Brian Chambers: Yes. On the elasticity on any kind of interest rates or anything like that, but primarily our roofing business is more an R&R business. So the elasticity around interest rates, we really have not seen that play in our roofing business because it’s a needs-based purchase. If the roof is damaged or needs repair or replaced, it is generally done and we haven’t seen that kind of volatility through different economic cycles. Now some people may choose to repair parts of the roof, not replace all of it, but it’s tough to put off that replacement because it’s protecting the value of most people’s largest investment around their home. So we don’t see a lot of interest rate movement variations that drive to demand. And then a small part of our business, less than 20% is tied to new construction, which generally has been a little bit more interest rate sensitive.
But it doesn’t have a big play in there. So in terms of overall pricing, as we go forward, we announced the April increase that’s in the market. We’re seeing good realization there in terms of future price increases. And we look at pricing through the frame of inflationary trends, demand trends, and we make decisions on those two factors as we go forward. And we’ll look at that through that in the roofing business and across our company as we make any future pricing moves.
Operator: Our next question today comes from Mike Dahl of RBC Capital Markets.
Mike Dahl: Hi. Thanks for taking my question. I’m going to stick with roofing. Obviously, very strong performance from profitability standpoint in 1Q and then even stronger in terms of the guide for the low 30s in EBIT margins for 2Q. You recently increased your long-term thoughts around where you could take that business. But I think this year has still thought that maybe you’d be in kind of the high 20s. Obviously, the first half starting out 30, it seems like prices going through in the market, the volumes have been remarkably resilient. So how’s, what you’re seeing changing at least in kind of a 2024 framework? How do you see that potential margin profile as you kind of work through the year?
Brian Chambers: Yes. Thanks, Mike. I mean, you’ve outlined all the things that we’re seeing that is really been driving the roofing performance and the team just continues to do a great job in execution in terms of our contractor expansion and focus there to drive demand in terms of our components, growth and expansion, in terms of our manufacturing performance, our lam additions and lam mix moving up. So all of these things I think are contributing to a margin step up in the business. A big part of that we talked about in moving the long-term guide up approximately 500 basis points because we thought all of those were incredibly durable in terms of as we move the business forward. I think on top of that, what we’ve seen here the last several quarters now.
So yes, this is the last four quarters, the business running at 30% or better operating margins. We’re guiding to that in Q2. And I think the step up from there has been strong volumes in the market. So I think that contributes in a couple of ways. One is it’s given us the ability to significantly shift up our lam mix and accelerate that, which gives us a better margin profile. It’s accelerated our roofing, components business because we get great attachment rates. When we sell a square of shingles, we sell the accommodating starter and hip and ridge and underlayment and all of that is high margin business. So that volume growth that we’re seeing inside a strong market also contributes to margin expansion for us with our components. And we’re getting great operating leverage across the network and that’s contributing.
I think the other thing that’s contributed is a very positive price cost. So we’ve been able to manage price to your point relative to any inflationary trends. So in the near term, I’d say that we see these trends continuing forward into Q2 and I think continuing into the back half of the year. We expect to see strong markets continuing. We’ve got the price increase in place. We are starting to see some asphalt inflation come through. So I think we are going to see a little more inflationary trends as we move through Q2 and into the back half of the year. But we still feel good about our price cost mix there. And then we expect to continue to produce more laminates as we have talked about over the last few quarters where we’ve invested in manufacturing capability to increase our laminate production to service our customers.
That’s an important part of us servicing our customers, growing with our contractor base. It also gives us a nice margin profile of that part of the business. So I think all those are contributing to the strength of the margin performance over the last few quarters. And I’d see that continuing here in Q2 and into the back half in the near term.
Operator: Our next question comes from Keith Hughes of Truist.
Keith Hughes: Thank you. I just want to dig into your statement in the insulation guidance about evaluating manufacturing investments. Are you talking about capacity adds or more operational type investments?
