Chris Kapsch: Appreciate the color. Thanks.
Corning Painter: You’re welcome, Chris.
Operator: Thank you. Our next question comes from the line of Jon Tanwanteng with CJS Securities. Please proceed with your question.
Jon Tanwanteng: Hi. Good morning, guys. Thank you for taking my questions. My first one is you mentioned in the press release and then kind of talked about it a little bit, but you quoted lower demand and I’m wondering was that a specific reference to destocking and versus end demand? Or was that a reference to something else more generally in your overall end markets?
Corning Painter: Right. So if we — let’s separate this rubber and specialty, I shared that one report that we reviewed that was looking at it. We may looked at packaging, personal care. The truth is certain areas were on an upward trend. Certain ones were on a downward trend. I think the salt of that is though that end consumer demand has shifted a bit more towards services and experiences away a little bit away from manufacturing goods. They would say that every — that there was the great shortage when we came out of COVID, right? And there were shortages for everything. People built a lot of inventory and we’re now more or less in a phase of kind of working through that, especially as consumer demand has shifted a little bit.
So I think you’re looking at a mix of both of them, that’s a little bit hard to see, to speak with certainty about how much is destocking versus end customer demand. And I think that’s just the reality we have to all accept. When you look at the rubber demand, which is largely going around tires, it’s a little bit easier. Right? Which is why we put in that slide. It shows, to be clear though, a bit of a mixed environment, right? So passenger car, gasoline consumption, miles driven, those kind of metrics continue to grow. Truck traffic reflecting to a certain degree, manufacturing, but also just general commerce is off of it. And so you sort of have mixed factors in that. Beyond that, I think you do see — or you have seen up until now, certainly consumers deferring some of their purchases.
When you look at the purchases by light truck and personal or passenger cars, those were up a bit this quarter. So maybe it shows like we’re hitting the end of that, but I think we need more than one quarter to really have a trend there. Does that help, Jon?
Jon Tanwanteng: It does. Thank you, Corning. And then second, do you have an estimate of what your UAW impact in Q4 is going to be? I don’t know if it’s going to be anything material or not, but any clarity would be helpful.
Corning Painter: Yeah. No, I would just say that’s in our expectation of the guidance that we provided, which is a fairly strong Q4 as you compare it to prior years.
Jon Tanwanteng: Okay, fair enough. And then last question, just what’s driving the lower EPS guidance versus the unchanged midpoint of the EBITDA guidance? It doesn’t look like your tax or interest rate expectations have changed, so I’m just wondering what’s going on there.
Jeff Glajch: Sure, Jon. There’s not that much. It might be a little on the light side.
Jon Tanwanteng: I’m sorry, what was that?
Jeff Glajch: There’s not nothing really dramatically different. It might be a little on the light side on EPS.
Jon Tanwanteng: Okay.
Jeff Glajch: Sometimes we have Q4 tax things that sometimes come in that I was concerned about. So decided to be a little cautious there because the Q4 tax things, of course, are cumulative for the year.
Corning Painter: Jon, are you still there? Did you have another question?
Jon Tanwanteng: I’m sorry. I think I was on mute. I was saying thank you for that.
Corning Painter: Thank you, Jon.
Operator: Thank you. Our next question comes from Laurence Alexander with Jefferies. Please proceed with your question.
Kevin Estok: Hi. Yeah. Good morning. This is Kevin Estok on for Laurence. Thank you for taking my questions. I guess I was just wondering how you were thinking about 2024, I guess, thoughts on a possible further slowdown, maybe a recession, thinking about maybe how rising rates are impacting auto loans. Just I’m curious to get your thoughts around the puts and takes for next year.
Corning Painter: Well, so we’ll do our guidance later, right, after we could report our fourth year and quarter results. And so that gives us a little more time to see how the economy term develops between now then. It is certainly a pretty dynamic world that we’re in. But I think if you come back to it like on the fundamental level, level, especially if you think about rubber, the economy can go wherever it’s going to go. Yeah, there can be truck traffic that goes up and down a bit or passenger cars. But it’s ultimately a product that wears out. It’s a consumable. I think that’s a strength for us in whatever environment we’re in. I think products like Kappa 10 that are going into a new market that have high growth, I think that’s something where we can place all that product regardless.
I think in a market like China where we’re small in the overall scheme of things, we’re going to have success in our specialty and in our rubber there, we’ll all — we’ll be able to place that all. So I think we’ve got certain, like real strengths going into this. If it is slow, we’ll be very focused on customer qualifications, that sort of thing. If it’s very strong, we’ll be taking full advantage of it. And I just don’t know that I’m in a better position to speak about macroeconomics than anybody else you read about.
Kevin Estok: Okay, fair. Thank you. And I guess most of my other questions have been asked already, but I guess I think last quarter you mentioned that you expect customer shutdowns would be longer in Q4 than usual. I just wondering, is that still true?
Corning Painter: Yeah. Excellent question, Kevin. I appreciate that. Certainly for some have signaled that they may take a longer shutdown, others have not. Right? So this is somewhat customer specific and I would say that that’s really was a comment we made it before about rubber, but even in other specialty markets, I guess we find the difference between what one customer’s experiencing and their game plan versus another is, is somewhat spiky and a little bit distinct right now. But that’s in our guidance for the fourth quarter. And yeah, I do think we’ll see some people really trying to draw down their inventory for the end of the year.
