Joe Ahlersmeyer: Yeah. Thanks very much, guys. Good morning. Jim, you are talking here about the price mix, sort of offsetting the deflation benefits that you’re seeing. And then on the other side of it, the productivity sort of offsetting the other bad guys here. I mean, it sounds like you are to the place where you’ve been trying to get to, which is that improvement in EBITDA is just going to be a function of volume. And if we are talking about a back half improvement, it seems like maybe what you’re suggesting is that we could see flattish EBIT in the front half, which you’re already kind of guiding to on the first quarter and then EBIT up in the second half to potentially EBIT up for the year. Are you willing to kind of less that?
James Brunk: Yeah, I think that’s pretty much in line, Joe, with what Jeff indicated. As the business strengthens, if in fact were correct through the second half of the year then it will be a volume-led story to improve the results from a year-over-year perspective, and then from a full year perspective.
Jeff Lorberbaum: This is a comment as the — if the business picks up as historical with remodeling, the mix also improves because they sell better products to home homeowners.
James Brunk: And you also have the benefit, Joe, of more steady production and with that, you have less of the shutdown, which is that unabsorbed overhead, which also plays into the second half of the year as — if volumes do indeed begin to improve.
Joe Ahlersmeyer: Right. This was actually my second question on the shutdowns because it feels like you’ve had if we are just looking at the back half, that the most recent two back half they are sort of negative on negative, and the way I’ve always understood this is there are positives once you lap them. So if you’re getting volume growth and you’re lapping these that would kind of be a double positive. But just wondering kind of the timing around decision to improve production. Do you have to do that in anticipation of the improvement in demand in the back half, or is it more flexible for you?
Jeff Lorberbaum: Given the capacities we have, we assume we are going to flex it up as it occurs. So you won’t build the inventories in anticipation of it. If we were running at very high levels, you’d have to build some of it beforehand, but we are not intending to.
Joe Ahlersmeyer: All right. Understood. Thanks. Good luck, guys.
Jeff Lorberbaum: Thank you, Joe.
Operator: And our next question today comes from John Lovallo with UBS. Please go ahead.
John Lovallo: Good morning, guys. Thanks for taking my questions. The first one is just around the comments on returning to normal seasonality in the first quarter. So if I look at 2017 to 2019 for instance, is it fair to assume that kind of low to mid-single-digit sequential improvement maybe in both Global Ceramic and Flooring Rest of World revenue and may be flat to slightly down revenue in North America? I mean is that the right way to think about it? And along those same lines, how do you think about sort of normal seasonality in segment margins from fourth quarter to the first quarter?
James Brunk: So if you look from a segment perspective in the first quarter, we believe Flooring North America margins should improve from last year with increased productivity and lower costs, some of which coming from the restructuring actions. Ceramic and Flooring Rest of World are more impacted by a lower mix or a weaker mix and lower volumes with Flooring Rest of World being impacted more given so much of its market right now is in Europe and lower prices and wood panels and the laminate categories compressing margins.
John Lovallo: Got it. Is that cadence that I mentioned in terms of revenue, though consistent with how you guys are thinking about it, low to mid-single-digit sequential improvement in both Global Ceramic and Flooring Rest of World? And may be flat-to-down in North America?
James Brunk: Are you speaking of just in the first quarter versus the prior year?
John Lovallo: Sorry. Sequentially, fourth quarter to first quarter.
James Brunk: So fourth quarter — why don’t you…
John Lovallo: We can follow-up.
James Brunk: Follow-up on that one.
John Lovallo: Sure, yeah, no problem. Second question is just on capital allocation. I know you guys mentioned paying down the $900 million term loan. Any thoughts on when you might get back into the market in terms of repurchases?
Jeff Lorberbaum: We haven’t decided to do it yet. We can change whenever we determine at the short-term, we still see uncertainties in difficult financing conditions. We decided to pay off $900 million of debt in the first quarter. So we haven’t decided to — again, buying back stock at this moment.
John Lovallo: Okay. Thank you, guys.
Operator: Thank you. And our next question comes from Laura Champine with Loop Capital. Please go ahead.
Laura Champine: Thanks for taking my question. On the Flooring North America, we were struck with the 700 basis point year-over-year profit improvement. Given that sales were down 4%, I’m wondering if that is most fleet cost recapture or if there’s something else really driving that? And then on the segment profitability for ceramic, I’m wondering how much of a hit that segment is taking from the acquisitions in Brazil and Mexico?
Jeff Lorberbaum: So, the — in the Flooring North America, the earnings did improve from lower costs, offsetting pricing, restructuring as well as productivity gains in the period. Then we continue to invest in all these different marketing activities and new product collections to drive business. We think it’s going to carry over into the first quarter and continue on with the margins.
Chris Wellborn: And, Laura, on the South America, both in Mexico and Brazil had dramatic increases in interest rates, which impacted the acquisitions and our base business. In that environment, we’ve done a lot to reduce the cost. We’ve got the businesses more or less fully integrated and the interest rates are starting to come down, which should improve those businesses a lot in the future.
