And remodel, historically, has been less volatile than new in commercial. And so I think that will help us. And also, we were back looking again, Dave, at the volumes. We’re still not back. Our industry, ourselves and our industry, I would guarantee that, are still not back to pre-COVID levels in volumes in wallboard and steel, in the neighborhood of 10%. So whatever happens in commercial going forward, I just don’t see it being a draconian event. I don’t see it being off 20% like we saw single-family just hit the brakes so hard a year ago and now we’re down in there the course of the last couple of quarters having significant double-digits declines in volume. I just don’t see commercial doing that. Will it soften? Certainly will. I think, you can’t, with the AVI and the financing being as tight as it has been, I think it’ll soften into 2025, the back half of our fiscal 2025.
I also think it’s going to be fully offset by single-family activity, because I don’t think it’s going to be a real dramatic change and post that period I also think that there’s a lot of pent up demand out there. You’re reading about it every day whether it’s the conversion of office space to single — or to multi-family or just in general our channel checks are indicating increased remodel activity in office, some of that being driven purely, because it hasn’t been done in a long time. So I do feel like we’ll see some slowdown in commercial, but we’re not expecting it to be off 15% or something like that.
David Manthey: Yes, commercial is about two-thirds of remodel, correct?
John Turner: Yes, historically that’s right. It’s a little less than that right now, because of the softness in office. So it’s closer into that 50-50 range. But in a historical market, our remodel would be two-thirds. That’s right.
David Manthey: Okay. Thank you very much.
Scott Deakin: Thanks, Dave.
John Turner: Thanks, Dave.
Operator: Our next question is coming from the line of Matthew Bouley with Barclays. Please proceed with your questions.
Anika Dholakia: Good morning. This is Anika Dholakia on from Matt. Thanks for taking my question. So first off, just curious if you could give us a little more detail on the strength in multifamily that you guys are seeing this quarter and moving forward? I know you guys noted that backlog should carry you through fiscal year and further growth into 2024? So I guess given just starts are so much weaker, when do you see this pressure coming? Is it more of a fiscal ‘25 story or could it potentially be earlier? Thanks.
John Turner: We think it’s fiscal ‘25. I mean, we just did the math on starts and completions. You know, I think it’s the same math that you guys have done and everybody does. And we just experienced, of course, the single-family backlog environment and worked ourselves through that. And so between that experience and the math, I think it’s fiscal ‘25 before we start to see significant slowdown.
Anika Dholakia: Understood, thank you. And then for my second question, I know steel deflation was a large headwind this quarter, and you guys are seeing further pressure into the third quarter. Do you have a sense of maybe the magnitude of pressure that you see in 3Q ahead of it flattening in 4Q? Thank you.
Scott Deakin: Well we talked about sort of the $85 million impact in the third quarter. I’d say based on our projections for Q3, it’s probably still meaningful, but less than that, probably in the ballpark of about $50 million. And then you can flow that down through the P&L in a similar fashion to what we saw in Q2. Still impactful, but less than what we saw in Q2.
Anika Dholakia: Perfect. Thank you, guys. I’ll pass it on.
John Turner: Thank you.
Operator: Our next questions are from the line of Mike Dahl from RBC Capital Markets. Please proceed with your questions.
Mike Dahl: Good morning. Thanks for taking my questions. I want to stick with multifamily, I mean, I think it’s helpful the way you articulated the balance between single-family and commercial on that by the time commercial season declines, single-family could make up for it. It does seem like multifamily declines could be more meaningful and those cycles can potentially last a little longer given it is credit and tap rate induced. So how are you — I guess if single-family offset commercial, how are you thinking about the impact from multifamily in ‘25 and beyond? And just remind us at this point, what percentage of your business is multifamily?
John Turner: Well we use wallboard as a proxy right in our wallboard volume it’s about 17% it’s less than that as a total revenue component probably down in that 12%, 15% percent range is multifamily and so I almost throw a multifamily commercial together and so you got to put those two markets together and single-family is 50% plus of the overall wallboard business and probably when we get into a more normalized market, 50% plus of our overall revenue. So if we see single-family come back meaningfully, it’s in my mind a full offset to whatever we would see in multifamily and commercial. Again, my expectation of commercial is not to be off in the teens, probably I would imagine single-digits to maybe at the bottom, low-double at the best.
