Joseph Ahlersmeyer: Morning. Yeah, interesting acquisition you’re doing here with Fleetwood. It seems to me to be a pretty clear move outside of your core door category and push the concentric circles outward of what even constitutes doors. Thinking about your Doors That Do More strategy, I am wondering if maybe it ought to be called more than Doors That Do More and just maybe you could talk about that blurring of the lines a little bit? And as you go and look for new and other targets that maybe doing similar things, what are the considerations I guess around identifying assets that you’ll be able to integrate successfully. I would think at least one with maybe be the management team needs to be one that you feel you can retain. I’ll just kind of let you run with that.
Howard Heckes : Yeah, thanks Joe. This is Howard. It is a great acquisition. We really like this business for a number of reasons. First I think their strategy is very aligned with our Doors That Do More or as you now pointed more than doors that do more strategy. This is about developing innovative products and services in solving life and living problems, right? And you think about these products and you see some pictures and I encourage you to go to their website fleetwoodusa.com. This trend macro trend, indoor outdoor living, lights, security, et cetera these are premium luxury products that really supports that innovation. Two, it addresses a large patio door market that we play in today. Remember when we talked at Investor Day, we participated in the hinged patio door market.
We don’t play in the vinyl sliding market, which we feel is much more competitive. But this is a the high-end luxury side of that patio door market, which we see as a very interesting growth platform for us. Three, when you think about their products and we think about good, better, best and again at Investor Day we talked about the fact that sort of pinpoint what is a best door. There’s a lot of good, there’s a lot of better, I’d say that their product platform, absolutely addresses this best. And it’s one of the reasons why they can realize the margins that Russ just talked about, which we like. And then fourth, and obviously, the growth potential of this business with the high percentage of their revenue being on the West Coast with accretive margins to our business and accretive EPS in year one make this we think a really smart – a really smart investment.
Now, we talk about more than doors, 70% of their revenue is doors. And we talk about folding, hinge, sliding, pivot et cetera. 30% are glass panels that are fixed. They don’t move or window systems that tie back to the doors. Typically, but in fact, in almost every case, the windows are sold in conjunction with the door – the door is the highlight of this business, right? And the windows are sold secondary sort of match the doors. So we still, we’re sort of calling the Doors That Do More strategy, so.
Joseph Ahlersmeyer: Understood. That’s fine by me. I’m glad you touched on the point around the high end consumer. I don’t think you have to look far this earnings season to find evidence that that consumer continues to do better. And I’m just wondering if you feel like that’s a trend that is likely to sustain for many years, whenever R&R does sort of inflect back to growth, people have a lot of home equity. And I would imagine that this sort of plays in line with that trend. And then just bigger picture, as well, as you think about skating where the puck is going with respect to M&A. I noticed some other things within this product assortment on this slide that include what seems to be hurricane protection. Just wondering how you’re thinking about other attributes of products that are interesting to you.
Howard Heckes : Yeah, so, first of all, I completely agree with you that this particular consumer typically does better in all cycles and that’s important. And we certainly expect that to continue to be the case. As far as skating where the puck is going and you think about the two acquisitions that we’ve completed this year. First Endura, which is the leading manufacturer of components that go around the door and really allow us to innovate door systems that again are better at keeping air and water out or better connectivity or better security. That was critical to our Doors That Do More strategy and this is a an adjacency, if you will, into this patio space, where we think it’s a big market, $4 billion to $5 billion market at this they at the high end.
But you can imagine that there could be some longer term synergies in how we collaborate on sourcing an R&D and product development. So any company that fits this profile of allowing us to execute our strategy and continue to behave more like a consumer durable a decommoditized consumer durable, that’s going to be important to us as we look at future M&A.
Joseph Ahlersmeyer: Very interesting. Thanks for all the thoughts. Good luck. Thanks, Joe.
Russ Tiejema : Thanks Joe.
Operator: Thank you. The next question is coming from Jay McCanless of Wedush Securities. Please go ahead.
Jay McCanless: So, I’m just wondering why, when you have the Investor Day on September 9th and essentially had most of the quarter done, why not go ahead and release this information then about where you thought EBITDA was going to go, where you thought sales might end up, given that you had the majority of the quarter in the bag already at that point?
Russ Tiejema: Yeah. Jay it’s Russ. I guess, I’d answer that by saying that the purpose of an Investor Day is not to focus on the near term. The focus of the Investor Day is to focus on the long-term and the strategy that our company is pursuing. And that is what we wanted to highlight on September 19th and what we did as opposed to getting to a broil in the near term outlook for the business, which is driven – let’s face it more by a choppy macro environment, than where we’re expecting to take the company longer term.
Howard Heckes: The only thing other thing I would add Jay, is that, I am really proud of the team in light of the macro environment for delivering – as Russ said earlier, we set guidance almost a year ago. And we’re within the guidance straight down the middle on revenue and we said, maybe towards the lower end of EBITDA. But again, right in the in the middle of guidance set almost a year. So, I don’t think there’s any real surprises there.
Jay McCanless: Okay. What about the Fleetwood acquisition was more compelling to pay probably a higher valuation and where your stock price is right now versus buying back stock or looking at maybe something that you could have acquired a little cheaper?
Howard Heckes: I sort of hit the key points of what we liked about Fleetwood. There’s a lot to like about this deal. And when you think about being able to acquire a very near adjacent asset that has very significant growth potential at accretive margins, potentially significantly accretive margins for a multiple that’s very near where we historically trade. That felt like a very strategic and proper investment does.
