David Lowe: Yes. When you age our backlog, the vast majority of our backlog reflects €˜22 pricing either in January or the interim adjustment we made at the middle of the year.
Joe Ritchie: Got it. Yes, that makes sense. I guess — maybe just focusing on the Contractor segment for a second. This segment is really incredible, the growth you’ve seen over the last several years. It’s almost shocking that it’s almost 50% of your revenue base as of the end of last year. I guess you mentioned that the pro is continuing to stay pretty healthy, the demand outlook. And there’s been a divergence between the pro and the home center? I guess just in your experience, is that typical that when you have cycles in that business that there’s divergent trends in what you’re seeing on the pro side versus the home center side? Or would you expect that to start to converge at some point if the demand outlook weakens?
Mark Sheahan: Yes. I don’t really know. I mean, what I would tell you is that at least with regard to the home center over the last couple of years, it’s been kind of crazy, right, with all the stimulus money and people working from home and hanging out at Home Depot doing projects, that kind of thing. So it probably doesn’t really line up with what we may have seen historically. Money was free for a long time. Now money is not free anymore. So I do believe that the consumer is going to retrench a little bit and that likely would show up on that side of the business. On the pro side, again, our experience has always been that if they’ve got jobs and they’ve got a pipeline and they’re busy and they can see projects going out, they buy new equipment.
Typically, if you’re a painter and you buy a new sprayer and you’re busy, you can pay for that thing like within one or two jobs. So it’s a really quick payback, plus you get all the benefits of having a new tool and a new piece of equipment. So it’s sort of a confidence thing for them. And with all the different projects and things that they get involved with, at least for now, it appears to be on fairly good footing.
Joe Ritchie: Got it. If I could sneak one last one in on the Contractor. How do you think about normalized margins for that business? Because I remember a time when like the margins were in the low-20s, and there was an opportunity for them to really expand as you mixed up your products that were being sold, higher-priced sprayers. How do you guys think about normal margins for the Contractor segment over time?
Mark Sheahan: Yes. So one thing I’d just point out is if you go back historically, never had the protective coatings or the spray foam in their numbers. And those are in our Industrial business. So it’s a little bit hard to go back and compare. What I will say is we don’t really have a target for our teams when it comes to margin increases and what we’re trying to get to. I think that if the volume is there, and we can get a little bit of relief on the price/cost equation, which we’ve really not seen much in contractor that their margins can trend higher. So a couple of years ago, somebody would probably have said, well, gosh, your Industrial margins are so high. Where do you go from here? And if you look at what we did this year, I mean, we went from 33% operating margins last year to 36% this year, and we were at 37% in the fourth quarter.
So we don’t really put a lid on these things for our people. They get incentivized to grow the business both on the top line and the bottom line. And we find ways to do it.
