Q3 2024 Worthington Enterprises Inc Earnings Call
Hello, and welcome to the Worthington Enterprises' third quarter fiscal 2024 earnings conference call. All participants will be in a listen only mode until the question and answer session of the call. This conference is being recorded at the request of Worthington enterprises.
Unknown Executive: Hello, and welcome to the Worthington Enterprises third quarter fiscal 2024 earnings conference call. All participants will be in a listen only mode until the question and answer session of the call.
Unknown Executive: This conference is being recorded at the request of Worthington Enterprises. If anyone objects, you may disconnect at. I'd now like to introduce Marcus Rogge, Treasurer and Investor Relations Officer. Mr. Rogier, you may begin.
Speaker Change: If anyone objects you may disconnect at this time.
Speaker Change: Now I'd like to introduce Mike Marcus Rocchi, Treasurer, and Investor Relations Officer, Mr. <unk> you may begin.
Marcus A. Rogier: Thank you, Sarah. Good morning, everyone. And welcome to Worthington Enterprises' third quarter fiscal 2024 earnings call. On our call today, we have Andy Rose, Worthington's President and Chief Executive Officer, and Joe Hayek, Worthington's Chief Financial and Operations Officer. Before we get started, I'd like to note that certain statements made today are forward-looking within the meaning of the 1995 Private Securities Litigation Reform Act. These statements are subject to risk and uncertainties that could cause actual results to differ from those suggested. We issued our earnings release yesterday after the market closed. Please refer to it for more detail on those factors that could cause actual results to differ materially.
Speaker Change: Thank you Sarah good morning, everyone and welcome to Worthington Enterprises third quarter fiscal 2024 earnings call.
Andy Rose: On our call today, we have Andy Rose Worthingtons, President and Chief Executive Officer.
Speaker Change: And Joe Hayek, where they gets chief financial and operations Officer.
Speaker Change: Before we get started I'd like to note that certain statements made today are forward looking within the meaning of the 1995 private Securities Litigation Reform Act.
Speaker Change: These statements are subject to risks and uncertainties that could cause actual results to differ from those suggested.
We issued our earnings release yesterday after the market close please refer to it for more detail on those factors that could cause actual results to differ materially.
Andy Rose: In addition, our discussion today will include non-GAAP financial measures. A reconciliation of these measures with the most appropriate comparable gap measure is included in the earnings press release, which is available on our investor relations website. At this point, I will turn the call over to Andy for opening remarks.
Speaker Change: In addition, our discussion today will include non-GAAP financial measures a reconciliation of these measures with the most appropriate comparable GAAP measure is included in the earnings press release, which is available on our Investor Relations website.
Speaker Change: At this point I will turn the call over to Andy for opening remarks.
Andy Rose: Thank you Mark and good morning.
Andy Rose: Thank you, Marcus, and good morning. I want to welcome everyone to our first full quarter as Worthington Enterprises. We have hit the ground running and are already delivering solid results, as evidenced by our adjusted EBITDA of 67 million and adjusted earnings per share of 80 cents. While there are a number of one-time items mostly related to the separation which Joe will run through, we are proud of our people and their ability to stay focused over the past year. I remain as excited as ever about Worthington Enterprises and our opportunity for long-term value creation.
Andy Rose: I want to welcome everyone to our first full quarter as Worthington enterprises, we've hit the ground running and are already delivering solid results as evidenced by our adjusted EBITDA of $67 million and adjusted earnings per share of <unk> 81.
Andy Rose: While there are a number of one time items, mostly related to the separation, which Joe will run through we are proud of our people and their ability to stay focused over the past year.
Andy Rose: I remain as excited as ever about Worthington enterprises, and our opportunity for long term value creation, our consumer products building products and sustainable energy businesses represent a strong franchise of market, leading products and brands that will enable people to live safer healthier and more expressive lives we have.
Andy Rose: Our consumer products, building products, and sustainable energy businesses represent a strong franchise of market-leading products and brands that will enable people to live safer, healthier, and more expressive lives. We have a unique and proven growth platform that has been purposefully created using deep industry expertise, a performance-driven, people-first culture, the best employees in the world, and a thoughtful long-term investment strategy. We find the best product opportunities, invest to drive value at scale, and build sustainable advantage through safety, quality, service, and a reputation for doing the right thing for our customers. The Worthington business system of transformation, innovation, and M&A is well established and enables us to grow faster and deliver on our number one goal of generating attractive returns for our shareholders.
Andy Rose: Our unique and proven growth platform that has been purposefully created using deep industry expertise a performance driven people first culture and the best employees in the world and a thoughtful long term investment strategy.
Andy Rose: We find the best product opportunities invest to drive value at scale and build sustainable advantage through safety quality service and our reputation for doing the right thing for our customers.
Andy Rose: The Worthington business system transformation innovation, and M&A as well entrenched and enables us to grow faster and deliver on our number one goal of generating attractive returns for our shareholders.
Andy Rose: Our transformation playbook, now in its third evolution, continues to provide a systematic approach to improving our commercial operations and supply chain functions, enhancing the top and bottom lines for our businesses. Innovation is now a deeply embedded competence that we put to work across our business, from process innovation to new product development, which we intend to make best in class with a pipeline that will distinguish us from competitors and provide enhanced value to our customers. And finally, our expertise in strategic M&A will help us drive growth and higher returns as we add new products, new brands, and consolidate markets. To that end, we recently welcomed Halo Products into our portfolio of brands, offering an innovative collection of pizza ovens, pellet grills, and griddles that is disrupting the outdoor living space.
Andy Rose: Our transformation playbook now in its third evolution continues to provide a systematic approach for improving our commercial operations and supply chain functions enhancing the top and bottom line for our businesses.
Andy Rose: Innovation is now a deeply embedded competency that we put to work across our business from process innovation and new product development, which we intend to make best in class with a pipeline that will distinguish us from competitors and provide enhanced value to our customers.
Andy Rose: And finally, our expertise and strategic M&A will help us drive growth and higher returns as we add new products, new brands and consolidated markets.
Andy Rose: That end, we recently welcomed halo products into our portfolio of brands offering an innovative collection of pizza ovens pellet grills and grid holes that is disrupting the outdoor living space.
Joseph B. Hayek: This acquisition immediately accelerates years of product development for us with its lean and capable team. And while it's early days, the company is already benefiting from our relationships with major retailers and gaining greater access to our capital and expertise to drive accelerated direct-to-consumer marketing and sales. This is a nice example of the Worthington business system at work and how we build market-leading businesses. We are disciplined stewards of capital, not only making new investments to deliver long-term value creation but also redeploying capital in situations where we can earn a better return. We're off to a good start in our first quarter as Worthington Enterprises, and Joe will now walk you through the numbers. Thank you, Andy, and good morning, everyone.
Andy Rose: This acquisition immediately accelerates years of product development for us with its lean and capable team.
Andy Rose: And while it's early days the company is already benefiting from our relationships with major retailers and gaining greater access to our capital and expertise to drive accelerated direct to consumer marketing and sales. This is a nice example of the Worthington business system at work and how we build market leading businesses.
Andy Rose: We are disciplined stewards of capital not only making new investments to deliver long term value creation, but also redeploying capital in situations, where we can earn a better return.
Andy Rose: We're off to a good start in our first quarter as Worthington enterprises, and Joe will now walk you through the numbers.
Thank you Andy and good morning, everyone.
Joseph B. Hayek: Q3 was our first stand-alone quarter as Worthington Enterprises, and given the recent business separation, we have recast our historical income statement and balance sheets for periods prior to December 1, 2023 to reflect Worthington Steel's discontinued operations. As a result, there is and will be some noise in our reported financials, but we will attempt to call out unique items and adjustments to facilitate year-over-year comparability of the business performance. In Q3, we reported gap earnings from continuing operations of $0.44 a share versus $0.60 in the prior year. There were several unique items that impacted our quarterly results, including the following. The current quarter was negatively impacted by one-time discrete tax charges of $9 million, or $0.18 a share, all related to the business separation.
Q3 was our first standalone quarter as Worthington enterprises, and given the recent business separation, we have recast our historical income statements and balance sheets for periods. Prior to December one 2023 to reflect Worthington steel as discontinued operations. As a result, there is and will be some noise in our reported financials, but we will.
Andy Rose: Tempt to call out unique items and adjustments to facilitate year over year comparability of the business' performance.
Andy Rose: In Q3, we reported GAAP earnings from continuing operations of <unk> 44, a share versus <unk> 60 in the prior year.
Andy Rose: There were several unique items that impacted our quarterly results, including the following.
Andy Rose: The current quarter was negatively impacted by one time discrete tax charges of $9 million or <unk> 18 cents a share all related to the business separation.
Joseph B. Hayek: In addition, we incurred a pre-tax expense of $3 million, or $0.05 a share, related to the separation in the current quarter. We do not anticipate having additional separation costs in future quarters. We also took advantage of the current interest rate environment to annuitize our only remaining legacy defined benefit pension plan, which resulted in a non-cash pre-tax charge of $8 million, or 12 cents a share. Additionally, we incurred modest restructuring charges which negatively impacted earnings by a penny per share in the current quarter.
Andy Rose: In addition, we incurred pre tax expense of $3 million or <unk>, a share related to the separation in the current quarter, we do not anticipate having additional separation costs in future quarters.
Andy Rose: We also took advantage of the current interest rate environment to a new <unk>, our only remaining legacy defined benefit pension plan, which resulted in a noncash pre tax charge of $8 million or <unk> 12, a share.
Andy Rose: We incurred modest restructuring charges, which negatively impacted earnings by a penny per share in the current quarter.
Joseph B. Hayek: And lastly, results in the prior year quarter were negatively impacted by 21 cents a share due to several unique items, the largest being corporate costs that were eliminated at the time of separation, along with smaller restructuring and other non-recurring items. Excluding these items, we generated adjusted earnings from continuing operations of $0.80 per share in the current year quarter compared to $0.81 a share in Q3 of last year. Additionally, our building products business recorded a one-time pre-tax charge of $2 million, or $0.03 a share, in the current quarter related to a lower of cost or net realizable value adjustment on propane tanks that were imported from a third-party supplier in Europe. The LCM was primarily driven by higher than expected transportation costs for those. Consolidated net sales in the quarter of $317 million decreased 8.5% from $346 million in the prior year.
Andy Rose: Lastly results in the prior year quarter were negatively impacted by 21, a share due to several unique items the largest being corporate costs that were eliminated at the time of separation along with smaller restructuring and other nonrecurring items.
Andy Rose: Excluding these items, we generated adjusted earnings from continuing operations of <unk> 80 per share in the current year quarter compared to 81, a share in Q3 of last year.
Andy Rose: Additionally, our building products business recorded a one time pre tax charge of $2 million or <unk> <unk> a share in the current quarter related to a lower of cost or net realizable value adjustment on propane tanks that were imported from a third party supplier in Europe the <unk>.
Andy Rose: <unk> was primarily driven by higher than expected transportation costs for those tanks.
Andy Rose: Consolidated net sales in the quarter of $317 million decreased eight 5% from $346 million in the prior year.
Joseph B. Hayek: The decrease was driven by lower sales in building products, which experienced an unfavorable product mix and slightly lower volumes during the quarter, partially offset by slight increases in sales within consumer products and sustainable energy solutions, which both benefited from increased volume. Gross profit for the quarter decreased to $73 million from $79 million in Q3 a year ago, while our gross margin increased to 23.1% from 22.8%. Including the $2 million charge for building products, our adjusted EBITDA in Q3 was $67 million, down from $70 million in Q3 of last year, and our trailing 12 months adjusted EBITDA is now $279 million, and our trailing 12 months adjusted EBITDA margin is 21.5%. With respect to cash flows on our balance sheet, cash flow from operations was $50 million in the quarter, and free cash flow was $40 million. That would have been higher if not for $13 million in cash outflows related to the business separation.
Andy Rose: The decrease was driven by lower sales in building products, which experienced an unfavorable product mix and slightly lower volumes during the quarter, partially offset by slight increases in sales within consumer products and sustainable energy solutions, which both benefited from increased volumes and.
Andy Rose: Gross profit for the quarter decreased to $73 million from $79 million in Q3, a year ago, while our gross margin increased to 23, 1% from 22, 8%.
Including the $2 million charge and building products, our adjusted EBITDA in Q3 was $67 million down from $70 million in Q3 of last year and our trailing 12 months adjusted EBITDA is now $279 million and our trailing 12 months adjusted EBITDA margin is 21, 5%.
Andy Rose: With respect to cash flows and our balance sheet cash flow from operations was $50 million in the quarter and free cash flow was $40 million.
Andy Rose: That would have been higher if not for $13 million in cash outflows related to the business separation.
Joseph B. Hayek: During the quarter, we invested $10 million in capital projects, which included $5 million related to our previously mentioned facility modernization project. We also spent $9 million to acquire an 80% interest in an affiliate of Halo Products Group and paid $16 million in dividends, which represented the larger pre-separation Worthington Industries dividend that was paid in December. We also received $40 million in dividends from our unconsolidated JVs during the quarter, a 93% cash conversion rate on that equity income. Looking at our balance sheet and liquidity position, we ended the quarter with an exceptionally strong balance sheet. $298 million of long-term funded debt carrying an average interest rate of 3.6%, combined with $227 million in cash that is yielding around 5%. We continue to operate with extremely low leverage, ending the quarter with a net debt to trailing EBITDA leverage ratio of about a quarter turn, and we are well positioned for the future with ample liquidity and $500 million of undrawn bank credit. Yesterday, the Worthington Enterprises Board declared a dividend of $0.16 per share for the quarter, which is approximately $8 million and will be payable in June of 2024.
Andy Rose: During the quarter, we invested $10 million on capital projects, which included $5 million related to our previously mentioned facility modernization projects.
Andy Rose: He also spent $9 million to acquire an 80% interest in an affiliate of Halo products group and paid $16 million in dividends, which represented the larger pre separation Willington industries dividend that was paid in December.
Andy Rose: We also received $40 million in dividends from our unconsolidated JV during the quarter at 93% cash conversion rate on that equity income.
Andy Rose: Looking at our balance sheet and liquidity position, we ended the quarter with an exceptionally strong balance sheet $298 million of long term funded debt carrying an average interest rate of three 6% combined with $227 million in cash that is yielding around 5%.
Andy Rose: We continue to operate with extremely low leverage ending the quarter with a net debt to trailing EBITDA leverage ratio of about a quarter turn and we are well positioned for the future with ample liquidity, having a $500 million Undrawn bank credit facility.
Andy Rose: Yesterday, the Worthington Enterprises Board declared a dividend of <unk> 16 per share for the quarter, which was approximately $8 million and will be payable in June of 2024.
Andy Rose: I will now spend a few minutes on each of the businesses.
Andy Rose: And consumer products net sales in Q3 were $133 million up slightly from $131 million a year ago.
Andy Rose: The increase was a result of higher volumes, which were partially offset by lower average selling prices adjusted EBITDA for the consumer business was $26 million and adjusted EBITDA margin was 19, 3% in Q3 compared to $21 million and 16, 1% last year.
Joseph B. Hayek: We're now spending a few minutes on each of the businesses, and Consumer Products Net Sales in Q3 were $133 million, up slightly from $131 million a year ago. The increase was a result of higher volumes, which were partially offset by lower average selling prices. Adjusted EBITDA for the consumer business was $26 million, and the adjusted EBITDA margin was 19.3% in Q3 compared to $21 million and 16.1% last year. We experienced a strong sequential improvement, with volumes increasing 19% compared to Q2 as a result of some storm and weather-related demand, as well as recent market share gains at level 5. Though some demand may have been pulled from Q4 into Q3, we are cautiously optimistic heading into the spring as people begin to enjoy the outdoors more frequently and begin to take on more repair and remodel projects. During the quarter, as Andy mentioned, the consumer business acquired an 80% controlling interest in an affiliate of Halo Products Group for approximately $9 million. Halo is an innovative asset light provider of tech-enabled products, including pizza ovens, pellet grills, griddles, and accessories that complement our other leading outdoor living brands, like Coleman, portable propane tanks, and burns-matic torches, fuel, and accessories.
Andy Rose: We experienced a strong sequential improvement with volumes, increasing 19% compared to Q2 as a result of some storm and weather related demand as well as recent market share gains level five.
Andy Rose: There was some demand may have been pulled from Q4 into Q3, we are cautiously optimistic heading into the spring as people begin to enjoy the outdoors more frequently and begin to take on more repair and remodel projects.
Andy Rose: During the quarter as Andy mentioned, the consumer business acquired 80% controlling interest in an affiliate of Halo products group for approximately $9 million.
Andy Rose: Halo as an innovative asset light provider of tech enabled products, including pizza ovens pellet grills grid holes and accessories that complement our other leading outdoor living brands like Coleman affordable propane tanks, and burns matic torches fuel and accessories.
Andy Rose: And it was a natural match with these products and creates a powerful combination.
Andy Rose: Hello is small today with 2023 revenues of $7 million, which was primarily direct to consumer.
Andy Rose: We intend to leverage our strong relationships with channel partners to help further grow and scale the brand.
Andy Rose: We're excited to have Halo as part of our consumer business and we welcome that talented team to work with them.
Andy Rose: Building products generated net sales of $148 million in Q3 down 19% from $184 million a year ago.
Andy Rose: The decrease was driven by a less favorable product mix lower average selling prices and lower volumes, especially in the large format heating end market, which continued to see destocking.
Joseph B. Hayek: Halo is a natural match with these products and creates a powerful combination. While Halo is small today with 2023 revenues of $7 million, which was primarily direct-to-consumer, We intend to leverage our strong relationships with channel partners to help further grow and scale the brand. We're excited to have Halo as part of our consumer business, and we welcome that talented team to Worthington. Building products generated net sales of $148 million in Q3, down 19% from $184 million a year ago.
Andy Rose: Building products generated adjusted EBITDA of $53 million for the quarter and adjusted EBITDA margin was 35, 8% compared to $58 million and 31, 6% in Q3 of last year.
Andy Rose: Results in the current quarter were negatively impacted by the 2 million due to the LCM on imported tanks that I mentioned earlier.
Andy Rose: Destocking, we continue to see in our heating end market should run its course by the summer and we are optimistic that that demand will return to more seasonally normal levels thereafter.
Andy Rose: Additionally, our water business continued to show growth in revenues and margins in Q3 as the initiatives. We put in place in early 2024 are having a positive impact.
Joseph B. Hayek: The decrease was driven by a less favorable product mix, lower average selling prices, and lower volumes, especially in the large format heating end market, which continued to see destocking. Building products generated adjusted EBITDA of $53 million for the quarter, and its adjusted EBITDA margin was 35.8% compared to $58 million and 31.6% in Q3 of last year. Results in the current quarter were negatively impacted by the $2 million due to the LCM on imported tanks that I mentioned earlier. The de-stocking we continue to see in our heating and markets should run its course by the summer, and we are optimistic that that demand will return to more seasonally normal levels thereafter. Additionally, our water business continued to show growth in revenues and margins in Q3 as the initiatives we put in place in early 2024 are having a positive impact. During Q3, the water team also continued the launch of our Amtrol Titan well tank with two new sizes. The Titan is a patented composite tank that combines the strength of steel with the advantages of high-tech composites providing superior impact, resistance, and UV protection.
Andy Rose: During Q3, the water team also continued the launch of our Amtrust tightened well tank with two new sizes.
Andy Rose: <unk> is a patented composite tanks that combines the strength of steel and the advantages of high Tech composites, providing superior impact resistance and UV protection.
Andy Rose: We have delivered very strong results contributing equity earnings of $26 million in the quarter up from $19 million a year ago.
Andy Rose: <unk> continues to focus on refining and enhancing their value proposition to customers and they saw both volume and margin improvements in the quarter.
Andy Rose: <unk> also continued to perform very well and contributed $18 million in equity income for the quarter.
Andy Rose: So their results were down $1 million compared to the prior year quarter and were up $4 million sequentially from Q2.
Andy Rose: The cart Dietrich team is leveraging its national presence and benefited from higher volumes in Q3, which was offset by some margin compression.
Andy Rose: And sustainable energy solutions net sales in Q3 of $35 million were up 11% or $4 million from the prior year, primarily due to higher volumes, which were partially offset by lower average selling prices and an unfavorable product mix.
Andy Rose: <unk> reported an adjusted EBITDA loss of $3 million in the current quarter compared to breakeven results in the prior year due to lower gross margins and several one time expenses.
Joseph B. Hayek: WAVE delivered very strong results, contributing equity earnings of $26 million in the quarter, up from $19 million a year ago. The team at WAVE continues to focus on refining and enhancing their value proposition to customers, and they saw both volume and margin improvements in the quarter. Partitric also continued to perform very well and contributed $18 million in equity income for the quarter.
Andy Rose: In the current environment. The Ses team continues to focus on near term cost controls and long term investments as they attempt to balance current market conditions with the exceptional growth opportunities that we believe will materialize as the hydrogen and CMG ecosystems growth.
Andy Rose: During the quarter the team had success getting additional new products certified and customer ready and quoting activity continues to improve which should ultimately result in a better demand environment.
Joseph B. Hayek: So their results were down $1 million compared to the prior year quarter. They were up $4 million sequentially from Q2. The Clark-Dietrich team leveraged its national presence and benefited from higher volumes in Q3, which was offset by some margin compression, and Sustainable Energy Solutions' net sales in Q3 of $35 million were up 11% or $4 million from the prior year, primarily due to higher volumes, which were partially offset by lower average selling prices and an unfavorable product. SCS reported an adjusted EBITDA loss of $3 million in the current quarter compared to break-even results in the prior year due to lower gross margins and several one-time expenses.
Speaker Change: At this point, we're happy to take any questions that people might have.
Speaker Change: Thank you if you have a question. Please press star one on your telephone keypad. If you have queued up and want to withdraw your question simply press Star one again.
Your first question comes from the line of Daniel Moore with CJS Securities. Your line is open.
Daniel Joseph Moore: Thank you good morning, Andy Good morning, Joe Thanks for taking the questions.
Daniel Joseph Moore: Good morning, Dan Good morning.
Daniel Joseph Moore: Let me start with <unk>.
Daniel Joseph Moore: Finished off there at the tail end of the comments on the Jv's.
Daniel Joseph Moore: What can you tell us about demand and activity levels, both at wave and Clark feature and a forward looking basis I know you don't quote backlog, but no.
Unknown Executive: In the current environment, the SES team continues to focus on near-term cost controls and long-term investments as they attempt to balance current market conditions with the exceptional growth opportunities that we believe will materialize as the hydrogen and CNG ecosystems grow. During the quarter, the team had success getting additional new products certified and customer ready, and cooling activity continues to improve, which should ultimately result in a better demand environment. At this point, we're happy to take any questions that people might have. Thank you. If you have a question, please press star one on your telephone keypad. If you have queued up and want to withdraw your question, simply press star one again.
Daniel Joseph Moore: How would you describe the level of new business coming into the pipeline.
Daniel Joseph Moore: Relative to maybe six months ago or this time last year.
Speaker Change: Yes, it's a fair question I think the the markets have.
Speaker Change: Involved in that construction space.
Speaker Change: Thank you Jamie for instance, wave who's <unk>.
Speaker Change: Mix of repair and remodel versus new is typically.
Speaker Change: 65% to 70% repair and remodel it's higher now.
Speaker Change: In part because the new spend is down there their mix.
Speaker Change: Of end markets, our estimates of those at least.
Daniel Joseph Moore: Your first question comes from the line of Daniel Moore with CJS Securities. Your line is open. Thank you. Good morning, Andy.
Speaker Change: It's still kind of tough sledding in commercial buildings.
Unknown Executive: Good morning, Joe. Thanks for taking the question. Good morning, Dan.
That our office centric.
Speaker Change: But also in commercial you have lots of other things, including data centers, which is.
Unknown Executive: Morning. Maybe start with where we finished off at the tail end of the comment. JV's.
Speaker Change: Is showing good growth but.
Speaker Change: 70% of their end markets, we believe our non commercial right. They are a mix of healthcare education retail and sort of transportation projects and so.
Unknown Executive: What can you tell us about demand and activity levels both at WAVE and Clark-Petrick on a forward-looking basis? I know you don't quote backlogs, but how would you describe the level of new business coming into the pipeline relative to maybe six months ago or this time last year? Yeah, it's a fair question.
Speaker Change: Volumes seem steady there.
Speaker Change: Clark Dietrich.
Speaker Change: There is.
Speaker Change: A little bit of a different mix there slightly more new there.
Speaker Change: They are broadening the types of projects Youre working on that because there.
Unknown Executive: I think the markets have evolved in that construction space. For instance, you know, Wave, whose mix of repair and remodel versus new is typically 65 to 70% repair and remodel. It's higher now, in part because the new spend is down, their mix of end markets, our estimates of those, at least, it's still tough sledding in commercial buildings that are office-centric. But also in commercial, you have lots of other things, including data centers, which are showing good growth, but, you know, 70% of their end markets, we believe, are non-commercial, right? They're a mix of healthcare, education, retail, and sort of transportation projects. And so, you know, volumes seem steady there. Clark Dietrich.
Speaker Change: Super focused on extra y or Z, but just because it's where construction is happening and so.
Speaker Change: We think that.
Speaker Change: As construction and activity kind of came down it seems to be more.
Speaker Change: Sort of flat now it's not continuing to go down at least right. This minute nor is it going straight up.
Speaker Change: I think the architectural.
Speaker Change: Architectural billings index that came out yesterday or the day before was 49, five which is just below 50 it was.
Speaker Change: It was 45 the last few months. It was I think the last time. It was at 50 was was April of last year.
Speaker Change: Thats a good sign I think we mentioned in December that the.
Speaker Change: The activity level not to billings, but activity with architects had started to pick back up which is typically a precursor to billings, but that also takes.
Unknown Executive: You know, there's a little bit of a different mix there, slightly more new there. They're broadening the types of projects they're working on not because they're super focused on X or Y or Z, but just because it's where construction is happening and so. You know, we think that, as construction and activity kind of came down, it seems to be more sort of flat now; it's not continuing to go down, at least right this minute, nor is it, you know, going straight up. I think the Architectural Billings Index that came out yesterday or the day before was 49.5, which is, you know, just below 50. It was was 45 the last few months. It was I think the last time it was at 50 was April of last year. That's it.
Speaker Change: We just see a good Abi that takes 12 to 24 months to show up in.
Speaker Change: Somebody like ours, as revenue or car T trick or waves and so.
Speaker Change: We generally are still feel very good about those spaces that they're in kind of mid to longer term I can call. It a bit murky out there in the short term.
Speaker Change: Very helpful.
Speaker Change: Maybe switching gears I still early days, obviously, but maybe just update us on progress in the direct assume direct to consumer channel, obviously, a key capability of level five now you bolt tacked on Halo.
Speaker Change: Any tangible examples of products you are now offering or plan to offer DTC that perhaps you didn't historically and just.
Unknown Executive: That's a good sign. I think we mentioned in December that the activity level, not the billings, but activity with architects had started to pick back up, which is typically a precursor to billings. But that also takes, You know, when you see a good ABI, that takes 12 to 24 months to show up in, and somebody like ours is Revenue or Clark Teatrick or Waves. And so, you know, we generally still feel very good about the spaces that they're in kind of mid to longer term. I could call it a bit murky out there in the short term. Very helpful. Unknown Speaker Maybe switching gears, still early days, obviously, but maybe just update us on progress in the direct assume direct, Unknown Operator, Unknown Participant, Unknown Participant, Unknown Participant, Unknown https://www.unc.org.au Yeah, I think Dan, the short answer is that when we acquired, level five, we acquired not only a new set of products, but we acquired a capability.
Speaker Change: Progress in general and.
Speaker Change: In that channel.
Speaker Change: Yes, I think Dan the short answer is that when we acquired.
Speaker Change: Level five we.
Speaker Change: Acquired not only a new set of products, but we acquired a capability.
Speaker Change: And it really helped us.
Speaker Change: Really helped to open up our eyes in terms of the direct to consumer channel and so the team in consumer really is looking across the product line to figure out which products. We think we can sell into that channel and.
Speaker Change: Excuse me Halo is another example of a product that is sold direct to consumer only right now and so that's part of the overarching strategy now when we either develop new products or acquire new products is looking across all the channels direct to consumer and using and leveraging <unk>.
Speaker Change: Our big box retail relationships to sort of maximize the opportunity for those products. So.
Speaker Change: I Wouldnt say theres, one opportunity, there's probably a bunch of opportunities, where we're looking to leverage those capabilities.
Unknown Executive: And it really helped us really open up our eyes in terms of the direct to consumer channel. And so the team and I are really looking across the product line to figure out which products we think we can sell into that channel and, You know, Halo, excuse me. Halo is another example of a product that is sold direct to consumer only right now. And so that's part of the overarching strategy now, when we either develop new products or acquire new products, is looking across all the channels direct to consumer and using and leveraging our big box retail relationships to sort of maximize the opportunity for those products. So I wouldn't say there's just one opportunity.
Speaker Change: Helpful Last one for me I'll jump out.
Speaker Change: Thank you mentioned that puts a little bit of potential pull forward in demand in the consumer side in from Q4 to Q3.
You know details there or can you quantify that at all thanks again for the help and congrats on a.
Speaker Change: Really solid quarter.
Speaker Change: Thank you and yes sure.
The consumer business, particularly our camping gas cylinders to and to a lesser extent the torches that go with those there is a little bit of weather related spike demand from from time to time and so if you remember in January the polar vortex and then the storms that we're kind of back to.
Unknown Executive: There's probably a bunch of opportunities where, you know, we're looking to sort of leverage those capabilities, and the last one for me, I'll jump out. I think you mentioned that puts a little bit of potential pull forward in demand. Q4 to Q3. Any details there, or can you quantify that at all? to help and congrats on a really solid quarter. Thank you, and yeah, sure. The consumer business, particularly our camping gas cylinders and, to a lesser extent, the torches that go with those, there is a little bit of weather-related spike demand from time to time. And so if you remember in January, the polar vortex and then the storms that were kind of back-to-back across the country, you know, really created a need because those products are sometimes used as emergency heat sources, and they're If you... Not to become a weatherman, but if you get past those... to events, the weather in the winter has been relatively benign.
Speaker Change: Back across the country.
Speaker Change: It really created.
Speaker Change: A need because those products are sometimes used as emergency heat sources and they are certainly used to repair pipes that break.
Speaker Change: If you.
Speaker Change: Not to be become a weather man, but if you get past those.
Speaker Change: Two events the weather in the winter has been relatively benign.
Speaker Change: And so we.
Speaker Change: We feel really good about the spring in the season and how we're positioned and how we've helped our retail customers get.
Speaker Change: To where they want to be and to where they'll be able to best serve their own customers.
Speaker Change: But sometimes that spike demand can can really.
Speaker Change: Move things from <unk>.
Speaker Change: A month to a month, that's the reason for kind of some of our I'll call. It cautious optimism in Q4, yes.
Speaker Change: Storms are incremental demand the question and it's hard to predict is was there a pull forward or not and.
Unknown Executive: And so, we feel really good about the spring and the season and how we're positioned and how we've helped our retail customers get to where they wanna be and to where they'll be able to best serve their own customers. But sometimes that spike in demand can really move things around. [inaudible] It's not an exact science in terms of estimating it. Okay. Thank you again.
Speaker Change: The answer is if our retailers are fully prepared and fully stocked there may be a little bit of pull forward, but it's again, it's it's not an exact science in terms of estimating it.
Speaker Change: Understood. Thank you again.
Speaker Change: Sure.
Susan Mcclary: Sure. Your next question comes from the line of Susan McClary with Goldman Sachs. Your line is open.
Speaker Change: Your next question comes from the line of Susan Macquarie with Goldman Sachs. Your line is open.
Susan Macquarie: Thank you good morning, everyone.
Unknown Executive: Thank you. Good morning, everyone. Hey, morning, Susan.
Susan Macquarie: Hey, good morning.
Susan Macquarie: Good morning.
Unknown Executive: Good morning. You know, I'd like to start with the price for a bit. Can you just give us more color on what's driving that lower? Is it mixed?
Susan Macquarie: I would like to start with the price for that can you just give us more color on what's driving that lower is it mix is it absolute declines in marriages, what's going on in there and how youre thinking about that going forward.
Unknown Executive: Is it absolute declines in there? Just what's going on there? And how are you thinking about that going forward? Yeah, I think your question was around pricing.
Speaker Change: Yes, I think your question was around pricing.
Speaker Change: Yes.
Unknown Executive: Okay, yeah, so it's mostly mixed, honestly, you know, the dynamics within consumer and building products were right. I get building products, for example, the destocking of those very large propane heating tanks, those are our most expensive tanks, and they come at pretty healthy growth and gross margins. So there's an, there's an outsized impact when those are running up or, in this case, destocking. Okay, all right.
Speaker Change: Okay, Yeah, so no.
Speaker Change: It's mostly it's mostly mix honestly.
Speaker Change: The.
Speaker Change: Dynamics within consumer and in building products.
Speaker Change: <unk>.
Speaker Change: Right I got building products for example.
Speaker Change: The destocking in those very large propane heating tanks those are our most expensive tanks and they come at pretty healthy growth gross margins. So there is there is an outsized impact windows are running up or in this case destocking.
Speaker Change: Okay Alright.
Unknown Executive: And then perhaps turning a bit to the outlook, you mentioned the potential for this pickup as we get into the spring and summer, or maybe some lift in the R&R activity. I guess, when you think about the macro backdrop and, you know, some of the more recent news and data points, just any thoughts on how that could come through to the business and how you're thinking about the setup more broadly there? Yeah, I think I would maybe call it sort of pretty close to, seasonally normal with some continued, I think we say cautious optimism, but, and you're right, the data points out there are still a little bit mixed. And so I don't. It's certainly not worse than it was six months ago.
And then perhaps turning a bit to the outlook you mentioned.
Speaker Change: Potential for this pick up as we head into the spring and summer maybe.
The lift in the R&R activity I guess, when you think about the macro backdrop and some of the more recent news and data points, just any thoughts on how that could come through to the business and how youre thinking about the setup more broadly there.
Speaker Change: Yes, I think I think.
Speaker Change: Maybe call it.
Speaker Change: Sort of pretty close to.
Speaker Change: Seasonally normal.
With some continued I think once we stay cautious optimism but.
Speaker Change: And Youre right the data points out there are still a little bit mixed.
Speaker Change: And so it's certainly not worse than it was.
Speaker Change: Six months ago, but again, the consumer is still relatively cautious.
Unknown Executive: But again, the consumer is still relatively cautious. We still have some de-stocking in these large and good-sized margin propane tanks. And so, yeah, I would say that we continue to be thoughtful about our markets. Our teams have done a phenomenal job being there for their customers. We haven't, at least we don't think we've lost any share in a lot of these categories. But ultimately, higher interest rates matter.
Speaker Change: We still have some destocking in these large and.
Speaker Change: Good sized margin.
Speaker Change: Propane tanks, and so yes, I wouldn't say that we.
Speaker Change: Continue to be thoughtful about our markets our teams have done a phenomenal job.
Speaker Change: <unk>.
Speaker Change: There for their customers, we haven't at least we don't think we've lost any share and a lot of these categories, but ultimately higher interest rates matter. If you look at.
Unknown Executive: If you look at the large propane tanks, for instance, and you look at kind of housing starts and then our demand there, there's about a 6-12 month lag and how those have worked for us in the last several years. Housing starts, I think, bottomed out last summer, you know, kind of July and have kind of crept back up since. But because of that lag in residential construction, at least, you know, we anticipate needing another quarter, quarter and a half for that to run its course.
Speaker Change: If you look at the large propane tanks for instance, and you look at kind of housing starts and then our demand there there is about.
Speaker Change: Six to 12 month lag and how those have have worked for us in the last several years.
Speaker Change: Housing starts I think bottomed like last summer.
Speaker Change: I'm trying to July and have kind of crept back up.
Speaker Change: But because of that lag in residential construction at least.
Speaker Change: We anticipate needing another quarter.
Speaker Change: Quarter to quarter, and a half for that to run its course.
Speaker Change: Okay. Okay. That's helpful and then.
Unknown Executive: Okay, okay, that's helpful. And then, um, just one last one for me, you know, it was exciting to see the HALO acquisition come through. Can you give us just an update on the overall M&A pipeline, how that's coming through, and anything that you know is of interest, perhaps there? Sure. You know, as you know, as M&A activity in 2022 and 2023 really sort of slowed down, that was okay for us, right, because we were in the midst of the spin. Activity in 2024 has certainly been predicted to pick back up. We're hopeful that that is the case, but it's still early in 2024.
Speaker Change: Just one one last one for me.
Speaker Change: It was exciting to see the Halo acquisition comes through can you give us just an update on the overall M&A pipeline, how that's coming through in anything that is of interest perhaps there.
Sure.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: As M&A activity in 2022, and 2023 really sort of slowed down that was okay for us right. Because we were in the midst of the spin Act.
Speaker Change: Activity in 2024, it has certainly been predicted to pick back up.
Speaker Change: We're hopeful that that is the case. It is still early in 2024, I don't think Youll see us acquire a lot of companies smaller than Halo.
Unknown Executive: I don't think you'll see us acquire a lot of companies smaller than Halo. You know, that was a really good opportunity for us, as Andy said, to really fast-forward a bunch of product development and be able to really grow and leverage what we do to make that business better. But, you know, we have a pretty robust program of kind of making outbound calls and trying to be as smart as we can, knowing who the right fits for us are in building products and in consumer products, although right now, less in the SES business. Some are pretty large.
Speaker Change: That was a really good opportunity for us as Andy said to really fast forward, a bunch of product development and be able to really grow and leverage what we do to make that business better.
Speaker Change: But we have.
Speaker Change: A pretty robust program of kind of making outbound calls and trying to be as smart as we can.
Speaker Change: Knowing who the right fit for us are in building products and in consumer products right now less in the SCS business.
Speaker Change: Some are pretty large some are not as big and more bolt ons, but.
Unknown Executive: Some are not as big and are more bolt-ons. But, [inaudible] Think about that, but going back to our criteria for those, they're going to be margin rich, they're going to be aspect light, and they're going to have a sustainable competitive advantage that we think we can either leverage or have it even make us better. Okay. All right. Well, that sounds great. Thanks for all the color and good luck with everything
Speaker Change: Theres nothing that were kind of getting ready to announce or anything thats burn a hole in our pocket, but we continue to be out there and as we said have.
Speaker Change: Really good balance sheet and some liquidity so that when we find the right fit we'll be able to.
Speaker Change: Think about that but going back to our criteria for those they're going to be we're going to be margin rates are going to be asset light.
Speaker Change: And theyre going to have a sustainable competitive advantage that we think we can either leverage.
Speaker Change: Or have it even make us better.
Speaker Change: Okay, alright, well that sounds great. Thanks for all the color and good luck with everything.
Unknown Executive: Thank you. Your next question comes from the line of Kathryn Thompson, Wisconsin Research Group. Your line is open. Hey, good morning. This is actually Brian.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Kathryn Thompson with Thompson Research Group. Your line is open.
Speaker Change: Hey, Good morning. This is actually Brian Biros on for Catherine. Thank you for taking my questions.
Speaker Change: Brian.
Kathryn Ingram Thompson: Good morning, Brian. [inaudible] The past few quarters have kind of seen the two go in kind of opposite directions almost, probably not always, term blip just giving out markets have been, I guess. Do you think that dynamic is kind of over going forward? Maybe it is a little bit.
Brian Biros: Further on the GBS I think.
Brian Biros: Past few quarters has kind of seen the two go in opposite directions on those.
Speaker Change: Probably not always the case.
Speaker Change: A bit more of a short term blip just given that markets have been recently I guess do you think that dynamic is kind of over going forward.
Speaker Change: It seems like maybe there's a little bit given your comments about <unk> future kind of stabilizing from here, but just interested to hear your thoughts on how those two may or may not be linked to a momentum going forward.
Unknown Executive: Stabilized. But I'm just interested to hear your thoughts on how those two may or may not be aligned. Yeah, I mean, if you think about the products, Brian, Clark Dietrich tends to be more on the front end of the construction wave, a little more on the back end of construction. So, as the cycles move up and down, they're gonna, you know, not move in lockstep, if that makes sense. You know, Joe kind of talked about it earlier, the market for, you know, overall commercial construction products is pretty steady. You know, there's pockets of weakness, which is office space, everybody knows and talks about that.
Speaker Change: Yes, I mean, if you think about the products, Brian Clark Dietrich tends to be more on the front end of construction wave a little more on the back end of construction. So.
Speaker Change: As the cycles move up and down they're going to.
Speaker Change: Not move in lockstep, if that makes sense.
Speaker Change: <unk>.
Speaker Change: Joe kind of talked about it earlier the market for.
Overall commercial construction products is pretty steady.
There's pockets of weakness switches office, everybody knows and talks about that but there is a bit of a belief I think that there could be a renovation a renovation renaissance of sorts that comes from.
Unknown Executive: But there is a bit of a belief, I think that there could be a renovation renaissance of sorts that comes from, you know, companies trying to attract workers back to the office and, you know, changing up things to make them more appealing. To be there, as well as some of the other kind of macro trends around, you know, reshoring, nearshoring, healthcare, education, those markets continue to be pretty, pretty strong. So, you know, it's a little hard to predict if those businesses are gonna, you know, kind of move together. But, you know, their demand, I would say, is reasonably steady right now. Once again, ladies and gentlemen, if you have a question, it is star number one. Your next question comes from the line of Brian McNamara with Canaccord Genuity. Your line is open. Hey, good morning, guys. Congratulations on the results! This morning, Thank you, Brian. Good morning. I hate to put you on the spot, Joe, but I'm gonna.
Speaker Change: Companies trying to attract workers back to the office.
Speaker Change: Changing up things to make it more appealing to be there as well as some of the other kind of macro trends around re shoring nearshoring.
Speaker Change: Health care education, those markets continue to be pretty pretty strong so.
Speaker Change: It's a little hard to predict if those businesses are going to.
Speaker Change: Can I move together, but.
Speaker Change: Their demand I would say is reasonably steady right now.
Speaker Change: Once again, ladies and gentlemen, if you have a question that is star one.
Speaker Change: Your next question comes from the line of Brian Mcnamara with Canaccord Genuity. Your line is open.
Brian McNamara: Hey, good morning, guys congrats on the results.
Brian McNamara: Thank you Brian good morning.
Brian McNamara: I hate to put you on the spot Joe what I'm Gonna I.
Brian McNamara: I get a lot of questions about the earnings power of the business. For maybe some folks new to the story, could you please put up some guardrails in terms of how we should look at the business in terms of both the gross margin side and then how that flows into EBITDA margin, if you wouldn't mind? Yeah, I mean, the gross margin for the quarter was 23.1%, and it's gonna be a little different by business. You know, historically, the consumer products business is going to have higher gross margins just based on what they do, and maybe a little bit higher SG&A as a percentage of sales as well, but when we think, when we see... Consumer at kind of 19...
Brian McNamara: I got a lot of questions about the earnings power of the business for maybe some folks new to the story can you can you put up some guardrails in terms of.
Brian McNamara: How we should look at the business in terms of both the gross margin side and then how that flows to EBITDA margin if you wouldn't mind.
Brian McNamara: Yeah.
Yes.
Sure.
Brian McNamara: The gross margin for the quarter was 23.1% and it's going to be a little different by business.
Brian McNamara: <unk>.
Brian McNamara: Historically, the consumer products business is going to have higher gross margins just based on what they do and maybe a little bit higher SG&A as a percentage of sales as well but.
Brian McNamara: When we think when we see.
Brian McNamara: Consumer at kind of 19.
Joseph B. Hayek: Unknown Speaker 0.3% EBITDA margin in the quarter, you know, that's kind of what we think and they think good looks like for them, they get, they get good volumes. And then ultimately, you can you can kind of hang in there, you know, those numbers around here are better than we feel really good about it as revenues grow. The gross margin for building products, on the heating, cooling, and water side of the business, was really strong this past quarter. I think it was 6.2 percent.
Brian McNamara: 3% EBITDA margin in the quarter.
Brian McNamara: That's kind of what we think and they think good looks like for them they get they get good volumes and ultimately.
Brian McNamara: You can you can kind of hang in there that number around there are better than we felt really good about it as revenues grow.
Brian McNamara: The.
Brian McNamara: Gross margin for building products.
Brian McNamara: On the on the heating cooling and water side of the business was really.
Brian McNamara: Strong this past quarter I think it was six 2%.
Joseph B. Hayek: You know, they had 100 and 30 basis points of that was the LCM that we talked about, which we certainly believe is non-recurring. So that would be, you know, adjusted seven and a half percent. It was 11%.
Brian McNamara: 100.
Brian McNamara: 30 basis points of that was the LCM that we talked about which we certainly believe as nonrecurring so.
Brian McNamara: That would be adjusted seven 5% it was 11%.
Joseph B. Hayek: A year ago, this is the EBITDA margin I'm talking about, 11% last year. And so, I think you get a normalized environment, and you're certainly significantly higher than 6.2%.
Brian McNamara: A year ago. This is the EBITDA margin I'm talking about 11% last year.
Brian McNamara: And so.
Brian McNamara: I think you get a normalized environment.
Brian McNamara: And you are certainly significantly higher than six 2%.
Joseph B. Hayek: I've got some good things going on here in the water business; you will get through this destocking in the larger propane businesses. And those guys in that team, I think are absolutely focused on doing the right things. The water business is showing great progress. You know, we talked about some of the businesses, historically, as kind of having more upside and not really running at full speed. That's one of them.
Brian McNamara: <unk> got some good things going on there in the water business you will get through this destocking in the larger propane businesses and those guys that team I think.
Brian McNamara: Are absolutely focused on doing the right things the water business is showing great progress we talked about some of the businesses historically as kind of having more upside and not really running at full speed that that's one of them, but those big improvement there and then the core business.
Joseph B. Hayek: But there's been big improvement there, and then the core business continues to think through what's happening now. But you go back to kind of Andy's comments on innovation and new product development. There's, there's, there's a lot going on, a lot of good work being done that we think can add both to the top line and to margins. Yeah, and maybe just to take it up a level, Brian, if you think about our long-term goals of driving our EBITDA margin up to 24%, you know, over the next three to five years, everything that we do is very much focused on that. Our transformation playbook is about improving the profitability and the margin profile of the businesses we own today. And as we think about M&A and capital that we're going to deploy into our innovation pipeline, there again, you know, we're looking to drive not only higher margins but also, you know, higher return on capital. We talk a lot about returns and, you know, making more money using less capital where possible.
Brian McNamara: Continues to.
Brian McNamara: Think through whats happening now but.
Brian McNamara: If you go back to kind of Andy's comments on innovation and new product development. There is there is.
Brian McNamara: There's a lot going on a lot of good work being done that we think can add both to top line and to margins.
Brian McNamara: And maybe just to take it up a level, Brian if you think about our long term goals of driving our EBITDA margin up to 24% over the next three to five years.
Brian McNamara: Everything that we do is is very much focused on that our transformation playbook is about improving the profitability and the margin profile of the businesses, we own today and as we think about M&A and capital that we're going to deploy into our innovation pipeline.
Brian McNamara: There again, we're looking to drive not only higher margins, but also higher return on capital we talk a lot about returns.
Brian McNamara: Making more money using less capital where possible so.
Joseph B. Hayek: So, you know, I think the fact that the businesses are where they are today has upside, but over the long run, we fully expect that we're going to drive higher margins, and that'll start at the gross margin line. That's really helpful. Thanks. Just one more for me. I think all my other questions have been answered already. I'm just curious, relative to you, Joe or Andy, or both of you, relative to your own expectations heading into the separation, have you run into any surprises, either good or bad, in your first couple of three or so months?
Brian McNamara: I think the fact that the businesses are where they are today there is upside there but over the long run we fully expect that we're going to drive higher margins and then I'll start at the gross margin line.
Speaker Change: That's really helpful. Thanks, just one more for me I think all my other questions have been answered already I'm, just curious relative to your Joe or Andy or both of you relative to your own expectations heading into the separation I'm curious have you run into any surprises either good or bad in your first kind of three or so months.
Unknown Executive: Yeah, you know, I would say the process has been exceptionally smooth. On the surface, you know, there's been a few struggles.,,,,, [inaudible] involved and, you know, we're fortunate that we get to sit here and kind of on the surface talk about it, but it's been a tremendous effort. Success, I would say. Really across the board.
Speaker Change: A separate entity.
Yes.
Speaker Change: I would say the process has been exceptionally smooth.
Speaker Change: On the surface there.
Speaker Change: It's been a few struggles.
Speaker Change: Underneath the surface, but nothing thats really.
Speaker Change: Major I mean look when you take a company that was put together over 68 years and you try and separate it into two public companies Thats a lot of work by a lot of people.
Unknown Executive: I mean, I don't know if there's anything else to add, Joe, but we're really proud of everybody that has been a part of it. Thanks a lot, guys. Best of luck. Thanks. Your next question is a follow-up from Kathryn Thompson. Your line is open. Hey guys, it's Brian again. Brian, she keeps calling you Kathryn, I hope you appreciate that.
Speaker Change: You talk about.
Speaker Change: The it group separating systems, the finance group, having to recast financials, which continues to this day.
Speaker Change: So there's just a ton of work and it's never perfect, but I would say it's been an exceptional performance by everybody involved and we're fortunate that we get to sit here and kind of.
Kathryn Ingram Thompson: I had a quick follow-up, and the building product. The opinions rendered herein are those of the guests and not necessarily those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News. Realtors should consult with a professional financial advisor prior to investing.
Speaker Change: On the surface talk about it but it's been a tremendous effort and.
Speaker Change: Success I would say.
Speaker Change: Really across the board I mean, I don't know if there's anything else to add there Joe but.
Joseph B. Hayek: We're really proud of everybody that there's been a part of it.
Unknown Executive: Please see the complete disclaimer at https://sites.google.com or at www.sites.google.com. Have a great day! This has been a presentation on the estimated volume of investment that is expected to occur in the next five years. If you have any questions or comments, please post them in the comments section below. And, of course, you can always contact me at the address shown on the screen, or you can email me at info at info.info.com. Thank you for watching, and I hope you've enjoyed this presentation. If you have any questions, please feel free to reach out to me.
Joseph B. Hayek: That's great. Thanks, a lot. Thanks, a lot guys best of luck.
Joseph B. Hayek: Thanks.
Joseph B. Hayek: Our next question is a follow up from Kathryn Thompson. Your line is open.
Joseph B. Hayek: Hey, guys. This is Brian again, Brian.
Speaker Change: Brian keeps calling you Kathryn and I hope you appreciate it.
Speaker Change: Okay.
Speaker Change: Got it.
Speaker Change: Brian for today I had a quick follow up on that again not earlier, but in.
Speaker Change: And the building products segment I know you guys have called out kind of impacting the sales.
Speaker Change: Overall, though volume seems pretty good relative to the destocking going on there.
Speaker Change: Down 2% I know you touched on it in the opening comments and some of the responses here, but can you just maybe further parse out what was maybe up or down across the different products in that category type you called out propane you called out water.
Joseph B. Hayek: If you just maybe further parse out products in that category. You called out propane, you called out water. Anything else to specifically call out because it seems like this is pretty good stuff going on? Yeah, that made if you get away from the, you know, LCM, which again, we think was was was one time a couple million dollars, the big, the big factor was mix, honestly, and it's that de-stocking of those largest propane tanks. Every, every kind of, I think facet around home goods, building products, some consumer goods, right, had a post COVID run up and then kind of a post CO It's just that's just what's happening in that business. You know, the water business was solid. You know, our other businesses, a couple of other businesses were around some of the large kinds of refillable refrigerant, Thanks. But those sort of slowed year over year just because of the same dynamics that that destocking.
Speaker Change: Also specifically call out because it seems like there is maybe some pretty good stuff going on there that might be masked by the propane de stocking in the short term here.
Speaker Change: Yes.
Speaker Change: If you get away from the LCM, which again, we think it was one time a couple million dollars the big <unk>.
Speaker Change: Big factor was mix honestly, and it's that destocking in those largest propane tanks.
Speaker Change: Every.
Speaker Change: Kind of I think facet around home goods building products. Some consumer goods right had had a post COVID-19 run up and then kind of a post COVID-19 trough.
That's just what's happening in that business.
Speaker Change: The water business was solid.
Our other business, there's a couple of other businesses.
Speaker Change: We're around some of the large kind of refillable refrigerant.
Speaker Change: Thanks.
Speaker Change: Those sort of slowed year over year, just because of the same dynamics that that destocking.
Joseph B. Hayek: But other than that, you know, there were a couple of puts and takes, but those are the real drivers. There are no further questions at this time. I'll turn the call over to Andy Rose for closing remarks. So, as I said last quarter, we're proud of our history and who we are today, but we're mostly excited for our future. We are determined to leverage our capabilities to reward our employees, our customers, our suppliers, and our shareholders. As our founder, John McConnell, once said in a speech in 1980, "We've only scratched the surface." That quote is as true today as it was back then, and I think it represents how we all feel about Worthington Enterprises and the opportunity in front of us. Thanks for joining us today. We'll see you next quarter. This concludes today's conference call. We thank you for joining. You may now disconnect your line.
Speaker Change: Other than that there were a couple of puts and takes but those are the those are the real drivers.
Speaker Change: Thank you.
Speaker Change: Sure.
Speaker Change: There are no further questions at this time I'll turn the call to Andy Ross for closing remarks.
Andy Ross: So as I said last quarter, we're proud of our history and who we are today, but we're mostly excited for our future. We are determined to leverage our capabilities to reward our employees our customers our suppliers and our shareholders as our founder John Mcconnell, One said in his speech and 1980.
Andy Ross: Quote we've only scratched the surface unquote.
Andy Ross: That quota is as true today as it was back then and I think it represents how we all feel about Worthington enterprises and the opportunity in front of US. Thanks for joining US today, we'll see you next quarter.
Speaker Change: This concludes today's conference call. We thank you for joining you may now disconnect your lines.