Jay McCanless: Okay. That’s good to hear. And then just the second question, M&A phrased a different way. Are you starting to see some of this tightening in terms of bank lending standards and underwriting on some of your potential acquisition targets? Is that freeing up or making some people may be more willing to sell than they might have been at the beginning of the year?
Dave Rush: That makes reasonable sense that we would start to see that. I would say what we’ve been looking at lately, that hasn’t been a factor.
Operator: The next question comes from David Manthey with Baird.
Quinn Fredrickson: Yes. Hi. This is Quinn Fredrickson on for Dave. I’ll just ask one question here. Peter, your earlier comment made it sound like the competitive environment has remained pretty benign in value-add and better than you expected. Do you think that’s due to same dynamic among competitors with the commodity price lags in their contracts, or is there a structural change and improvement there? And then, are you assuming an uptick in competitiveness and the expectations for the slight back half gross margin moderation?
Peter Jackson: So, I guess, I need to be a little careful how I answer that. On the first hand, we have seen incremental competition and margin erosion in core business, period, full stop. Now, it’s not as much as we expected. It’s not as much as we forecasted, hence the outperformance in that area. I would say that there’s been a lot of strength in the volumes within the value-add, which gives us increasing confidence that we’re meeting a need that our customers see value in it, that they’re leveraging it to improve their cycle times, their job site efficiencies, their job site safety and that we’re at a price point that’s competitive that allows them to do what they need to do better. So, we’re certainly pleased with all of that and have been seeing the competition.
Now, the components of cost, the investments that we’ve made, but also the inflation we’ve seen, certainly, I think that has had a structural impact on the overall market, us included, but others as well, where you got to make a little more gross margin if you want to cover those incremental wage costs or truck costs or whatever it is. But then lastly, we’ve done a lot of work. We’re much more efficient and that self-help has allowed us to earn more on the same equipment year-on-year because of our efficiency improvements, whether it be new automation that layers on the same equipment and facilities, sometimes it’s a new equipment, but sometimes it’s just better process. And all of those things are why that strength we’ve seen is sustainable.
I think that helps to Dave’s point, us be more competitive, right? We can still make good money where others are struggling. And if we can do it by being more reliable or on time and in-full being better that our quality is better, then we’re always going to be the partner of choice for these builders who want to make sure their houses are high quality and on time.
Dave Rush: And I would just add a real-life example. In a major market we had a customer try someone else for 50 houses on truss for a lower price. They came back to us less than a month later at our price for those same 50 houses, which we, by the way, delivered inside of 10 days. So, the stickiness we generated or by being able to do what we do best for our customers, they recognize that value proposition. And that’s allowed us to make money for them and us, and that’s where we want to be.
Operator: This does conclude today’s question-and-answer session. I will now turn the program back over to our presenters for any additional closing remarks.
Peter Jackson: Thank you very much. Have a great day.
Dave Rush: Thanks, everyone.
Operator: This does conclude today’s program. Thank you for your participation. You may disconnect at any time.
