Kathryn Thompson: Hi, thanks for taking my question today. As part of your release today, Masonite also came out with selling their architectural business segment. Could you comment just on kind of how we should think about the divestiture of that business in relation to the upcoming sale? And then in your prepared commentary, you had talked about capitalizing on some key secular trends that are driving growth in the US broadly. Could you talk on three of your segments just to highlight a few products that are capitalizing on these secular trends? Thank you.
Brian Chambers: Yes, thanks, Kathryn. And yes, we did see the release from Masonite on the announcement for the architectural sale. So this is something that they have been working on and talking about for the last several quarters in terms of looking for alternatives for their architectural business. When we looked at the business and were in discussions with them, we knew that this was something that they were looking at hard at. Our view is that the value of the business is primarily in that residential space. That’s how we place the value. That’s where we see the opportunity for us to continue to grow inside the interior next year’s space around residential. And that part of the business is going to be a great fit as we go forward.
So strategically, the architectural business was not something that was key for us. And then from a financial standpoint, valuation standpoint, it’s a business that hasn’t generated a lot of earnings. I think that’s why they were looking for alternatives in that space to maybe get that to a home that would be a better fit. So from a valuation standpoint, we didn’t see that as a big impact. And supported this move and this continued decision to look at alternatives. So as we get the close date on that, they’re trying to get done here sometime in Q2. And then we’ll pick up the business when we’re through our closing process. But very consistent with what we expected, and we’re very supportive of that decision. In terms of the key secular trends, I’d say that broadly, we continue to look at a few key areas.
One, there’s this continual investment in housing and living spaces, particularly in North America. We see that housing in the US market has been under-built for many years, we think that’s going to be a continued trend. We think home renovation, repair and remodeling is going to be a big trend as millennials now coming to the age of buying homes. So this fundamental need for additional living units, living spaces, and upgrading those living spaces, particularly in North America, but we’re also seeing that in Europe. We think that’s a big secular trend for many years to come that feeds into our product offering a roofing business installation, our future doors business that we have coming in. So I think we’re really set up well as people continue to invest in either new housing or remodeling and renovation, our product offering fits inside of that.
The other big trend I’d say is around sustainable building materials in terms of recycling content as part of building materials, in terms of lower greenhouse gas emissions, and clearly in my prepared comments we talked about as part of our sustainability report, about 60% of the revenues of our company now are generated from products that either reduce energy or have lower carbon emissions. And that’s something that we think from a consumer trend aspect is going to be really, really important. As consumers make buying decisions on building material products, they’re going to look for a sustainable footprint, a circular footprint. They’re going to look for lower emissions. And we think our overall product offering fits into that very, very well.
So those are two big themes that we think play forward for us in really all the product categories we have for the next several years.
Operator: The next question comes from John Lovallo of UBS.
John Lovallo: [Inaudible] question. So it looks like you repurchased about 130 million of shares in the first quarter. The communication had been, though, I think the capital allocation, we focused on sort of reducing debt to EBITDA to that low 2% to 3% target range. So I mean, I guess the question is, as we move forward here into the second quarter into the back half, I mean, should we expect you to kind of back off on the repurchases or should we still think that you can continue as you’ve been doing?
Todd Fister: Sure. Thanks, John. I appreciate the question. So I’d say overall, we remain committed to the capital allocation framework that we’ve talked about for a number of years here around a really balanced agenda of maintaining an investment grade rating, maintaining debt in this 2x to 3x leverage area, as well as returning approximately 50% of cash to shareholders over time while we invest in the business. And that remains our focus. We have an ongoing share repurchase program. We’ve got authorization for a little over 8 million shares remaining from our board on that program. And to your point, we did act on that program at the start of this year. We have shared once we close the transaction, we are going to be focused on repaying the short-term bank debt that we take on as a part of the transaction.
Nothing really has changed around our thinking on financing for the Masonite transaction in terms of financing approximately half of the original purchase price with permanent debt after we close. But we would focus on getting to the low end of that 2x to 3x leverage as we think about our capital allocation priorities in the short run, but in the medium to long run, nothing at all has changed in our posture around our framework or our strategy. And in fact, we view both the Masonite acquisition and the divestiture, potential divestiture of our glass reinforcements business as being positives in terms of our ability to return cash to shareholders.
Operator: Our next question comes from Susan Maklari of Goldman Sachs.
Susan Maklari: Thank you. Good morning, everyone. My question is on the more discretionary elements within roofing demand. Have you seen any changes there as rates have moved higher or any expectations of implications on that? And you’re also seeing anything in terms of the pricing, the price elasticity in that category and any plans for future price increases or how we should be thinking about that going forward.
Brian Chambers: Sorry, I didn’t have my mic, I apologize, yes, on the roofing demand side, yes, I did. Yes, I guess. That was on my end, not yours. Okay. So on the roofing –
Susan Maklari: I know from you never heard of it.
