James Perry: Yes, it’s a good question. As you know, that market, we’ve been through almost a couple of mini cycles in the last few years. COVID hit and things really slowed down. So we were kind of taking some lower margin projects. Then we had a period where things opened up again and things looked good. And now we’re producing some of the lower margin projects, again, because with interest rate spiking and some economic uncertainty, some of the projects have been put on hold. Despite that, as we said, our backlog has grown. Biddings are very geographic, I’ll say. We were talking to the leadership in that group just in the last couple of days and the Sunbelt remains pretty solid, as you would imagine. Toronto where we have a nice presence has some good construction going on.
The California market, especially in Northern California, has been a little softer. And as you know our Smoke Guard part specifically, we have a good opportunity there, because we’re the distributor and the manufacturer. So we kind of have that double dip when we fell into that market, and that’s been a little softer. So there’s geographic pockets here and there. So we’ve seen bidding slow down just a little because I think funding for these projects has taken a little longer to firm up because of where interest rates are and equity expectations are. But our team is doing a really good job, as Joe mentioned in his comments, focused on those high quality developers or projects with a high likelihood that they’re going to get done. We know that our backlog right now is solid.
The projects in there are out of the ground. And as you know, our parts are at the backend. So what’s in the backlog now that we’ve been taking orders for the last quarter or two, that’s 9, 12, 18 months out. So I think as we get deeper into fiscal ’24, the back half and then even to fiscal ’25, which is hard to say out loud, but that’s a little over a year away for us, we’ll really start seeing these newer entries into the backlog come through the revenue. But in the meantime, the group’s doing a good job keeping busy, keeping the projects going. The margins are just a little softer, given the nature of those products.
Jon Tanwanteng: Okay, great. And do you expect bidding to continue slowing from where you are today?
James Perry: Jon, again, I think that interest rates rising will slow parts of the market. We have been focused on institutional projects. We’ve been focused on high quality projects that may have a little less entrepreneurial speculation in them. And so we’re still a relatively small player. We think we can grow kind of in every market. But we do think that the interest rates remaining high will continue to have an impact on some of the more speculative projects. And so our focus on institutional, our focus on the healthier portions of that market I think is going to pay dividends for us.
Jon Tanwanteng: Got it. Thank you. James, do you have any more color on just price versus volume trends in the past quarter and kind of where you expect that mix to go as you continue growing into the future?
James Perry: Yes, Jon, the growth this quarter was really based on the acquisitions that we talked about, the four acquisitions over the last 12 months, and then pricing. Volume, overall, on a consolidated basis was pretty flat. Contractor Solutions down just a bit. Then we had a little offset with the other segments that helped, certainly in Specialized Reliability Solutions. But pricing is really the driver here in the organic growth. Where that’s going from here? As Joe said, we’re going to continue to have some year-over-year pricing pickup for the fourth quarter here and into the first fiscal quarter. The pricing kind of slowed down the increases the back half of last calendar year. So that will start lapping, so to speak.
