Nelson, what are your thoughts on KTCC post Q4 CC? They had some interesting things to say about potential cost savings in FY25, but what confused me is that a chunk of that came in Q4?
This part of the conversation confused me:
Bill Dezellem
Brett, would you please start by sharing with us what proportion of the $10 million of annual savings, or what, roughly $0.70 cents per year. How much of that will be achieved in fiscal ’25?
Brett Larsen
Through the fiscal year 2025 most of it, if not all of it, Bill, we're expecting that those cost savings to occur in the year.
Bill Dezellem
And some did fall into the Q4 -- how about just falls into fiscal ’25?
Brett Larsen
I would say the majority of it fell into our fourth quarter since most of that severance occurred during our third quarter, there was some limited amount but the majority of it was felt in our fourth quarter.
Bill Dezellem
Okay, that is helpful and so that explains why we see revenues down pretty meaningfully, but gross margin increasing completely counter to what we would normally expect.
Brett Larsen
Absolutely.
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First, what does cost savings from layoffs in Mexico have to do with GM (which did increase nicely, but I'd assume that came from sales mix and price increases)? And if they had a chunk of those savings in Q4 (lets say $2.5MM savings on pretax), what does that mean for the adjusted pretax margin going forward? Is their SGA already showing the benefits of those cost reductions?
With this company, I know that "Murphy's Law" should be expected.....but it does seem cheap here based on the Q1 guide
AI
