Really the change that we think really helps us outperform the market this coming year is the way we’re tailoring various programs to various customers.
Garik Shmois: That’s helpful. Last question is just on the trade-down comments. It’s been a headwind for several quarters now. It sounds like you’re anticipating that you’re going to anniversary the worst of it in the first half of the year. But just curious as to, maybe has the pace of the trade-down behavior stabilized at all? Any — is there anything that we should be looking out for to give us confidence that indeed in the second-half of the year that it should be stabilizing?
Dave Banyard: Yeah, I think it’s follow the trajectory that we expected through Q3 and into Q4 and the commentary we gave on it at the previous earnings call came to fruition. I’d say the reason we outperformed a bit to the higher end of our internal expectation was, there was a bit more activity in volume that we were able to drive, particularly in the new construction market. But now it’s been very well-received. The way we’re going about delivering different products that ultimately results in a trade-down has been well-received. And frankly, that’s the case in both end-markets, the new construction and R&R. But, no, I think the pace is such that it feels like this is being well-received and I don’t anticipate the need for any additional changes there.
Garik Shmois: Sounds good. Okay, thanks for that. I’ll pass it on.
Operator: Thank you. [Operator Instructions] Our next question comes from Tom Mahoney with Cleveland Research. Please state your question.
Tom Mahoney: Hi. Good afternoon. Just a follow-up on the question about promotions normalizing. Are you finding — are there any types of promotions that are having success moving consumers into projects? Do you find that maybe leads are running stable, it just takes some incremental promotion to convert them? Or are promotions more aimed at driving that lead activity, get customers interested in the first places? Any way to characterize those?
Dave Banyard: Yeah, it’s a fair question, Tom. I think it depends on the channel a little bit. I would say that your larger format retailers are going to use that promotional arm to drive traffic a bit more than your dealers because you can get other things in those retailers. So, you don’t go to your small dealer to buy hammers and so on and so forth. So that the major retailers will use promotion more broadly to drive foot traffic in the store. But then, once you’ve reached that point, it’s really more, you know you follow your sort of logic pattern out. First, try to get the consumer to buy the product that they can afford by sliding them down and that’s where the trade-down comes into play. If you can get them into something that they’re happy with and excited about at a lower price point, you don’t have to talk about promotions.
And that’s why I called them more normalized, because then you use the promotion as a targeted activity for certain deals that you’re trying to get done. For example, if you have a consumer that’s at a high-end product, you’re probably not able to slide them down and — if they’re doing a very expensive kitchen, but you might need that to nudge them over the edge in the current environment. So, I think, it really does depend, it’s very tactical in a lot of ways. We look at it as an executive team as kind of overview of how are we functioning of moving the consumer where they want to be and then we — our sales team is very adept at executing on the tactical side of that.
Tom Mahoney: Understood. And then, kind of also getting at the competitive environment, there have been some recent upticks in transportation costs. And I think a topic for 2024 as well is the potential for tariffs to enter back into the conversation. Can you describe the competitive environment? I guess, first of all, MasterBrand’s exposure to those two things and then the relative exposure of MasterBrand relative to competitors as potentially transportation costs pick back up here and then as tariffs enter the conversation?
Dave Banyard: Yeah, sure. I guess, I’ll break it apart. I’ll talk about the cost side of it. I think obviously, we’re paying attention to it and we bake that into our basket of how we think about inflation in general. Our supply chain team weathered what’s probably the worst storm if you could ever have in our business over the ’22 and ’21 time periods and so I think we’re pretty adapted. This is nothing compared to that. So, I think their process is pretty well-established on how to navigate when you have transportation scenarios, both on the ocean or even in the trucking world. So, we pay attention to it. I think we’ll monitor it over time. I think you’re seeing some uptick right now, but generally what happens is as the market normalizes so does the cost.
And so I think if the new normal is you can’t go through the Suez, then yes, it’s a little more expensive to go around the horn, but I think the pricing always reacts first and then normalizes over time. So we’re paying attention to it. Tariffs, I don’t have any crystal ball on what the government’s going to do on that. So again, we react if necessary. And we’re obviously very active when it comes to discussing these matters with the Department of Commerce as well as our various representatives because we cover a lot of the United States in that regard. So we have a lot of conversations with Congress around these topics. In terms of the competitive dynamic in that, I don’t know how well they performed during the tumultuous period of the COVID years, but I think we outperformed them.
