Julio Romero: Thank you, and good morning, Joe, James and Alexa. Maybe to start on Contractor Solutions. Nice job. Once again, growing unit volumes there. I wanted to ask what the first month of calendar ‘24 has kind of told you about how the remainder of the calendar year will shape up in regards to HVAC/R demand, what you’re hearing from customers, and what your boots on the ground are seeing.
James Perry: Sure, Julio. This is James. Good morning. Thanks for being on the call, as always. Yeah, we wanted to give you a little peak into January to give you a sense of what Q4 looks like. It’s just one month. We’re literally starting to close the books today. But across the board, we felt really good about January. And as Joe mentioned earlier to Jon, that’s not just on the heels of making up for the lost shipments in SRS in December. Right now we feel good. We’re at the very beginning of the early buying season for Contractor Solutions. That HVAC market will start really stocking up the next couple of months. A lot of us were at the industry show just last week. A lot of people reported it was record attendance. A lot of mixed conversations when you talk to folks.
But we continue to outperform the market. We are indexed to the subcategories, as Joe mentioned, that grow faster than the unitary ducted HVAC OEM market. There’s some expectations that could be down this year, some relatively flat. But like we said, we expect growth. The ductless market continues to grow as a percent of share and the number of products, as you and our shareholders know that we have tied to that ductless market continues to grow. Areas like search protection continue to grow and we’re indexed to that space more and more as we go along. So our commercial team continues to find products to introduce and innovate that will outperform the market. So it’s hard to say that January, the strength that we’ve seen, is a precursor to an entirely great season.
But we will certainly take a good January. One thing I will say without getting too deep into it. We’ll report back in May when we have a good sense of how the start of the year looked out. We can never predict the weather, but we talked a lot the last couple of quarters about destocking. And we’ve said that generally it feels like that’s behind us. And I think the fact that we saw in Contractor Solutions and nice January tells us that folks are stocking up for what they anticipate to be a good season.
Julio Romero: Thanks very much. That’s really helpful color there. And you talked about your efforts to outperform the market on the HVAC side. Some of that’s related to your efforts to increase sales of some previously acquired product lines, taking them nationwide. Can you just speak to that and maybe how much more runway you have with that?
James Perry: I still think there’s runway. It’s a great question. We — you go back to even TRUaire over three years ago now. We’re still introducing that product to some new customers because we want to be really sure that when we introduce a product and they’re going to displace a competitor, that we’re going to give them the highest level of customer service, the highest availability of inventory, the pricing, that makes sense for us and them. So we’re still converting customers from TRUaire and Shoemaker from three years and two years ago, respectively. One example I’ll give you, though, of a recent one is Falcon. That’s now organic because Falcon is more than a year old. So we call that organic. That was a West Coast centered product for the most part under marketed, under commercialized, because of — the ownership team did a great job innovating and selling the product, but they were somewhat limited.
And it’s a great example of our model of shipping that out to more distributors. That was a slow introduction. We got the product in our catalog immediately and moved the inventory over. It was literally a couple of hundred-mile move. But we now have introduced that nationwide. Now it’s in all of our warehouses. Now the customers are more aware of the product. So our ability to now kind of own the water heater, so to speak, and have a full package of things around the water heater that the Falcon connectors attach to is now a full product. We had a whole part of our booth at the show last week, in fact, around the water heater, and Falcon is prominent. So it takes time. So there is certainly runway for those acquisitions we made about 18 months ago, as well as still runway for TRUaire and Shoemaker.
So, yeah, I appreciate you recognizing that. You don’t get all that day one, you don’t get it all quarter one or year one. It is a long cycle of introduction and continued opportunity for growth.
Julio Romero: Very helpful there. And then just wanted to ask about the other press release you had this morning regarding the appointments. Can you maybe talk a little bit about Jeff’s background and what he brings to the role of GM of Contractor Solutions? And same question about Don and what he brings to the Strategy Officer role.
Joseph Armes: Yeah. This is Joe. I’ll start with Jeff. I mean, Jeff’s been here for five years now, charge of sales and marketing. And when we talk about the professionalization of our go-to-market strategy for the Contractor Solutions segment, that’s been Jeff’s initiatives and the growth and really the increase in size and scale of that business has been in large part attributable to those initiatives and the great work that’s been done there. So a real strong track record here. Jeff comes from — came to us from Goodman, where he’d worked with Don before. Before that, Jeff had been at Bain. And just a really strong background, a lot of experience, well known in the marketplace, in the industry, has been very, very integral to our acquisition strategy for that business.
