Steve LeClair: Thanks, Elizabeth.
Operator: Our next question is from the line of Pat Baumann of JPMorgan. Pat, please go ahead now.
Pat Baumann: Well, thank you. Good morning. Just had a couple here. On slide nine, can we walk through how you went about building up the TAMs for these different buckets? And then how that translates to your company, I guess, it should be assumed share that’s in line with that 15% to 20%, that you’ve — I think you said 17% on one of an earlier slide and then spread that out over five or so years? Or is there a reason to believe it’ll be kind of above or below that type of share? And I know this is a long question, but I think you said none of this is assumed yet for ’23, maybe just kind of flush out what’s holding it up.
Mark Witkowski: Yes. Hey, good morning, Pat. Thanks for the question. Yes, as you look at the infrastructure build, we basically look at that spend and how much that as material component that we would distribute. And then obviously, as you mentioned, then applying our share to that, I would say the one difference is, as you think about some of these projects, they tend to be fairly large scale and we’re one of the best position to capture those benefits. So we do feel like there’s opportunity to get more than our fair share of those types of projects. As you think about it and then as it relates to timing, as Steve mentioned, we have seen some beginnings to that — those funds starting to flow, which has been encouraging to see, we wish we had seen more, I’d say, at this stage, so that’s what’s pushed us more maybe towards the back half of €˜23 before we really start seeing the incremental benefit here.
I’d say we are feeling better about the supply chain and starting to free up, so that could be an opportunity to potentially accelerate some of this, if we see more of those funds starting to get applied for. And then, yes, I think over a period of five to seven years as those projects depending on the size and the scale actually get deployed as a reasonable time frame to think about that opportunity.
Pat Baumann: How much is incremental do you think in terms of versus like current market? Like is some of this just kind of funding from different sources as opposed to like incremental projects? Or is there a way to think about the incremental nature of this stuff coming through?
Mark Witkowski: Yes, we still believe it’s incremental. We’ve indicated in the past we do think it could accelerate our municipal end market by 1 points to 2 points of growth over this period. So there is incremental funding here. There is through a lot of either state revolving funds or specific grants for this type of work. So we’re still confident that we could see an acceleration of that municipal end market due to this funding.
Pat Baumann: Great. And then on pricing, last year I think you pointed to 32% of your sales were commodity priced product, I think you called it? Can you remind us what that is now, kind of, what’s embedded in those numbers? Like what type of product is in there? And how much price did that see in ’22 and kind of what gives you confidence that this bucket of products will be able to, kind of, sustain pricing if commodity costs come down?
Mark Witkowski: Yes, Pat. So what I would say is we’ve got about two-thirds of our revenue is based on products that are highly specified at the local level and price is very sticky and that’s a element of this business that gives us a lot of confidence about the stability of pricing. Then I’d say there’s less than 5% or so of our product that really tracks more towards underlying commodities. And those would be things like copper pipe, steel pipe, that’s used in our fire protection product line. And those pipe products are widely distributed to various industries. So they tend to be much more cyclical. The balance of it then, so call it 25% to 30% is our municipal pipe products, which include PVC pipe, municipal ductile iron pipe, is in that category.
Those types of pipe products are very specific to this sector and don’t tend to move as cyclical as those copper and steel pipe. And we’ve been very encouraged to see the pricing on those products be fairly stable here over the last few quarters even despite the supply chains improving in those categories. So those are areas that do have some risk. So we’ll watch them closely. But that’s how we’re thinking about it and the stability that we’ve seen recently is really what’s driving that confidence going into ’23.
