Kathryn Thompson: Okay. And then a consistent question we are getting from not just our public companies, but the many private companies that we speak to on a regular basis. Is that — there’s so much volatility in the market? And how do you — how do you forecast? And I guess the question I posed you that is posed to me often, which was — what are the metrics given the volatility in the market that you are relying on most and making that prediction? And how has that changed and really understanding the why behind these metrics?
Steve LeClair: You know, Kathryn, I shared with you a couple of things that we have internally that we evaluate as we have a number of indicators, including our backlog, the geographic location of where this backlog is and you follow that up with all the bidding activity that we see. And so we feel like we’ve got a really good line of sight into the different end market sectors, the geographies, and our ability to forecast as we go forward. The biggest unpredictability we had in the past has always been the pricing piece. Now as that is stabilizing, we believe that we’re in a much better basis right now to forecast going forward.
Kathryn Thompson: Okay, great. Thanks very much, and I’ll hop back in the queue.
Steve LeClair: Thanks, Kathryn.
Operator: Our next question is from the line of Mike Dahl of RBC Capital Markets. Mike, please go ahead now.
Mike Dahl: Good morning. Thanks for taking my questions. Just a follow-up on the current dynamics around end markets and kind of the recent banking stress. I guess two-fold, we’ll go on regional banks do play a large role in land development, as well as in the resi sector, as well as non-resi. So maybe could you articulate a bit more when you say double-digit declines in lot development, maybe quantify that a little? Then on the non-resi piece, you know, appreciate the bidding is still healthy. Today, if, you know, historically, do you have a good way of tracking, I assume you track your win rate, but do you have a good way of tracking project fallout in terms of where, kind of, a bid ultimately doesn’t even translate to a project moving forward? And how are you — and how do you evaluate that looking forward?
Steve LeClair: Yes. I shared with you as we look at the bid activity, certainly we look at win rate, we look at the ability for open jobs, if you can imagine a lot of the — these — the work that we do is project related. And so the release of materials and the release of the credit lines that we have with the businesses are certainly tracked pretty closely as we go through here, it’s kind of a complex lien rights type situation and how we look at the credit piece. So we do follow that. We do have a good line of sight. We are pretty quick at being able to adjust down on that. And to be able to get real time information, as well as what we’re seeing on the forward looking and then certainly in the backlog. So it’s too early to tell exactly what type of indirect impact some of the banking failures are going to have and the crisis it’s going to have with our customers go up to this point.
Certainly, we don’t have any direct impact to our business, and as we look at the customer impact, that’s kind of yet to be determined. But we do have pretty good indicators to start assessing that as it starts to play out, if it plays out.
Mike Dahl: Okay, that’s helpful. And then secondly, on the, just on the pricing assumptions, it seems like you still exited the year and kind of a low to mid-double-digit range on price, which presumably given your comments so far about price remaining elevated, there’s some carryover impact, yes, at least to start this year. So maybe help us understand, kind of, the trajectory of pricing as you go through the year to get to the flat estimate or is this just, kind, of being conservative on how the back half plays out, because it seems like you’re flowing through the entire — you’re kind of thinking in your gross margin side that prices really normalize, but then there should be some tailwinds to start the year. So just the puts and takes around that?
Mark Witkowski: Yes, sure, Mike. Thanks for the question. Yes, you’re right, as we wrapped up 2022, we did have some still year-over-year pricing benefit in there in the low-double-digit range. As we move into Q1 and certainly into Q2, you look back to last year, we really started to see some of that acceleration of price happen. So we do expect that price to moderate fairly quickly as we get into 2022 — or sorry 2023 in particular in the first quarter we’ll see a little price benefit and then that’s going to stabilize pretty quickly as we get into Q2 and Q3 as we anniversary those increases from a year ago. I’d say on the gross margin normalization is really more the cost side catching up more so than any, kind of, price declines or anything.
Obviously, we could see some risk with certain product categories. But frankly on some of our non-pipe categories, we’re still seeing some price increases come through, though not necessarily the same magnitude or frequency that we saw last year, so that’s what gives us the confidence that we’ll see that, kind of, price really stabilize as we get to, kind, of mid-year and that’s kind of how we see it playing out at this point.
Mike Dahl: All right. Thanks, Mark. Thanks, Steve.
Steve LeClair: Thanks.
Operator: Our next question is from the line of Dave Manthey of Baird. David, please go ahead now. Your line is open.
Dave Manthey: Thank you. Good morning, everyone. The waterworks segment of (ph) supply obviously had a pretty rough period of time from the peak in ’06 through €˜09. I was just wondering, Steve, if you could just compare and contrast the company then versus now and give us some comfort around cyclicality? And what we might expect the — during the — whatever is to come here?
Steve LeClair: Yes, sure, David. If you go back to that time period back in ’08 and €˜09, the business end market exposure was significantly different at that point. It was roughly about 50% residential. So a lot of the lot development and everything else that happened back then, that’s where this business was exposed to fairly significantly. A lot less exposure in municipal and certainly in non-residential. We tried to — and have diversified the business significantly since then. The other thing I’d share with you is back then the reason the recovery took so long, particularly in the residential piece for us when we get into land development was there were a number in a big — in a significant amount of I’d say developed property that was not built on.
And so that lasted for years before any new land development happened and new infrastructure was put in the ground. As residential started to improve in 2010, €˜11 and €˜12, they were utilizing a lot of the predeveloped lots that were out there. So we’re certainly not experiencing that now. The exposure we have is significantly less, it’s about 22% today is residential in terms of land development. And if you look at kind of the available lots that are out there, land development is still a key shortage item. And these builders are still working on land development, still working on acquiring land as we get through this period here with the interest rates and everything else. So the business has diversified into municipal much more heavily, we’ve been able to add a lot more adjacent products into there.
We talked about some of our meter business that we have grown significantly in this space and become a leader in that, also with high density polyethylene infusible HDPE, some of those areas have helped us to diversify the business and bring in other product alternatives into that industry. So we’re in a much different spot right now, many more levers to grow, much more diversified in terms of our end markets since then.
Dave Manthey: Thank you for that. And second on this landscape and construction acquisition, just two locations in Chicago, I think what serves 15 States and it sounds like they manufacture soap fence and geosynthetics. I’m wondering this is some kind of backward integration product access type acquisition. And I think we can back into $60 million in revs, is there something different about that profit model we should know about? Just more detail on that deal in particular would be helpful?
