Sean Steuart: Okay. Thanks for that second question on the growth CapEx of $50 million to $60 million in 2024. Can you give us an idea of where that’s being focused? Is it a few specific projects, a broad array of projects across several assets? Any detail on that front?
Alan Haughie: It’s everything and everywhere. We are – the biggest single item is the investment in Structural Solutions enhancements for the value-added OSB. But it’s a bunch of small projects. There’s no major project that I can really call out.
Sean Steuart: Okay. Thank you.
Alan Haughie: But – and again, 90% of – sorry, 80% of that – the strategic projects are basically inside it.
Sean Steuart: Got it. Understood. Okay, thanks very much. That’s all I have.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Kurt Yinger from D.A. Davidson.
Kurt Yinger: Hi, thanks, and good morning, everyone. I was just curious how important is BuilderSeries itself to your objectives to grow in the new residential construction segment. And I guess along those lines, what has been kind of the primary feedback from production builders with that product to date and what do you think is most important in terms of really hitting a tipping point and penetrating that specific customer set going forward?
Brad Southern: Yes, so, the BuilderSeries is very important to our growth objectives as a – for our segment and for the company. It is a – it provides a competitive alternative for the big builder in new construction, of course. The reception upon use has been very good. It is a very workable product and certainly easier to install and the competitive product that we’re going up against. So the reception has been good. The key is trial and getting the product – there’s an incumbent product that we’re having to compete against and so the – that – and that is a long sales process. These aren’t something that tracking – the decision is not made weekly on which Siding a builder is going to use. And so it’s a long sales process. It – I’ll tell you, we have a great value proposition with BuilderSeries standalone.
But as we couple that with Structural Solutions and even our commodity OSB, which is also a valuable part of the home builders package, we bring a heft to the sales process around these big builders that incorporates all of the products we make in North America and we’re finding traction with that as we couple Siding with Structural Solutions portfolio, and as I mentioned, even with commodity OSB. We are a meaningful supplier – have been a meaningful supplier to the big builder for a long time in our OSB business. And so bringing a Siding Solution to that relationship, we’re finding to be very helpful. The relationship that we built through our OSB business is helpful in the sales process for Siding. So, we’re getting started. I feel good about the progress we’ve made since we launched BuilderSeries.
I have a tremendous amount of confidence in the product. I have a lot of confidence that once we get the trial, once we get some usage and conversion, the product is going to be sticky because the installers are going to love the product, as we’ve experienced across our portfolio for 25 years. And we were very underpenetrated at the national builder level. So all that volume is incremental to us and as those builders continue to grow and gain market share, this provides us a real – a large opportunity to continue this growth story that we’ve been working on for the past 15 years in Siding.
Kurt Yinger: Understood. Appreciate the color there, Brad. And then just for my second one, I mean, bigger picture on Siding margins, it sounds like the increase in investment in sales and marketing and SG&A this year is kind of getting back to normal as opposed to kind of a one-off step up. There’s a pretty large gap still between 20% and, call it, the mid-20s target for the segment. I’m just kind of curious if you could talk about the timeline for getting back to those targeted Siding EBITDA margins and whether that’s possible prior to another conversion coming up to the extent that demand warrants it.
Alan Haughie: Yes, good question. Yes, it’s eminently possible before another mill comes up because the fundamental drag on the EBITDA margin right now is the fact that we’re running with one extra mill in the network which – and so the margins will become healthier as that – as we successfully fill that mill with new high priced product. So, yes, I am – it is possible that we could enjoy certain good movement towards 25% as we fill them, the capacity we have. As we’ve said, a significant amount of our capacity additions are behind us and now in operation. So we are carrying that fixed costs, and we’re carrying it because we’re very confident that the volume needed by those mills to run profitably is very much in our future.
Kurt Yinger: Got it. And just one quick follow up. I mean, sequentially Siding EBITDA margins look kind of down in Q1 versus Q4. It looks like volume could be flat, maybe a little bit better. You’ll have the price increase. I mean, is that all just kind of the increase in selling and marketing that’s weighing it down Q1 versus Q4, or anything else to call out there?
Alan Haughie: No, that’s it.
Kurt Yinger: Okay.
Alan Haughie: Labor inflation with January, the first – pricing – wage increases and so on, things like that. Nothing other than what you might call normal economics.
Kurt Yinger: Got it. Thanks, Alan.
Operator: Thank you. At this time, I would now like to turn the conference back over to Aaron Howald for closing remarks.
Aaron Howald: Okay, thank you, operator. If there’s no more questions, we’ll end there. But before I do, let me briefly remind everyone that LP will be hosting an Investor Day in Las Vegas at the International Builder Show, two weeks from today on the 28 of February, starting at 10 o’clock in the morning, local time. The event will be in-person only, with no simultaneous webcast, but we will record it and post the recording to the IR web page pretty soon thereafter. So if you’re interested in attending, check the IR web page for details or reach out and contact me. And with that, we’ll close the call. Thank you, everyone, and we hope to see you in Vegas.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
