Steve LeClair: Yes. We saw softness really continue in Q3, but we did see the volumes stabilize late in the quarter. If you look at a couple of the areas that have been very strong for us, we look at highways and street projects have been very robust while we’ve had some – had to offset, obviously, warehouse construction and multifamily has been softer than normal. But I think if you look at what a broad category that is for us with non-residential, it really gives us a lot of stability as we go forward. And we think we’re incredibly well positioned as we get into 2024.
Kathryn Thompson: Great. Thank you.
Steve LeClair: Thanks, Kathryn.
Operator: Our next question comes from Nigel Coe from Wolfe Research. Please go ahead.
Nigel Coe: Thanks. Good morning. Thanks for the question. Sneak another one on the back end of that. The unit cost of inventory…
Mark Witkowski: Nigel, you cut out on us. If you wouldn’t answering – or asking that question again.
Nigel Coe: Sure. Just on the inventory, good progress on working down inventory from where it was this time last year. How much of the to go on this inventory rebalancing process? I’ll ask a follow-up question.
Mark Witkowski: Yes. Great. Thanks for the question, Nigel. Yes, we heard you on that one. I appreciate the question. On inventory, I would tell you that we did make a lot of good progress in the third quarter on inventory. We’ve had, I’d say, some movement on certain product categories that’s really allowed us to work through a lot of the excess stock that we had what we were cushioning for some of the supply chain challenges. I’d say there is still a handful of product categories that we’re working down yet. I expect us to make continued progress in the fourth quarter. But as we’ve talked about, seasonally, volumes do come down in the fourth quarter. So it’s hard to say how much progress we will make against those remaining product categories as we wrap up this year. So I think we will make good progress, but there could be some of that that leaks into 2024 yet that we will continue to work to optimize.
Nigel Coe: Okay. So it sounds like there might be a slight tailwind in ‘24, but it looks like we’re in good shape. But then on the second part of that question is really around the cost of inventory and what I’m trying to get at here is, obviously, it seems like we’re getting close to the back end of the price cost sort of headwinds. I’m just curious if we’re now at the point now where we’re seeing the unit cost of inventory really stabilizing Q-over-Q at this point?
Mark Witkowski: Yes. Nigel, thanks for the question on that. Yes. I think similarly, as it relates to margins, the inventory is working similarly. I mean we have experienced some of that gross margin normalization across certain product categories that we’ve been able to really flush through and get current on. There is still a handful of categories that we’re still carrying some low-cost inventory and expect we will work through the remainder of that as we get into Q4 and into next year. So I still think there is a little bit of normalization that’s going to happen here. But we’ve been able to offset a lot of that. We’ve been – we’ve had some accretive M&A come through here in 2023. We’ve been able to deliver synergies on top of that at the gross margin level and then frankly, made a lot of really good progress on some of our gross margin initiatives, especially here in the third quarter.
So those are some areas we will continue to work to offset that normalization, but I do expect some of that to continue here into Q4 and into the first half of 2024.
Nigel Coe: Okay. I will leave it there. Thank you.
Mark Witkowski: Yes. Thanks, Nigel.
Operator: Our next question is from Anthony Pettinari from Citigroup. Please go ahead.
Asher Sohnen: Hi, this is Asher Sohnen on for Anthony. Thanks for taking my question. You talked about volumes flat to up low single digit in 2024. But I was just wondering if you could share your outlook maybe for price in 2024, at least directionally. And if you’ve announced or planning any kind of pricing actions?
Mark Witkowski: Yes. We continue to watch the price, obviously, in the current market and spend a lot of time talking to our suppliers about what their plans are going forward. And at this point, we’re – as we look into ‘24, we’re really assuming a neutral price environment. So we could see some ups and downs in any particular product category there, but really believe overall, from a price contribution standpoint, it should be really a neutral environment into 2024. But we will provide some more color on that as we get into next quarter’s earnings call and whether or not we see any other price movements, especially as we roll into the early part of 2024.
Asher Sohnen: Got it. That’s super helpful. And then just another one. Can you provide maybe an update around what you’re seeing in terms of IIJA spending flow through to your end markets? Your expectations around that for 2024, and maybe how that plays into your volume framework for 2024.
