Rachel Wilson: I’m happy to. I’m not going to deny that the working capital improvement is $121.2 million, so obviously very nice progress on that. But what’s interesting in this quarter in particular is that improvement has been driven while you’re seeing our inventory levels actually going up. So that shows some of the strength of how we are getting there. But again, as I cautioned before, and I’ll caution again, that is a long-term target, and this can go up and down, particularly as we start to continue to keep building inventory. But again, it’s very good control here as we think about our working capital turnover ratios.
Simon Thackray: Just on HMOS and procurement and R&D?
Rachel Wilson: Yes. So — working capital. Sorry, there’s a lot of background noise. But driving the working capital, yes, you are investing in inventory. But as we look at our accounts receivables, as we look at our accounts payable, there’s nice discipline in what’s been happening there. So overall, the progress in that does reflect having that central procurement group, having that cost discipline throughout the organization and really kind of moving to an emphasis on this and more controls around that. So again, some of this should retract as we build inventory, but overall strong performance.
Aaron Erter: And Simon, I would just add — as we get through our year end, we’ll report on what our cost savings and our progress there. But needless to say, to Rachel’s point, we’re making really good progress there.
Simon Thackray: That’s excellent. Thank you, both. Appreciate that.
Aaron Erter: Thank you.
Operator: The next question comes from Matthew McKellar with RBC Capital Markets. Please go ahead.
Matthew McKellar: Hi. Thanks for taking my question. You talked about third-party projections for R&R, and how that market is a bit soft right now. But from what you’re seeing in your own business, are there any differences in outlook for R&R by region in North America, that you call it?
Aaron Erter: Yes. Matthew, it’s a very good question. You know, I would say for us, the largest opportunity would be in the Northeast, in the Midwest. And I think that as we think about those projections, they would be right in line with that.
Matthew McKellar: Okay. Thanks for that. And one more for me. Are you content with continuing to allocate capital to a share buyback or roughly the current run rates? Or are your priority shifting at all with the strength in the share price here?
Rachel Wilson: Hey, Matthew, it’s Rachel. This is one where we feel very strongly that with our current performance with our margins, we had our revenue growth with, but we’ve been able to return on capital employed. You know we look at some of the multiples of some of our North American peers and say there’s room, okay? And that we have been performing to that point. So again, we have a $250 million program. We’ve executed $75 million of it. And we will, as we said, first prioritize investing in organic growth. And then, of course, with excess capital, we want to make sure we are good stewards of capital, and we’ll be returning to shareholders.
Matthew McKellar: Great. Thanks. That’s all for me. I’ll turn it back.
Aaron Erter: Thanks.
Operator: The next question comes from Shaurya Visen with Bank of America. Please go ahead.
Shaurya Visen: Hi, Aaron. Hi, Rachel. Thanks for taking my questions. Aaron, congrats on a very solid quarter. I just wanted to get some sense for FY 2024 — calendar year 2024, right? And I appreciate you won’t give us explicit guidance. But if I just look at your presentation where you say that it’s expected that your end market will be flat for calendar year 2024. Now if you look at for this year, right, calendar year 2023, your volumes were largely be flat, whereas the market is down anywhere between 5% to 6%. I’m just curious to get your thoughts on whether you think you’ll be able to continue with those market share gains in the next year? And then I have a follow-up to Rachel. Thanks.
Aaron Erter: Yes. Hey, Thank you for the compliment there Shaurya. If we look to next year, of course, we’re not going to give any type of guidance as we move forward. And we are focused on profitable share gain. If you look at PDG, I think you have to have a full year look, right? And we’re always hungry for more, but as you think about moving forward, it gets tougher and tougher to get after that type of PDG growth that we’re seeing this year. We still expect, and I’m not going to give any projections to take profitable share gain, but it gets tougher and tougher year-over-year.
Shaurya Visen: It’s quite helpful. And just a follow-up here. I think Pete asked that question. So, for your first nine months, right, your North America volumes are down 2%, could you just give us a sense of the breakdown between a repair and remodel and new construction within that? I’m guessing repair and remodel is quite weak, but could you just share some rough numbers with us?
Aaron Erter: Yes, Shaurya, we don’t necessarily do that as far as the breakout. We just directionally would say 65/35 R&R to new construction. Now, I will put the caveat on that, this year, it may have shifted a little more directionally towards new construction.
Shaurya Visen: Sorry. Aaron, I was just trying to get the growth numbers. So, look, what I’m saying is like 2% up on volumes, right? What’s the growth been that good for R&R and new construction?
Aaron Erter: Yes. We don’t give that in breakout, Shaurya
Shaurya Visen: Thanks. Just one quick one for Rachel. Rachel, just your comments on the input costs, right? And sort of I note that you point that for the third quarter, pulp and freight were soft. Could you just share like some numbers with us and for those four key cost items for the third quarter on a year-on-year basis, is that easier for you?
Rachel Wilson: Yes, I talked about our input costs for COGS, roughly 15% of our COGS are cement, freight, pulp and labor. Above those particularly for this year, pulp and freight have been tailwinds for us. As we look to next year, we have been citing that cement we expect to be increasing and your most forecast or expected pulp to also become a headwind for next year.
Shaurya Visen: Great. Thanks Rachel. Thank you.
Rachel Wilson: Sure.
Aaron Erter: Thank you.
Operator: The next question comes from Lisa Huynh with JPMorgan. Please go ahead.
Lisa Huynh: Hi, morning, Aaron. Morning, Rachel. Hi, I just had a question around 4Q volume guidance. I appreciate the color around the lack of seasonality given the price rises. Just can you talk about feedback that you’ve had from your customers to date? And the extent that this guidance could potentially be just conservative, given we’ve seen rates come off over January, there’s been a strong pickup from the US homebuilders. And just any color from the R&R space.
Aaron Erter: Yes, Lisa, it’s a good question, and I think you’re asking us a little bit to speculate here because we do feel very comfortable with the guidance that we gave. I would just say this, all the reasons that I mentioned before for R&R to improve have to be in place, right? And a big part of that is interest rates. So, that’s going to really give some tailwind, which we don’t expect to be more towards the back half of the year. I would say this in conversations with our homebuilder partners, they’re optimistic. This is the larger homebuilders, but we’re starting to see some optimism from some of the smaller homebuilders call it the top 200 out there. So, there is still demand out there for homes. And as I said before what they’re able to do is buy down rates and they have land so they’re building.
So, I expect to still see some strength within the new construction area. And if you think about that and this is why it starts to get really exciting and hence why we keep investing in long-term growth initiatives, you get an interest rate cut and then you start to see repair and remodel accelerate as well. Now, I’m not talking about Q4 necessarily but as we look to our next year.
Lisa Huynh: Great. That’s helpful. Thank you Aaron. And just on around the comment about COGS rising in FY 2025. I mean is there anything around the purchasing of pulp, Rachel, that would suggest you would say a different kind of headwind than the RISI prices that we all kind of look at.
Rachel Wilson: Yes, I mean if you look at the pulp index, that’s probably a good indication for how we would be experiencing it.
Lisa Huynh: Okay. Great, that’s helpful. Thanks. Thanks a lot. I’ll leave there.
Operator: The next question comes from Daniel Kang with CLSA. Please go ahead.
Daniel Kang: Good morning, Aaron, Rachel. I just had a question on multifamily. So, the outlook from the industry forecast is on Slide 16, looks very wide, minus 45% to plus 3%. Just wondering if you can comment on what you’re seeing in your own business, and perhaps comment on the strategic progress with looking to penetrate this market segment?
Aaron Erter: Yes, Daniel, I would just say this, and I’ll let Rachel jump in with some of the data here. If we think about multifamily, this is an area when we had supply problems that we would put the foot on the gas and take it off again, right? And as we were ramping up this year we did have some allocation as it relates to multifamily. We’re normalized now on allocation. Also this is a business that we believe in. We have a full up and dedicated team around multifamily as well. And as we think about that allocation it’s really a bid-based type of business. So, we didn’t necessarily see that we were hurting any of our customers out there. So, again, a focus for us as we move forward, but I also think there’s going to be some headwinds as it relates to the multi-families look to the future. Rachel do you want to provide some data?
Rachel Wilson: Yes. As a reminder, as we think about our split, as Aaron talked about, 35% new construction, but only 10% of that is — within that is multifamily. So, it is a smaller piece for us. As Aaron said, the one that is a bid-based model and so one that we feel that we are ready to take advantage of as markets keep turning.
