David Nark: Yes, John. This is Dave. I think, as you look at it, there are a couple of areas in the end markets, where we are seeing some improvement. We believe we are outperforming the market in the Construction segment. Also, in the appliance market, is another area where we are outperforming and seeing, some conversions taking place. So, those are the two main areas I’d point to.
John Franzreb: Okay. And one last question and then I’ll get back in the queue. You talked about pricing initiatives on the Metal Coatings side of business benefited the quarter. Can you just go a little bit deeper on that? Is that in response to zinc prices? What is going on in the pricing initiative front on MC?
Tom Ferguson: We’ve always tried to talk about how we have tried to differentiate our value pricing versus zinc, but it does help. Zinc has been trending up. And so as zinc trends up, that tends to help support our price levels. I also think that, we continue to add services and anywhere from adding more transportation, so that we are able to be more responsive. But that also adds basically just revenue and flow through income and increases our price per hundredweight, if you will. So, I think all those things have – they bode well. We also have improved. We added another spin line late last year. So, we’re getting the benefit of that. That tends to be at a higher price per hundredweight. It actually tends to be priced per piece. So, those are all things that have benefited us, and we hope to continue to benefit from, as we go forward this year.
John Franzreb: Great, great. Thanks for the additional color. I’ll get back into queue.
Tom Ferguson: Thanks.
Operator: The next question comes from Adam Thalhimer with Thompson Davis. Please go ahead.
Adam Thalhimer: Hi, guys. Congrats on a strong quarter. And Philip, congrats on your retirement.
Philip Schlom: Thank you.
Adam Thalhimer: In Metal Coatings, so your gross margins were up 170 basis points in fiscal ’24. Curious how that might trend in fiscal ’25, if there is room for more improvement?
Tom Ferguson: I think as – we talk a lot about DGS and the leadership teams, and our playbooks. We believe we are benefiting from that, and we should continue to benefit. And hopefully, hold those margin improvements and continue to benefit, from the various or – tactics that we are using. We feel pretty confident with the team. As long – as volumes hold up, I believe we can drive those margins.
Adam Thalhimer: Okay. And then at Precoat, is this normal seasonality between November and February or sound like you also just had a really good quarter in Precoat in February?
Tom Ferguson: We did. So part of this is yes, it was a lighter winter than normal. But also I think just – we had mentioned last fourth quarter, where we were carrying a lot of customer inventory. And we cleaned that out as we got into the fiscal year. Good, good operating performance by the team in Precoat. And then, so this fourth quarter, I think it was the benefit of kind of normal customer inventory sitting in our facilities, which allows us to drive productivity and efficiency. And then the volume, just we start to get – when volume flows through, those margins tend to pop nicely.
Adam Thalhimer: Okay. And then, do you guys have – like an actual interest expense and tax rate forecast that is embedded in the guidance?
Philip Schlom: We do. I mean, we look at the forward curve on our interest rates. So, just like everybody else out there, we were expecting four to six cuts this year. Then we got out there and were able to reprice here in March ’24, which wouldn’t have been part of our original forecast.
Tom Ferguson: Well, we don’t have cuts factored in.
Philip Schlom: We have the…
Tom Ferguson: Just the forward curve.
Philip Schlom: Just the forward curve.
Tom Ferguson: Not any additional cuts.
Philip Schlom: Not any additional cuts. Then on the tax rate, we have a 21% stat rate. Then we’re primarily North America, so call it 3%, 3.5% to 4%. So that’s kind of 23.5% to 24% tax rate is what we utilize.
Adam Thalhimer: Okay. I’ll turn it over. Thank you.
Tom Ferguson: All right. Thanks, John.
Operator: Our next question comes from Jon Braatz with Kansas City Capital. Please go ahead.
Jon Braatz: Good morning, everyone.
Tom Ferguson: Good morning, Jon.
Philip Schlom: Good morning, Jon.
Jon Braatz: Tom, talk a little bit about Washington, Missouri. As you ramp up, what can you say about maybe startup costs, costs you’re absorbing prior to production? And is there a little bit of a drag on margins for this fiscal year?
Tom Ferguson: No, there shouldn’t be. I think we’ve got all that planned – in our budgets for how we’re going to ramp up. And naturally, we’ve got a little bit of contingency in there, too. So, we’ve got some decisions to make, as the line gets tested out and comes online, whether we actually start producing at the end of the year, or whether we just carry in and meet the normal customer demand that’s been committed. So, but in either case, I don’t look for that to be a drag. So there should be an opportunity.
Jon Braatz: Okay. And how much of the production is committed at this point?
Tom Ferguson: 75% is contractually committed. And that’s kind of – but that is how we’ve built the model and in fact that ends. So we’ve got 25% to go sell, although in this case, the customer that made that commitment, actually would have liked to have had 100% of it. So, we’ve got upside with this customer, which we hope to announce here in the next month or so.
