Ketan Mamtora: Got it. No, that’s helpful. And then switching to OSB. Can you just update us as to kind of where Allendale is with the ramp-up and where you expect that mill to be by the end of this year in terms of rate of production? I know you flagged kind of a pretty extended ramp-up period in your release. But just curious kind of what you’re seeing — what you’re expecting for ’24.
Sean McLaren: Yeah. No, the first thing I would say there, Ketan, is very pleased with the progress that we’re making at Allendale and the team we have in place there, that mill started in July of last year and so we’re 10 months later. The mill is going to take two to three years to ramp up. And I would say when you look at the capacity of the mill and sort of look out three years from when we started. If you drew a line, a start-up line, that would probably – you probably end up pretty close in terms of where we’d expect to be by the end of this year. Saying that, we’re happy with the progress. It’s going to lower our cost footprint in our OSB business, which is the reason we bought Allendale and we’re well on track to deliver that.
Ketan Mamtora: Understood. And just one final question from my side before I turn it over to an earlier question around R&R demand. Have you seen outside of seasonality, obviously, as we move through April and May and June activity picks up. But outside of seasonality, have you seen any change in the demand pattern, whether sort of any slowdown or has it kind of largely been stable with this recent uptick in interest rates. Just curious about that.
Matt Tobin: I think we’ve seen a slowdown in R&R demand across our different products. Like I said, I don’t think we think it’s a long-term issue. We think that we’re well positioned for R&R in the long term. But certainly, this quarter, we’ve seen across our segments, just weakened customer demand around R&R.
Ketan Mamtora: Okay. That’s helpful. I’ll jump back in the queue. Good luck. Thank you.
Matt Tobin: Thank you.
Operator: Our next question comes from the line of Sean Steuart see from TD Cowen. Go ahead, please.
Sean Steuart: Thank you. Good morning, everyone. Matt, I just want to follow up on the last point. When you talk about a slowdown in R&R volumes, can we put some percentage numbers around that quarter-over-quarter? Are we talking mid-single digit volume declines? Just trying to get better granularity on what’s happening across various demand channels.
Matt Tobin: I would say, we don’t have perfect visibility to the end markets around that, but there are customer segments, anecdotally is what we’re reporting, and that’s what we’re seeing through the typical channels that we see those products move for R&R. So I can’t give you an exact percentage because we don’t have that visibility, but we certainly feel that slowness through the channels that we typically move our products to support R&R.
Sean Steuart: Okay. And on lumber with respect to finished goods inventories through the distribution channel, you guys and comps the last few quarters have pretty routinely positioned it as lean. But I’m hoping you can reconcile that characterization with prices sort of spinning their wheels here, looking for traction. Any updated thoughts on finished product inventories. It feels like it’s pretty low at the mill level, but what you guys are seeing through the supply chain and the end markets?
Sean McLaren: Yeah. Good morning, Sean. Sean here. I’ll make a comment on that and then ask Matt to pitch in anything I missed. Really tough for us to speak to what’s happening. It is difficult to see what it is across the supply chain. We can only speak to our inventories and our customer buying patterns. Our inventories are normal and our customers appear to buy when they need it. So nobody seems to be under a lot of pressure to buy. So there’s not — at least we’re not feeling anybody building inventory because they’re concerned about supply. So anyways, I would just leave it at that, but hard for us to really give you a sense on what it is across the whole system.
Sean Steuart: Okay. Thanks for that Sean. Just one last question maybe for Chris. The $11 million quarter-over-quarter decline in operating costs that was referenced in the waterfall slide in the deck, how much of that is tied to the U.S. South optimization initiatives? And can we expect follow-on progress on that front in the coming quarters or is that a step function change and a new level, and you should just expect that same level going forward?
Chris Virostek: Well, I’d say here’s kind of how we’re thinking about it as we look at the next several quarters. We’ve seen a little bit of — with the lower prices we’ve seen a little bit of stumpage relief in Canada that’s been a tailwind for us that’s benefited us on the cost side there. As you know, we said the Fraser Lake, the impact of that won’t really be felt until the third quarter or fourth quarter as that mill winds down through the balance of this quarter and the inventory gets liquidated there, and we wind up operations there. The closure of the two mills in the U.S. South was a much more expeditious process, given how lean the inventories are typically in the South and those mills wound down operations quite quickly.
But what we did there was, as you can tell from the shipments is we effectively replaced that volume at our other newer, lower cost mills. And so we had effectively internal cost arbitrage by moving that production and keeping our shipping pace where it was, but with an overall lower cost platform. So those are the things I would say that we’re laser focused on doing every day. We’ve spent a lot of capital in the last several years and continue on our capital program. And I think that’s one of our differentiators is we’re spending the capital and trying to improve the quality of the assets in the businesses and how they run even through the bottom of the cycle. So we’re going to keep pushing on that cost lever as much as we can to keep driving costs down across the platform in lumber and in fact, in all the businesses.
And we saw some great results on that in the first quarter and certainly, the teams are working on that every day.
Sean Steuart: Okay. Thanks a lot, Chris. Appreciate it.
Operator: Thank you. [Operator Instructions] We have our next question coming from the line of Matthew McKellar from RBC Capital Markets. Go ahead, please.
