Bill Griffiths - Chairman, President and CEO Brent Korb - SVP, Finance and CFO.

Ken Zener - KeyBanc Capital Markets Daniel Moore - CJS Securities Nick Coppola - Thompson Research Group Al Kaschalk - Wedbush Securities Scott Levine - Imperial Capital Lee Brading - Wells Fargo Securities Bill Baldwin - Baldwin Anthony Securities.

Good day, ladies and gentlemen. Welcome to the Quanex 2015 Fourth Quarter Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question-and-answer session and instructions will be following at that time.

During today's conference call the Company management may make forward-looking statements about the future prospects of Quanex Building Products. Participants should refer to the Company's most recent Form 10-K filed with the SEC for a more complete forward-looking statement disclosure.

Additionally, the Company may refer to non-GAAP figures throughout today's call. A reconciliation of EBITDA to the comparable GAAP figure is included in the Company's most recent earnings release, which is available along with the Company's Form 10-K and 10-Q documents at the Company's Web site at www.quanex.com.

Last, participants are reminded that today's conference is being recorded. I will now turn the conference over to Mr. Bill Griffiths, Chairman and President, CEO of Quanex Building Products for opening remarks. Please go ahead sir..

Thank you. Good morning, everyone and thank you for joining us for our 2015 fiscal fourth quarter conference call. On the call with me this morning is Brent Korb, our Chief Financial Officer. 2015 was a very satisfying and successful year for Quanex, both strategically and operationally.

We closed the year with recorded revenues of 645.5 million and EBITDA of 59.9 million or EBITDA margins of 9.3%, a significant improvement over 2014 and slightly better than the midpoint of our guidance given at the beginning at the year and at the upper-end of the range after adjusting for the acquisition of HL Plastics.

Obviously from a strategic standpoint, the highlights of the year were the addition of HL Plastics in June and the addition of Woodcraft Industries two days after our fiscal year closed.

On a pro-forma basis, assuming we had owned both businesses for the full year and absent any transaction costs, 2015 pro-forma revenues would have been approximately 935 million and pro-forma EBITDA would have been approximately 105 million or 11.3% EBITDA margins, well on the way to our stated goal of 15%.

These two acquisitions also make us the largest supplier of components to OEMs in the building products sector. Compare this to 2013, when recorded revenues were a similar 952.6 million with EBITDA of 42.8 million or 4.5% EBITDA margins.

This of course included our Aluminum Sheet business which had a completely different set of operating dynamics than our core OEM Component Supply business. As you are aware we divested this business in April of 2014 as the first step in our strategic transformation.

These strategic moves over the past two years have improved profitability 2.5 times on a similar revenue base. And will put us within striking distance of our stated goal of 15% EBITDA margins.

While we have clearly made major and highly visible moves on the strategic front, we've also been working diligently in the background at improving the profitability of our Legacy business. During the quarter, we continued to see margin improvement particularly in our Vinyl Profile business.

EBITDA margins for the quarter in our Legacy business improved a further 100 basis points on essentially flat sales quarter-over-quarter and 500 basis points better than the prior year. Our number one priority remains improving our EBITDA margins to 15% as a total company and generating cash to pay down debt.

After Brent covers the details of our fourth quarter and full year earnings, I will talk a little more about expectations for 2016.

Brent?.

Thank you, Bill and good morning to everyone on today's call. Consolidated fourth quarter net sales increased 19.3% to $195 million, while fourth quarter EBITDA more than doubled to $27.5 million compared to the year ago quarterly result. The acquisition of HL Plastics was the largest contributor to the quarterly net sales increase.

The comparable Legacy business experienced a 6.2% increase for the fourth quarter. For the year, revenues increased 8.4% to $645 million and EBITDA increased 24.4% to $59.9 million. Similarly to the quarterly performance, the base Legacy business grew 5.9% in fiscal 2015.

The largest contributor to the fourth quarter EBITDA increase was the improvement in our North American vinyl products, as we continue to experience the year-over-year improvement coupled with the solid early performance of HL Plastics, during its first full quarter as part of Quanex.

The increase in the full year EBITDA was driven by vinyl extrusions in North America, vinyl extrusions in the UK, as well as screens and components. All of this, while we recognized $5.1 million of higher transaction related costs during 2015 and 2.8 million of lower comparable EBITDA from the 2014 warranty reversal.

Adjusted EBITDA for the year increased $18.7 million or 39.9% to $65.5 million. We ended the year with net debt of $34.3 million comprised of senior debt of $50 million and other debt related to capital leases and industrial revenue bond of $7.4 million, reduced by cash of $23.1 million.

Of importance in all of this, is the fact that we reduced the amount borrowed to fund the HL Plastics acquisition by $42 million in the 4.5 months since the acquisition. Obviously our leverage changed immediately following year-end as we completed the acquisition of Woodcraft Industries on November 2nd.

We borrowed an incremental $270.5 million of debt to fund the Woodcraft acquisition. Immediately after closing, our senior debt was comprised of $310 million in term loan B borrowing at an all-in rate of 6.75% and $10.5 million of borrowings against our $100 million ABL Facility.

Based on healthy and pro-forma EBITDA of $105 million our debt-to-EBITDA leverage ratio immediately following the Woodcraft acquisition was a comfortable 2.9 times.

While we've been focused company-wide on generating cash flow as evidenced by the sizeable debt reduction in the latter part of 2015, given the recent increase leverage position we are rebuilding our effort with a laser focus to notably lowering leverage through a reduction of net debt.

We are targeting net debt reduction of approximately $50 million per year. Note that fiscal 2016 benefits from the utilization of prior-year net operating losses, which we expect will be fully utilized during 2016 and limiting cash taxes to the latter part of the year.

We expect to end fiscal 2016 well within our future focus long-term average debt-to-EBTIDA leverage range of 2 to 2.5 times. Any future acquisitions we might make will only be completed if there is a clear path to getting back to within this range in relatively short order.

As mentioned in the earnings release, additional 2016 assumptions include depreciation and amortization of $51 million, interest expense of $23 million, a tax rate of 34% and capital expenditure spend of $45 million.

The capital expenditure estimate assumes $16 million of capital at HL Plastics and Woodcraft combined for the first full-year as part of plan. One last item I would like to address is our go-forward plan for messaging the positive transformation that we completed over the last two years. The plan is to spread the word far, wide and frequently.

We intend to host an Investor Day in early spring, as well as proactively reaching out to existing shareholders and perspective new shareholders throughout the year. Timing and further details for the Investor Day will be announced in the coming months. I'll now turn the call back to Bill..

Thank you, Brent. Before I talk about specific expectations for Quanex in 2016, let me start by making three points. Firstly, since the housing recovery began every housing industry forecast at the beginning of every calendar year has proven to be optimistic.

Secondly, on a comparable basis over the past two years, our core Fenestration Components business in North America has grown in line with the actual window shipments, excluding any planned revenue shrinkage.

And thirdly, as I've stated previously there is not benefit for me to be overly optimistic at the beginning of the new fiscal year, particularly when weather conditions have a large impact on shipments and winter is still ahead of us.

With that, let's talk about 2015 growth rate, which while they're not quite final they are close enough that they're unlikely to change materially in the next few weeks. Ducker is currently forecasting window shipments in calendar 2015 to increase 5.9%. This is based on 10.2% growth in housing starts and a 3.1% growth in R&R.

This forecast triangulates well with recently reported independent forecasts of both segments. It should be noted that at the beginning of 2015, Ducker was forecasting much higher growth rates based primarily on a housing start forecast of 19%.

On a comparable North American fenestration basis, our growth in fiscal 2015, excluding planned revenue shrinkage and petroleum surcharges for our core Fenestration Components business was 5.5%, very close to Ducker at 5.9. Looking forward to 2016, Ducker is currently forecasting U.S. window shipment growth of 7.5%. Current consensus for U.S.

housing start into 2016 is 14% with a range from 10% at the low-end to slightly over 18% at the high-end. R&R activity is also expected to increase to 4.2%. At this point we continue to view this as optimistic and feel that 5% to 6% growth in the North American Fenestration Components business is more realistic.

In other words, 2016 should be very similar to 2015. Having said that, we have demonstrated over the past two years, that whatever the actual outcome our revenue should reflect similar growth. In the cabinet sector, growth rates are slightly higher and more predictable at 7% to 8%.

However, growth rates are the highest in the stock cabinet sector, which is largely driven by new construction, particularly multifamily. Woodcraft does not participate as much in this sector and as such our expectation is for growth rates to be slightly lower likely closer to 6%.

Market conditions in Europe remain healthy particularly in the UK and as such we expect to see 7% to 8% growth in 2016 in our core European markets, which is slightly better than this year. When this is all blended together, we're anticipating 2016 revenues to be close to $1 billion.

If in fact any or all segments experience higher actual growth rates, we would expect to see similar improvement in our revenues. With this volume level and mix, we currently expect EBITDA to be between $112 million and $120 million, excluding transaction costs and purchase accounting effects most of which will occur in the first quarter.

As we enter fiscal 2016 with net debt of 305 million or 2.9 times EBITDA, our clear priority in 2016 is to continue to improve profitability and to pay this debt down to below 2.5 times by year-end.

Revenue growth will be secondary to this goal, which means we may elect to shrink part of our business if the long-term economics do not favor improved profitability and improved cash flow.

In summary, we expect to deliver close to $1 billion in revenue in 2016 and improved EBITDA margins with sufficient free cash flow to reduce our debt level to below 2.5 times even with a continuous healthy level of capital expenditures. As we enter 2016, Quanex is now $1 billion supplier of components to OEMs in the building products industry.

We have a business that is transparent and easy to understand, it is a pure-play opportunity in the residential construction sector, which is still in the early stages of a recovery.

If in fact our expectations are conservative and the current economic forecast for 2016 hold true, we could exit 2016 with a business that delivers three times the profitability than it did just three years ago in 2013.

And on that note, we would be happy to take any questions, operator?.

Thank you. [Operator Instructions] First question is from Ken Zener of KeyBanc. Your line is open..

Well, '16 is going to be a very different year than '15 clearly. I wonder Bill if you could, in the light of transparency the guidance you gave for EBIT, it seems like the vast preponderance of that is associated with the acquisition.

So, similar to my question last quarter, why kind of the conservative view I guess on the organic piece in terms of incrementals and to understand that you talked about the improvement at EBIT year-over-year, could you kind of talk about how much the different business is, so, extrusion, screen, and warm-edge space just kind of grew year-over-year, so we could understand if all of that EBIT expansion was associated with the Vinyl business, relative to operational improvement?.

I think, let me take a step back first and say we do have conservative expectations for growth built into the Legacy business.

Much of that is just based on history, where as I said in my remarks, every calendar year starts with a great deal of optimism and then gets ratcheted down and clearly there's nothing in it for us to be optimistic at this stage of the year. We believe the story is good enough even with conservative assumptions.

So, in the Legacy business we did see a greater growth in our Components business over our Legacy Spacer business. We also had confusing growth if you like in the Vinyl Profile business because while there are really three important dynamics to consider when looking at revenue growth in the Vinyl business.

One is the core business with a customer base that is performing well in the industry overall is growing at or above window shipment rates.

There's another segment of the vinyl market where the customer base is strategically shrinking their business to get better profitability as you well know a number of the vinyl window manufacturers are not particularly profitable.

So, we have a customer base in one segment that isn't growing at market levels and obviously we grow with our customer base and then the third thing is there are planned shrinkages that took place in that business and then maybe more to come yet as we go into 2016.

So, a rather wordy answer but hopefully that gets at why we're taking a conservative view on the Legacy business as we head into '16, but let me make a final point as I said in the remarks, it is pretty clear that whatever the outcome turns out to be, we are likely to see revenue growth in that range.

So, as I have said if we are being too conservative and the housing starts are great, R&R recovers and it's a much more robust year than we currently think. We would expect revenues to improve accordingly..

If I could ask one more question related to the legacy, more on the vinyl extrusion side, than anything else, given your large market share within that extrusion business, and also a large competitor Company who's potentially reviewing its portfolio if could you -- this is a big-time question, but if something were -- assets in that space were to become available, is that something that you feel you would be able to look at given your leverage position and recent acquisitions.

Or how could we think about that, broadly speaking? Thank you very much..

Yes.

Actually a good question and even broader than that, as we've said before we've clearly done a tremendous amount of work in the building products arena at uncovering potential acquisitions, although it is not our number one priority right now to go add businesses to the current portfolio, we are not going to withdraw ourselves completely from the market.

So, we will continue to look at any or all opportunities, however now for the first time in addition to the economic and strategic issues we need to look at those potential opportunities with the backdrop of our current leverage profile and we have no desire or intention to significantly increase that profile, but we do have the firepower to add some bolt-on deals if they are not that expensive, so we'll continue to look and evaluate accordingly, but the priority will be improved profitability, pay down debt, but if an opportunity arises you can't afford not to look at it..

Thank you. Next question is from Daniel Moore of CJS Securities. Your line is open..

Maybe just talk a little bit about the expected accretion from Woodcraft now, given the cost of borrowing was maybe modestly higher than we had been anticipating?.

Yes, I mean I think we talked about at the time of the announcement that it is going to be like $0.11, so it's -- obviously the borrowing was -- we're out in a difficult time, so I would say if you did it purely on an incremental you are closer to mid single-digits, so it's kind of in the $0.04 to $0.06 range..

Got it, and then as a follow-up to that, maybe just remind us, since the deal was done intra-quarter, you are flexibility to refinance if and when -- when does that become available, if the opportunity presents itself?.

I mean the way the facility works is we have the opportunity there is a hard call for 12 months with a 1% premium, but we can do it with the 1% premium sort of whenever.

I think the reality to it would be we'll need to deliver a couple few quarters and then if the markets are right there whether it's a re-pricing or an overall refinancing could do so let’s call it 9-12 months down the road..

Great, and with the improvements obviously that we've seen in the Vinyl business, just maybe rank order the three businesses, legacy Quanex, HL, and then Woodcraft, in terms of the opportunity for significant margin improvement over the next 12 to 24 months?.

Well, I think clearly the Vinyl business still has the opportunity to improve their margins perhaps more than any other segment of the business in terms of order of magnitude. Having said that, they still face the toughest market conditions in trying to get price increases, but there is still a lot to be done there on the cost side.

We believe that there is still a good opportunity for further improvement at Woodcraft and we have our operating teams already in there working on initiatives for margin improvement most of which won't show up until the second half of the year.

The Components business and the Spacer business, I don't think we'll see a great deal of margin expansion there, absent operating leverage. And in HL a similar story, margins are pretty descent there anyway, so I think that would be the way we would rank-order them..

Very helpful, maybe one more, and I'll jump back. Maybe -- you gave a lot of detail in terms of fiscal ’16 guide, Brent.

Anything, just in terms of SG&A, be it quarterly or for full year, how we should be think about that with all three businesses combined?.

Yes, I mean we haven't talked that much, our corporate cost came in for ’15 right in line with expectation.

In the past we've talked about that being kind of in $35 million level, so we may have slightly elevated corporate cost next year only because we will bear a bit of a addition integration costs with Woodcraft and so there is some things that we'll do from a Sarbanes-Oxley implementation and things like that, that will ramp those up a little bit, but nothing significantly grand scheme of things.

[Multiple Speakers].

Go ahead, I am sorry..

No, and I was just saying we haven’t given really the guidance overall on the combined company SG&A..

Last one, I promise.

The $50 million expected debt reduction of free cash flow annually in fiscal ’16, is that inclusive of some of the benefits of the NOLs that you mentioned?.

Yes, that is, I mean, the thinking there is ’16 benefits from the NOL and then as we look out into the future years if the growth and improved margin offset the lack of NOLs at that point..

The next question is from Nick Coppola of Thompson Research. Your line is open..

As you guys talked about in your opening comments, there was some nice gross margin improvement in the Legacy business.

And just looking for any further clarity on how to think about that, the real impact of the vinyl line upgrade versus any other items if you're willing to share in terms of mix or price?.

No. It's pretty clear, most of that improvement came out of the Vinyl Profile business, which if you recall was really an anticipated after the investment in line upgrades. We said the second half of the year we should start reaping the benefits of that.

We expect that to continue into 2016, and we're not going to give a great deal of granularity on that at this point but that's where the bulk of it is coming from..

Okay, that's fair. And then in the press release, you called out reduced sales into Russia. So I was hoping you could add a little bit of color on that.

Surely the impact of kind of the economy over there and potentially anything else you have to add there?.

And it's one of the reasons why, I answered it in an earlier question that the growth rate in our Spacer business in fact lagged the other components. A big factor there, though we never really talked about in the past is we used to sell several million dollars of spacer products into Russia and the Ukraine and in 2015 that number's zero.

It just disappeared completely. And probably is not going to come back and that's simply because of the geopolitical issues there, but that's where that comment came from. It was several million dollars worth of business..

Okay, understood.

And then last question here, can you just provide an update on the warm-edge spacer product and kind of applications that the entire group does?.

There, I mean I think -- are you asking about sort of the line we've talked in the past about the line fees and things like that for our customers?.

Yes, yes so just any progress on that kind of initiative..

Yes, the first prototype at a customer out in California has been extremely successful and they're talking internally now about funding a further expansion to add more lines.

We have a second customer with a different manufacturer's line that just started up and in fact I'll be visiting with the customer's senior executive team, that facility actually next week to see that line running, but the early indications there are that that's going to be a very successful opportunity.

That's a multi-year program in its early stages. We'll start seeing some benefits with improved volumes later in '16 but it should really take off in 2017 and beyond..

Thank you. Next question is from Al Kaschalk of Wedbush Security. Your line is open..

I just want to touch base on the multi-year outlook, and maybe just from a broader perspective.

The 11% to 11.5% EBITDA margin I think going to ’15, is this more a volume benefit, or how do we think through the cost initiatives that I think are still underway? Operational efficiencies, particularly given the success you've had in ’15?.

Yes. Clearly we expect continued margin improvement in the businesses, so a good portion of getting from call it 11.5 to 15 is actually going to come out of a better cost structure in a number of the businesses and as I said with the earlier question, the opportunities there are still in the Vinyl business and in the Cabinet Component business.

We will get operating leverage particularly in spacers as we see growth, so the combination of those as you go out over the next few years that's what's going to get us to 15%..

Is there any assumptions, Bill that in terms of the operation, is there any facility consolidation, or it's still too early, or are you from a footprint standpoint comfortable with what you see in HL Plastics and your Legacy businesses?.

Yes I would not expect to see in 2016 any consolidation moves with our current business. We're okay with the footprint as it is.

We have the capability with the current footprint to grow with the conservative numbers we put out there, but we could handle double that growth rate if it actually occurred and it wouldn't be an issue for us, with the potential exception of labor in some jurisdictions, which continues to be tight..

Let’s switch gears, on the petroleum side or the input raw material cost, it’s kind of hard to not think that there's some benefit, whether it be margin, even though there may be some lower input costs for you and therefore probably the lower surcharges.

But can you talk about any of the benefit in the fourth quarter, and what you see going forward from input costs on your side?.

No, the input costs are effectively near margin neutral. So, while the petroleum surcharge which went negative on us, effectively reduced revenue numbers, it was margin neutral. The same applies to aluminum which has being dropping through the year, that's for the most part margin neutral as well and as we now know resin is margin neutral.

So, really none of the benefit really came from reduced input costs. It really was a question of efficiency and reduced labor cost inside the operations..

My final question, I guess, just a little more if I may, on the nature of the Woodcraft acquisition, strategically how to think about that. I mean it diversifies the product offering but not sure if it diversifies as your customer base as much, but let me just talk a little bit further.

I know you've spoken about it a little bit, but maybe just add to how this fits, and then the acquisition opportunities going forward, particularly as you look to grow above our industry targeted growth rates?.

No, I mean the primary consideration at Woodcraft is the business model is identical to our Fenestration Components business. It does diversify the customer base. It will really impact the seasonality of that business too. As you know, cabinet installation is indoor work, so isn't as affected by the weather.

So, it would be particularly helpful in our first quarter, although let me just footnote that by saying, we will not see the benefits of that this first quarter because of purchase accounting and transaction costs. But it will definitely dampen the seasonality of our business.

And we do see opportunities there to take a very profitable business and improve the margin profile as we start getting our arms around it..

Thank you. Our next question is from Scott Levine of Imperial Capital. Your line is open..

So I know you are not breaking out your EBITDA guidance for ’16 based on legacy versus the two acquisitions, but can you give us a rough sense maybe of how much might fall within each bucket to the extent you'd be willing to do so? And I'm guessing the K might not be out for a bit but is your expectation as you'll be breaking those out in separate reporting segments or anything new to think about there, as we restructure our models to incorporate Woodcraft?.

Yes, so let me cover your last question first. I mean on the reporting segment what we will do some additional splitting out here in the 10-K that you'll see the next few days, as a result of making acquisition of HL Plastics.

But then we will again reassess that in our 2016 reporting because that'll be the first time we'll be including Woodcraft, so I don't want to commit with certainty but we would expect there to be some line of sight of these acquisitions as we go through that financial reporting process.

And to your earlier question on the growth rate, I mean I'd hazard to not jump into providing the overall guidance to what the growth is, but I think if you attribute some of the additional cost at the corporate level which is classified theoretically as legacy to really the acquisition of Woodcraft in some of the integration, you could get into a little bit of a 50-50 kind of a split with some added growth at HL Plastics just because of where they are in their cycle and how the UK market is performing, we would expect some higher than legacy like growth at HL Plastics..

And then a follow-up on international, I think you were asked earlier about Russia and Ukraine, and I'm guessing with HL, the vast majority of your overseas is the UK.

But are there other markets to think about or consider as being meaningful contributors in your international footprint, or is it almost entirely UK? I think there was some Germany in the Spacer business, but maybe an overview of the international mix, geographically?.

Yes, I think international is almost exclusively the UK and what I would call core Western Europe Germany, France, Belgium, the Russia-Ukraine thing was a little bit of an aberration and that product was actually delivered out of North America, not out of our European operations.

But the bulk of it is more than two-thirds of our international volume is going to be UK-based, so I think better stability there, we don't envision another Russia-Ukraine situation that really was a bit of an aberration..

One last one if I may. It seems like both the new acquisitions here are performing well in line with your expectations.

But anything you'd highlight either positively or negatively versus your initial expectations, based on what you have seen since you've closed both of these acquisitions and just initial thoughts on both or whether you -- it’s basically the same view you had articulated when you announced both deals?.

Yes. No surprises positively or negatively, in both case as advertised so a testimony to our due diligence process..

Our next question is from Lee Brading of Wells Fargo. Your line is open..

I wanted to follow-up on the CapEx discussion a little bit, I guess if you could give a little insight on that. I think you talked about $16 million more incremental for the acquisitions, but hope you could talk about what the direction of the CapEx or what you'll be spending on, on the Legacy business.

I think if I recall, you'd done a lot of updating on the extrusion side on your lines, what's kind of the next focus there?.

Yes, the next focus really is going to be on productivity improvements particularly as it relates to labor. We haven't had the severe shortages of labor that the homebuilders have, but in a number of our jurisdictions it's getting increasingly difficult to find qualified labor as we grow.

So we're looking more and more towards automation, so we are going to be investing in some automation projects in our Legacy businesses that really are positive all part of that how do we get to 15% EBITDA margins and how that we continue to grow in tight and expensive labor markets, that's really going to be the focus in ’16..

Got you, and then the expectation would be for benefit and margin side in ’17?.

Yes, and some of it, I mean we would hope to see as we start existing 2016 but the real expansion should be ’17, you're right..

And you've touched on this. I'm not sure how much more detail you'll want to provide, but I'll follow-up a little bit. On the vinyl profile side, you talked about 500 basis point improvement year-over-year.

When does that become more of a difficult comp, I guess is the way to think about it, is that after the first half of next year?.

Yes, I think as we get into the second half that comp does become much more difficult and thereafter it's going to be pretty much normalized..

[Operator Instructions] Our next question is from Bill Baldwin of Baldwin Anthony Securities..

Can you all offer any thoughts as to whether there has been discussions in your planning regarding the expansion geographically of the footprint of HL Plastics beyond UK and other countries in Europe?.

No, the immediate focus at HL is going to be to continue to grow in the UK market. They still have some runway there to perform at above normal growth rates and that's the intent so there are no current plans to expand that into mainland Europe at this point..

Secondly, are there meaningful cross-selling opportunities between Edgetech and HL in the UK market?.

That's still under investigation as we said when we did the acquisition, there were no benefits built into the transaction for any kind of cross-selling opportunities. We recently put in place a new leader in Edgetech business in the UK and he is starting the work with Roger at HL on exploring what opportunities there might be.

So that's a working progress and any benefits there will be upside to anything we have put on the table thus far..

And lastly, are there any best practices, benefits that will accrue to Mikron from transferring processes and technologies from HL Plastics into Mikron here domestically?.

That is already in process that's in work..

Next question is from Ken Zener of KeyBanc. Your line is open..

So if you could or if you would clarify the statement you just made about, regarding vinyl, you know the comps getting more difficult in the back half of this year and then normalizing.

Could you clarify what normalizing margins mean for you in extrusion?.

What I mean in terms of comps is, by the time we get into 2017 when we start comparing '17 to '16 or the back half of '16 to the back half of '15 the opportunity for incremental improvement is going to start diminishing. So by normalized I mean you could expect maybe whatever we close at, at '16, '17’s are going to be similar.

There isn't going to be the opportunity probably for 500 basis points improvement at that point..

Understood, just was trying to give it a shot, thank you..

I know. You never give up Ken..

Well thank you sir. There're no further questions at this time..

Okay thank you. I want to thank everyone for joining us on today's call. Stay tuned for more information about our spring Investor Day and we look forward to updating you next on our first quarter results in early March. Thanks everybody..

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day..