Budd Bugatch: And you’ve come out of this period stronger than you went into it. Your balance sheet is pretty good right now. What do you see going forward in terms of the longer term now after KII, and the leasing events that I think Jeff alluded, to accelerating maybe furniture events? Do you see anything strategically that – what you’d like to comment on?
Marshall Bridges: Budd we see lots of runway on the path we’re on right now. We’re driving profit expansion, margin expansion in workplace furnishings, driving the benefits of the integration with KII and driving top line growth in the high-margin Residential Building Products segment. So no, we’re not – we feel like we got a lot of runway of what we have right now and not necessarily feeling we needed to add anything at this moment.
Jeff Lorenger: Yes, I think that’s right, Budd. I think we believe we’ve got a lot – our teams are focused. We’ve got to plow on the ground. We’ve got a lot of dry powder, but we are investing in the business and integrating KII. And so – but that’s all good.
Budd Bugatch: And operationally where you want to be and what are the things in that area that I was thinking about, we geographically with KII, you still are I guess, over-weighted into the rural markets. As I think you alluded to Marshall, if businesses start to be a little firmer on their requirement for people to be back in the office. Do you see a way to gain some strength in the more metro markets?
Jeff Lorenger: Yes. Budd, I mean, look, we still participate there, and we have a nice chunk of business there on the contract side. It’s just we have the – we have some of the other stuff as well. So that’s why we talked about it. We’re focused on that area. It’s been a big piece of our business. And we do believe, we’re competing well for what’s happening now and will compete well going forward. So, we will benefit as that – as those furniture events unlock in major metros.
Budd Bugatch: Okay. And last from me. Anything on the cost side that you’re seeing maybe a little worrisome out there. I know people have talked a lot about, at least for the residential side, what’s going on in some of the canals and the waterways issues, are you seeing anything on costs that might be a little bit concerning.
Marshall Bridges: For the year, Budd we do expect to see some inflation primarily from wages, the normal the normal merits like all. We are seeing a little bit of a freight pressure. That is definitely an issue at the moment. And the commodities are pretty stable, even maybe a little deflationary in the first part of the year. And we expect to offset that inflationary pressure with price realization. So, we do expect favorable price cost again in 2024, roughly speaking, in the $10 million range.
Budd Bugatch: Okay. All right. Well, thank you very much, and congratulations, and best of luck for the balance of this year.
Marshall Bridges: Thanks, Budd.
Operator: Your next question is a follow-up from Steven Ramsey with Thompson Research Group. Please go ahead.
Steven Ramsey: Just wanted to circle back to something you just talked about, Marshall, with the runway of drivers helping earnings growth in 2024, how much of these carry into 2025? Clearly, there’s a broad array of good things happening across both segments. So curious how you think about some of the drivers beyond the next 12 months.
Marshall Bridges: Yes, Stephen, we think we’ve got a lot of runway, particularly on the productivity side of things. I think Jeff mentioned in his comments that we made some operational investments in 2023, primarily in that new facility in Mexico. And that’s actually a headwind to our 2023 profitability of about $15 million. All of the investments total, including Mexico. And as those investments mature and begin to generate a return in ’25 and ’26 and a little bit in ’24. They’ll pay off in the $10 million to $15 million range. So that’s a pretty big swing of at least $25 million from where we are right now. So that’s indicative of the type of runway we’ve got in front of us to keep driving profit growth, with not a lot of help from volumes.
Jeff Lorenger: Yes, Steven. As we said, I mean, we can continue – we’re going to continue to expand margins without volume growth. I mean we obviously are doing everything we can to capture as much volume as we can. But we have plans in place that, we’re looking at margin expansion in Workplace Furnishings, and profit growth visibility in the ’24 and ’25.
Steven Ramsey: Okay, that’s very helpful. Thank you.
Operator: And at this time, there appear to be no further questions. I will now turn the call back to Mr. Lorenger for any closing remarks.
Jeff Lorenger: Great. Thanks, everybody, for joining us today and taking the time. Have a great day.
Operator: Thank you all for joining today’s call. We appreciate your participation. You may now disconnect.
