Daniel Moore: Understood. Thank you again.
Andy Rose: Sure.
Operator: Your next question comes from the line of Susan Maklari with Goldman Sachs. Your line is open.
Susan Maklari: Thank you. Good morning, everyone.
Andy Rose: Hey. Good morning, Susan.
Susan Maklari: Good morning. I’d like to start with the price for a bit. Can you just give us more color on what’s driving that lower? Is it mix, is it absolute declines in there? What’s going on in there and how are you thinking about that going forward?
Joseph Hayek: Yeah. I think your question was around pricing.
Susan Maklari: Yes.
Joseph Hayek: Okay. Yeah. So, it’s mostly mix, honestly, the dynamics within consumer and in building products. I got Building Products, for example, the destocking in those very large propane heating tanks. Those are our most expensive tanks and they come at pretty healthy gross margins. So there’s an outsized impact when those are running up or in this case, destocking.
Susan Maklari: Okay. All right. And then perhaps turning a bit to the outlook, you mentioned the potential for this pickup as we get into the spring and summer. Maybe some lift in the R&R activity. I guess when you think about the macro backdrop and some of the more recent news and data points, just any thoughts on how that could come through to the business and how you’re thinking about the setup more broadly there?
Andy Rose: Yeah. I think — I would maybe call it, sort, of pretty close to seasonally normal with some continued I think what we say cautious optimism, but — and you’re right, the data points out there are still a little bit mixed. And so, it’s certainly not worse than it was six months ago, but again, the consumer is still relatively cautious. We still have some destocking in these large and good size margin propane tanks. And so, yeah, I would say that we continue to be thoughtful about our markets. Our teams have done a phenomenal job, being there for their customers. We haven’t — at least we don’t think we’ve lost any share in a lot of these categories. But ultimately, higher interest rates matter. If you look at the large propane tanks, for instance, and you look at kind of housing starts and then our demand there, there’s about a six months to 12 month lag in how those have worked for us in the last several years.
Housing starts, I think, bottomed like last summer, kind of July, and have kind of crept back up since. But because of that lag in residential construction, at least, we anticipate needing another kind of quarter or quarter and a half for that to run its course.
Susan Maklari: Okay. That’s helpful. And then, just one last one for me. It was exciting to see the HALO acquisition come through. Can you give us just an update on the overall M&A pipeline, how that’s coming through and anything that is of interest perhaps there?
Joseph Hayek: Sure. As M&A activity in 2022 and 2023 really sort of slowed down, that was okay for us, right, because we were in the midst of the spin. Activity in 2024 has certainly been predicted to pick back up. We’re hopeful that is the case, it’s still early in 2024. I don’t think you’ll see us acquire a lot of companies smaller than HALO, that was a really good opportunity for us, as Andy said, to really fast forward a bunch of product development and be able to really grow and leverage what we do to make that business better. But, we have a pretty robust program of making outbound calls and trying to be as smart as we can, knowing who the right fits for us are in Building Products and in Consumer Products right now, less in the SES business.
Some are pretty large, some are not as big and more bolt-ons. But there’s nothing that we’re kind of getting ready to announce or anything and burn a hole in our pocket. But we continue to be out there and as we said have a really good balance sheet and some liquidity so that when we find the right fit, we’ll be able to think about that. But going back to our criteria for those, they’re going to be margin risks, they’re going to be asset-light, and they’re going to have a sustainable competitive advantage that we think we can either leverage or have it even make us better.
Susan Maklari: Okay. All right. Well, that sounds great. Thanks for all the color and good luck with everything.
Joseph Hayek: Thank you.
Operator: Your next question comes from the line of Kathryn Thompson with Thompson Research Group. Your line is open.
Brian Biros: Hey, good morning. This is actually Brian Biros on for Kathryn. Thank you for taking my questions.
Andy Rose: Sure. Good morning, Brian.
Brian Biros: Maybe further on the JVs, I think the past few quarters has kind of seen the two go in kind of opposite directions almost and probably not always the case. Maybe more of a short term blip just given how markets have been recently. I guess do you think that dynamic is kind of over going forward? Seems like maybe it is a little bit, given your comments about ClarkDietrich, kind of stabilizing from here, but just interested to hear your thoughts on how those two may or may not be linked in momentum going forward.
Andy Rose: Yeah. I mean, if you think about the products, Brian, ClarkDietrich tends to be more on the front end of construction. WAVE, a little more on the back end of construction. So as the cycles move up and down, they’re going to not move in lockstep if that makes sense. Joe kind of talked about it earlier. The market for overall commercial construction products is pretty steady. There’s pockets of weakness, which is office everybody knows and talks about that. But there is a bit of a belief, I think, that there could be a renovation renaissance of sorts that comes from companies trying to attract workers back to the office and changing up things to make it more appealing to be there, as well as some of the other kind of macro trends around reshoring, nearshoring healthcare, education.
