Hello, everyone, and welcome to the Core & Main Third Quarter 2021 Earnings Conference Call. My name is Victoria, and I will be coordinating your call today. [Operator Instructions] I'll now pass over to your host, Robyn Bradbury from Core & Main to begin. Robyn, please go ahead.

Thank you. Good morning, and welcome to the Core & Main fiscal 2021 third quarter earnings call. This is Robyn Bradbury, Vice President of Investor Relations and FP&A for Core & Main. Thank you for joining us this morning. We're excited to share our results with you. Steve LeClair, our Chief Executive Officer, will lead today's call with a brief company overview and our third quarter execution highlights. Mark Witkowski, our Chief Financial Officer, will then discuss our third quarter financial results and revised full year guidance, followed by a Q&A. We will conclude the call with Steve's closing remarks. For Q&A, please limit to one question and one follow-up. If you have additional questions, you may return to the queue. Thank you for your cooperation. Some of the information you will hear today may include forward-looking statements. Forward-looking statements include all matters that are not historical facts. We may include statements regarding our intentions, beliefs, assumptions or current expectations concerning our financial position, results of operations, cash flows, prospects or growth strategies. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be outside of our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that they may differ materially from those made in or suggested by the forward-looking statements contained on this call. These forward-looking statements are made only as of the date of this call. We do not undertake any obligation to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events or changes in future operating results. In addition to providing risk determined in accordance with U.S. GAAP, we present EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income and net debt leverage, all of which are non-GAAP financial measures. These measures are not considered measures of financial performance or liquidity under U.S. GAAP, but we use them to assess the operating results and effectiveness and efficiency of our business. We present these measures because we believe investors consider them to be important supplemental measures of performance. For a reconciliation to the nearest GAAP measure, please refer to the slides in the appendix of the fiscal 2021 third quarter investor presentation, which can be found on the Investor Relations section of our website. Thank you for participating on the call and for your interest in Core & Main. I will now turn the call over to Chief Executive Officer, Steve LeClair.

Thank you, Robyn. Good morning, everyone. Thank you for joining us today, and welcome to our fiscal 2021 third quarter earnings call. I will begin today's call with a brief business overview, followed by our third quarter execution highlights. Starting on Page 5 of the presentation, I'll begin with an overview of Core & Main. Core & Main is the leading specialty distributor water, wastewater, storm drainage and fire protection products and related services, servicing municipalities, private water companies and professional contractors across municipal, non-residential and residential end markets nationwide. Our specialty products and services are used in the maintenance, repair, replacement and construction of water and fire protection infrastructure. We are one of only two national distributors operating across large and highly fragmented markets, which we estimate to be approximately $27 billion in size. With approximately 300 branches across the U.S., we play a critical role in driving the adoption of new products and technologies throughout our industry, and we offer the logistics of last-mile delivery and support for our customers. We have diversified end-market exposure with an estimated 45% municipal, 37% non-residential and 18% residential end-market mix in fiscal year 2020. Furthermore, we had near equal exposure to construction on new projects and existing repair-and-replace projects in fiscal year 2020. Our business is well positioned for scale growth, margin enhancement and strong cash generation. We have a secular focus on water infrastructure with ESG at our core. On Page 6, I will now cover our third quarter execution highlights. Our teams delivered exceptional performance in the third quarter by capitalizing on strong end-market trends, proactively managing inflation and continuing to execute on our margin initiatives, all while operating in a very dynamic environment. We achieved record net sales of just over $1.4 billion, growing nearly 40% compared with…

Thank you, Steve. Good morning, everyone. Turning to Page 9, I'll begin by covering our third quarter operating results. Net sales in the third quarter were approximately $1.4 billion, an increase of nearly 39% over the prior year period. The increase was driven by higher average selling prices, strong volume growth and accretive acquisitions. On an organic basis, our net sales growth was approximately 35%. Our sales benefited from growth across each of our end markets. The municipal end market continued to experience strong demand trends resulting from growth in municipal water and wastewater infrastructure spending. Residential construction continued to benefit from single-family housing demand and new lab development through growth in the – residential construction continue to benefit from single-family housing demand and new lab development, though growth in the third quarter was more moderate compared to what we experienced in the first half of the year due to supply chain constraints across the residential building sector. The nonresidential end market, which contains a mix of project types, experienced strong volume growth as demand continues to catch up to pre-pandemic levels. The execution of our sales initiatives and our leadership position within our industry have allowed us to outperform our end markets and deliver solid market share gains by ensuring our customers have access to the products where and when they needed them, despite the ongoing supply chain constraints and product availability challenges. We believe roughly two thirds of our net sales increase for the quarter was due to price inflation, which was much higher than expected and driven by our team's ability to communicate rapidly rising material costs to our customers and locate the products they need so they can complete their projects. We continue to experience rapidly rising material costs across several product lines resulting from unprecedented…

[Operator Instructions] And the first question comes from David Manthey from Baird. David, please go ahead. Your line is open.

Okay. Thank you, good morning everyone. First off, to bridge the EBITDA guidance increase here, last quarter, you were at 4 90 for a midpoint. And this quarter that you just reported, most of us were at 1 40, so you outperformed by like $50 million, let's say. I guess when I think about the acquisitions, a couple of those were known, a couple unknown, but that's just adding marginally to EBITDA. So I'm coming up with about a $30 million increase in core fourth quarter EBITDA guidance effectively. Could you just give us an idea, when you think through the list of things that are benefiting the company today, which are the primary drivers of that upside?

Good morning David.

First off, to bridge the EBITDA guidance increase here, last quarter, you were at $490 million for a midpoint. And this quarter that you just reported, most of us were at $140 million, so you outperformed by like $50 million, let's say. I guess when I think about the acquisitions, a couple of those were known, a couple unknown, but that's just adding marginally to EBITDA. So I'm coming up with about a $30 million increase in core-fourth quarter EBITDA guidance effectively. Could you just give us an idea, when you think through the list of things that are benefiting the company today, which are the primary drivers of that upside?

Yes. Dave, thanks for the question on that. Yes, certainly, as we look back at our guidance last quarter and the performance here that we're now expecting through the end of the fourth quarter, certainly, the price levels was a major factor. We did anticipate prices might stabilize a bit, and we've continued to just see increases across all of our product lines. And that's been a major contributor to the revised guidance. In that inflationary environment, we've also been able to capitalize on our inventory investments, and that's been driving our gross margin rate up higher than we also expected. So between the higher price levels and our ability to capture that in margin – at the gross margin level, those have been the two primary factors and when we do see inflation like this, we can really leverage our SG&A. So we saw really those two factors drive up the EBITDA and result in the EBITDA guidance range increase.

Okay. Thank you. And second, you mentioned the chip shortage impacting AMR sales. How should we think about the dynamics of that market today? I would imagine, obviously a meter has to go in of some sort. Do customers just default to the traditional meters? Is there some kind of deferral? Are those sales gone forever? Can you just help us understand the chip shortage relative to the automatic meters and what that means for the future?

Hi Dave, this is Steve. So a couple of things I'd share with you regarding meters. There's definitely – we're definitely feeling the impact right now of chip shortages, particularly in a couple of segments of smart meters. And so when we look at how that product is used today, a lot of this – a good portion of those sales are refurbishment of new water meter projects. So municipalities are investing in this technology almost for all of their endpoints as they do this and a replacement of the old manual read ones. So some of those projects are being delayed as we go through here, so we're seeing the backlog build in that, meanwhile, on the repair and replace of some of these, right now, a lot of the inventory is being allocated into the most critical needs that we're seeing for repair-and-replace sort of finished-out projects that are halfway through at this point. So we're going to continue to see pressure as we get into the back half of this year and likely into the first half of next year with these chip shortages. And it's going to be a continual thing we're going to have to work through. Some of the manufacturers are working through alternative designs to help fill that void, but that's not an immediate or a quick solution for some of the projects that have already been slated and ready to go.

Got it. That’s helpful. Thanks very much and good luck.

Thank you.

Quiet thank you, David for your question. And our next question comes from Jamie Cook from Credit Suisse. You can go ahead, your line is open.

Good morning and nice quarter. I guess two questions. One, short-term, I know you're opportunistically building inventory to help your customers, but like how do we think about inventory as we end the year? And is this a trend that you expect to continue into next year? And to what degree does this impact over the longer-term sort of free cash flow conversion? And then my second question, just sort of longer-term with the market share gains that you've had and the infrastructure bill and some of these pricing dynamics you're talking about, does it make you more confident or optimistic about where EBITDA margins can go longer-term relative to the objectives that you guys put out when you first went public?

Thanks, Jamie. I'll tackle these, and then hand it over to Mark to talk a little bit more about the flow-through in working capital and the seasonality impact. So certainly, right now, with demand as high as it is and product availability as limited as it is, we're trying to take positions in inventory that we typically wouldn't see. We generally see a seasonal downturn towards the back half of the year, particularly with the areas in the north that may have more seasonal weather and makes it difficult to do underground construction work. But we're going to continue to build that. Seeing the demand profile that we have in the backlog, we're going to continue to try and capture the inventory we can to secure the projects and fulfill the backlog and release some of that. If you look at the share gains that we've had, we're continuing to see our value proposition play out for our customers, our existing customers, and certainly newer customers that have come to us, unable to get their product needs fulfilled by our smaller competitors. So we think that has a lot of opportunity for us to continue to build share and continue to do that. And then given really the shortage in supply right now and given the role that we play with our size and scale, we're certainly encouraged by what we see with margin enhancement as we go forward. Some of this stuff, particularly right now, we're benefiting from the fact that we've been able to take big inventory positions at lower cost and then sell that through. And we've also been in a beneficial position of being able to get access to products right now almost in factory to job site that have enabled us to get price have been less – much less price sensitive. There's a portion of that, which we think could be transitory as we get into next year, but we're really encouraged by what we're seeing with the margin enhancement, our ability to gain share and the value proposition that we play. Mark, do you want to talk a little bit about the seasonality of the working capital?

Yes, Jamie, I think you were asking about cash conversion as we think about the inventory investments. And I would tell you, certainly for 2021, we're going to see slightly less cash conversion of that EBITDA due to those inventory investments. I do expect some of that to unwind into 2022 as capacity kind of normalizes, but I think really returning back to normal levels after that. And then from an EBITDA expectation, I would tell you that certainly, if we see that infrastructure bill flow through, like we said, maybe in 2023, and that continues to be a lift for demand for us, certainly – probably helps sustain these pricing levels, which we're certainly able to leverage pretty significantly. And I think that certainly helps that EBITDA target that we were looking at as part of the IPO, so more to come on that, but certainly a good environment for us given the current supply-and-demand characteristics.

Okay. Thanks and nice job.

Thank you.

Quite thank you very much for your question. And our next question comes from Matthew Bouley from Barclays. Please go ahead. Your line is open.

Good morning. Thank you for taking the questions congrats on the results. Back on the gross margin of over 26%, apologies if I missed it, but would – any way to quantify what the benefit specifically from pre-buying was in the quarter? And looking forward is 26% kind of a new baseline? Or just from this pre-buying dynamic, would you expect some kind of reset or reversal as we think about 2022? Thank you.

Yes. Thanks, Matthew, for the question. As you look at gross margins for the quarter, I'd tell you, there's a lot that we are working on and have continued to benefit from that have resulted in that 26% gross margin rate. Certainly, our initiatives that we've talked to you a lot about in terms of our focus on price, both to get these inflationary prices into the market and stay ahead of those, has been critical for us. Certainly buying ahead and getting good procurement opportunities from our vendors has been a driver. The other area that we've talked to you about is really the data-driven exercises we've done on some of the non-bid items, and we've been able to get that price more aligned across the markets in the U.S. Our private label initiative, we saw great expansion there in the quarter. And then certainly, the acquisitions that we've done, we continue to get synergies out of those. So there's been a lot of factors driving that, not necessarily breaking out any one in particular, but as we look at kind of the sustainable gross margin rate. I would tell you, Matt, that we kind of look at as year-to-date gross margins and our performance there, I feel like there's about 50 basis points to 100 basis points of temporary benefit that we're seeing in there across the year. So that will be the amount we continue to look to offset as we go into 2022 and beyond with those gross margin initiatives that we have that are sustainable. So that's probably the best way to think about it in terms of the rate.

No, that's great color. Thank you for that. Just second one on the topic of passing through inflation. I'm just wondering, if there's any product categories or even end markets where you're starting to see any incremental pushback on pushing prices through, just given the amount of inflation we've seen? Thank you.

Yes. Matthew, right now at this point, inflation has been ubiquitous across nearly all product lines that we have. We haven't really seen demand subside in this. So as of the end of the third quarter, everything still looks incredibly strong right now. The demand across all end markets is strong. Municipal is strong. So we're feeling that the market's absorbing a lot of these cost increases. And kind of the challenge right now is being able to release this backlog, fulfilling all of the demand that's out there. Our customers are struggling with some labor as well too. So getting a lot of those things fulfilled is really the bigger constraints that we’re seeing at this point rather than absorbing the inflation.

Great. Thanks for the color. Good luck.

Thank you.

Great. Thank you, Matthew for your question. We will now move on to Kathryn Thompson from Thompson Research Group. Please go ahead. Your line is open.

Yes, thank you for taking my questions. A Follow-up on IIJA, [ph] we’ve been speaking to a variety of state departments of transportation and other key officials just about the passage of this bill and what it means now. We’re already hearing from a handful of states that are seeing an acceleration of letting schedules and granted some of this may be for highways, but it could have a trickle effect for you. Two-part question on this. What are you hearing on a regional basis? And with the passage of – since the passage of IIJA, are you hearing a similar thing in terms of the acceleration of letting of schedules? And then what, if any, changes do you anticipate on pricing quotes given the passage of this bill? Thank you.

Thanks, Kathryn. I’ll touch base on really in two ways that we’re kind of looking at this thing. Certainly, when we look at the water aspect of this and the $55 billion there, there’s still a pretty lengthy process for that – for those funds to be allocated into the different states and the revolving funds. So that’s still yet to be seen exactly how and where those funds start flowing in. Those, we anticipate, will – we think are going to be constrained somewhat right now for the demand just given the supply chain constraints in the backlog that’s already existing in municipal. I mean the demand has already been strong. So we think that could be challenging to get anything incremental through 2022, but we think that’s going to really provide a lot of sustained growth and opportunity for municipalities to continue to grow and to find the funding means necessary to grow that municipal piece certainly through 2023 and beyond. So we’re encouraged by what we’re seeing there, but probably not an immediate impact at this point from what we can see. In regards to some of the other infrastructure aspects of this, certainly, DOT has always been quicker to get into the projects. And we see some pretty good opportunity there with storm drainage material yet to be seen exactly how well that flows through, but we’re encouraged by what we see there. We’ll have certainly a positive impact on that aspect, and we’ll continue to monitor that at a state level. So in regards to those two things, those are the things that are immediate. When we look at the third piece here, which talks about kind of this resilient infrastructure and some of the things related to drought, that’s going to be much more difficult to ascertain exactly how that plays into our – certainly short and medium term, but we’ll continue to monitor that.

Okay. A topic discussion that we’ve had with you in the past, and granted you’re newer to being on the public stage, is the concept of best and worse branches in terms of market share. And you had shared that there had been a differential – pretty big differential in terms of market share between the best and worst. How is that gap expected to fare in 2022? And maybe describe some of the steps to bring some of those laggards up and importantly in bringing those laggards up, how that contributes to margin expansion.

Yes. Kathryn, we always looked at with 300 branches, we certainly have areas in the country where we’ve had really strong position to continue to build on that and other areas that we’ve been entering into over the last few years, really for the first time. And so working your way up from a distant number 3 or number 4 in the market up has great potential for margin enhancement, earnings performance and everything else. So I won’t share specifically about areas in the country where we’re starting to see a lot of improvement there. But this environment that we’re in right now has really played to our strengths. So certainly, when we look at some of these areas that we’ve been underpenetrated in the past, the fact that we’ve got size and scale behind us to be able to get access to product has really helped us to continue to gain share in the space and gain margins over a lot of our smaller competitors that may have a more significant position in that individual market. So we’re continuing to do that. This is a model that we continue to refine. So we’re always looking from a quartiling standpoint at our underperforming branches, and we’ll continue to refine that through next year as well. And we’re encouraged by what we’re seeing in terms of margin enhancement and EBITDA growth through those branches.

Okay, great. Thank you.

Thank you.

Great. Thank you, Kathryn for your question. And we will now move on to Nigel Coe from Wolfe Research. Nigel, please go ahead. Your line is open.

Thanks. Good morning. Thanks for the question. So taking out the price impact, it looks like 25% or so price, so 14% volumes. How do we think about how that 14% look by your three end markets? And how do you think your share is trending? And I’m a little curious if your – kind of your inventory strategy and availability, whether that’s kind of leading to share gains in whatever end market you think you are gaining share?

Yes. Thanks, Nigel, for the question. Yes, when you look at volume performance for the quarter, I would tell you, across each of our three end markets, it was very strong. So I’d say pretty steady across all three of those end markets, no real major differences there. And that’s really the biggest contributors there. In terms of the inventory position, yes, I would tell you, certainly, our ability to access product right now has been a nice driver for share gains for us. We do believe that was a contributor and again, those share gains really across all three of those end markets. So I wouldn’t say any one in particular was much stronger than the other. Resi continued to benefit from new add development. We’ve seen a nice comeback with nonresi, was certainly pretty depressed last year and then the municipal spending has continued to be strong. So those end markets combined with those share gains, really the major contributors to the volume in the quarter.

If you had to rank the end markets, would you say resi would be at the higher end of the curve? Again, in reference to the volume number, the 14%?

Yes, I’d say if I rank them, it was probably resi’s slightly higher than nonresi, and then you need kind of right on the heels.

Okay, great. And then just on pricing, obviously, a lot of ground covered there. But how do we think about core price? So obviously, you’ve got commodity price swings. But if you had to think about just core price, how did that look? How has that been trending for the year?

Yes, Nigel. I’d tell you on pricing. It’s really been a unique year for us. Typically, we would see more volatility with commodities. This year, I would tell you, we’ve seen the price increases coming across all product lines. Similarly, I’d tell you if I would rank on my prior put PVC at the top of the commodity price increases, but then really the noncommodities have seen inflation, and then those manufacturers are continuing to try to get price into the market to offset some of their manufacturing costs, labor shortages and everything else. I think there’s probably more to come in some of those areas as well. But we’ve really seen it across the board.

Okay. Thank you very much.

Yes.

Great. Thank you so much for your question Nigel. And we’ll now move on to Mike Dahl from RBC Capital Markets. Mike, please go ahead. Your line is open.

Hi, thanks for taking my questions. Just a follow-up on the share gain because it’s something we’ve seen across distribution, just players of scale, this environment is really playing to the strength and leading to accelerated share gains. I know it’s tough to pin down in any one quarter. But when you look back over the past few quarters, any way of sizing up how much share you think you’ve gained year-to-date?

It’s hard to tell right now, Mike. I think these things tend to be market specific in a lot of these areas. When we look at the volumes that we’re seeing over here compared to what we think the industry volume is, we get some level of estimate on that. What I would share with you as we get into these, how sticky are those share gains. And we feel pretty comfortable that given the value proposition that we have right now and the opportunity to serve some of these newer customers that we haven’t been able to before, we have a very high retention rate with our customers today, 84%, 85%. So we feel pretty good about the opportunity to be able to serve some of these new customers in addition to holding our own. And so we’re pretty encouraged by what we see that we think this could be good sustainable share gains going forward, but difficult to really put a number on it at this point.

Okay. Got it. That’s still helpful. And my second question, just around the supply constraints. Are there any regions or any product lines where you’ve seen an inflection and started to see any easing of the constraints? Or conversely, are there product categories where you’re still seeing constraints incrementally worsen?

I would share right now that it’s across the board, we’ve seen challenges. Geographically, given our national footprint, I wouldn’t say there’s anything specific geographically we’re seeing. But by certain product categories, we should start seeing an easing of maybe some of the import product that has been really challenged through the third quarter with some of the port issues, things like fittings, for example, that could be imported, some of those are starting to ease, but there is still a significant challenge and still a very empty pipeline right here in this channel. So a lot of what we’re seeing as we ended third quarter was almost – in some of these product categories, factory to job site, it was that immediate. They were really being put right to the projects themselves and very little inventory building in the channel as we go. So what we are seeing as well, too, is some of these projects are – we’re waiting to release some of this backlog waiting on a couple of different products and materials. So most of the projects that we’re dealing with at this point involve not just one or two types of products, but have a pretty lengthy product list than when one is short, we can’t substitute it. We often have to wait and see delays on in the release of some of that material. So that’s kind of what we’re experiencing as we ended third quarter and encouraged by demand characteristics, encouraged by what we’re seeing right now with maybe some easing in a few of these product categories, but it is still incredibly tight.

Okay. Got it. Thank you.

Thank you.

Great. Thank you. And our next question comes from Patrick Baumann from JPMorgan. Please go ahead. Your line is open.

Hi, good morning. Thanks for taking my questions. Can you talk about the acquisitions you did in the quarter outside of L & M and Pacific Pipe? And any color on the size of the deals, revenues, margins and multiples that you’re paying? And then when you look at the pipeline, what are you currently seeing on valuation multiples?

Sure. Thanks, Patrick. Yes, the two acquisitions we did were what we call relatively small tuck-in acquisitions with CES Pipe & Supply in Kansas City and then Catalone in Pennsylvania. So combined, their revenue was somewhere around $13 million, so single-branch operations. Multiples were typically what we have done historically, particularly for branches at site, so relatively low multiples. We’re encouraged by what we see. Pipeline looks really strong right now. As far as multiple goes – multiples go, we continue to operate within our strike zone that we’ve had. Anywhere from six to nine pre-synergy is kind of what we’ve been looking at historically. We haven’t seen that move a whole lot in our space. So we’ll continue to refine and look at the pipeline that we have, a very active pipeline as we speak and excited that there’s still a lot of opportunity there to continue to consolidate.

That’s helpful. And then on L & M and Pacific Pipe, what kind of synergies are you expecting out of those, both at the businesses themselves? And anything you can take to the rest of the portfolio? Because I know those were a little bit higher multiple than the six to nine pre-synergy.

Yes. For Pacific Pipe in particular, they have a really strong foothold in Hawaii. So we definitely have some purchasing synergies we can provide there. We’re continuing to look at how we can expand out there as well to some other product line enhancements. For L & M, this is really an underserved product category for us. When we look at erosion control and geosynthetics, we’re carrying that in less than 10% of our branches today. So we’re really encouraged by our ability to not only enhance that product category but be able to pull that through many of our other branches that we have all across the country. And that gives us a really good substantial footprint. They have seven branches out there that move from the East Coast, all the way out to Texas and Colorado. So that’s given us a really good footprint on which to expand on organically and inorganically as well.

Thank you. Helpful color. Appreciate it. Best of luck.

Thank you, Patrick.

Great. Thank you, Patrick.

We have time for one more.

And last – okay. So we take the last question?

Yes, go ahead.

Great. Our final question comes from Joe Ritchie from Goldman Sachs. Please go ahead.

Thanks and nice quarter, everybody. A couple of quick ones for me. So just in terms of your guidance, your EBITDA guidance for the year, I’m curious, what’s the implied growth framework for the fourth quarter?

Yes, Joe, I would tell you in terms of the guidance on that for the growth, we’d see pricing kind of at the similar levels in Q4. We think pricing kind of stays where it is. We have, I’d say, built into the guidance. Last year was a really good weather year for us. So I’d say we have a little bit of conservatism and for the volume for the quarter in the outlook to reflect kind of a good weather environment last year in there, but that’s kind of the way to think about it. And then from an acquisition standpoint, I’d tell you, the ones we’ve completed will contribute probably four to five points of growth for Q4.

Got it. And there’s nothing in terms of like extra days or less days or anything like that to be – to take into consideration for 4Q?

No, not for the fourth quarter this year.

Okay. Great. Last quick one. Just on pricing. So pricing for some of your key commodities had – or the cost growth has come down pretty significantly. Clearly, this was a bit of an abnormal year in terms of how much pricing you were able to put through. How do we start to think about whether there’s a – like significant potential top line headwind next year, whether that could be mitigated by some pricing stickiness? Just any thoughts around that would be helpful for 2022. Thank you.

Yes, sure, Joe. I think the way to think about 2022 right now is given the demand and supply characteristics that we’re seeing, we do expect pricing will hold at fairly high levels, at least through the first half of next year. And given where they’re at, we’d expect a pricing benefit in the first half. Possible that those prices start to subside more on the commodity side in the second half. And you could see a little bit of pressure in the second half. But I think on the non-commodity side, like I said, we’re still seeing some price increases and some opportunities for increases there. So some of that may offset even what we might see on the commodity side. So we’re feeling, I’d say, more confident about where pricing is and where it’s headed than probably what we did last quarter. But those are good situations for us. If we – if prices stay high, again, that gives us a strong ability to leverage that ultimately down to profitability.

Great. Thank you.

Yes.

Great. Thank you, Joe for your question. And this concludes our Q&A session. I will now pass over to Steve for final remarks.

Thank you all again for joining us today to participate in our third quarter earnings call. To close it out, I would like to share a few key items that make Core & Main a leading specialized distributor. We are a market leader with size and scale in an attractive and fragmented market. We have a strong value proposition playing a pivotal role in shaping our industry. We have multiple levers for organic growth, continually cultivating waste to grow faster than the market and gain market share. We have a proven ability to execute and integrate acquisitions with a large pipeline and additional runway. We are poised to benefit from favorable industry trends in each of our end markets. We have an attractive and resilient financial profile with strong return characteristics. I’m incredibly proud and want to thank all of our associates for their continued commitment to our customers and our communities, especially given the disruption related to COVID-19, the product availability challenges and labor shortages. We are committed to providing our customers with local knowledge, local experience and local service nationwide. Thank you for your interest in Core & Main. Operator, that concludes our call.

Great. Thank you, everybody, for joining today’s call. You may now disconnect your lines.