Adam Thalhimer : Do you see any more variability than normal geographically?
Craig Kesler: No, I don’t think so. There’s — again, for us, it’s interesting if you were to think through the prior cycle, we’re nearly 3x the size that we were back then. We got exposure from Northern California, East Ohio, South Texas. So we very much more represent a national average today versus where we were a decade or so ago, where we were kind of a very — smallest regional player. So we just operate more markets today than we ever had before.
Adam Thalhimer: Got it. And then I’m trying to back into because the cement margins — the cement margins remain exceptional. But I’m wondering, do you have any thoughts on cement cost per ton in the back half of the year?
Craig Kesler: Yes. So yes, as you pointed out, our margin profile continues to do very well in that business. And as we’ve said, what the tailwinds a year ago were around energy, specifically fuel, those have abated. Certainly here in FY ‘24 as you start looking beyond FY ‘24 certainly, in fuel costs, which for us is today predominantly solid fuels have trended lower. So you should see some benefit there. Maintenance costs we’ve seen inflation across parts and services, I would hope that, that might start to turn and go the other direction or at least become less inflationary. So it should be a reasonable environment for us.
Operator: The next question comes from Phil Ng with Jefferies.
Unidentified Analyst: This is actually Collin on for Phil. I just wanted to touch on Stockton terminal really quickly. It was a nice contributor to the Cement segment this quarter. Can you just help us think about the volume contribution from that plant going forward? Does have the ability to ramp up from its fiscal 2Q contribution? Or is it at capacity at this point? And then any color as to how those margins look versus your wholly owned margins?
Craig Kesler: Look, imported margins are going to be lower than your normal manufacturing margins. It’s just a function of it’s a distribution business versus manufacturing business, but it is operating with a good margin profile. And as we had expected. We pointed out in the earnings release, there is some kind of purchase price allocation still flowing through there this quarter, but that’s largely behind us and a good amount of depreciation. But in terms of the volume profile, I expect it to remain in this level in the immediate term. And there are some opportunities to expand that that we are exploring, but we’ve not made any decisions on that quite yet.
Unidentified Analyst: Great. That’s helpful. And just going to the wallboard side of the business, you’ve seen Wallboard EBIT margins north of 40% for the fifth consecutive quarter now. I guess how sustainable is this level of margin just given the uncertain macro backdrop that we’re in?
Craig Kesler: Colin, look, it’s a function of price and cost and price, as we’ve said, has been much more resilient, pretty much flat and almost exactly flat year-over-year. And again, we just don’t face some of the other uncertainties that we had in prior cycles. So not surprised to see pricing more resilient here. And then on the cost side, as we pointed out, paper prices have stabilized here at least sequentially, gas prices for us, natural gas has remained pretty stable here, $3 or a little below that on an MMBtu basis. Those are the primary inputs into the manufacturing of wallboard and don’t see any significant changes on the horizon as we sit here today. So those are the biggest factors, and they’ve been very supportive so far.
Unidentified Analyst: Appreciate the color.
Operator: This concludes our question-and-answer session. I would now like to hand the call back over to Mr. Michael Haack for closing remarks.
Michael Haack : Thank you, MJ. I just want to say I appreciate everybody joining us for the call today, and we will talk to you in our early 2024. .
Operator: The conference has now concluded. Thank you for your participation. You may now disconnect.
