Anthony Pettinari: You talked about private label and sourcing and pricing analytics. I’m wondering if you could talk a little bit about some of the strategic customer initiatives you have around kind of the design build space and sort of what inning you are in terms of penetrating that. And is that an initiative where there’s maybe some quantifiable benefit in 2024, or is that more kind of an investment to 2025 and beyond?
Steve LeClair: Yes, sure, Anthony. We’re fairly far along with that, and we’ve had some really good results. You’ll see that really put into our organic growth above market is where we’ve really bucketized that. The group that we have has been working with plan engineers and designers in this design build format. It’s what I would call fairly new in terms of the application within water and wastewater treatment plants. And we’re really on the cutting edge of this. And the use of the design build methodology is really starting to take shape in water and wastewater treatment plants design, and we’re really well positioned for that. We have a number of folks that are certified in that, actually sit in some of the boards that apply specifically into our industry and trade organizations.
So we’ll continue to see benefit from that. You’re going to continue to see major projects. And one of the things we’re going to start doing as we get into our subsequent year in our earnings calls is to start highlight some of the opportunities that we’ve been able to achieve there and how that plays out and get a little bit more visibility into that as we go forward this year.
Anthony Pettinari: Okay. That’s very helpful. And then just following up on IIJA, some of the heavy construction materials companies, they kind of seem to talk about it as once we see volume start to hit, we should see accelerating demand for three to five years as IIJA spending flows through. Understanding you’re not baking much in from IIJA this year, is that similar to kind of how you think about it? Once the spigot is turned on, you have a number of years of incremental demand, or do you expect something a little bit more start and stop? I’m just wondering how we should think about IIJA funding and the incremental impact to your volumes maybe over the next five years.
Steve LeClair: Yes. I’m anticipating we’ll see a minor acceleration this year as we get into it. We started seeing more of the funds starting to flow. We’re seeing projects now starting to be scoped out. As that starts landing and ultimately results in material being shipped and delivered, we’re still encouraged by what we’re anticipating could be incremental growth in the municipal piece over the next several years. I would say we have a little different take on the long-term aspects of this. I don’t believe this is going to be a one and done type thing where you’re going to see these funds utilized. As they’re utilized, what we’re really encouraged about is the long-term prospects of this. Municipalities will borrow from the state revolving funds.
They will pay back into that state revolving fund. That money will be a regenerative source for many years to come, even beyond the initial issuance of the IIJA funds. That’s what has us really encouraged. That’s what has our municipal customers encouraged as well, too, is ability, medium and long-term, for what those funds can do.
Operator: Our next question comes from Joe Ritchie from Goldman Sachs.
Joe Ritchie: Maybe we can start on just the positive comments on resi lot development. And ultimately, what you’re seeing in 1Q in terms of volume trends, is it consistent with what the framework that you’ve laid out for the full year?
Steve LeClair: Yes, Joe. As we ended 2023 in that fourth quarter, and really as we started the back half of third quarter, we started seeing some positive signs of life in residential, particularly in lot development. That grant, we’re coming off from two years of down market in residential, so it was encouraging. But as we looked at the start of this year, the sentiment is really strong. I think people are getting acclimated into the higher interest rates at this point, and then just the inevitable demand that’s been out there for housing continues to be robust. So we’re encouraged by what we’re seeing there. We think that we’re going to be anniversarying a lot of downside in residential for the last two years, and so we’re encouraged by what we’re seeing. Lots of developments continuing to expand, and it seems to be more pervasive across the country than what we experienced before.
Joe Ritchie: Yes, that’s great to hear. Steve, maybe just the comments around 1Q, the volume trend you’re seeing across your business, that seems fairly consistent with what you’re expecting for the full year at this point.
Mark Witkowski: Yes, I’d say we’ve seen some really strong bidding activity and volumes to start the year. Now, say if you go back to early part of ’23, we did experience a little bit of weather and a little softer start to 2023, so relative to the comp, also strong, but feel really good with how we’re starting this year.
Joe Ritchie: Awesome. Then, Mark, just one quick follow-up for you. On the gross margin normalization, is it right to expect most of that to be first half-weighted and to be through it then? I know you guys mentioned that some of it is a little bit longer cycle. Just how are you thinking about that from a cadence standpoint for the full year?
Mark Witkowski: Yes, I’d expect most of that to show up in the first quarter and stabilize. Obviously, we’ll be working to offset as much of that and build off of that as we get later into the year, but I’d expect it to be early.
Operator: The next question comes from Patrick Baumann from JPMorgan.
