Unidentified Analyst: This is actually Gustavo for Josh — earlier on the gross margin front and mix headwinds heading into ’23. I think just looking a little bit more near term, can you sort of quantify the margin impact from price cost, maybe the improving supply chains? And then how does that sort of trend from here from what you saw in the fourth quarter?
Holden Lewis : So price cost, the — I think last quarter, we talked about it being about a 30 basis point impact. This quarter, that was probably more like 40 basis points. So it widened a little bit more than I expected. I will say though, one of the reasons we expected that it would be flat to better this quarter because we expected the dynamic around fasteners to improve. And we, in fact, saw that happen. The drag from a price cost standpoint on the fastener side was narrower than what we saw last quarter, where we saw the more than offset was when I alluded earlier to sort of the other product side, I think we saw a greater impact on the other products that sort of moved that number from where I would have expected it to be to about a 40 basis point drag.
Unidentified Analyst: Got it. That’s helpful. And then I guess just sticking with fasteners. And obviously, it’s been a margin headwind here in the fourth quarter as well. I guess with steel deflation coming into the fold now, how should we be thinking about P&L impact from fasteners deflation over the next couple of quarters? And maybe any historical context on what you’ve seen previously would be helpful?
Holden Lewis : I’ll take historical context first, and I’ll — yes. So I mean, thinking about the current, as you know, I don’t have the same historical context that Dan does. But the €“ this is one of those variables on gross margin next year where it comes down, Gustav, to your belief in our ability to execute, right? I mean the — we do expect that at some point in 2023, there will be requests to adjust fastener pricing down based on the cost of steel. Now you have to —
Dan Florness: Or the cost of transportation.
Holden Lewis : Or the cost of transportation. Now certain costs are still higher labor, things of that nature, right? And so we have to balance that. But in the end, it’s the same question during a period of inflation is can we time the reductions in the price of our product with the lower cost coming through our P&L? And as we have had conversations with customers, that’s been the message that we’ve conveyed is €“ we understand when our cost is going to come through and these conversations will sort of occur in lockstep with that. And to the degree that we execute that effectively, then we would target neutral from a gross margin standpoint in terms of price cost. But it comes down to your belief in our ability to execute it effectively.
I think that with the new tools that we’ve put in place the last few years, I think our ability to manage that process has improved significantly. And I think you saw that during a period of a fairly aggressive inflation. And €“ so we feel good about that prospect. But our goal would be to really time the cost and the price effectively so that price cost is neutral in 2023. But it comes down to your belief in our ability to execute that effectively.
