Bill Christensen: Hey, good morning Alex. Yes, it’s very limited. As with prior closures, we feel pretty confident that we’re able to take the asset offline and there’s going to be nominal revenue loss, at least that’s our expectation today and what we’re baking into our model.
Alex Rygiel: And then can you also talk about investment in new products in light of the CapEx uptick?
Bill Christensen: Yes. So, clearly, there’s going to be some things that we’re doing around growth. I mean, as we look at growth, automation will be one area that we can take the cost out. But clearly, we also are looking at innovation, product innovation and how we create products in the future. Obviously, that have a strong demand. I’ll point to our composite windows, which are doing exceptionally well. I mean high growth factors growth, not percentage growth, but it’s off a low base. And there’s other areas where we see exceptional growth opportunities. So in our VPI business, which is multifamily windows, that’s an area where we believe, clearly, we’re underpenetrated. We have a great team, great products, and there’s a lot of opportunities.
So, it’s not just about new products. It’s also about kind of white spot penetration and taking what we have, and we’re doing really well and pushing it into areas where we’re not yet active. So, we’re pretty happy about what we’re seeing in the short-term. We do have a lot of work to do around innovation. That’s a longer-term challenge, and that’s something that we’re also starting to think more about, but it’s people on performance right now, and there’s ample opportunity in the short-term for those buckets.
Alex Rygiel: Thank you.
Bill Christensen: You’re welcome. Have a good day Alex.
Julie Albrecht: Thank you.
Operator: Our next question comes from the line of Truman Patterson with Wolfe Research. Please go ahead.
Trevor Allinson: Hey guys, this is Trevor Allinson on for Truman. Thank you for taking my questions.
Bill Christensen: Morning Trevor.
Trevor Allinson: Start on Europe, you guys had some really nice margin improvement there, not only on a year-over-year basis, but also on a sequential basis. I think margins were up 80 basis points versus 2Q. Your revenues were down sequentially. Just wondering if you could talk about what drove that margin improvement sequentially? And then should we think about margins maybe outperforming normal seasonality there going forward to some of these improvement initiatives you put in continue to flow through?
Bill Christensen: I mean, as you saw in the release and the comments that Julie and I shared today, there is a pretty significant volume headwind. If you look at the volume mix were in Q3, this is high teens volume headwinds. So, we’re pleased with the progress that we’re making in the market. It’s a combination of tightening up cost, positive price/cost and productivity improvements that we’re making. And so I’d say we’re doing what we need to be doing, definitely not there yet, but we are expecting continued challenging macroeconomic environment across Europe. And our expectations are that, that macro reality will have a continued detrimental effect on building products volumes. I mean you see inflation, you see interest rates.
We have a war. We’re getting into the heating season, where energy costs are going to become an issue again. So, it’s a tough environment, and we’re doing a nice job. And Julie can comment on Q4, but we’re expecting tough times ahead. So we need to make sure that the homework is being done to prepare for that reality.
Julie Albrecht: Yes, sure. Thanks Bill. Yes, absolutely. Europe margins in the third quarter were very strong. We’re really pleased with what that team is doing. And they’re doing a lot of great things going forward. Our outlook for their fourth quarter margins really don’t show that same level of improvement though. In fact, we’re going to say, I mean, probably closer to the level of Q1 of this year, probably not getting back to what we delivered in Europe last fourth quarter. So, kind of to Bill’s point, really volume in Europe, we’re still expecting that 15% to 20% down year-over-year in the fourth quarter for Europe’s volumes limited, again, year-over-year price benefit. And so that volume headwind is a pretty large one for them despite all the good work around productivity and such.
So, we don’t expect, I’ll say that a similar level of margin Q3 into Q4 in Europe. And again, like I said, probably something more like maybe not exactly like Q1 of this year, but something closer to those levels.
Trevor Allinson: Okay. Understood. And then a quick one on corporate and unallocated costs that were down about $10 million year-over-year. I know you’ve talked about some onetime costs coming back there, but you’ve also got some savings from headcount reductions. Is that down $10 million year-over-year. Is that a good run rate moving forward? And how are you thinking about corporate unallocated here in the fourth quarter?
Julie Albrecht: Yes, I think that roughly $20 million a quarter run rate is pretty reasonable. I mean we do have in that number unforecastable things like other income events that come in from time to time that we don’t have a lot of visibility to a lot of times, not that material. But nonetheless, that’s kind of more of the wildcard. But when we look towards the end of the year, I think corporate unallocated probably lands full year in that $80 million to $85 million.
Trevor Allinson: Okay, understood. Thank you. Appreciate it. Good luck going forward.
Julie Albrecht: Sure. Thank you.
Bill Christensen: Have a good day Trevor.
Operator: Our final question comes from the line of Keith Hughes with Truist. Please go ahead.
Keith Hughes: Thank you. You had called out $30 million in cost savings. I believe that’s all year-over-year in the third quarter number, is that correct? And number two, as we trend towards, I guess, we get $50 million next year, roughly, when do you think that will be in the fourth and how much of it is Europe and how much in North America?
Julie Albrecht: Yes. First of all, just to clarify, yes, the $30 million is in the quarter that we delivered, and we’re in that kind of call it, $65 million range year-to-date Q3 around kind of all things, cost savings and productivity. Just thinking about — well, first of all, just to clarify on the $50 million, we’re delivering $100 million this year. And then with actions taken this year, not all that obviously lands in 2023. And again, this is where we’re getting $50 million carryover into 2024. So, I do want to also make that clarification. And I think from a cost reduction perspective, I think right now, roughly in line with pro rata, the split of our business is about — it’s probably the right way to think about the delivery of that $100 million and we can talk a little bit more about that going forward as we make more plans and give more color around 2024.
