David Lowe: Yes. This is David. I’d just like to volunteer that on the inventory side, you may know this, but others — maybe you’re newer to the story. It’s helpful to remind them, when they read that other companies are talking about destocking and channel working off excess inventories because they have more confidence in the supply chain. It really isn’t a significant factor, excess inventory in our businesses because our channel partners in industrial and in process really don’t stop much outside of the spare parts space. So through good times and bad and through periods of greater or lesser demand, we have and continue to have a high level of confidence that wholesale equals retail. And there is not an inventory overhang in those 2 segments, that gives us any degree of concern.
Operator: Our next question comes from Saree Boroditsky with Jefferies.
Unidentified Analyst: This is James on for Saree. And I wanted to talk about contractor margins. So the margins improved like kind of significantly year-over-year and quarter-over-quarter, like despite lower revenue levels on a sequential basis. So can you please provide more color on the magnitude of benefit from price, product cost and mix? And also, can you talk about the sustainability of the margin level?
Mark Sheahan: Yes. I don’t think we are going to be able to fine-tune the different components there. But for sure, price has had a nice impact for CED. You might remember a year ago, when we were talking about all our input costs going through the roof. And how contractor was really bearing most of that burden and things like electronic components that were very expensive and hard to get and you had to make special accommodations to suppliers to actually get parts in the door. That has really freed up. So a lot of that hyperinflation that was going on and some of the things that they purchased is has subsided. Our pricing actions that we took, were really designed to offset the cost pressures that we had in the business, and we’re seeing that happen.
So you’re seeing margin rates kind of go back to more of a normal level, I would believe in that business and what we had seen maybe over the last couple of years. The team is doing a great job managing their expenses. They’re not — they understand the dynamics in the market right now are not as good as they were the last couple of years. And I think that I’m pleased with how they’re making sure they’re keeping an eye on spending and not adding to our fixed cost base. We do have some variable expenses in our P&L and contractor related to incentive payments that last year were higher than they are this year. So there’s a little bit of tailwind from that activity in addition to what you’re seeing on the gross margin line in that business. But Overall, they’re at 30% operating margins.
I don’t know if the business has ever been that high. I think in Q1, we might have touched that level. But as we work our way through the rest of the year, I think as Chris said in his comments, we really believe that those rates of operating profitability are sustainable as long as we continue to run at the volumes that we’re seeing, which we’re pretty confident that we will.
Unidentified Analyst: Got it. Thanks for the detailed color. That’s very helpful. And staying with contractor. So can you kind of talk about how different end markets within the Contractor kind of played out in the quarter since one of your large customers talked about kind of solid commercial performance, while new residue remains precious. And have you seen any pressure or headwind from interest on the commercial side?
