Vincent Andrews: I think you commented in the prepared remarks that you’ve got auto builds flat in 1Q, and I think the consultants are still calling for it to be up about 2.25%. So is that just something you’re seeing in your own book? Or are you anticipating those consultant numbers to come lower? And just, in addition to that, could you talk about how you anticipate the mix of auto builds this year? Is there going to be any different than last year, and would that be a plus or minus for you?
Tim Knavish: Yes. Thanks, Vincent. Well, first of all, historically, I don’t want to brag, but historically, we’ve actually nailed it pretty well compared to some of the external consultants on the builds because we got so many people in the plants every day. We have visibility to operating schedules, and we talk to those folks. So, the difference for us in Q1 specifically is China. Because our base case is that there will be, to some degree, a second wave after Chinese New Year of infections, and we saw what that did on the first wave to assembly plants and other suppliers. So that’s our base case, and that may explain the difference between us and some of the consulting houses out there. But beyond that, we’re expecting modest growth for the year, low single digits.
And that’s an area where there potentially could be upside, but our base case is low single digits. Yes, just to give you some examples specifically of what happened on the ground in China, and why we are a bit cautious on the post-Chinese New Year. When things opened up in mid China — I’m sorry, mid-December in China, we’ve got 19 PPG manufacturing sites across the country. And we went from near zero absenteeism very quickly to above 50% absenteeism across that whole network. And that has returned very rapidly to near zero in a period of about 2.5 to 3 weeks. And we saw that same in some of our other suppliers, assembly plants, you name it. So we’ve lived it, we’ve seen the data, and we believe that as people travel to the families that more travel than the last three years across China for Chinese New Year, as they travel to some of the more remote villages to visit their families in return, we do believe there will be a short, but acute second wave.
And so that’s why we’re a bit more cautious. And as Vince mentioned, March is a huge month normally for our China business.
Operator: Our next question comes from Aleksey Yefremov with KeyBanc. Please go ahead, Aleksey.
Aleksey Yefremov: I just wanted to clarify your raw materials commentary from earlier. It sounds like you are currently destocking sort of earlier raw materials purchases and will begin to purchase more perhaps in the second quarter. So, there could be more of a step down in the cost. Is that the right way to think about it?
Vince Morales: Yes. Aleksey, let me provide some — maybe some clarity here. So we did see, as Tim mentioned, some modest sequential raw material deflation Q3 to Q4. We expect a — we expect a further incremental deflation in Q4 to Q1. We were still up Q4 year-over-year. And we have to work that deflation through our inventory, which will take us likely through the first quarter before we see that impact on our P&L. And so that’s, I think what we were trying to articulate. We do have — as Tim mentioned, we do have efforts underway to optimize our working capital, primarily our inventory. We ended July or June with exceedingly high inventory levels. We worked in the second half of the year to work those down, and we’re still working those down as we get into the first quarter of 2023.
So, they’re still above what we want to be our target range. So, we’re still going through various destocking depending on the region, depending on the product. So, we will have print raw material purchases in Q1 and likely some crimped on material purchases in Q2 as well.
