Michael Rehaut: Appreciate it. Obviously, like we both said a lot — it’s a lot of moving parts, because secondly, I’d love to hear your thoughts on price mix for the upcoming year. Obviously, there’s been manufacturer price increase by different producers in January, December-January. If you could talk to the realization of that price increase and as you progressed during the year, I don’t know if you’ve had any discussions already with your builder partners about any type of change in pricing structure or that might impact margins. So it’s kind of a two-parter there, first on pricing and the OEM price increase and then just thoughts around price mix for ’23.
Jeffrey Edwards: Well, as Michael mentioned to the second part of that question, as Michael mentioned earlier, we make sure that we get paid a fair price and definitely geared towards an index towards pricing versus volume, and so will continue. Our managers and sales people like to say, we don’t — we don’t work for free. So ultimately, I think from a pricey perspective, this is a tough job. This is a tough business, right and we told that story before, but on average to head out to the house three times in order — in order to collect $3,500 let’s say, on an average house to put fibre glass insulation in the wall, that’s a tough thing to do, right. And so we deserve I think what we get paid when we show up on time would be patent inspections, and so that’s kind of our attitude and we get that to good times and bad times.
Michael Miller: And we are constantly in dialogue with both the manufacturers and our customers about price and making sure that, as Jeff said, that is a fair and reasonable price for everybody. I would say on your comment about what we don’t provide guidance, I think if you just look historically, our price mix this year is at an unprecedentedly high level compared to prior years, and we certainly wouldn’t expect to have that kind of outsized price mix growth in 2023.
Michael Rehaut: And just the realization of the December January price increase, if you could provide any insights into how that’s going?
Jeffrey Edwards: Well. We buy from all four.
Michael Miller: Yeah, we buy from all four manufacturers. We’re in constant dialogue with them and, it’s on a hard job to try to do as well as we can in any negotiations around that topic. Clearly, as you pointed out, that it was a price increase in January, and we’ll see. It’s still a tight industry in terms of a special employment . There’s a little bit of room on that. So at least we’re not having to run to supply houses and home depot and Lowes, etcetera, like we had talked about in previous calls. So clearly, that’s made our life easier as it relates to kind of running the business on a day to day basis. But volume continues to be very tight, and there’s not really a clear site in the scene where that isn’t still the case.
Operator: Our next question is from Susan Maklari with Goldman Sachs. Please proceed.
Susan Maklari: Thank you. Good morning, everyone, and congrats on a great quarter and a great year. Well done. My first question is when we think about the dynamics between volume and price mix for this year, obviously in ’22, it was really driven by that price mix in ’21, and we saw that it was more of volume kind of driven a point in there. How do you think about it going forward or when do you think that those two will start to converge more closely together the way that we had seen pre-COVID?
Jeffrey Edwards: Well, again, Sue, we don’t provide guidance, but, given our commentary from the last question just about what completions might end up looking like and what ’23 looks like for the industry, I think what that would say to you is that the likely of price mix and volumes being more closer to historical averages would probably be in ’24 or the latter half a — latter half of ’23.
Susan Maklari: Okay. And then my follow up is, you obviously have made a lot of progress on the gross margin as well, which was really impressive for the quarter. How do you think about holding on to some of that as conditions perhaps normalize out there, and just more broadly sort of what is the new normal in terms of that gross margin line?
Jeffrey Edwards: I wasn’t joking that the gross margins, which was great, but excuse me. We feel very good about where the gross margin is right now. If you look historically, over the past several years, we’ve sort landed in a fairly tight range on growth margin and we will continue to work hard to continue to improve gross margin to maintain gross margins, and our — most of our improvement in EBITDA margin over the past several years has really come from G&A leverage and not just improvement in gross margins. So, we as Jeff said earlier, we don’t work for free. We want to get a fair price for what we do, and we believe it’s very appropriate given the difficulty of the job that are we are doing.
Susan Maklari: I was slow to chime in mostly because I was worried that I was going to have to give Michael a highlight. It didn’t look good.
Susan Maklari: Well, those margins are impressive, so exact. All right, thank you, and good luck.
Operator: Our next question is from Mike Dahl with RBC Capital Markets. Please proceed.
Mike Dahl: Thanks for taking my questions. Just another follow up there. If we look at the growth trajectory, the details that you provided in terms of the underlying dynamics between installation and other, you do see more of that gap on margins where maybe a few years back, you would have been in the high 20’s and now you’re in the 34% range. So it seems like on a like-for-like basis, there has been a notable step up and unique backdrop talk of kind of builders and some of the excitement out there, but also what they’re talking about is pushing back more on suppliers. There’s conjecture, an installer like yourselves would be the ones that would be at risk of being kind of squeezed out in the middle as kind of the OEMs hold firm and the builders try to push back on trades.
Your price comments and price versus volume comments seem a little more pointed maybe I’m reading into it, but what are you hearing in terms of that push back against the trade base, as everyone’s trying to drive cost out and are you seeing something different that’s making you say like, maybe we are going to end up giving up a little volume this year as we look to be more disciplined on price?
Michael Miller: Yeah, we will favor price over volume. No doubt, and as a company that has been fairly — that’s been consistent historically that we would favor price over volume and as we go through the course of the year, obviously, we’re going to make adjustments as necessary. and we are in — we’re constantly communicating with both our customers and the manufacturers to make sure that our price costs are in line. As we’ve said before, we are a very small percentage of the overall cost of the home and we are selling an install solution. So we’re not just selling material. We’re adding a lot of value by providing our installed solutions and in the case of insulation, not only does it have to have inspection, but it also was required by code.
So the builders can’t decontent us, and I think that’s — and we’re very important part to the cadence of the house, even though we are a very small percentage of the overall cost. So we believe all of those things help us to achieve a fair balance between the cost of the products that we purchase to install and the price that we get from our customers to do that installation.
Mike Dahl: Okay, that’s helpful. Thank you, and my second question is, they made interesting comments about the R&R side and the inflation reduction act clearly, there’s some nice incentives out there, reinflated homes still can be a pretty disruptive process. So maybe just give us a little more color on what you’re seeing in terms of the R&R side? How much of an impact or if there’s any quantification you can provide on what you think the IRA has meant or could mean to your business in ’23 would be helpful?
