Question-and-Answer Session
Operator
(Operator instructions) Mr. Kramer, your first question comes from the line of James Greeter [ph] of MVL Company.
Ron Kramer
Hello?
James Greeter – MVL Co.
Hi, thanks for taking my question. I had a few questions. I guess the first was just with respect to steel costs. It moved up rather rapidly during the quarter and just wondering if, as that inventory flows through the garage door business, if you'll be able to pass that on to the customers in the residential industry, especially through Home Depot? And if not, how that might impact margins in the current quarter and the next quarter?
Ron Kramer
What we're experiencing is the inflationary impact of steel in the garage door business and obviously, of oil and natural gas and its flow through into resin in our plastics business. The answer to your question is that, yes, the cost of our raw materials are going up. It hurts our margin. We intend to be able to pass through prices but, ultimately, the end consumer is under pressure and the ability for that to pass through to the consumer market still remains somewhat in doubt. But there's no question that we, like others, are going to have increased cost of production and we'll be passing that through to our retailers.
James Greeter – MVL Co.
I see. That applies on the polyethylene prices, I was going to ask you?
Ron Kramer
When the price of oil is going up, you can expect the price of resin to follow, and vice versa.
James Greeter – MVL Co.
I see. Another question with respect to the garage business, it seems you will be closing the installation business. How will that affect sales in terms of your ability to push products through that channel?
Ron Kramer
Good question. We've been very sensitive as we've explored how to go about selling and exiting the installation business to protect the intercompany sales that we have between Clopay Garage Doors and for service companies. The plan that we've developed will protect the approximately $20 million of intercompany sales from Clopay Garage Doors. So, we believe that we'll roll out some of the locations directly under Clopay Garage Doors' management, while exiting others into third-party hands with supply agreements.
James Greeter – MVL Co.
Okay. And just one last one on the pension. Are you planning on funding that this year? Or is the goal to keep it unfunded for another year?
- To read the full transcript on Seeking Alpha, click here »
