Some of that — a lot of that inventory and a lot of that backlog for the distributor is when we have the crew there, we want you to deliver this and this simultaneously for install here, here and here. And that piece of it, I think, has left because it’s been — the lease times between pipe valves and other fittings have become so disparate between one and other that we end up with a much larger inventory needed to support the logistics piece. And I think that, that — as that shrinks, then you’ll start to see that inventory shrink as well. And so if you use the 30% price kind of, let’s call it, 30% logistics, 30% speculative, as you see the lead times trash, you’ll be able to use one. As you see the prices increase, that will be an upward pressure.
And as I said in my prepared comments, we increased prices last quarter again. And then, as you see the other part, though, it’s — it too will drive down channel inventories. And I think you have to look at all 3 elements and then make the timing piece what you can of that mix of their inventory, what’s driven it?
Operator: The next question is from Joe Giordano with Cowen.
Joe Giordano: Can you talk about price realization in the quarter and what’s embedded for the full year? I assume that like — how much of the full year expectations like baked based on actions you’ve already taken? I assume it’s probably a little bit harder to like incrementally do this, given inflation is like moderating sequentially, right?
John Hall: Yes. Look, I think the sequential increases in price realization in Q1 was something we were very pleased with. We’re benefiting from the multiple price actions taken over the past year with price realization in the mid-teens for Q1. I think that improved price realization. As I said earlier, more than overcame the inflation and it was not dilutive but it’s necessary in order to get us back to that kind of pre-2020 dilution that we’ve seen from inflation. I think in the first quarter, total material cost inflation, keep me right here, Martie but — it included purchase price remains elevated and was somewhere around 8% year-over-year versus approximately 14% a year ago, while negative impact of inflation improved sequentially.
We continue to experience higher costs associated with raw and purchase materials. So to answer your question, I’m not trying to — there’s a lot of pieces moving there to say will it be dilutive or — and it really depends on how quickly we can ship the backlog, how much of the price that’s trapped in the backlog. Obviously, shipping sooner is better as evidenced by our Q1 having kind of that mid-teens price in it. So I — it’s hard to say. I can tell you what’s in our guidance is that we get back to kind of flat level with 2020 in terms of price to inflation. So it’s no longer dilutive this year but that will not offset all of the inefficiencies and costs associated with outsourcing and the other problems that we talked about. So we won’t be back to pre-pandemic margins contributed by price and then the efficiencies until 2025.
Joe Giordano: But within that, like full year revenue growth guide, is it fair to say that the price contribution is higher than the overall growth guide? So I can in contemplate price?
John Hall: Perhaps you missed it. Yes. No, That — when we did the guidance, we were explicit. The actual unit volume, we expect to be slightly down in all of our growth, all of the 6% to 8% growth that we talk about is being driven from price.
