Falcon is the only one that’s considered inorganic and that will turn organic again after this next quarter here in Q3. That will be organic. But overall, really pleased, and I want to highlight, too, the margin growth, to see the inflation we’ve had the last few years, to see even just slight unit volume growth, which we are very proud and pleased with that team to see margin growth like we’ve had of a few hundred basis points year-over-year is really impressive.
Julio Romero: Okay. That’s good color there. I appreciate that. And maybe talk to the timing of this HVAC residential volume normalization. How would you have us think about how that cadence kind of plays out over the next few quarters?
James Perry: Well, yes, we are entering, obviously, the slower quarter. As you all know, our fiscal third quarter here through December is the slower selling season because air conditioners aren’t being run as much, obviously in most of the country, and then we’ll start stocking up. And our fourth quarters, when we see things ramp back up, no one can fully predict what next year looks like economically. The interest rate environment has clearly put some pressure on some of that. But as we talked about earlier, from the question that Pete asked and as you’ve seen out in the market, everyone seems to think that destocking has decelerated and the destocking is generally kind of done by the end of this calendar year. And like I said, we are working the stock back up.
We were just with our Contractor Solutions team, Joe, Alexa and I were in the last couple of weeks looking at their inventory and what we need to stock up to be sure we are ready for the busy selling season that really gets going in February, March again. So we are optimistic about next year. And we talked about second half growth overall for the company, and obviously, Contractor Solutions is a big engine to that. We are not forecasting anything for fiscal ’25 yet, but I would certainly say that we are optimistic on our ability to continue to introduce innovative products, continue to win more market share, continue to penetrate and win more customers with more of our products. And then as Joe mentioned, also find acquisitions that can continue to fuel growth.
Julio Romero: Got it. Really good color there. Maybe just turning to the Specialized Reliability Solutions segment. Maybe if you could talk about the end markets that you called out that we are seeing some softening. Maybe give us a flavor of the magnitude of the softening. And do you see demand for those markets kind of continuing to trend that way or maybe stabilizing anytime soon?
Joseph Armes: Yes. Thanks, Julio. I think it’s at the margin. We don’t see large changes. Interestingly, the rig count domestically is down, while production rates are not down that much. The rig count is down. But international rig count is up, Canadian rig count is up. And so mix signals there. Mining and rail has been a little bit slower, and we are seeing some of that through the JV and so it’s — none of it’s alarming. It’s just at the margin, and we would expect normal variations throughout the year. There’s a little bit of seasonality in some of those end markets, but nothing that’s alarming at all.
Julio Romero: What would you maybe attribute some of that softening? Is it just the general economic uncertainty, higher interest rates or anything of that nature?
Joseph Armes: Yes, I think so. Yes, I mean a lot of uncertainty. It is — people are not committing a lot of capital right now to larger projects due to higher interest rates and uncertainty of what the future holds. And so I think that’s a little bit of slowdown to be expected.
Julio Romero: Got it. And then maybe just last one for me on that segment. With the deferral of some of the CapEx you’re doing, does that change the timing of when Phase 3 comes online?
