Erik Aldag: Yeah. Thanks, Dave. So I would say we’ve largely caught up. We still have some more pricing to go, pockets of pricing to make sure that we’re capturing the value that we’re providing to our customers. From an inflationary standpoint, I’d say right now facing a much more stable inflationary outlook than we have over the last two years. But from a pricing power and an overall input cost perspective, we’re in good shape. I would say we’re in a much better position today than we have been historically in terms of reacting quickly to any changes in input costs. We’ve got our supply chain working really closely with the commercial teams. So we feel good about being able to mitigate any changes that we’re not anticipating at this point. But overall, we’re in a good position in terms of pricing power.
Douglas Dietrich: Yeah, David, maybe I can pass it over again to D.J. and Brett to give you kind of a feel what’s going on, where our products are, the new products, the mix and how pricing is playing out this year versus prior. So, D.J., I’m going to start with you.
D.J. Monagle: Certainly. So, David, as I’m looking at the segment, of course, we’ve got part of our pricing that’s well covered with contracts. So that’s on the paper and packaging side and agreements. If I look at the broader Specialty Additives group, our pricing power is pretty strong. We’ve been able to recover and our ability to execute on orders and requests and just be that reliable supplier when other folks have been running out of stuff, keeps us very strong in our ability to hold on the price. On the pet care side and on the consumer specialty side still remains very strong. A good pull for the products. And underlying all of this is that with these new products, and Doug had pointed about earlier, but the significance of the new products is that they are providing higher levels of value, which is translating into better margins for us.
So all of those things add up to us being able to expand further upon our price versus inflation. But as Doug said, probably not to the same degree that we’ve seen in the previous year.
Douglas Dietrich: Brett how about you?
Brett Argirakis: Yeah. So for the Engineered Solutions segment, of course, our customers continue to look for lower prices. But this group works really close with them, not only to offset higher costs, but we also provide them alternative solutions, whether that may be a different product formulation or the technology that applies the product faster or more efficiently. So they’re using less. The cost and price appears to be stable now, David, in most cases, but there are steel pockets, as Doug pointed out earlier, in our business that require additional pricing and we’ll continue to do that. For instance, labor, of course, continues to rise. We’re adjusting labor where necessary. And we have some products that certain parts of that formulation require higher price. So, we’re doing that. We’re — but again, working very closely with our customers to assure that we’re getting what we require, but also offsetting their requirements.
Douglas Dietrich: And David, let me just summarize all that for you and give you kind of how that plays out this year, what Erik was saying in terms of more volume growth. We see a pretty strong volume year, at least a stronger volume year ahead for us than we — than when we were in 2023. There’s still good opportunities for pricing and we have strong pricing power in the marketplace to make sure we hold onto it. On a comparison basis, over last year, maybe — pricing may be less of an impact because of the huge increases that we’re putting through in the inflationary cycle. So, this year is going to be still some pricing, a lot more volume driven revenue growth, but that’s going to lead to that leverage through our gross margin.
So gross margin expansion because covering fixed costs and more volume through those plants and that’s going to translate down into that operating income line. You know us, we’re pretty stable with our fixed corporate expenses and expenses that’s going to hold flat this year. So that’s where it’s really going to come in that margin expansion. And while earlier Erik said that’s why we’re pretty bullish on making sure we hit or exceed those targets that we let off for you on operating income, okay. Hopefully that helps.
David Silver: That’s great. And I do want to ask one more and I’ll apologize in advance. Well, actually, I’m going to ask Brett kind of two separate questions, if you don’t mind. But first, on your traditional refractories business, high temperature activities, you did show good growth 4Q year over year. You cited north American steel. And I would just like to go back, I believe in that group you have signed or you have a number of meaningful new contracts signed over the past 12 months, 24 months, at least one went into effect last year. What is the outlook for those incremental new supply agreements that you have booked in the past and we’re supposed to play out over the next several years? I mean, what should we expect in that regards for 2024? I’ll stop with that — I’ll start with that one.
Brett Argirakis: Yeah, no problem, David. I’m happy to answer that. Look, this business has done a really good job, again, working very closely with our customers in selling value, as Doug pointed out, creating a much safer work environment and solving problems by using a combination of our refractory materials, our laser equipment, and our application technology. In addition, we’ve also been able to grow our business from a metallurgical wire standpoint for a cleaner steel operation. But as far as the agreements go, Dave, we — these are five-year in duration and include, as I said, product and equipment. We currently have 13 refractory and wire contracts in place. Net value is about $150 million through 2026. The annual run rate for this business in ’23 was about $29 million, which is about $10 million higher than ’22.
And looking forward, the contracts will generate about $40 million in ’25 and about $50 million in ’26. So this is great opportunity, changing the market to be safer and more efficient, giving this deal maker what he needs to protect his people and protect his furnaces. So we’re looking forward to expanding this into other regions of the world.
David Silver: Okay, great. No, that’s extremely helpful. And then last one for Brett and then I promise I’ll get back in queue. But — you know, I was reading kind of what was presented for the environmental activities. And I guess there’s probably some seasonal issues there to account for the year-over-year decline. But, in particular, I was hoping you could give us an update on progress with PFAS. And, in particular, just I guess from your perspective, the pace of commercialization, getting past the beta testing and other — and trials and other things and moving on to full commercialization. And maybe just a comment on where you think PFAS has made the greatest impact or penetration to date. In other words, is it in municipal, is it in drinking water? Is it in groundwater? Is it in soil remediation? Where has the uptake to this point been the most prevalent? Thank you.
