Jim Giannakouros: Yes. No, it shouldn’t be relative to how we set expectations both for top line and for the margin progression for this year, David. I will say, though, just given the correction that’s taken place in the marketplace, our ability to produce if we think that the demand is going to be as strong as €“ if the demand is as strong as we believe it will be, our ability to service that demand only increases in the spring summer selling season with that facility fired up. So we see it more as an opportunity, not something that you should be modeling or hindering your margin progression with firing up.
Chris Koch: And David, I think Jim brings up an interesting point, which is the timing of this inventory, let’s call it, correction or normalization is going to be interesting. Usually, back in pre-2020, we’d see an inventory load into distribution in the April €“ March, April time frame as we began the bulk of the North American construction season. And if we think about this inventory normalization probably wrapping up in the first quarter. You have to ask yourself the question, well, that might mean that there is going to be less inventory in the channel going into the construction season where the high demand is there. And if we’re right, which we €“ from every indication we have, this is going to be another good year in the commercial roofing space, then you think we start to think about how there might be some pressure for product and around availability, which obviously at Carlisle with Sikeston, with the new 16-foot TPO line and this kind of stuff, we think we’re prepared to flex with that.
But that does have some implications for pricing, for sure, that creates a very nice support for the pricing question asked earlier. So again, early days, Q1 really never tells us in certainly January much about how the whole year is going to go. But at this point, things do look positive.
David MacGregor: Got it. Thanks very much for the detail.
Chris Koch: Yes, of course.
Operator: Thank you, Mr. MacGregor. The next question is from the line of Adam Baumgarten with Zelman. Please proceed.
Adam Baumgarten: Hey, everybody. Maybe just starting with CCM and CWT, just kind of what you’re thinking in terms of end market demand across the various verticals like commercial reroofing, new commercial roofing demand in the new res and residential R&R?
Jim Giannakouros: Yes. I mean I’ll start with the high level, Adam, as far as new resi. I mean, when you split €“ I’ll start with CWT, right, each exposure, repair and remodel and new in both res and non-res, each about a quarter of the exposure there. Obviously, on the new residential side, we have to think that 20% to 30% down is a potential. The backdrop for demand in that end market. On the repair and remodel, obviously, we have a mix of discretionary and non-discretionary. So it shouldn’t be that bad at all. It should be potentially flat to maybe slightly down €“ excuse me. And then on the commercial side, I would think just think low single digits both on the new and repair remodel, commercial, we think is going to be a strong end market for us.
So that’s the CWT basket, if you will. For CCM, hard to have that discussion without pointing out that 70% of what we sell CCM is reroofing. And that demand, we think we have tailwinds not only for 2023, but certainly for the next decade.
Adam Baumgarten: Got it. Okay. Thank you. And then just maybe the step-up in CapEx, what’s kind of driving that? Is it just timing? Or is there something across some of the businesses that we’re investing.
Kevin Zdimal: Certainly, with Sykes then coming on in 2023, that will be a big piece of it. And outside of that, as you say, just really a normal step up with growth of our business and continuing to invest organically into our businesses. That’s been our highest ROIC type investments.
Adam Baumgarten: Got it. Thank you.
Operator: Thank you, Mr. Baumgarten. Our last question is from the line of John Joyner with BMO Capital Markets. Please proceed.
John Joyner: Hey, Thank you. So I guess, I don’t know, like a lot has been asked, but €“ so just looking at the segment outlook, right? I want to figure that the assumptions around CCM would have been closed or probably the single-digit range. And maybe following up on, I believe it was Dan, who asked this question about the first quarter. I mean, based on the guidance for CCM, it pretty clearly implies that the first quarter is down. And with regard to, I guess, the growth being half price at volume, how does the, I guess, significant amount of pricing that was put through over the past year, not carry over more than what is implied?
Kevin Zdimal: Yes, it’s going to be on the volume side. Certainly, the price will carry over into the first quarter and throughout the year, but the volume is a bigger challenge, and that’s a few different pieces. One, the weather in the fourth quarter actually impacts the first quarter because the inventory didn’t get out of the channel as we got to the end of 2022, we were expecting that to be out and not be an issue going into 2023, but weather slowed that down, so that’s going to impact the first quarter. And then also with the weather in January, that’s impacted volume in the first quarter for CCM as well as CWT. CWT actually benefited from some of the rain and some of that piece in California. That’s been a pickup there. But sticking with CCM, the other piece that we discussed earlier in the call is the year-over-year comp is a challenge because 2022 was a much higher first quarter than the historical trend that we’ve been talking about.
John Joyner: Okay. Thank you. And then maybe just one more, just a follow-up on the Duralast, so which would no doubt has been €“ I think a home for Carlisle synergistically. But regardless of the competitive landscape, you certainly know the company and presumably did the due diligence on it. So I guess, what do you think about the prices being paid by wholesome?
