Joe Ritchie: Thanks. Good morning, guys. So maybe just following on that new product discussion. I’m just curious when you’re thinking about this and hitting the shelves of some of the big box channel, is there a stocking effect that you’re contemplating as well? Or is this just — you would just expect end market demand for the product to be good?
Mark Sheahan: I mean for sure, once we launch a product, if it’s a good product, they’re going to want to have it in stock. So there’s going to be a stock-in that happens just naturally, particularly with respect to the CED products. But I also believe that these are some pretty smart people that run these businesses, and so they’re not going to overstock, they’re going to stock what they think the demand is going to be. So we might see a little bit of a bump, but then the sell-through for these products should be strong enough where I wouldn’t expect to see a big pullback, let’s say, later in the year because they did a big ramp up, if that helps.
David Lowe: Yes, I would agree with that, and I would just add that the days — the times that we experienced maybe over the last 18 months to 2 years where maybe some of the large box stores ordered a little bit extra because they were fairly concerned about deliveries and supply chain challenges and such, that’s not what we’re talking about here. There won’t be — there shouldn’t be that effect now.
Mark Sheahan: We do have one really interesting product going into the Home Center that I can talk about because we have released it. It’s called Cordless Connect, where you can take a cordless drill and put an attachment onto it and turn it into a paint sprayer. And we think that the Home Center is going to love it. And so that one was released recently. It’s called Cordless Connect. You guys can look at it on our website, if you’d like. But that could be a nice product for the Home Center.
Joe Ritchie: I’ll definitely take that one out, 2 for 1. But — so Mark, I guess, with these new products that are — that you’re introducing, I would imagine that the pricing is pretty good as well. How does this — does this change how you guys are thinking about pricing across the portfolio this year?
Mark Sheahan: Well, typically, when we launch a new product, we’ve — if it’s an upgrade of an existing product, we’ve redesigned it to take some cost out, or just better and more efficient at it, I wouldn’t say that there’s any large incremental pricing on these products, but I would say the margin rates as a whole are consistent with what you would see across the CED businesses.
Joe Ritchie: Okay, got it. I’ll get back in queue. Thank you very much.
Operator: Our next question comes from Matt Summerville with D.A. Davidson.
Matt Summerville: Just back to the new products for a second, Mark. Do you consider this more of — and maybe the answer is both, but do you consider this more of a refresh of existing product lines or an opportunity where you’re adding brand-new tools to a contractor’s tool belt? And along those lines, are you gaining shelf space or are you cannibalizing shelf space?
Mark Sheahan: Yes, it’s a good question. I would say it’s a mixed bag. So like the Cordless Connect product that I just talked about, you’re adding something to someone’s tool belt that they didn’t have before. Bringing that QuickShot technology, which you can again find on our website and having that be able to be used by all the airless sprayers in the world, that’s also another tool that you would add that a contractor doesn’t currently have access to today. The XT, which is our new airless electric motor that Graco has designed and is built specifically for airless sprayers, that’s an upgrade. That’s taking an existing product and just making it better by putting that technology into it. On the HPCS side of the equation, the flooring units, some of our protective coating units, contractors are doing that work today, but we’re bringing them a better tool to get the job done, giving them variable ratio capability, giving them the ability to get away from having to do some hand mixing, making them more productive and making them more efficient.
Really everything that, that group does in CED when they launch a product is to bring more tools and a better experience to their customers when it comes to the materials that they got to apply.
Matt Summerville: Then as a follow-up, maybe can you sort of touch on whether or not you’re seeing much in the way of anything from a momentum standpoint when it comes to your M&A funnel pipeline? Has actionability changed? I mean, obviously, you’re sitting here with $600 million in cash and practically no debt. So how should we kind of be thinking about capital deployment from here?
Mark Sheahan: Yes, I feel pretty good about our pipeline. I brought in an M&A guy a couple of years ago, and we’ve been working the pipeline hard. The teams have been very thoughtful in the names that are on our list. And we have been active in communicating our intentions with some of the more substantial targets that we have. The proof is always getting the things done. But I do feel, at least internally, in terms of what Graco is doing, I feel really good about our prospects. The market, David, Chris might have a better view of this, but from what I’ve read and what I’ve heard, the market for deals is a little bit more favorable now than what it has been at least over the last 6 to 12 months.
David Lowe: Yes. I would add — yes, that’s my impression talking with our internal team and cross-checking with some smart people on the outside. We see an increase in, I’ll call it, marketing activity, from teasers to blue books, and there’s speculation out there. Again, you guys think about this a lot more than I do, but there’s speculation out there that we’re — we are — where we are at in many private equity portfolios, where they’re at in their cycle now, it’s not unreasonable to expect them to bring some of their merchandise to market, and big picture, long term, that could be an opportunity for us. And also touching on our team and the work, that Mark alluded to, that they’re doing, increased activity of reaching out and initiating contacts and relationships with companies directly.
And that’s been really one of the important things we want this group to do. Not that there’s anything wrong with auctions, but exclusive discussions can sometimes generate some very interesting opportunities. So the proof is in the results, not in the good intentions, but I see what we’re doing and I think it is a series of steps in a good direction.
