Adam Baumgarten: Hey, good morning everyone. Vic, you’d mentioned that bidding activity turned positive for the quarter. Did that continue into April?
Vic Grizzle: I don’t have April data yet, we won’t get that until next month. So, I couldn’t answer that specifically. We’re going to keep an eye on it. Again, we’re not putting too much weight on it in the first quarter, but we’re going to keep a close eye on it for the second quarter.
Adam Baumgarten: Okay, got it. And then just on the topic of natural gas, just curious when you guys put in the hedging program, and if you could remind us what percentage of your total COGS is natural gas?
Chris Calzaretta: Yes, sure. So, energy, and we don’t break it out any more than that, but energy is about 10% of our Mineral Fiber COGS inputs costs — sorry, of our total COGS to Mineral Fiber. Again, I mentioned we’re hedging about 50% of our natural gas exposure by way of the price locks that we talked about. Kind of entered into towards the earlier part of the quarter, so you can look at the NYMEX settlements and get a feel for the pricing there. And hopefully that’s helpful as you’re thinking through the nat gas locking.
Adam Baumgarten: Got it. And then just to confirm, I think there was a question earlier on just overall input cost inflation assumed in the guide. It was mid-single digits last quarter. Is the way to think about that as roughly the same still?
Chris Calzaretta: Yes, for the year, mid single-digits on inputs costs. Again, a little bit of variability, obviously, depending upon how the rest of the year shakes out, obviously, on dynamics associated with nat gas, but certainly more heavily weighted there towards our raw material inputs where we see a lion’s share of that inflation.
Adam Baumgarten: Okay, got it. Thank you.
Chris Calzaretta: You’re welcome.
Operator: The next question comes from Joe Ahlersmeyer with Deutsche Bank. Your line is now open.
Joe Ahlersmeyer: Yes, thanks very much for the question. Just wanted to clarify on that last point about the hedging, you’ve mentioned it starting in the earlier part of the quarter. Is it simplistic enough to think you’re talking about the early part of this quarter or was this the early part of last quarter that you started it?
Chris Calzaretta: Yes, sorry. Good question, early part of Q1.
Joe Ahlersmeyer: Okay, got it. And then just a quick clarification on the mix, know it’s kind of been beaten to death at this point. But was there a benefit from lapping unfavorable channel mix related to the destocking last year? I don’t think I saw a favorable geographic mix called out, but looks like you did call out the unfavorable channel mix in the prior year.
Vic Grizzle: Well, I don’t recall what was disclosed last year in particular. I mean, it was a down quarter last year, right, based on the destocking. But I wouldn’t put this particularly all on destocking, but I would say that, in the first quarter of last year, we had areas where our highest AUV products were sold that were stronger than the others. And so, part of this is just base period comparisons driving some of this mix, which is, again, why we believe this is transitory and will work its way through as we go in the year.
Joe Ahlersmeyer: Okay, thanks very much.
Operator: The next question comes from John Lovallo with UBS. Your line is now open.
John Lovallo: Good morning guys, and thank you for taking my questions. The first one, I just wanted to go back to Stephen’s question on the Mineral Fiber volume, it being a little bit better than expected in the first quarter and the full-year expectation remaining the same. I mean, that would seem to imply that the back-half outlook has gotten incrementally worse. So, I just wanted to clarify that. And if so, what are you seeing that has changed your mind on that?
Vic Grizzle: John, one thing that we didn’t mention with Stephen’s question is some of the goodness that we saw in the first quarter, and we point to this is, the inventory build in the retail channel, which will come out, right? So, that’s a timing-related, we wouldn’t expect to hold that for the whole year. So, we didn’t mention that in Stephen’s question, but that’s another factor in its overall equation, is some of that goodness in the first quarter is timing-related inventory build.
John Lovallo: Got you. Okay, all right. And then on the digital growth initiative spending in Mineral Fiber, is that a lever for you guys to potentially pull back on if your end markets were to soften more than expected?
Vic Grizzle: Well, I think we’ve done a tremendous amount of work and effort around making room so that we could continue our digital investment. The traction that we’re getting there is making a meaningful contribution to the growth of the business. So, we’ve made room in our cost structure so that we could continue to do that. And again, we’re, I think, appropriately balanced in our outlook for the rest of the year given the uncertainty in the back-half so that we don’t have to pull additional levers like that.
John Lovallo: Got it, thank you, Vic.
Vic Grizzle: You bet.
Operator: I show no further questions at this time. I would now like to turn the conference back to Vic Grizzle for closing remarks.
Vic Grizzle: Thank you. I just want to say thank you everybody for joining today. At the end of the first quarter, we feel like we’re in a very different position than we were into the first quarter last year. We’re well-positioned for tougher market conditions that we’re outlooking. And we feel good about the position that we’re in and ready to perform in tougher economic conditions that we’re outlooking. So, thank you again for joining today, and we’ll look forward to talking to you next quarter.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect. Goodbye.
