Operator: The next question comes from Reuben Garner with The Benchmark Company.
Reuben Garner: Congrats again on the strong quarter. I guess, I had some connection issues earlier. So, if I repeat anything, sorry, in advance. But first question is on inventory. Can you talk about where your inventory stands from a volume perspective relative to kind of historically normal times? We’ve heard from both kind of two-step distributors and some manufacturers that the dealer channel is kind of thin and hesitant to add. I was just curious how you guys are viewing inventory? Is that something where you’re stocking and it’s an advantage you have product over some of your smaller peers, or are you the folks that are running thinner than usual now?
Dave Rush: I would say we’re running normal, right? I think we’re not seeing the same kind of supply challenges we did just after COVID. It’s more of a normal operating environment. Our guys have done an unbelievable job of coming through that and getting back to normal for us. We’re where we would be normally with just seasonal fluctuations now. So we’ll see a buildup of inventory during the third quarter, and it will start to wane in the fourth quarter as we head into the seasonal months. But we’re kind of business as usual at this point.
Reuben Garner: Okay, great. And then,, I’m not sure if this one was asked, but an updated way to think about sensitivity to lumber? I know you’ve got the base business lumber out there. But if we’re continuing to run $100 higher, how much of an impact does that have on revenue and profit?
Peter Jackson: Yes. That’s a good question, Reuben. You may have noticed we brought back the base business guidance and estimate, but we did not bring back that sensitivity chart in the back. Candidly, I think that caused as much confusion as clarity. So, we’re going to try a different approach. What I can tell you, and this is really based on what we’re seeing today, if lumber goes up or down by $100, $1,000, we think it’s worth between $175 million and $225 million in annual EBITDA. So, it’s — if I use 200 as the midpoint, it’s in that range, but there are two things that I need you to just keep in mind, right? There are a number of assumptions that go into that type of rule of thumb metric. The two most important are: one, that’s assuming normalized margins.
It’s a normalized margin impact of that up and down specific to commodities. And then, please keep in mind, it takes three, four months, sometimes a little bit longer of lag before that change in commodity will show up in our results, right? You think about the inventory on the ground, the order time, the delivery and then the pricing change impact as that flows through. So, just keep in mind, those two assumptions are very critical to that, that rule of thumb. But again, $100 lumber worth between $175 million and $225 million of annual EBITDA.
Reuben Garner: And a quick clarification, Peter. Is that lumber and OSB altogether commodity?
Peter Jackson: Correct. And we assume a 70-30 lumber OSB mix.
Operator: The next question comes from Kurt Yinger with D.A. Davidson.
Kurt Yinger: Just given the strength in value-add and what you’ve talked about in terms of, I guess, the widening kind of margin differential versus traditional distributed products. Are you seeing competitors, I guess, invest behind the category to a greater extent or lean in more there? And I guess, over the long term, how do you think about your ability to kind of differentiate with some of those solutions?
