Todd Fister: Great. Thanks, Sam. Sure, I’d be happy to give more context on mix and what we see going forward. A big part of our mix really relates back to the previous question on commercial end markets. And we are seeing good mix out of Europe right now, in part because we’ve seen good stability in our film glass business and some of our technical insulation product lines within the mineral wool category in Europe. As we’ve talked about technical and global businesses before, we’ve talked about the properties of these products being a little more complex than the properties of our residential products, where we deliver thermal performance, but we also deliver other properties with our insulation material that tends to create really close partnerships with customers and contractors on the use of our materials in these end markets.
So we’ve seen relatively stable demand in some of those categories compared to overall conditions in Europe that’s driving favorable mix. Our growth in technical and global continues to be a priority for us. We continue to invest in innovation as well as our own processes in order to support growth in that business going forward. So I would continue to expect those to be strong pieces of our business.
Operator: Thank you. Our next question today comes from John Lovallo from UBS. John, please go ahead. Your line is open.
John Lovallo: Good morning, guys. Thanks for taking my question. Maybe just switching gears to Composites. It looks like Composite volume is expected to be down in the fourth quarter on a year-over-year basis. But I guess the question is, should it be down less year-over-year than what happened in the third quarter given the easing comps in Europe and Asia. And along the same lines, contract pricing seems like it held up but it sounds like it may turn negative in the fourth quarter. Is that the right way to think about it? Thank you.
Brian Chambers: Yes. Thanks, John. Let me start this overall Composites — our Composites — we delivered a good quarter relative to some of the glass reinforced volume weaknesses that we’re seeing in the market. And really, I think we continue to face headwinds in our industrial markets and in our international markets. So Kathryn had asked about that a little bit earlier as well in terms of Europe and Asia. So I think the volume decline we are seeing is across the board. But I would say that we are starting to see some stabilization in several regions. So the volume declines, we would expect would start to be less severe than what we saw in Q3 in terms of some of the year-over-year comps. But it is a headwind that we continue to face in the market.
And really, when we look at industrial production globally, we still see that pretty weak in several regions. It’s still negative. I think probably the bright spots, I’d say we see is North America. We’ve seen volumes hold up better in North America. We’ve seen volumes hold up better in India in terms of performance. So regionally, I think we are seeing some areas that are stabilizing, but we are still seeing weakness in Europe. We are still seeing weakness in China, and those are going to be some of the headwinds that we face going forward in terms of volume opportunities. Just to finish that cut though, I would say part of our strategy has been to focus on applications that we think we can have unique advantages, primarily building and construction, renewable energy, infrastructure.
I’d say our Building and Construction segment, though, particularly in Europe and North America, are holding up very well. We talked about that in our comments around our glass nonwovens business, our WearDeck, our structural lumber business. Those are applications inside building construction that are actually holding up very well relative to some of the other industrial applications in some of the other regions. So we expect to see some volume headwinds. But again, that should comp a little bit better as we go forward. The downside and knockdown effect of that is we are starting to see continued pricing pressure, particularly in our spot pricing business. That’s primarily in Asia Pacific, primarily in China and Korea and Japan, but we are starting to see that now with weaker volumes in Europe and North America starting to impact price points in those two regions as well — these other two regions.
So our guide was then around contract pricing in Q4. We still think it holds up well, but we are also facing some inflationary clauses that are going to start to be impacted where we are seeing deflation in energy. A lot of the contracts that we talk about have those kind of energy inflation, deflation clauses in them. So the market price that’s established in the contract is holding, but there are some deflationary causes kicking in. So we see a combination of that in Q4 and then more pressure on spot pricing, which is turning the overall pricing negative in the quarter. And those are going to be some headwinds that we are going to face as we start 2024 in glass reinforcements. But I’d say outside of glass reinforcements, our nonwovens business, our other downstream products, we see good volumes.
We see good pricing strength there. So that’s going to be a tailwind in the business that we are going to continue to invest and grow in.
Operator: Thank you. Our next question today is from Joe Ahlersmeyer from Deutsche Bank. Joe, please go ahead. Your line is open. Joe, your line is open. Please check [indiscernible].
Joe Ahlersmeyer: Hey, everybody. Sorry, I was on mute. I will get right to my question then. The 4Q margin guide, just following up on Composites. Is it right to think maybe that, that margin in 4Q that you’ve guided do not necessarily representative of what full year next year could look like. I recognize you don’t get in to guide beyond the quarter, but maybe there’s two things. The price might be hitting you a little bit quicker than the deflation works through inventory. And then on that inventory point, maybe your near-term production under absorption is also more severe upfront as you’re managing those inventories. Is that the right way to think about it?
Brian Chambers: Yes, Joe, it is the right way to think about it. I wouldn’t — we are not guiding out to 2024, but I wouldn’t want anybody taking that fourth quarter performance and thinking that’s a long-term guide in terms of what the performance of the business can deliver on into next year. But certainly, in the quarter, you’re right, we are facing some downward price pressure incrementally. We are also very conscious and focused on managing our inventories and our working capital to generate strong cash flow. So we are going to manage those inventories against this current demand environment. That’s going to lead to some incremental production downtimes. Now we’ll leverage those downtimes to do maintenance and other things.
So we take advantage of that. So when volumes do come back, we are in a great position to service that demand going forward but that is going to be something that impacts us here in Q4 incrementally in terms of that downtime. So that’s the combination that we are working through in the near term. But yes, I wouldn’t want that to be perceived as any kind of a guide going into 2024.
Operator: Thank you. Our next question today comes from Matthew Bouley from Barclays. Matthew, please go ahead. Your line is open.
Matthew Bouley: Hey, good morning, everyone. Thanks for taking the question. I wanted to ask on Roofing margins running over 30% in the past couple of quarters. Think your fourth quarter guide implies you may set all around somewhere in the high 20s for the year. You’ve obviously made a lot of investments in Roofing and components and your contractor network. So really, the question is the longer these margins stay where they are, it begs the question of what is the new normal. Maybe oil prices are rising. My question is mechanically, what would it take for Roofing margins to normalize from here? And do you have any kind of color around where those margins may settle over time. Thank you.
