Scott Patterson: I wouldn’t say it’s an outsized opportunity, but it is a new service offering for us and CDDs are created really around large multi-phase communities with expensive lifestyle amenities. So if a developer is looking at that type of community, he may choose to finance it with a CDD, which enables the building of infrastructure and the building of clubhouse and amenities early on in the development. And it certainly helps sell lots and accelerate development. That size of community is right in our strike zone in terms of our capability and expertise. And so we do — we are excited about adding the CDD consulting and management expertise. And Rizzetta has been at it for years and they’re experts at this.
Stephen Sheldon: Got it, you know it’s helpful. Maybe then it’d be great to get an update on the restoration technology platform that you guys have been developing. How is that progressing? And as you think about the next few years, what could it mean to restoration operating efficiency?
Jeremy Rakusin: So, hey Stephen, it’s Jeremy. Yes, I touched on it last quarter. We’ve completed a lot of the heavy lifting, essentially what we call Phase 1, the complete rollout of the operating platform in the U.S. We’re always going to have kind of enhancements and other modules that we’re working on, tweaking at least for the next couple of years. And then we’re also in the planning phase of migrating this into the Canadian operations. We’re already seeing tangible benefits, dealing with better transparency with our clients, field reports that we’re able to provide to them, internal clarity and visibility around our job costings. So there’s a lot of tangible benefits. And again, some of the efficiencies, again, I touched on it I think on my last quote and have said it for several quarters, this is going to be a multi-year effort that we will see over time and it won’t be in a straight line.
The lack of predictability around weather is one of the factors around that and job mix for different types of events. So all of that is not going to make it clear straight line realization, but we will see it over a multi-year period. But good efforts, well executed, and again, seeing tangible benefits both internally and with the clients.
Stephen Sheldon: Great to hear. Thank you.
Operator: And thank you. And one moment for our next question. And our next question comes from Himanshu Gupta from Scotiabank. Your line is now open.
Himanshu Gupta: Thank you and good morning and thanks for taking my question here. So on Century Fire, it’s been very, very strong. Again, double-digits organic growth. The question is what’s driving these kind of gains? And I mean, are you getting market share? Are you benefiting from a strong construction cycle?
Scott Patterson: Yes. You know, I would say that really this has been the case for the last year that almost all our 30 plus branches continue to perform and grow year-over-year. I think that’s the key for us at Century that really all the engines are firing. We’ve focused over the years really since we partnered on adding services and ensuring that all our branches are full service. So we’ve added sprinkler to alarm, historically alarm branches, added alarm capability to historically sprinkler branches. And it has been a real growth driver as we’ve layered in additional services to existing customers effectively. Separately, our national accounts program has certainly been helping drive growth. And frankly, commercial construction has been fairly robust and Century is well known in its markets for being a quality provider.
Their backlog has been solid the last couple of years. So a lot of things at play. You know, going forward in ‘24, we expect organic growth to ease back to high-single-digit, and that’s really only a based on the tough comps that they have and the strength that they had, particularly the last nine months of 2023. I hope that answered your question.
Himanshu Gupta: Yes. Thank you for that. And then shifting to home improvement business, specifically California Closets, how should we think about the growth here? I mean, how did that segment perform in Q1? And how should we think about Q2? And I guess, I think you were mentioning about higher marketing costs and maybe sluggish demand as well. So maybe something on that.
Scott Patterson: Yes. Cal Closets and really all our home improvement brands, CertaPro, floor coverings, about flat year-over-year, up a couple of points, organically flat. We continue to face headwinds. The macro environment is tough. Home sales down, interest rates elevated, global instability. All of this creates uncertainty and tempers consumer confidence and home improvement spending. And all the indicators we’re looking at all of our internal metrics point to a continuation of these headwinds. We have — we made a decision in ‘23 and in the Q1 to invest in marketing to help drive leads into cautiously use promotions to help facilitate and close sales with a view to take market share in this environment. And by holding sales to last year’s level, we’ve done that.
It’s a balance between growth and margin. We’ve got our hand on the dial, and we’re tweaking it and we’ll continue to tweak it. I expect that we’ll temper some of our investment, the balance of this year, but we do expect that our margins will continue to be impacted. And Jeremy, do you want to add to that on the margin side?
Jeremy Rakusin: No, Scott, I think it’s — I think you walked through it well. All to say that the margin compression at least for the next couple of quarters are reflective in this year are baked into the outlook I’ve previously provided.
Himanshu Gupta: Got it. Thank you guys. It was very helpful and I’ll turn it back. Thank you.
Operator: And thank you. And one moment for our next question. And our next question comes from Daryl Young from Stifel. Your line is now open.
Daryl Young: Hey, good morning, everyone. Just focusing on the M&A pipeline and specifically, I guess, valuations. Just curious if you’ve seen any sort of change in the dynamics there with a higher for longer rate outlook? And are you seeing any potential targets coming in the line of sight that maybe wouldn’t have been available six months or a year ago?
