Dave Rush: Yeah. The only thing I’d add is and why I use the term pause versus halt, is just the underlying housing demand need. I mean, if they can’t get into single-family because of affordability concerns, multifamily is the next best option. And I think it will be relatively quick for the rent factor to be figured out to where we get to a rental number that’s cheaper than a mortgage, maybe more than we wanted to pay, but at the end of the day, it’s the best chance I’ve got to get my own place. So maybe pause is too optimistic, but it’s something that I hold because of the overall demand that we see out there.
Mike Dahl: Okay. Yeah. I mean, now that last point, we certainly agree with. I think it’s just a question of kind of the financing mechanics and other things in terms of what’s going to dictate kind of depth and duration there. And then the five-story and below is probably an important distinction too. My second question or follow-up, which is also related on the margin side. So setting aside the over-earning that you’ve covered kind of ad nauseum on multifamily and just thinking about kind of the core multifamily margin and mix. If we were to see your multifamily business, which is currently about 13% of sales go to say, 8%, 9%, 10% of sales. Can you help us understand or quantify the margin impact to the total company from that type of a change? It mix, again, setting aside the current over-earning dynamics and just focusing on kind of that being a better than average core margin?
Peter Jackson: So I want to be careful here. I totally understand your question. It’s a good question. I don’t want to start getting into guidance for 2024. So I’ll comment directionally based on some of the things we’ve said throughout this year. I hope it’s helpful to you. I think if you go through and look at the margins that we’ve talked about over-earning, it’s been different by quarter. You kind of average them together and you’re kind of in that 150-ish range-ish. So I think that’s a starting point for what we described as over-earning. Now, if you see some of the numbers you’re describing and a big downturn, that adds another layer of challenge to the market and capacity and competition. So that kind of I won’t say all bets are off, but that’s a different model than what I’m referring to. I’m talking about this year and what we think has been unusual in terms of the over-earning. But both of those will play together.
Mike Dahl: Got it. Okay. Thank you.
Operator: And our next question comes from Ketan Mamtora with BMO Capital Markets.
Peter Jackson: Good morning.
Ketan Mamtora: Thanks for squeezing me in. Hey. I’m just curious, can you talk a little bit about how some of the regions are doing as far in October? We talked about some of the product categories, but in terms of your key regions, are you seeing sort of any noticeable change in terms of one being either stronger or weaker versus the other?
Peter Jackson: Yeah. In the beginning of the year, definitely. As we came into this, we saw a lot sort of west to east, the markets got stronger, right? West was the worst. That changed a little bit as the year progressed. I’d say west bottomed out and bounced a little bit. Central struggled a little longer. We’ve seen certain parts of the, especially the south central sort of drag longer than we expected. Again, not horrible, but if I’m comparing the year-over-year sales trends, they’ve probably trailed the other markets. I don’t know that there’s anything meaningful in terms of differences at this point. I think they’re all pretty comparable.
Dave Rush: Yeah. I would say the west relatively has shown a little bit more of a bounce. That’s for sure. I’d say parts of Texas flattened for sure. I think we’re seeing a nice uptick, relative uptick in the north central and in some of those markets. But we’re at the beginning of the year, the discrepancy between great and not so great was wider, it’s — that gap’s closed. It’s more stable across all markets at this point from a perspective of year-over-year comparison.
Ketan Mamtora: Got it. That’s very helpful. Good luck.
Peter Jackson: Thanks, Ketan.
Operator: And our final question comes from Steven Ramsey with Thompson Research Group.
Dave Rush: Good morning, Steven.
Steven Ramsey: Hi. Good morning. On the 2024 market outperformance perspective, have you thinking about how to get that outperformance if it’s new accounts or bigger penetration of existing accounts, just any color on the outperformance?
Peter Jackson: Yeah. I mean, there’s a couple of key categories that we continue to run the same play, like in football, if they can’t stop the run, we’re going to keep running. We’re going to keep investing in and taking advantage of the need for value-added products and services in this industry. Builders continue to wrestle with the labor availability problems. They continue to wrestle with on-site efficiency and effectiveness. They continue to wrestle with the cost of capital for the cycle times of building a home. That’s what we’re good at. So we’re going to continue to invest. We’ve got multiple plants coming online. We’ve got more capacity coming online in markets where we think it’s really going to be taken up quickly.
So that’s an important piece. The other big important piece for us is digital. We think that we already have a lead, we think we’re already the easiest to do business with, we’re the most efficient, we’ve got the best technology and we’re about to take a big leap in that space that we think is going to be both hugely beneficial to our customers, but also make us even more the supplier of choice and the partner of choice in this industry.
Dave Rush: The only thing I’d emphasize is what Peter said at the very beginning. We’re looking at the industry. We’re seeing where our customers’ pain points are and we identify those as opportunities for us. So we’re trying and we’re focusing on how we can help solve labor challenges for our customers and create opportunity for ourselves. We’ve got core base operations in our major markets that do that today. We’re looking to expand that into additional products. There’s ways we can do what we’re already good at and expand that and that’ll grow share. The other thing I would add is, we have the last couple years been in somewhat of a maintenance mode because we have had to. We’ve had sales guys that were covered up and just handling the business they already had.
We’re going to also make a concerted effort to invest in the sales board to go out and be more hunters than we are gatherers. So those two things we think are realistic initiatives that will help us grab share.
Steven Ramsey: Okay. Helpful. And then on the 2024 scenarios, looks like the free cash flow midpoint is down about $500 million from the midpoint of the 2023 guide. What are the factors that drive the midpoint difference there between EBITDA, working capital and CapEx?
