Carl Anderson : Yes. This is Carl. So, yes, just on the M&A pipeline, obviously, Chris talked a lot, but we do just accomplished here with André Koch here in October. But as we look forward here at least in the near term from a capital allocation perspective, we are really focused on our net leverage ratio. As you saw in the slide deck, we have an opportunity where we set new targets, especially on net debt leverage to two times to 2.5 times. The company has done a really great job in delevering this year. And we think that we have a lot more that we can do and potentially even achieve maybe the top end of our objective as we finish out 2024 on a net leverage ratio. But having said that, as we look at the overall pipeline and M&A, we will continue to evaluate those opportunities. But at this point, I think the primary focus will be a little bit more inward looking as we continue to delever and also reinvest back in the business.
Steve Haynes: Thank you.
Carl Anderson : Thank you.
Operator: Our next question comes from Mike Harrison with Seaport Research Partners. Please go ahead.
Mike Harrison : Hi. Good morning. Congrats on a nice quarter. You noted the opening of the Jilin manufacturing facility in China. Can you give a little bit more detail on how that’s going to help you grow in the Mobility business there in China? Maybe what additional capabilities does that facility provide for you?
Chris Villavarayan: Certainly. Thanks for the question Mike. And yes, as we think about China, China, the growth in China for us if I think about that $200 million of net wins that is skewed a little bit more towards China. And the best part of it, I was looking at some numbers last night and our growth in — not only is our — are we growing faster than the market on the ICE side. But our growth on the EV side is 5% higher and that is an important — it’s an incredible market for EV. And as you look at that we’re certainly positioned for that growth. And so what the facility provides us the ability to make both waterborne and solvent board products. It’s great in a sense that it protects — it gives us capacity both on the Refinish side.
And as the market starts to trend towards more waterborne products, it gives us extra capacity, which obviously gets us ready for the growth in the region. So across the board, I would say, as I think about next year and where we’re going this facility certainly provides us the capability to continue to grow. We just had our official opening this last week. And again, just a great story as the production ramps up through 2024.
Mike Harrison : All right. And then also curious it sounded like you’re going accelerating some of your capital investments into next year. Can you walk through what some of the key projects might be that you’re investing in?
Chris Villavarayan: Yes. So as I referenced on the — on my prepared remarks, capital expenditures the one thing you’ll see is our investment in S4 and the ERP system will trend down as we get into 2024. But that will be replaced and probably even a little bit more just with overall really primary focused productivity investments in the network. And so we believe there’s an opportunity for our facilities to get more efficient and so we’re going to be taking a closer look at where we can invest those dollars really just to drive overall productivity improvements across the entire global network.
Mike Harrison: All right. Thanks very much.
Chris Villavarayan: You’re welcome.
Operator: Our next question comes from Mike Leithead with Barclays. Please go ahead.
Mike Leithead: Great. Thank you. Good morning, guys. Chris just one higher-level question for me. There’s been a number of board refreshments say the past few months in addition to yourself and Carl joining Axalta. Can you maybe just speak to what the new Board joiners bring to the table or any sort of specific attributes or qualities the board is really looking to refresh or enhance going forward?
Chris Villavarayan: Sure. I’d love to Mike. I think just looking at the last two announcements and starting with Kevin Stein, Kevin obviously a sitting CEO of TransDigm, and in terms — we have a great board that has walked this company through a lot of the pandemic and looking forward. One of the things that we want to continue to drive is obviously value accretion. And as I look at the new Board members what they bring is to one is sitting CEOs which will provide a base for me to also work with and also the fact of the value creation story that both of them have done. TransDigm has gone through an amazing journey. And as I look at Mary, and what she brings in, it’s certainly both on the private equity side as well as on public boards, just done an incredible job in driving value.
And this is just not only with, what she’s done at Sundyne or is doing with Sundyne, but also previously with Tyco, Exxon and Alcoa. And both of them also bring quite a bit of experience from the standpoint of chemical background. Kevin being a PhD in chemistry helps and obviously Mary with a background in chemical engineering. So certainly, the right mix of — for our Board. And certainly, as I look at the board structure that, we have certainly, we have an incredible talent that we have from all aspects, whether it’s operational finance, and I think this just round it off with folks that have also been that are currently sitting CEOs.
Mike Leithead: Great. I think you can get your margins anywhere near where TransDigm are, investors would be very, very happy.
Chris Villavarayan: That’s the goal. There you go. That’s the stat.
Operator: Our next question comes from Laurent Favre with BNP. Please go ahead.
Laurent Favre: Thanks, and good morning. Chris, you’ve talked a couple of times about backlog. I was wondering, if you could talk about the bottlenecks. Is that on the customer side still? Or is it something on your side and I guess what can you do to some of those? Thank you.
Chris Villavarayan: Yes. So, absolutely. So I would say the bottleneck — the one place that we have just the bottleneck is just on the Refinish business and this is just with our facility in Virginia. We’ve done an exceptional job bringing down the backlog from Q2 to Q3. And as we noted this in our Q2 guide, we did say that, we were being conservative and driving to — if we reduce the guide, we would obviously see better performance and this is obviously track through as we see in Q3. There is more of the backlog that we can take out and we will be focused to do that. And I believe, we’ll be back to normalized backlogs in the Refinish business in Q1 of next year. So, we still have some backlogs through Q4 and it’s just in our Refinish business.
And just to answer the question still, there is still opportunities to drive efficiencies with S/4. And all that said, as I look into ’24 operationally, I do believe that there are more efficiencies that we can drive through the entire company. And this talks to the investments that Carl talked about in productivity investments that we’re going to drive next year.
