And again, I think it’s important to say, Stanley, that does not contemplate mid-years. That’s the same type of conversation we had in 2023 as well. And you’ll recall that we came back and actually had mid-years in more than half of our markets. So, again, we’ll come back and revisit that at half year and see where that is. The other thing that I think is important to keep in mind is you’ve seen what I think is a lot of very productive, very appropriate M&A. I think it’s totally consistent with what we’ve sent to the market. We are an aggregates-led business. And part of what I moved by, if we look at simply what’s occurred so far this year, two large transactions with assets coming into the organization, obviously, Bluewater still has some time to go through the Hart-Scott process.
But we’ll close on that transaction between Bluewater and what we’ve done without Frei & Sons, those are two pure-play aggregates businesses. And what I’m particularly moved by as well, if we look at our pipeline, that’s what our pipeline looks like, too. I do believe our company is positioned from a quality growth perspective and a very compelling and it’s an overused term, but I almost think unique position as well. So, will commercial discipline, be a piece of it? You bet. Will operational excellence be a piece of it? And we think it continue to be, particularly as we bring these businesses into our hold. But again, our ability to do shareholder value increasing transactions, we think here in the near-term, medium term and long-term is a fundamental differentiator for our business.
And if we think about what value creation looks like for Martin Marietta and its shareholders, we think those are the key drivers. But Stanley, I hope that’s helpful in response to your question.
Stanley Elliott: Sure does. Thanks so much and best of luck.
Ward Nye: Thank you, Stanley.
Operator: Thank you. Your next question is from Anthony Pettinari from Citi. Please ask your question.
Anthony Pettinari: Good morning.
Ward Nye: Good morning.
Anthony Pettinari: The gross profit per ton guidance of $840 million, I think, implies cost per ton up maybe mid-single-digit year-over-year. if I got that right. And I’m just wondering if you could bridge that between maybe some of your different cost inputs and any kind of assumptions around cost categories and maybe energy for the balance of the year?
Ward Nye: So, happy to take, but I’ll ask Jim to go through and give you a bucket-by-bucket view. But overall, you’re entirely right. If we’re just looking at general inflation, it’s going to be in the mid to high single-digits range. That can obviously move around a little bit, but there are some components of our business that are seeing higher pieces of inflation. I think it’s important to say that labor is actually not one of those. Those numbers continue to be in a very comfortable place, both for our workforce and for our company, but let Jim take you through some of the puts and takes on some of the other inputs.
Jim Nickolas: Yes, you’re right. It’s about 7% inflation on the COGS — on the aggregates business, COGS per ton. So, here are the items that are above 7% or north of 7%. Oil lubricants, we’re expecting to be up quite a bit explosive, still remain high. The parts and equipment for the plants, also about the ZIP code. So, those are the areas that are pushing it above 7%, areas that are pushing it below 7 are, as Ward mentioned, labor, which is our biggest cost component and also diesel and electricity, nat gas. Those are not expected to be headwinds in 2024. So, those are the large buckets, I would say, that are deviating from the 7%, some are more than 7%, others are well below the 7%. But on a blended basis, that’s where we’re ending up.
Anthony Pettinari: Got it. Got it. And the assumption for diesel is just current prices or–
Jim Nickolas: There’s a smidge of a headwind in for diesel, not much off of current spot prices.
Ward Nye: So, we hope we’ve been a bit punitive to ourselves. We’ll see how that plays out, Anthony.
Anthony Pettinari: No, that’s very helpful. I’ll turn it over.
Ward Nye: Thanks so much.
Operator: Thank you. Your next question is from Angel Castillo from Morgan Stanley. Please ask your question.
Angel Castillo: Hi, good morning and thanks for taking my question. Just was curious on the recent acquisitions. I was wondering if you could help us quantify a little bit more or give us a little bit more color as to kind of upside opportunity on the pricing side as you look at those assets in those regions in terms of bringing those more to the value over volume strategy?
Ward Nye: Well, look, if we look at the overall businesses and looking at the prior business in Colorado, they were doing somewhere between 3.5 million and 4 million tons of stone per annum. Denver is a very attractive marketplace. We’ll have to see how that plays out. But you can go back over time and get a good sense of commercially at least how we’ve approached those markets. As you can imagine, the barriers to some degree of entry and hard rock can be quite high in a number of markets. So, we feel very good about our team in Colorado. They’re very cost conscious. They’re very commercially focused. And we think the marketplace in Denver will continue to be very attractive for an extended period of time. Keep in mind, if we go back — let’s call it, 13 years.
