James Brunk: Well, the answer is no to that. But in Russia, we are all following — we are following all the sanctions, we are adjusting our strategies to be — to adjust to these more difficult market conditions. We are also leveraging our leading styling and distribution to maximize our sales in that market.
Jeff Lorberbaum: Remember, that’s — Russia is less than — all the Russian businesses together are less than 5% of our business.
Laura Champine: Understood. Thank you.
Operator: Our next question comes from Eric Bouchard from Cleveland Research. Please go ahead with your question.
Eric Bouchard: Hi. Thank you. Two things. First of all, Jeff, you have talked about this being the bottom of price and then a potential improvement in the middle of 2024. I am just curious what you are seeing in the business now that supports both of those thoughts?
Jeff Lorberbaum: First is the pricing decreases are following the material costs, the material costs we believe are at a bottom. So we believe that will change the pricing from falling significantly more going forward. And then what was the other part of the question?
Eric Bouchard: The second part was the comment about the first half being similar to today and then the path for improvement in the back half of 2024, what you are seeing in the business today that informs that?
Jeff Lorberbaum: I guess that — we don’t have a crystal ball any more than you do. We are making the assumption that the present circumstances continue, we believe we have line of sight into the first quarter. After that, given the dynamics that’s going on in the world that anything could happen.
James Brunk: What we are quoting there is there’s numerous people that have come out and said that, you see some strengthening in the back half of the year. But again, you can get an argument going the other way as well. So it’s really one scenario, Eric.
Eric Bouchard: Okay. And then, secondly, the goodwill write-off is a component of that or I am just curious, the catalyst for this, is there some component of this relates to a reduced future earnings of the business or are there other dynamics that explain right after they start…
James Brunk: It really starts. Yeah. Eric, it really starts with the volatility on the macro side. The higher interest rates, inflation, deterioration in the market conditions negatively impacted our business, which reduced our market capitalization. Then you go through an internal review of the stock price compared to that, it triggered the goodwill impairment that was required. Remember, that’s a non-cash charge in the quarter and it’s across all the segments. There will be more detail for you to see in the 10-Q that’s filed after the call.
Eric Bouchard: Okay. Thank you.
Operator: Our next question comes from Rafe Jadrosich from Bank of America. Please go ahead with your question.
Rafe Jadrosich: Hi. Thanks for taking my questions. That’s great. The first thing I wanted to ask, just what are you seeing in terms of industry capacity, particularly in the U.S. Are you seeing other competitors start to pull back in any of the segments or are you seeing any foreign competition continuing to add capacity?
Jeff Lorberbaum: Across all the different categories, there have been capacity taken out of some pieces of the industry in different places and LVT over the past year, there have been some increases in capacity in the U.S. marketplace. What else was the rest of the question?
Rafe Jadrosich: Are you seeing any of the foreign competitors opening capacity in the U.S., is there any incremental capacity investments there and then are the domestic manufacturers reducing capacity on categories like carpet or hardwood?
Chris Wellborn: Well, just to comment, in ceramic there have been a couple that have added new plants, but in generally, the capacity that’s in the United States is slightly underutilized, I would say, in ceramic.
Jeff Lorberbaum: In ceramic one, probably, about 50% — in excess of 50% is imported. So there is some of the foreign companies are opening some capacity here, which he is talking about. LVT would be similar to the same situation where there’s some of the ones have opened up capacity here, trying to find ways to optimize their service levels from where they are. And then some of the other product categories, there have been some capacities taken out of the industry.
Rafe Jadrosich: Okay. Got it. That’s helpful. And then just on the new construction outlook, can you just remind us your exposure to multifamily versus single-family and then what you are seeing on between those two segments?
Jeff Lorberbaum: Not sure I have those numbers in front of me. The new construction, homebuilding, I think, it’s around 20%, 25% of our business. I don’t have the number in front of me, the multifamily piece.
James Brunk: Yeah. Rafe, we don’t have that. We don’t usually break that out. We kind of include it in the new construction number that Jeff quoted.
Jeff Lorberbaum: It’s either in the new construction number or it’s in the remodeling number as it gets replaced as we go forward.
