Ronald Kramer: We’re still comfortable in looking at this and confirming that 30% margins or target for the year.
Operator: Our next questions come from the line of Bob Labick with CJS Securities.
Bob Labick: Congratulations on a good start to the year. I just want to kind of stick with doors for a second. And you’re showing success in share gains. You just mentioned the share gains in residential as you now can fulfill the backlog down a little bit. But you’re also showing gains in commercial as you’re expanding the Clopay sectional doors into CornellCookson dealers. Just give us an update on how far along you are with that process and where you think that can go going forward? .
Ronald Kramer: So we’re still in relatively early days in that process, and that will continue for quite some time. We’re getting very good take and our dealers are pleased with the product and having more expanded offering through us.
Bob Labick: Okay. Great. And then on CPP, noted, I guess, a little softness in North American demand. Can you just expand on that? What areas were soft? And was it sell-in? Or is it sell-through from the consumer? And what are you hearing from your large customers in CPP for their outlook for the spring season that we’re coming into?
Brian Harris: Sure. So for the spring season, as of now, we’re just assuming normalized weather compared to last year, which wasn’t very — the weather was not very good. The consumer still seems to be weak and there’s still elevated inventory at most of our customers, which is the main driver for the reduced demand.
Operator: Our next questions come from the line of Robert Schultz with Baird.
Robert Schultz: I was just thinking about HBP and the cadence for the rest of the year. How should we think about lapping the rest of the backlog conversion as we look through ’24?
Brian Harris: Sure. So we normalize at the end of last year’s second quarter, that would be March 23. So the second half of the year will be more of an apples-to-apples comparison. We’ve made investments in marketing, as I mentioned earlier, and we expect volume to improve year-over-year in the second half.
Robert Schultz: Got it. And then how are we thinking about buybacks for the rest of the year?
Ronald Kramer: We’ll continue to be opportunistic, and we continue to think our stock is a compelling value.
Operator: Our next questions come from the line of Trey Grooms with Stephens.
Trey Grooms: Congrats on the really nice results. So first, I guess on — I want to touch on the free cash flow. I mean you guys are putting up very strong free cash flow. And Brian, could you maybe touch on how you’re thinking about free cash flow for the year. I think the current guide is for it to exceed net income, but any update there? And anything for us to be aware of as far as unusual items or any changes to the cadence in what we typically see for — as far as free cash flow is concerned?
Brian Harris: Sure. So generally, our second quarter will be a cash usage period. We still believe that will be better than net income for the year. It does include all our CapEx, including the Troy expansion project and any CapEx related to the expansion into global sourcing as well as any other costs related to the expansion to global sourcing. So cash flow will pretty much be in the cadence that we’ve seen historically with the second half being strong.
Trey Grooms: But even with those investments you’re talking about here, your — the expectation for free cash flow to be — to exceed net income is — it includes those unique items. Is that correct?
Brian Harris: That is correct.
Trey Grooms: Great. Great. And I guess on CPP. The improved profitability there was pretty impressive, and it sounds like your global sourcing strategy is on track and within budget. It’s clearly moving along nicely. Is there any update on how we should think about kind of the cadence of getting to your targets in the coming quarters in your goals around the sourcing and what that could mean for margins?
Brian Harris: Yes. So for this year, we still expect modest improvement in CPP’s EBITDA. Keep in mind that this year, most of the products we’re selling in North America is product that we built and is still at that higher cost as well as the fact that our customers’ current inventory that we expect it to be normalizing somewhat into the back half of the year is still elevated. So the cadence remains, we’ll see improved margin in ’25. And by the time we get to ’26, we expect to be across all of CPP at our 15% EBITDA margin goal.
Operator: Our next questions come from the line of Julio Romero with Sidoti.
Julio Romero: I wanted to ask about CPP, if you could speak to price mix in the quarter and if that was flat or up or down year-over-year?
Brian Harris: Yes. There really was no significant impact from price and mix, pretty much flat. That’s right.
Julio Romero: Okay. Understood. And then as Troy mentioned earlier, it sounds like CPP is going well, the cost outs are going well. Are the benefits of those cost-outs kind of flowing through the P&L a little bit earlier than you expected? Or are they kind of right on track to your expectations?
Brian Harris: They’re generally on track. We started to see some benefit as we close some of the facilities, and that will continue to bleed at modest levels through the remainder of this year, and we’ll really see the step up next year as we’re more into the project and have more sourced inventory as part of our sales.
Operator: Our next questions come from the line of Sam Darkatsh with Raymond James.
