PPG Mexico, I point out because I would argue it’s the strongest distribution network in the coating space globally, but we have similar opportunities to different scales around the world.
A – Vince Morales: Yeah. And Steve, I just want to expand on the battery factory comment, Tim made. So if you look at the battery factory construction, we typically have multiple angles to prosecute that. We may go in first with protective coatings as they’re building the infrastructure for the factory. We certainly could do architectural coatings. We then have an I into the actual products being made in those factories, both on a light industrial or heavy industrial coatings as well as an OEM basis. So that I think battery factors are prime examples of where we are able to cross pollinate with the customers.
Operator: Your next question comes from the line of Jeff Zekauskas with JPMorgan. Jeff, please go ahead. Your line is now open.
Jeffrey Zekauskas: Hi. Thanks very much. You said that you’re on FIFO and that your raw materials on that basis were down at a high-single digit rate. If you were on LIFO, how much would they be done? I know that they would be down more, but my question is by what percentage? And secondly, it seems that your volumes in your domestic architectural paint stores business increased in the third quarter, is that true and do you think they’re capable of increasing in the fourth quarter?
Vince Morales: Jeff, this is Vince. Great to hear from you. Let me take the first question on inventory and Tim will take the architectural question. I think the best way we could describe that, it’s a complicated question, as you pointed out, but a great question. I think the best way we’ve been describing that is, if you look on a realized basis, we’re realizing mid to high-single digit deflation in our financial — in our P&L in Q2, Q3. We think that would be high-single digit or even low-double digit depending on the commodity. If we were able to move to a LIFO for the 80% of our business that’s on FIFO. So that gap is probably 200 basis points to 300 basis points of deflation capture. So hope that’s understood. Tim?
Tim Knavish: Hey, Jeff. On your architectural U.S. question, the way we look at it with our new business model is our stores are part of our professional omni-channel, which is company-owned stores plus the Pro at Home Depot plus our independent dealers. That business, despite all the challenges macro-wise that omni-channel delivered low-single digit growth in Q3. And we would expect that or better as we move forward. So yeah, I think the omni-channel is delivering what we’ve expected some help from macros would make that even better.
John Bruno: And Jeff, this is John. Just one other point to Tim’s feedback that growth was driven more by volume than price in the third quarter.
Operator: Your next question comes from the line of Josh Spector with UBS. Josh, please go ahead. Your line is now open.
Josh Spector: Yeah. Hi. Thanks for taking my question. So I wanted to ask on margins, and I’ll ask it on Industrial, but I think the same market should apply on performance to remove some of the seasonality. So if we look at where margins are now in Industrial, you’re in the high 13% range. You were there in the first quarter of this year, when you weren’t getting benefits on raw materials, you’re there now where you are getting benefit, sales are roughly similar. So I guess, first, is why aren’t we seeing the flow through on margin? Is there something on cost or any price hitting back impacting that? And then second, when we look at next year, if volumes are, say, flattish or maybe slightly up is there anything in your control to get margins up higher than where they are today, be it cost or otherwise or is this the level we kind of normalize that and it’s more volume growth? Thanks.
Tim Knavish: Hey, Josh. So Industrial segment, 39 as you said, that is 300 basis points up from last year in Q3. And the real driver — it’s not price, we have not seen any significant, if any, price give back to your question on the impact there in Industrial. The big impact is volume that — as volume recovers moving forward, you’ll see margin in Industrial Coatings improve. So within our control, the operational improvements that we’ve talked about and we said in our prepared remarks that we’re starting to see those impacts come through on a productivity basis. That’s another big driver to Industrial segment margin continued improvement.
Operator: Your next question comes from the line of David Begleiter with Deutsche Bank. David, please go ahead. Your line is now open.
David Begleiter: Thank you. Good morning. Tim and Vince, just on the Q4 guidance, can you give a little more color on your assumptions for the auto strike, how long it continues and does it expand? And also, what are you seeing in terms of professional contracted backlogs heading into Q4 here? Thank you.
Tim Knavish: Yeah. Hey, David. On UAW, I said in my prepared remarks a few cents, I’ll be a little more specific. We’ve assumed $0.03 for Q4. It was much less than that in Q3, almost negligible because just the mix of where the strikes hit from UAW, but we have made some assumptions that this will go on and will likely spread to a couple of plants. But as you know, David, we’re trying to guess as much as anybody to what tactics are going to be deployed. But we’ve got about $0.03 built into our Q4 guide. And the second question again was…
John Bruno: The backlogs in the U.S. architectural side.
Tim Knavish: Yeah. Thanks. Sorry, I forgot the second question. Backlogs in architectural from a DIY standpoint, of course, no backlogs down low (ph) from an overall sales and volume standpoint, but the Pro backlogs are actually holding up pretty well despite everything that’s happening out there on housing. You’ll recall that a lot of our Pro business is commercial and maintenance and that’s holding up well despite the macros. And some of it is based on a backlog of jobs still coming out of prior quarters and prior years. And some of that backlog is holding up because of skilled labor availability that our customers are seeing. So backlogs remain strong. I think the average backlog for us and our customers only dropped by about a week from average of 14 weeks to 13 weeks, so still pretty solid there.
Operator: Your next question comes from the line of Kevin McCarthy with VRP. Kevin, please go ahead. Your line is now open.
Kevin McCarthy: Yes. Good morning. Portfolio question for you, Tim. You’ve done a fair amount of pruning, including most recently, the Australia, New Zealand portion of Traffic Solutions. Can you just put that into context, where are you in that process? How much more might there be to go? And then on the flip side of the coin, I’d appreciate any updated thoughts on potential for an increase in bolt-on acquisitions, with interest rates having increased, are you starting to see asking prices come down in the private market and how would you characterize that versus say, repurchases or just ongoing deleveraging for next year?
