Ladies and gentlemen, welcome to the Core & Main Q3 2022 Earnings Call. My name is Glenn and I will be the moderator for today’s call. [Operator Instructions] I will now hand you over to the host, Robyn Bradbury, Vice President of Finance and Investor Relations to begin. Robyn, please go ahead.

Thank you. Good morning, everyone. This is Robyn Bradbury, Vice President of Finance and Investor Relations for Core & Main. I am joined today by Steve LeClair, our Chief Executive Officer; and Mark Witkowski, our Chief Financial Officer. Steve will lead today’s call with a business update and an overview of our recent acquisitions. He will then highlight an example of how we help build sustainable water resources for the communities we serve, followed by a discussion on the resilience of our end markets. Mark will then discuss our third quarter financial results and full year outlook followed by a Q&A. We will conclude the call with Steve’s closing remarks. We issued our fiscal 2022 third quarter earnings press release this morning and posted a presentation to the Investor Relations section of our website. As a reminder, our press release, presentation and the statements made during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in our earnings press release and in our filings with the Securities and Exchange Commission. Additionally, we will discuss certain non-GAAP financial measures, which we believe are useful to assess the operating results of our business. A reconciliation of these measures can be found in our earnings press release and in the appendix of our fiscal 2022 third quarter investor presentation. Thank you for your interest in Core & Main. I will now turn the call over to Chief Executive Officer, Steve LeClair.

Thanks, Robyn. Good morning, everyone. Thank you for joining us today. If you are following along with our investor presentation, I will begin on Page 5 with a brief business update. I am pleased to report another strong quarter as we continue to build on our momentum, achieving double-digit growth in both net sales and adjusted EBITDA. This marks our eighth consecutive quarter of double-digit net sales growth, with third quarter net sales exceeding our expectations due to healthy end market demand, robust performance across our growth initiatives, and continued price realization. This is an impressive accomplishment considering the 39% sales growth we achieved in the same period last year. Our teams continue to execute at a high level to grow the business and support our customers, suppliers and communities. We achieved strong volume growth in the third quarter, driven by a combination of end market growth and share gains from the execution of our product, customer and geographic expansion initiatives. Municipal repair and replacement activity was strong. We expect it to remain positive through the end of the year and beyond. Municipalities continue to benefit from healthy budgets, allowing them to invest in improvements to their aging water infrastructure. Additionally, we believe the funding available through the Infrastructure Bill will start to flow to municipalities at some point in 2023. During the quarter, we saw non-residential construction activity strengthen as suburban communities expand, which increases the demand for our waterworks, storm drainage and fire protection products. Historically, non-residential construction activity has lagged residential housing development by roughly 12 to 18 months. We believe we are currently seeing non-residential construction strengthen due to the growth in residential development we experienced in late 2000 and 2021. We expect continued strength and resilience from both our municipal and non-residential end markets. Shipments…

Thanks, Steve. I will begin on Page 10 with highlights of our third quarter results. We reported net sales of $1.8 billion, an increase of 29% compared with the prior year period. The increase was partly due to price inflation from passing along rising material costs to our customers, mid single-digit volume growth, driven by a combination of end market growth and share gains and approximately 3 percentage points of contribution from acquisitions. We outperformed our end markets and gained share in the quarter due to our strong execution across our product, customer and geographic expansion initiatives. We continue to experience rising material costs across many of our product lines in the third quarter. As supply chains improve for certain products, we are beginning to see those costs stabilize, most notably in our municipal PVC pipe category. If prices hold steady from where they are today, we expect price contribution to moderate in the fourth quarter, as we anniversary the price increases from a year ago. Gross profit increased 35% to $500 million in the third quarter and gross profit margin increased 110 basis points to 27.5%. Gross margin was positively impacted by our margin enhancement initiatives, accretive acquisitions, utilization of lower cost inventory, and a favorable mix benefit. Selling, general and administrative expense increased approximately 23% to $231 million in the third quarter. The increase was primarily due to an increase in personnel expenses, which was driven by higher incentive compensation costs from higher sales and profitability. In addition, distribution and facility costs increased due to higher volume and inflation. SG&A as a percent of net sales improved 70 basis points to 12.7%. The improvement was due to our ability to leverage our fixed cost on the increase in net sales. Interest expense in the third quarter was $16…

Thank you. [Operator Instructions] We have our first question that comes from Matthew Bouley from Barclays. Matthew, your line is now open.

Hey, good morning everyone. Thanks for taking the questions and congrats on the results. I wanted to ask a question on – you mentioned in the prepared remarks around pricing kind of commodities versus some of your other product lines. I think I heard you say that you are expecting cost increases for many product lines and that could offset commodity-based deflation in other categories. I am just curious if you can kind of expand on both of those? I know you mentioned a lot around PVC, but just kind of any specifics around what level of commodity deflation we could expect into the new year and then where are you seeing those kind of offsetting product line increases? Thank you.

Yes. Thanks, Matthew, for the question. In the third quarter, we really saw some nice momentum in a lot of the non-commodity products. We saw some nice cost increases come through, which our suppliers had indicated that they were working on and we are able to get those passed along to our customers. I’d say on the commodity side, those prices were fairly stable for the quarter and that was despite some improvements to supply chain there. So that was a positive, I’d say, development for us as we look forward and what could happen as we get into 2023. We are still expecting non-commodity products in those areas to see some additional cost increases and we will work those through, as we mentioned, still too early to say on the commodity products and what could happen there. But I think the momentum we saw coming out of the third quarter and in the fourth quarter could help if there is any potential declines there, as we go forward.

Alright. That’s helpful. Thank you for that. And secondly, shifting to the margin side, I think I heard you say that you now view potentially 100 to 150 basis points of temporary margin may have been achieved year-to-date, which I guess would suggest sort of mid to high 25% gross margins would be normalized. I guess, number one, how quickly do you think we reach that level? And number two, as you reach that normal level, should we kind of think of that as the new baseline after which your margin initiatives that you have been working on kind of organically could then see that margin expand from those levels? How should we think about all that? Thank you.

Yes. Thanks, Matthew. On the gross margin side, yes, we did increase that expectation to – from 50 to 100 to 100 to 150 now. So I think the baseline you are looking at there from kind of 25 – mid 25.5 up to 26 is a reasonable baseline to look at. In terms of the timing of that, it does depend a bit on ultimately what we see on some of these other product categories and if we continue to see some price opportunity. We still have a lot of, I’d say, low-cost inventory in a lot of the non-commodity products. So, if those market prices keep rising that will help defer some of that maybe into 2023. So we will keep an eye on that, but the timing of it, I’d say, is going to still depend on how that supply chain frees up.

Alright. Wonderful. Thanks guys. Good luck.

Thank you.

Thank you, Matthew. We have our next question, comes from David Manthey from Baird. David, your line is now open.

Thank you. Good morning, everyone. First question probably for Mark. A lot of distributors these days are flagging elevated variable comp expenses in the inflationary environment. Could you talk to us in dollar terms, approximately by how much is your variable comp elevated relative to what you would consider normal right now?

Yes, Dave, I can talk to you about how that works. And as we generate higher product and gross margins that we’re – that’s how we commission our sales reps. So as you see, expansion in gross margins like we’ve had both through volume and margin expansion, you would typically see those types of variable plans expand at a higher rate than the sales that we’ve had. And then similarly, we’ve got other structures in place for bonuses based on profitability and return on investment, which have all performed very well. So we have seen some elevated incentive compensation costs that are flowing through SG&A and – at the same time, if we were to see any kind of economic uncertainty happen or reductions in top line or margins, then that kind of cost comes out very quickly as well. So we have seen some elevation there. It’s flowing through SG&A. But given the overall performance, we’ve still been able to leverage that and deliver some really nice EBITDA percentage increase.

Yes, thanks. And I assume that’s tens of millions of dollars. Is there any way you can put a slightly finer point on that or we could follow up also?

Yes, Dave, I’d say that’s a reasonable way to think about it. It’s definitely at those levels. It’s a larger component of our personnel expenses, which makes up about 75% of our our SG&A and a good chunk of that is variable compensation.

Okay. And then second, you talked a little bit about the trends you’re seeing in residential lot development. Could you discuss the great financial crisis and some of the leads and lags you saw at that time? Obviously, it was a very overbuilt situation then, but are there any insights that, that experience gives you relative to the current downturn that we’re seeing?

David, there is a couple of things that we saw back during that – during The Great Recession. Number one, our business was positioned very differently at that time as well, too. About 50% of our business was really geared towards new lot development and residential. So we were much more dependent upon that sector. The other thing I’d share with you is during that time period, lot development continued to happen after the recession really appeared. And so we continue to see a lot of vacant undeveloped lots that permeated through that entire sector that took years of work to finally work its way through the network. And I think we’re in a different spot now because lot development is almost hand-to-hand with new housing starts to some degree. And builders are trying to get ahead of that. they are also anticipating that, hey, at some point, whether it’s next year or in ‘24, they are going to need these lots ready to go to see the expansion again in the long-term needs for this housing development. So it’s a much different profile that we have for our business, and it’s a much different situation of where housing is, particularly a lot development than where we were coming out of that – The Great Recession.

Alright. Thanks, Steve, Mark, Robyn. Thank you.

Thanks, David.

Thank you, David. We have our next question, comes from Kathryn Thompson from Thompson Research Group. Kathryn, your line is now open.

Hi, thank you for taking my questions today. Just – the first one is just a cleanup from your guidance question or your guidance from today, and I appreciate all the color you’ve given. But what is embedded in terms of volume assumptions going for Q4? And then as you look into either the balance of calendar ‘23 or for the next fiscal year, what are your high-level expectations of that balanced contribution price versus volume?

Yes, Kathryn, it’s Mark. I’ll take that one. In terms of the guide for the fourth quarter, what we’ve got embedded in there, I would say, is kind of volume down kind of mid-to-high single digits. And again, primarily due to the really difficult comps we had last year. If you go back to Q4 of ‘21, volume was in the – up in the teens, and we had really, I’d say, unusually strong weather season for – in particular in our northern climate. So we’re capping against a tough quarter there. I think as you look forward, we do plan to issue guidance as part of our Q4 release, but recognize there is a lot of interest in what’s going on in the end markets in volume. I’d say, as we mentioned in the prepared remarks, we are anticipating some near-term softness in the resi market, which is just about 20% of our mix. Say it’s too early to tell really the extent of that softness. But given the slowdown in single-family starts, we believe that likely correlates into some softness in the lot developments. On the non-resi side, we have seen strong construction activity and that should continue to benefit us and certainly is a lagging end market relative to resi. So I do expect non-residential be a positive contributor, but that’s an area we are watching pretty closely. And then from a municipal standpoint, that’s been very steady and we would expect that to continue. So as you kind of take those together, I think that sets us up again pretty strong foundation as we go into 2023 from a volume standpoint. And I’d say, beyond the market, we do expect to continue to grow in excess of the market by 200 to 300 basis points. And that’s really a result of the – our organic growth initiatives that we continue to deliver on. And then the acquisitions for another 100 to 400 basis points similar to our historical results that we’ve seen there.

That’s helpful. The second question really is a bigger picture and more on material substitution. And Texas is allowing drainage with plastic and PBC instead of just concrete and there is a bit a widespread shortage of cement, which is obviously a critical component for concrete. So this paves the way for greater use of your products versus concrete, how does this benefit Core & Main? And how do you – are you – is this just a unique event to Texas or is there a push for change for other states? Really, what are the opportunities for that line of business? And as you think broadly about material substitution and how that benefits Core & Main? Thank you.

Yes. Kathryn, Texas is a good example of where we’re starting to see some of those specifications change. They were a heavy reinforced concrete pipe for their storm drainage need. And one of the areas that you’ve seen is the use of alternative products along those lines, particularly corrugated, high-density polyethylene storm drainage and retention systems that, in many cases, can be easier to install, easier to work with and have some additional benefits and characteristics for the flow of water through there. So what we’re seeing is this has been part of what our team has been working closely with, with a couple of the key suppliers on getting these specifications modified and changed to allow that product in to be able to test it. Texas is a great example on a large scale where we’re seeing entire states relook at some of those specifications and we think it has great opportunity for us, medium-term, short-term and long-term.

Great. And are there any other states where you would identify where you’re seeing a similar trend?

Certainly, as you look at it at a state level, there are a number of bigger states on there that have been heavy RCP users in the south and the southeast. And then as you get into some of the more refined areas, there is still a number of municipalities that on a local level, we continue to drive those specs and introduce them to the product and help to understand how that product can be utilized in some effective ways as a good alternative.

Okay, great. Thank you very much.

Thanks, Kathryn.

Thank you, Kathryn. We have our next question, comes from Mike Dahl from RBC Capital Markets. Mike, your line is now open.

Good morning. Thanks for taking my questions. My first question is just around kind of the inventory management and supply chain. It sounds like there is been a little progress and some improvement in the supply chain, which is allowing you to work down inventories a bit. Could you elaborate on just what products you’ve already seen it in and it sounded like that might broaden out in the fourth quarter in terms of where you can start to strategically normalize your inventory levels? So maybe if you could give some color on, again, which categories seems to be evolving in the right direction and allowing you to take down some of those inventory levels?

Yes, Mike, we saw some pretty good progress and availability of products and lead time reduction in many areas across multiple categories, although there are still pockets where lead times are extended out for some of these areas. So certainly, we saw with PVC a normalization of flow and production and lead times getting back to near pre-COVID-type lead times and many of the core products there associated with that the typical diameters of bread-and-butter-type product has really gotten back into more traditional lead times and availability. Prices has remained firm through the end of the quarter on that. So we’re pleased to see that. We’re going to be watching that one closely. The other areas that we get that are real specific to our sector, particularly when we get into valves, hydrants, ductile iron pipe. Some of these are still dealing with extended lead times, as capacity is still constrained to meet demand. So we’re continuing to see some price increases coming in from those product categories. And then we just have some your regularities and inconsistencies on a couple of different other product categories, where extended lead times have just become the norm. And we see that with a lot of like large diameter-type work, specialty valves, specialty fittings, those things along those lines are still not only in short supply, but very long lead times. So we’ve had to take a real active approach here and be able to manage our inventory where the lead times have gotten more consistent to be able to balance that and optimize our inventory levels to best serve our customers. And then still where we’re seeing items in short supply, making sure that we’re stocked appropriately getting access to that product.

That’s very helpful, thank you for that color. And then as my follow-up, Mark, in response to Kathryn’s question, I think you mentioned that maybe the initial expectation is that maintenance – that municipal remains fairly steady. When we think about potentially kind of budgets resetting and then infrastructure funds flowing in at some point, are there offsets to why we wouldn’t see some improvement in municipal or is that just kind of a conservative approach until you actually see the funds hitting or some timing issue? I know you explained the lag a little bit, but maybe just a little more color on why we wouldn’t see better traction on municipal next year?

Yes. Thanks, Mike. Yes, just to clarify, I would say what the expectation for muni is that we see steady growth and definitely has the potential for some incremental infrastructure spending at some point during 2023. So that would definitely be upside on the – any kind of municipal steady growth that we’ve experienced historically. So that’s how we’re thinking about it as we move forward.

Got it. Okay, thank you.

Yes. Thanks.

Thank you, Mike. We have our next question, comes from Keith Hughes from Truist Securities. Keith, your line is now open.

Thank you. Question. You made some comments on PVC and some of the prices are coming down. Is PVC going to be down year-over-year in the fourth quarter or are you still dealing with some latent inflation on just a year-over-year basis?

Hey, Keith, we said that pricing really normalized through the third quarter and remained at elevated levels. So we haven’t seen a price decrease in PVC. We’re watching it closely to see particularly how seasonality affects it and how we’re dealing with the improved availability and lead times, but we have not seen a price deflation in PVC through the end of third quarter.

Okay. And I guess, switching over to the municipal business. You talked about some of the infrastructure spending coming in. Is there any sort of clarity at what time of ‘23 that would really start to hit municipality projects?

Yes. It’s difficult to tell. Most of the budgets have been set for a lot of the projects that have been scoped. So we’re just now seeing some of the funds trickle in. And in fact, we’ve seen a couple of projects that have popped that have been treatment plant expansion projects that are going to be utilizing those funds and some really early bidding activity. But that that’s a handful that we’ve seen so far. So there is still – we’re still watching that closely. We’re looking at the bid activity that’s coming in. We’re looking at how those types of funds get allocated into the budgets and the project scoping. we will start getting a real clear picture, I think, as we get into spring and the bidding activity to see how that starts flowing. But up to this point, like I said, we see a handful of projects that have been utilizing those funds.

Okay, thank you.

Yes.

Thank you, Keith. We have our next question, comes from Joe Ritchie from Goldman Sachs. Joe, your line is open.

Thanks. This is Vivek Srivastava on for Joe Ritchie. Maybe I wanted to understand the market share dynamics at play here. If you can provide some color how much market share you’ve gained year-to-date and maybe where you stand on the market share front? And then just a follow-up on the same question is just during the last residential downturn, did the market see some kind of trade down to either lower priced or more private label products as bidding activity got more aggressive? And what happened to your market share during that time?

Hi, Vivek, this is Steve. So I’d say that we’ve – it’s difficult to quantify exactly what we’ve seen so far in terms of market share gains, but what we have experienced so far is that certainly, with a lot of our smaller competitors that have been limited with access to product, we’ve been able to get preferential access along those lines, given our size and scale, and that’s allowed us to gain some good amounts of share, certainly against a lot of the smaller competitors out there and the regional folks. You talk a little bit about what we experienced through the downturn in the last recession? Very different dynamic back then as I shared during one of the earlier questions and our business was positioned much differently. At that time, we were about 50% residential. Now you look at it, we’re about almost 40% municipal, 40% non-res and just over 20% residential. So our exposure was very different. We built a lot more sustainable opportunities and product categories that help to enhance that municipal sales and the non-residential sales. So our business is just much more diversified than we were back then. Certainly, through that downturn, things got very competitive as – particularly in the residential area. But that was a different environment than – that was – it took a while for those lots that were way over developed to be replenished once housing started to get back on its feet again through 2012 and the 2016-’18 in that time frame. Right now, what we’re seeing is a real shortage in lots. So even as housing starts to build out and as we started to see a little bit of a pause, the medium- and long-term demand for lot development is still going to remain strong, we believe, and that creates a little different environment than what we’ve seen in that past in the deep recession that happened 12 years ago, 13 years ago.

Thank you. That’s super helpful. Maybe my next question more focused on the strategic inventory investment and mix benefit this quarter. Any quantification you can provide on those two buckets? And then maybe more specifically on the mix side, what really was that mix driver? And how should we think about mix aspect of your business going forward, maybe next quarter in a bit more medium-term?

Yes. I’d say, Vivek, on the inventory investments that we’ve made, I’d probably bracket that somewhere in the $300 million to $400 million of inventory where we’ve bought ahead of a lot of these price increases more recently on some of these more non-commodity-type products that will work to continue to optimize as we get through the fourth quarter and into 2023. In terms of the mix benefit, I’d probably give you – as you look at those gross margins sequentially from Q2 to Q3, we picked up about 60 basis points. I’d say a lot of that came from the mix benefit that we saw in the quarter. As we get through the fourth quarter right back into 2023, we will see that mix probably return back to more normal, which is part of that kind of 100 to 150 basis point reset that we expect to happen at some point.

Perfect. Thank you.

Alright. Thanks.

Thank you, Joe. We have our next question, comes from Patrick Baumann from JPMorgan. Patrick, your line is now open.

Hi, thank you. Good morning. Nice to see the free cash flow in the quarter was positive, but since you’ve taken down the conversion guide throughout the year, I just wanted to see if you could update us on what you see as the normalized free cash conversion level for the company? And then how we should think about that into next year in light of what you’re hoping to do from an inventory perspective? And maybe if you could give some color on how much inventory you think dollar-wise could come out to normalize things? I think you said $300 million to $400 million in response to the prior question is that, that number that you’re talking about or is it something else?

Yes, Patrick. Thanks for the question. As you saw, we had some nice operating cash flow conversion in Q3, and we will look to expand on that as we get into into Q4. I’d say, yes, the $300 million to $400 million of inventory is an opportunity there that we think as we get back to more normalized supply chain environments that we should be able to release at some point. I’d say our – the way to think about it normally is probably 60% to 70% of our EBITDA we’d expect to convert into operating cash flow. So as you think kind of going forward, if we can capture some of that inventory, there should be some upside to that conversion rate into 2023.

Makes sense. And then last one is just kind of a mechanical question around the capital allocation discussion. Just curious how you go about evaluating potential share repurchases from a share owner that remains the largest holder and also as members on the board?

Yes, Patrick. Obviously, as part of our governance, we’ve got independent directors, we’ve got independent audit committee. So to the extent we look at a transaction like that, we would obviously go through and apply the appropriate governance to any potential transaction there. But yes, I understand the question, but that’s how we’d look at that.

Understood. Okay, thanks a lot. Best of luck.

Yes. Thank you.

Thank you, Patrick. We have our next question, comes from Andrew Obin from Bank of America. Andrew, your line is now open.

Good morning. This is David Ridley-Lane on for Andrew. I wanted to go in a little bit on the non-resi revenue strengthening. We did see some indicators suggesting potential future weakness in non-residential, like the Architectural Billings Index fell below 50 and ConstructConnect is forecasting non-resi starts to decline for 2023. Do you think you’re gaining market share? Is it a regional mix that you’re benefiting from here, something else to explain the non – strength in non-res?

Yes, David, I think what we’ve seen is that while there is been some pressure in a couple of areas in the East Coast and West Coast, we’ve really strengthened our position in the Sun Belt, certainly strengthened our position in the Midwest over the last several quarters. And I think that’s paid off in some share gains for us. We’re continuing to see a lot of work as well, too, which we bucketed a non-residential in the storm drainage world. So we shared a little bit earlier about some of the conversion of specs from RCP into polyethylene and other storm drainage products. We’ve been helping to lead that effort in a lot of areas are continuing to see prolonged growth there. So non-residential has been a real good mixed bag for us of a lot of different areas with fire protection products and storm drainage products, where we’ve been able to accelerate some growth there and gain some share.

Got it. And how does the macro backdrop sort of change the way sellers are thinking? Is potential residential weakness ahead of them making them more willing to transact? How are sellers thinking these days?

Well, I think we’ve certainly seen from an M&A pipeline, as you’ve just seen in this last quarter, we’ve had a healthy pipeline. We continue to do that. We’ve been able to tuck-in some great businesses, almost across the spectrum on us from a fire protection distributor to waterworks distributors, it continues to be a very robust and healthy pipeline. Sellers have been through quite a bit over the last several years between COVID between getting through this whole supply chain challenge and everything else that’s been encouraged and now you look at a potential – many are worried about what could happen with residential. It just plays well to our strengths as the acquirer of choice in the space, and we continue to see just a robust pipeline of opportunities for us and from the M&A front.

Thank you very much.

Thank you, David.

Thank you, David. We have our next question, comes from Anthony Pettinari from Citi. Anthony, your line is now open.

Hi, this is Asher Sohnen on from Anthony. Thanks for taking my questions. Just following-up on a previous question around share. As availability in PVC and some of your other products kind of normalizes, do you expect to seed a portion of that share back to competitors or share kind of a little bit more sticky than that?

Well, certainly, as we look at one product category and another with availability, what we generally see with the projects that we execute are a series of different types of product categories that go into each project. So if you can imagine, there is pipe valves fittings, there is hydrants, there is – you name it. So having access to be able to complete a full project is really the strength that we provide. And we still have, what I’d say, a pretty significant competitive advantage right now and the ability to gain share by doing complete projects along those lines. So while we may see one product category or a couple become much more available in lead times get back to normal. We still see the opportunity with a lot of these specialty products that have limited availability right now and extended lead times to have an advantage for us. And beyond that, we’re obviously working to continue to share our value proposition with all of our new customers as we go through here and continue to win their business on a go-forward basis.

Right. Yes, that makes a lot of sense. And then my next question is sort of just specifically on the residential end markets. As that market slowed? Do you see prices kind of slipping there or is maybe prices for – across your end markets kind of – set across the end markets and maybe the demand from public will try to buoy that pricing?

Yes. Certainly, what we anticipate is that for a lot of the products that go into new lot development are essentially used in the municipal space as well, too. So the prices tend not to be swayed by one sector or another. And I think we’re watching closely to see how this infrastructure build and those funds start flowing. So there is some – we would like to see that as if residential does get soft, the ability for municipal to pick up on that infrastructure bill will help support some of that volume we may see that could be reallocated into the municipal world as those budgets increase and we start seeing those funds flow.

Thanks. That’s very helpful. I will turn it over.

Thank you.

Thank you. We have no more further questions on the line. I will now pass back to Steve for closing remarks.

Well, thank you all again for joining us today and your interest in Core & Main. We are very proud of our third quarter performance and our ability to drive profitable growth and operating cash flow. We are confident that our underlying demand trends and impending investment in the U.S. water infrastructure paired with our robust M&A pipeline and key growth initiatives will position us to achieve sustainable growth for the remainder of 2022 and beyond. Thank you for your interest in Core & Main. Operator that concludes our call.

Thank you. Ladies and gentlemen, this concludes today’s call. Thank you for joining. You may now disconnect your lines.