Vince Morales: And if I could just add a little broader commentary, we talked in May about being bullish on the Mexico economy. I think that has come through in space for us in the region. We continue to see reshoring of industrial activity into Mexico. We’ll support that with our industrial companies. We’ll support that certainly with our Comex brand. In addition, one of the things we haven’t Tim alluded to it on the opening comments, but we haven’t talked about in the Q&A, a second economy for us that’s well outpacing most other regional economies is India. And we’ve got a good position in India as well, and that’s supported by I’ll call it reshoring into India or shoring in India that is just starting.
Operator: Our next question comes from Laurent Favre with BNP Paribas. Your line is open. Please go ahead.
Laurent Favre: Yes, good morning. In the presentation, in the list of watch out, you’ve mentioned the Red Sea situation. And Tim, I was wondering if you could talk about, I guess, how you’re looking at the risks there in terms of ability to source impacts on costs. Have you seen anything on that side yet? And on the flip side, on the positive or potential positive, there’s such a thing? Could it be a reason for a bit of a restocking along the chain in your customers? Or is it just not big enough of the deal right now? Thank you.
TimKnavish: Yes. Laurent, it’s really not been anything near material to us to this point. First of all, from our direct products, paint and coatings don’t do very well shipping around the world. We’re mostly local for local. So minimal impact on our direct products. Our suppliers, we have — our suppliers have plenty of capacity. There’s plenty of inventory upstream of us. And our suppliers are seeing some delays but they’re accounting for that in their production planning and in their logistics planning. So we’re not expecting any impact to us there to the financial impact. We’ve seen a few minor small surcharges being implemented, but frankly, to this point, pretty insignificant. So the piece that we’re watching and the reason we listed it on that part of our slide, was we’re not certain of the impact on customers particularly if you think about European auto OEMs where they’ve got sourcing from around the world.
And if they’re missing any critical parts, it may impact production scheduling, we have seen none of that so far. That’s really the piece we’re watching more of a customer impact than on any internal impact. To your restocking, maybe I doubt that we’ll see any significant inventory build of paints and coatings as a result of this. I think it will be more a movement of inventories upstream of us and how our suppliers deal with deal with their own logistics planning. But again, the fact that they’re pretty long right now, we’re not expecting any issues.
Vince Morales: And Laurent, just to put numbers to it. Typically, the average delay to do to not going through the Red Sea about 10 to 12 days. So certainly, plan — we can plan for that on our raw material purchases.
TimKnavish: And Laurent, one more for me. We have nothing in the guide for the first quarter for this area
Operator: Our next question comes from Patrick Cunningham with Citigroup. Your line is open Please go ahead.
Patrick Cunningham: Hi. Good morning. Just on auto refinish. It seems like there’s maybe some normalization there. So I guess my first question is what’s causing lower collision claims in the U.S. Is there anything structural you can point to like balance of total vehicles trending upwards? And how should we think about the outlook for Refinish for the full year by region?
TimKnavish: Yes, I’ll take this one. Refinish had a good year, a record quarter, and that was off of tough comps. Yes, claims still down in the U.S., still down versus 2019. But we’re able to achieve our results even at that level. And what I’ll tell you is body shop activity is up and strong. And the only thing — most of our body shop customers have backlogs, driven mostly by labor availability. So even though claims are down and we watch that closely, we’re still performing. I would also add, largely because of our digital tools, we had a really good share gain year and even the revenue that we get from those digital tools was up more than 100% year-over-year. So, we feel good about that moving into this year. We’ve got a good order book as we sit here today.
So, yes, we are watching claims and mouse driven. The only thing I can hypothesize is that the type of driving is maybe a bit different. Most downtowns and cities are still not as crowded as they used to be. We see more claims coming from suburbia than we used to. But overall, we feel positive about this business moving into the year. I’m confident in our best-in-class productivity, value proposition, we’re winning shops. So, I would say we expect to have another really strong year out of our Refinish business.
Vince Morales: Yes. And then regionally, we expect the U.S. and Europe to hang around 0 plus or minus for the year. As we said earlier, we expect China to grow as we see kind of a reopening on a full year basis there. So, that’s the regional aspects. And just again, to hit on Tim’s comment about our digital tools, these are tools we think are best-in-class. We have body shop productivity focus on those tools. And those are a subscription model for us that didn’t exist three or four years ago.
Operator: Our next question comes from Michael Sison with Wells Fargo. Your line is open, please go ahead.
Michael Sison: Hi guys. Good morning. I guess just one question, Tim, when you think about the — achieving the 10% EPS growth at the midpoint, can you sort of break down sort of the key drivers? I know you talked about volume growth quite a bit. Is that low single digits, kind of half, a little bit more? Maybe how much is deflation and anything else that sort of gets you to that 10%? Thank you.
TimKnavish: Yes, Mike, I guess we’ll both have a little bit of extra time this weekend. So, we won’t be glued to the TV screen based on last week’s results. So, wish you the best for that. We’ll have some — it’s a number of things. We’ll certainly have positive price, as I mentioned earlier. We will have higher low single-digits on volume, which will bring not only the benefit of margin dropping, but we will get better leverage out of our manufacturing assets by finally starting to get positive volume. We’ll have a manufacturing productivity that will be a piece of that. We do expect — even though it’s a bit early to say what will happen on raws in the second half of the year, we do expect price net inflation to continue to be a good guy for us.
