confidence in order rates, citing promising early signs in the spring selling season, and stated the company is planning for continued profitable growth in fiscal 2026. He noted that the community developer channel grew year-over-year and the company is leveraging project learnings to accelerate future growth. CFO Laurie Hough clarified that SG&A is about 35% variable with revenue and that the increase reflects higher sales volume and continued investments in people and technology, which are expected to continue at a similar pace for the next several quarters.

Inquired about expectations for order rates and backlog amid seasonality and the upcoming election, requested a breakdown of gross margin drivers, asked about the confidence of REIT and developer customers, and questioned the company's capital allocation priorities, particularly regarding M&A.

Answer

The company expects some order softening and backlog moderation due to the election but noted overall strong order pace and customer confidence, especially from REITs and developers. They declined to rank gross margin drivers. M&A is a top capital allocation priority, along with platform innovation and shareholder returns.

Daniel Moore of CJS Securities inquired about RV and marine dealer inventory levels, the potential impact of a future restock, and sought clarification on the Q3 EBIT margin guidance in light of increased tariff impacts.

Answer

President and CEO Jason Lippert noted that both dealers and OEMs remain cautious, with the marine market in the "middle innings" of destocking compared to RV. He anticipates a slow, gradual recovery. EVP & CFO Lillian Etzkorn explained that tariff mitigation focuses on offsetting dollar costs, not preserving margin percentages, which causes some mathematical compression. She also cited integration costs from recent acquisitions as a near-term margin headwind but reaffirmed the full-year target of an 85 basis point overhead reduction.

Daniel Moore inquired about the expected cadence of wholesale shipments in 2025 (H1 vs. H2) and the feasibility of achieving 3-5% content growth. He also asked about the potential for operating margin uplift in 2025 and the outlook for the M&A pipeline over the next 6-12 months.

Answer

CEO Jason Lippert noted that content growth is dependent on product mix but feels more optimistic about a rebound sooner rather than later, driven by low dealer inventories. He anticipates more M&A activity in the next calendar year. VP of Finance and Treasurer Lillian Etzkorn projected a modest operating margin increase for 2025, supported by higher volume, facility consolidation, and overhead cost reductions.

Daniel Moore from CJS Securities inquired about current order trends for Q2, regional softness in the Southeast, drivers for the increase in average selling price (ASP), the impact of Texas flooding on insurance claims, the divergence of manufactured housing growth from site-built homes, and the strategy behind the American HomeStar acquisition.

Answer

President and CEO William Boor noted that while uncertainty remains, high-level positive order trends are continuing. He clarified that the Southeast was lagging in growth rather than declining and that the ASP increase was driven by true price appreciation. Boor also stated that recent Texas floods did not generate significant claims. He attributed manufactured housing's outperformance to resolving prior inventory issues and a strong affordability advantage. Regarding the American HomeStar deal, he expressed long-term confidence in the Texas market and highlighted opportunities for significant value creation.

Daniel Moore of CJS Securities asked about Interim CEO Ali El-Haj's top strategic and financial priorities for the next 6-12 months, the path back to year-over-year organic revenue growth, and midterm gross margin targets considering the updated outlook for the ceramics business.

Answer

Interim President & CEO Ali El-Haj stated his priorities are internal operational improvements to increase execution speed and aggressively pursuing short- and mid-term top-line growth opportunities. SVP, CFO & Treasurer Laura Russell added that margin expansion will be driven by top-line growth, improved capacity utilization, and the benefits from announced cost-saving initiatives.

Daniel Moore asked about the powersports market outlook, requested more detail on new product systems, and questioned the company's M&A strategy and willingness to increase leverage.

Answer

CEO Andy Nemeth noted that powersports inventories are stabilizing and attachment rates are rising. President - RV, Jeffrey Rodino, detailed new solutions like a composite RV roof and a proprietary Power Bimini system. CEO Nemeth also confirmed the M&A pipeline is active and the company would consider leverage above 3x for a strategic deal, with a plan to delever quickly.

Daniel Moore of CJS Securities asked if the revised margin guidance includes steps to reduce capacity or if the company is maintaining capacity for a potential short-term rebound. He also inquired about the outlook for manufactured housing gaining share from site-built homes and the share gain opportunity for Sportech in the Powersports market.

Answer

CEO Andy L. Nemeth and CFO Andrew Roeder explained that while they are undertaking thoughtful facility consolidations, they are strategically maintaining overall capacity to remain nimble and support customers during a potential inflection point. They reaffirmed the long-term value proposition for MH. Nemeth also highlighted that Sportech continues to see strong take rates for its cabin enclosures, particularly in the more resilient utility side-by-side vehicle market.

Dan Moore asked about the primary opportunities for driving organic growth, expectations for Q1 revenue and margins, and the company's capital allocation priorities.

Answer

CEO Andy L. Nemeth highlighted new product innovation and prototyping as key organic growth drivers. He corrected his initial statement to confirm that Q1 revenue and margins are expected to be up from Q4. Regarding capital allocation, Nemeth noted the M&A pipeline remains full and the company will be opportunistic while remaining disciplined across all priorities.

Daniel Moore questioned the 2025 RV outlook, asking why a dealer restock wasn't assumed if retail is flat. He also inquired about the potential for larger M&A given the company's liquidity and its ability to outpace the broader Powersports market decline.

Answer

CEO Andy L. Nemeth stated the 2025 RV forecast is intentionally cautious, assuming current low inventory levels, but acknowledged a restock is likely needed. He confirmed the company is seeing and has an appetite for larger M&A deals. President, Powersports Kip Ellis added that Patrick expects to offset the market decline through organic growth, particularly in premium UTV cab attachment rates.

Speaking for Daniel Moore, an analyst asked if Thryv would consider raising its long-term 100% net revenue retention goal given the new sales focus on expansion. He also asked about the company's target leverage range over the next few years.

Answer

CEO Joe Walsh explained that while NRR may be higher in the near term due to the focus on the existing base, the 100% target remains appropriate long-term to reflect the inherent churn of the VSB market. He prefers to remain conservative for now. CFO Paul Rouse added that the plan is to continue paying down debt, leading to consistent improvement in the leverage ratio over time.

Daniel Moore sought an update on the timeline for SaaS EBITDA to exceed that of Marketing Services and asked about the future cadence of new "center" launches versus the focus on Keap integration.

Answer

CEO Joe Walsh reiterated the company's projection that SaaS will become the majority source of EBITDA in 2026, leading to overall top-line growth in 2027. He confirmed the upcoming launch of the "Workforce Center" in 2025 but stated that the primary focus for subsequent years will be on integrating the existing platform and Keap, enhancing interoperability, and ensuring ease of use, rather than promising a new center each year.

Daniel Moore from CJS Securities requested more specific details on the expected cadence for Q1 revenue and EBITDA, using Q4 as a baseline. He also asked for a breakdown of the full-year 2025 revenue guidance, seeking clarity on the expected performance of Self-Storage versus New Construction and the Commercial segment.

Answer

CFO Anselm Wong advised using the Q4 adjusted EBITDA margin of approximately 19% as the starting point for Q1, with sequential margin improvement expected throughout 2025 as cost savings are realized. For the Q1 top line, he indicated a return to normal seasonality, which could be slightly lower due to weather impacts. For the full year, Wong stated that New Construction will see a slow decline as R3 grows, and the Commercial segment is expected to return to growth, aided by new locations.

Daniel Moore asked for more detail on customer sentiment, specifically the balance between interest rate concerns and supply-demand dynamics. He also inquired about the Q3 credit loss, whether more are expected in Q4, the magnitude of 2025 commercial actions, and the appetite for further share repurchases.

Answer

CFO Anselm Wong stated that customer hesitation is a mix of waiting for further interest rate cuts and election uncertainty. He confirmed the Q3 credit loss was due to a large, long-time customer's bankruptcy and that an additional reserve was taken for other accounts, with no further material losses assumed in Q4 guidance. Wong reiterated the previously disclosed impact of commercial actions and affirmed the company's intent to continue share repurchases, feeling the stock is undervalued.

Daniel Moore asked for clarification on the drivers of the revenue decline in the Memorialization and Industrial Technologies segments, the potential next steps in the Tesla arbitration, and the timeline for achieving the company's cost-saving targets.

Answer

CFO Steven Nicola clarified the Memorialization decline was weighted more to lower granite sales from backlog work-down in the prior year, with the exit from the European cremation business also contributing. He stated the company expects to reach a $25-$30 million cost savings run rate by year-end. CEO Joseph Bartolacci added that the vast majority of the Industrial Technologies decline was from the energy business and that while the arbitration ruling was definitive, he could not speculate on Tesla's future actions.

Asked about the Energy Storage backlog and future orders, the FY25 guidance for Industrial Technology (Warehouse Automation and Acxiom), the strategic portfolio review, the sustainability of SGK's growth, and details on cost savings and FY25 cash flow/CapEx.

Answer

The Energy Storage backlog is ~$100M for FY25, with caution on new deals due to the Tesla dispute. Warehouse Automation quoting is strong for a back-half recovery. The strategic review was triggered by growth opportunities in Industrial Tech. SGK's growth is driven by digital solutions and price increases. Cost savings are primarily from Europe and G&A. FY25 CapEx is projected at $50-60M, with operating cash flow expected to be favorable but hard to quantify.

Daniel Moore inquired about expectations for order rates and backlog amid seasonality and hurricane impacts, the drivers of gross margin, sentiment from REIT and community developer customers, and the company's capital allocation priorities, particularly its appetite for M&A.

Answer

Mark Yost, President and CEO, noted that while order rates softened due to seasonality and pre-election caution, the underlying demand from community REITs and builder-developers remains strong. He stated that M&A is a top capital priority, given the successful integration of Regional Homes and a robust pipeline. Laurie Hough, EVP and CFO, declined to rank-order the specific drivers of the gross margin beat.

Inquired about the target M&A range for the year, and expectations for working capital and free cash flow in fiscal '25.

Answer

The company did not provide a specific M&A range, noting it is wide and the environment is active, but they have increased revolver capacity in anticipation of opportunities. Working capital is not a meaningful part of the business but will continue to improve. No specific free cash flow range was given, but M&A would be an upside surprise.

Sought clarification on the full-year guidance and asked about the origin and strategic plan for the Raging Waves water park acquisition.

Answer

Guidance is confirmed at the low end of the previously stated range. The water park acquisition was an opportunistic deal with a management partner, offering significant upside and a superior return profile to bowling centers, with plans to evaluate the business over the next season before further expansion.