Unidentified Analyst: And then just on supply chain, can you just talk about the current supply chain landscape and if and where you see ongoing pressures. I know you guys have been active in really contributing on the self-help initiatives in optimizing that supply chain and production but what are some of the areas you guys are focusing on to continue driving some of those efficiencies?
Michael McGaugh: Yes, that’s great. I’ve talked about this in the past. It’s — we call it the salt model, SALT, standardized aggregate leverage titrate and it’s a model I’ve used in many of our team and procurement have used for two, three decades. And it’s a consistent and relentless focus to standardize the grades of the products that you use, aggregate the buy into a single contract, go to the market and qualify as many suppliers as you can. This sounds really simple but the companies I’ve advised, companies I’ve been at most of the time it’s not done with as aggressively or relentlessly as it needs to be done. And so there’s always value there. And then what you do after you standardize your buy, you aggregate your buy, you really do and you qualify additional suppliers most — in most of our categories, we have dramatically increased the number of available suppliers, most of the time we’ve doubled it, maybe more.
And so then you go out and you leverage the base, you leverage the supply base and then you titrate it. You work for that last penny. And ultimately, all those procurement savings just drop to the bottom line. We think that on the polyethylene side, there’s actually some looseness in the market to get some additional capacity in North America has come on. And we think that, that — given our SALT model, we actually feel there’s going to be some good value for our company in those pounds and translating into lower price. Now on the all the other cats and dogs that we buy, whether it’s office supplies or software or fittings or closures or caps, it’s the same thing, standardize aggregate leverage titrate. We don’t see any restrictions — severe restrictions on supply chain.
There may be an odd or an in there that’s limited. In the pandemic, if you recall, we actually were worried because we did have some Asian supply lines that we were concerned about. So we loaded up on some inventory in our MTS business. That really isn’t an issue anymore right now. So again, what we’re doing right now on the Distribution side is actually working down inventory, freeing up working capital because when we did the combination between Mohawk and MTS, we wanted to preserve our service levels and so we went rich on inventory. Now that we’re a year into that, we’re actually bleeding that down and releasing some working capital from inventory on that side. So hopefully that’s what you’re seeking but relentless, relentless focus on raw material procurement.
And then on the specific S&OP model, we’re bringing in — that’s that big company expertise. We’ve got a lot of big company veterans in our planning roles, in our scheduling roles, in our asset management roles and that’s where just running these plants better, scheduling them better, bringing in better software, better solutions. We’re able to increase our nameplate capacity now I’ve said directionally by a 1/3 with limited CapEx. And so that’s why I’m bullish even in choppy end markets, I’m bullish over the next year or 2 or 3 the EPS that we can create, the EBITDA we can create by just running the company better with all these components I’ve just mentioned.
Unidentified Analyst: Last question for me. I know you guys focus more on the aftermarket tire segment but one of the big tire OEMs came out very recently, pretty big commercial and replacement tire volume drop with signaled inventory destocking looks to be complete. Can you just help us connect your comments with those reported volumes and just with your updated optimism on the tire market dynamics?
Grant Fitz: Yes, again, just coming from the auto industry, you have to really separate it into what I would say our short-term adjustments in inventories versus the long-term growth trajectories. And so you can see within quarter-over-quarter, there could be some pluses and minuses within the tire industry. And certainly, I think in general, with the entire auto industry, there is some just some focus on some companies that are certainly building up more vehicle inventory. I would suspect similar to what Mike said on the supply chain issues that the tire industry had built up some additional inventory just for the — to manage through any supply chain prices. But I don’t think that really changes my point of view of seeing the tire industry on a long-term growth trajectory as we look at the future.
And I think most analysts would support that and what they see with the overall tire growth on both the national as well as global basis. And certainly without question, at some point, as more momentum comes into play with the electric vehicles I mean it’s just will be a physics question that there’s going to be more use, more [indiscernible] into our tires that’s going to drive more tire volume. So I think it’s — in my view, I think it’s more of some adjustments that are done in the short-term versus a longer-term view.
Operator: With that, we have no further questions on the line. So I’ll hand back to the team for any closing remarks.
Grant Fitz: Thank you, everyone. It’s — for my first call here, it’s been very good to meet all of you and look forward to many future calls coming up here. And I think with that, we can conclude our Q2 earnings call for Myers Industries.
Operator: This concludes today’s call. Thank you for joining. You may now disconnect your lines.
