So, there is no impact factored into — no upside factored into the guidance range in FY ’23. But certainly, we’re expecting benefits from this program in FY ’24 and then into FY ’25. And if you think about that, bear in mind, in H1 in FY ’24, we will have a headwind. These programs will kick in but weighted more to the back end of the year. So on that $170 million investment, if you call a 30% return, it’s roughly a $50 million potential impact to offset the Russia earnings. I would say that 2/3 of that we think we can achieve in FY ’24. So over the course of FY ’24, we feel that we can pretty much minimize any headwind from the Russia earnings in the first half of FY ’23, and then you’ll get the full run rate as we head into FY ’25.
Operator: We’ll take our next question from Larry Gandler with Credit Suisse.
Larry Gandler: I might as well just continue on that last comment. Can you just talk about some of the specifics about how to achieve that 30% return, $50 million savings from those Russia cost-saving actions? What are you guys doing there?
Ron Delia: Yes. As Michael alluded to, Larry, we’re going to close some plants. And as we think about it and take some overheads out, if we think about this environment that we’re in with the demand backdrop being as uncertain as it is and the fact that we’re also already increasing our CapEx to pursue growth, particularly in our priority segments, we feel like that’s pretty well in trained. So then the next — the fastest way to generate earnings to offset the divested earnings is through cost reduction, and cost reduction in a structural sense, which means optimizing the footprint. And it’s a business that — we’ve got 220 plants around the world. There are always opportunities to optimize further, and so that’s largely what we’ll do. And we will — as I said, we also will reduce overheads in parts of the business as well to rightsize the cost structure.
Larry Gandler: Okay. That’s pretty clear. And one other thing that caught my attention is you guys repurchased only $40 million of stock in the first half and then the target for $500 million now for the full year. So I’m just wondering, was there anything that kind of gave you some hesitancy in the first half? I’m interested if on the M&A pipeline, if you guys might have been looking at something that caused some hesitancy.
Michael Casamento: Well, look, Larry, I think ultimately, we started the buyback in Q2. We spent $40 million. If you think about the cash flows in the first half, we also invested in some M&A activities. So we acquired the plant in the Czech Republic. We spent a little more on APAC. And at the same time, we were managing the cash flow as we start to release some of the inventory that we built up on the back of supply chain constraints over the past 12 months. So, we started to see that come out of the system toward the end of quarter two, which gave us the ability to start to do the buyback. And then as we look forward into H2, we will start to see more — as I mentioned in my comments, we’ll see the cash flow more weighted to the second half, particularly as we start to get through the inventory and working capital impacts from that.
In addition to that, you’ve got the proceeds from the Russia sale, which we’re allocating $100 million to the buyback. So really, it was around the timing of the cash flow and just managing that through and we can get the buyback done in the second half as we’ve done in the past. So we feel like we can get the $500 million done.
Operator: We’ll take our next question from Ghansham Panjabi with Baird.
