Susan Maklari: Okay, all right, that’s helpful. And then you also mentioned that you’re seeing larger projects, especially in infrastructure areas as a result of some of the bills that have been passed there. As you think about the acquisitions that you’ve done in the last couple years in Architectural Specialties, the range of product offerings that you have there now, how is that changing your ability to go after those projects? And what does that mean in terms of your visibility and the longer-term margins for Architectural Specialties, the ability to get to that targeted range there?
Vic Grizzle: Yes, I think it’s a really good question, and there’s a real strong connection here to our participation. I mean, to take a step back, in the last six months, we’ve quoted over 100 transportation jobs; over 100 transportation jobs just in the last six months. And so, there’s a lot more activity on the transportation front than what we’ve experienced in the last several years. That’s noteworthy, but the fact that we’re in these bids and we’re quoting on this work is really directly connected to the expanded capabilities that we have added to the Architectural Specialties segment through our acquisitions. Our ability to do things with metal and wood, as we talked about in the last call, with the Kansas City Airport, our innovation around wood and be able to meet those requirements was unique in the marketplace because we had purchased a wood business, and now we’re in that business.
So, I think there’s a real strong connection. The breadth of our portfolio is allowing us to not only participate in these large projects, which we couldn’t have before, but also be competitive and uniquely competitive in these large projects, versus more niche players who don’t have the breadth and the platform of an Armstrong. And so, we’re bringing some real competitive advantage, I think, to these projects. Definitely a strong connection to what we’ve done over the last several years, to be able to play now in these larger projects.
Susan Maklari: Okay, that’s helpful. Thank you, and good luck.
Vic Grizzle: Thank you.
Chris Calzaretta: Thank you.
Operator: The next question comes from Keith Hughes with Truist. Your line is now open.
Keith Hughes: Thank you. Question on Mineral Fiber costs, the $6 million in inventory, is that an inventory write-up or specifically what is that with effect to the quarter?
Chris Calzaretta: Hey, Keith, it’s Chris. It’s basically inventory valuations. Think about it in terms of inflation and the timing of inflation rolling through the P&L as inventory sold. It’s not a write-off; it’s just the timing of inflation.
Keith Hughes: Okay, all right, perfect. And the same question on the AUV, I think it’s pressured with geography, is that a function of the northeast, which tends to be at your highest AUV just being weaker than other parts of the country. And do expect this to be something we’re going to see consistently over the next year?
Vic Grizzle: No, I think it’s timing. So, again as I said earlier, Keith, I think it’s timing. The northeast part of the country, it grew in the first quarter. It didn’t grow as fast as some of the southern regions, but the comparison year-over-year is we had double-digit growth in the northeast in the first quarter, last year, while overall volumes were down 4% last year. So, there was some outsized participation in two of our higher AUV areas that, by comparison I would say, even though they are positive, underperformed some of those stronger growth territories. So, in the month of April, Keith, I’ve already seen this reverse itself. So, this is a timing, I think, phenomena that will normalize throughout the year.
Keith Hughes: Okay, perfect. Thank you.
Chris Calzaretta: Thanks.
Operator: The next question comes from Garik Shmois with Loop Capital. Your line is now open.
Garik Shmois: Hi, thanks. I was wondering if you could provide a little bit more color just on your nat gas hedges. How much are you hedged now, and any color on the duration of the hedges? And I think you expected costs to be up mid-single digits this year, does your new hedging program impact that outlook at all?
Vic Grizzle: Hey, Garik. So, yes, as I said, we hedged a portion. Be thinking about that in terms of about half of our exposure. Duration is really just for this year. And relative to our guide earlier associated with natural gas and overall inputs, it’s not — I wouldn’t expect that to move the needle pretty materially there, but it was contemplated as we guided to our initial nat gas and input cost exposure for the year.
Garik Shmois: Great, thank you. Wanted to follow up just on the Mineral Fiber volume outlook, and just in conjunction with the strong reported performance in the first quarter, I don’t know if you could provide a little bit more handholding on how you expect the cadence of volume growth to progress over the next three quarters?
Vic Grizzle: Yes. So, in terms of volume, think about the remainder of the year, while we don’t provide quarterly guidance, we do expect negative volumes in the second quarter, and really consistent with what we talked about in February, really continued deceleration of volume progression for the remainder of the year. Again, it comes back to the level of uncertainty and cloudiness associated with the back-half of the year and the mild recession that we’ve incorporated into our guidance.
Garik Shmois: Understood. Thanks for your help.
Vic Grizzle: Sure.
Operator: The next question comes from Phil Ng with Jefferies. Your line is now open.
Phil Ng: Hey guys. With the regional bank failures and likely tighter lending conditions on CRE loans, how do you see that impacting your business and any color on timing? And then, Vic, I guess it would be really helpful if you could help us segment your customer base in type of work that you could see being impacted. I would suspect that new construction would be potentially impacted a little more, but any color on how to think about major (ph) versus your patch-and-match business would be helpful? Thanks a lot.
Vic Grizzle: Yes, Phil, so in the first quarter we really have not seen any impact from all the things that we’re reading about and the different possibilities about ramifications. I think our back-half guidance reflects the level of uncertainty that this adds to it. And I think this is going to have to play out for us to really understand what the full ramifications of this could be. It really is balanced though when you think about the things that you read about in Class A office-based and trophy, where there is high demand for that space, and the additional amenities and work that is doing to keep those buildings competitive and full. That drives renovation activity and we’re seeing that activity on one side of it; that’s not likely to stop.
So, if you step back and look at overall new construction versus renovation, I’ve said this before, and I think this is going to play out in the back-half of the year. This will be primarily impacting the renovation. More of those things that haven’t already started where you have some cost like you would have in new construction, you are going have discretionary pullback on those patch and match levels of work. The major renovation work, I think that’s where we are going to see additional softness in the back-half of the year. I think we are appropriately balanced in our outlook that’s reflecting what could happen in tighter lending conditions in our back-half outlook. I think this has to play out for us to fully understand the full ramification.
And, I’ll leave there, Phil.
