Matt Johnson: Thanks guys.
Bill Christensen: Thanks Matt. Have a good day.
Operator: Our next question comes from the line of Stanley Elliott with Stifel. Please go ahead.
Stanley Elliott: Hey good morning everyone. Thank you for taking the question. A quick question on the bump on the CapEx piece, how long do you think this will last? Some of these investments, my guess is it from an automation standpoint, you’re already getting teed up for next year? Just trying to get a sense for, one, how long you’re looking at this elevated CapEx piece. And then two, kind of what that ultimately will end up doing for free cash flow.
Bill Christensen: Yes. So, I’d say it’s definitely not a one-year topic. There is ample opportunity and what we’re working through right now is the ability of our organization to digest and execute just on the volume of projects that we do have, and we’re sequencing. So, think of this Stanley as more two to three-year. And obviously, we’re sequencing high-impact projects. Said differently, do you have a very attractive return on invested capital. And obviously, we’re looking at things like cost to achieve, complexity to achieve, duration and making sure that we’re balancing. So, it’s a two to three-year uptick in CapEx and at that point, we’ll kind of reevaluate what we have been saying, Julie and myself since we started sharing our insights about the state of the union at JELD-WEN as we were clearly under-invested and we had too many sites.
We did not invest appropriately in the sites, and we need to reset that. And this is what the process is signaling that we are starting to do that. So, Julie can maybe comment on the free cash flow implications for you, Stanley, just to make sure you can kind of size that appropriately.
Julie Albrecht: Yes, sure. Good morning Stanley. And what I’d say is we’re still — we’ve had obviously a really great year rebounding with cash flow generation this year after a week, unusually n a week 2022, so we’re still very bullish and confident about cash flow generation of the business. You think about strong EBITDA, still opportunities for some amount of working capital improvement as we look into next year and expect to deliver next year, and we’ll provide more on that in our February call. But all that said, and this increase investing in ourselves is really capital and when you think about restructuring cash costs, other operating expenses as we ramp up improvements to the business. But nonetheless, we would still expect to be free cash flow positive next year.
So, we’re still obviously putting all these plans together, but absolutely confident that we’ve got the funds. We’ll be generating the funds we need to invest in ourselves, again, OpEx as well as CapEx and again, would expect to be staying free cash flow positive in 2024.
Stanley Elliott: Perfect. And then just as a follow-up, kind of you talked about some of the longer-term profitable growth plans for you all. Could you remind us maybe what are some of the return on capital that you’re targeting? Maybe talk about some of the things you’re doing behind the scenes to explore new products and design new products to kind of win in the marketplace as you guys mentioned.
Bill Christensen: Yes. So, as you know, Stanley today, we shared once and for all that we’re resending kind of the 2021 guide that was put out at the Investor Day for 2025 goals. If you look at our logic around kind of return on capital employed, there’s a couple of things that we’re looking at. Obviously, we need to be delivering returns that are significantly above our weighted average cost of capital and we see ample opportunities. So, this is definitely high teens or better. The kind of returns that we’re looking at and the kind of opportunities that we’re seeing. So, that’s our expectation and aspiration. But clearly, we need to deliver. And that’s something that we’re working hard on trying to hit some singles on a quarterly basis to really create a conviction in the capital market and with our investors that we have a high stage ratio and we’re delivering on our promises.
So, we don’t want to get ahead of ourselves. We just want to make sure that the blocking and tackling and fixing the foundation is running according to plan. And as we ramp up our CapEx, we’re going to prove to the capital market that we do see those appropriate returns, and we’ll show that by delivering the results.
Stanley Elliott: Perfect. Thanks so much and best of luck.
Bill Christensen: You’re welcome. Have a good day Stanley.
Operator: Our next question comes from the line of Susan Maklari with Goldman Sachs. Please go ahead.
Susan Maklari: Thank you. Good morning everyone and thanks for taking the questions.
Bill Christensen: Good morning Susan.
Julie Albrecht: Good morning.
Susan Maklari: Good morning. I think let’s start on price/cost. Can you talk a little bit about how you’re thinking of pricing maybe to end this year and then into next year? And especially any updates relative to the inflation that you mentioned that you’re continuing to see come through the business?
Bill Christensen: Yes. So, maybe I’ll give a couple of high-level comments, Julie can maybe add some more color if that’s appropriate. So, we — as we signaled earlier this year, our goal is to stay price/cost positive. We see — we still do see inflation, but it’s trending at a lower rate, but it’s still up. And the third point would be we do have a higher base effect in H2 2022 that we’re comping against because we had really then started kind of pushing the prices through last year in the second half. There’s no major actions that we’re currently planning because we feel that the price that we have in the market is appropriately sized. But at this point in time, we’re evaluating what the perspectives are for 2024, as we kind of look at our sourcing opportunities and input costs. So, on a high level, it’s status quo, but we’re evaluating, obviously, what we want to do next year.
