Brian Chambers: Yes. Thanks for the question, Trevor. When I look at just the demand drivers of our Roofing business, a little over 80% is repair and remodeling demand, a little less than 20% into new construction. So when we think about the big demand drivers, a small portion is going to be driven by new construction starts. So based on my previous conversation, we have seen a slowdown in housing over the last 12 months. Moving forward into 2023, we would expect that could impact lower roofing volumes and that’s more impactful in certain markets that are more heavily new construction. In terms of repair and remodeling, we still see good fundamental drivers of the remodeling business. People are still investing in their homes.
When we look at our contractor backlogs, it’s regionally variable. But overall, we’re still seeing good contractor backlogs and demand for remodeling efforts. So we think that’s going to stay pretty steady. It could take a step back but still pretty steady. The — always the bigger uncertainty is around storm demand and storm volumes. On average, that’s about 30% of demand in a given year. And so that’s something that we’re really not going to get a feel for until we get more into Q2 in terms of how that could evolve in terms of demand for the full year. So, I think to start the year, as I said, I think we’re seeing distributors pretty cautious in their buying. We’re probably expecting the first quarter volume purchases more in line with historical averages than what we’ve seen in the last couple of years.
But I think a lot of this is going to be a little bit — we need to wait and see as we get further into the season into Q2 how these remodeling investments continue to play out, how new construction plays out and then ultimately, what kind of storm demand we see going forward. I think the last thing I’d say, we do — when we look at storm markets like in Florida, I think the repair work is going as we would expect. We’re seeing good demand still in Florida. We think it probably takes most of the year to get that completed. We’re still seeing good demand strength in the Upper Midwest, Minnesota. Now it’s a tough market to roof in here in February but we think that picks back up in the spring. And then some storms out West, particularly in California, has generated a lot of quote activity.
And so I think the storm pockets, we’re going to continue to see good demand at the start of the year. And then we’ll see how the rest of the year plays out around renovation and other storm events as we go forward. But again, we still expect to have a good, strong, healthy roofing market in 2023 overall.
Operator: Our next question comes from Mike Dahl of RBC Capital Markets.
Mike Dahl: I had a follow-up on the composite pricing dynamic. You mentioned you still have some tailwinds from the contract pricing but you now expect that to be offset by lower spot. Given the pieces between kind of your mix of contract versus spot, can you just help us then size what that — what you’re seeing on spot prices and then how we should be thinking about that as your contracts roll through the year?
Ken Parks: Yes. Thanks, Mike. Great question. So a little more color on Composites pricing. As mentioned, to be very clear, in the first quarter of 2023, like in each of the quarters of 2022, we’re anticipating pricing for Composites overall to be positive. The carryover of either existing contracts that are multiyear in nature and/or new contracts that were negotiated, we’re seeing positive — neutral or positive pricing on all those contracts. We mentioned that in the last quarter call that we were kind of working through the contract renegotiations for those that were up for renewal and we were seeing kind of good pricing discussions on those contracts. So we expect contract pricing to be positive in the first quarter of 2023.
