There’s two big macro trends that are fighting each other. One is massive amounts, trillions of dollars of federal subsidies and stimulus fighting the fastest interest rate increase that this country has ever seen. And you look at bond rates today, the cost of mortgage, the cost of rent, the cost of a lot of things that are debt-driven are continuing to go up. So those are the two macro trends, I think, that are fighting each other relative to how these things impact the economy to your question and impact us. But for portions of our Construction Products Group and portions of our Performance Coatings Group, we think there’s still pretty good tailwinds there.
Kevin McCarthy: That’s a great segue to my second question. You spoke earlier on the call, Frank, about how higher interest rates, you know, render acquisitions a bit less appealing relative to the era of free money. The flip side of the coin is, you know, maybe divestitures become less punitive or less dilutive. And in the case of low-margin businesses, we’re starting to see a couple of examples where divestitures can actually be accretive. And so I’m tempted to ask you, as you kind of look across the portfolio, do you think the next year or two could be an interesting window for what I would call portfolio cleanup, divestitures, you know, perhaps some candidates and specialty products or elsewhere in the portfolio to follow the trend that you started with Guardian?
Frank Sullivan: Sure. We’re continuing to look as part of our MAP 2025 initiative at opportunities to improve margins where we have low-margin, no-growth businesses. The latest example of that was in this quarter where in the U.K. we were able to sell off a service element of our USL business and then also restructure a piece. Taking the high-margin product lines and putting it in different parts of RPM paid off nicely. The divested piece has gone to a group that will retain all the employees there and continue to drive that business in a manner that works for them, but was not margin-positive for RPM. So part of the self-help and what we expect to be a quarter-by-quarter and meaningful improvement in European margins is not only the broader dynamics we’re talking about, but divesting or closing or restructuring lower margin, no growth businesses.
There is more of that to come over the next year in our MAP initiative in different segments, and it tends to be either product line or specific facility-related. And when they’re executed, we’ll provide details.
Kevin McCarthy: Perfect. Thanks very much.
Frank Sullivan: Thank you.
Operator: The next question comes from Jeff Zekauskas of JPMorgan. Please go ahead.
Frank Sullivan: Good morning, Jeff.
Jeff Zekauskas: Hi. Good morning. Thanks very much. I think on an adjusted basis your SG&A costs were up about 12% in the quarter. Isn’t that way too high? And in general, should your SG&A costs grow above the rate of sales growth, below the rate of sales growth, at the rate of sales growth over a longer period of time, or do you not have a target?
Frank Sullivan: Sure. So in general the SG&A in the quarter was up 10.9%. And so I’m not sure where the adjusted number came from –
Jeff Zekauskas: That’s 10.9%. Yes. Yes.
Frank Sullivan: And you know it really goes back to my earlier comments. A couple of things are driving higher SG&A, some of it is continued inflation and wages and salaries that we’re beginning to annualize. Those – we’re not seeing that so much today as we were seeing it throughout fiscal ’23. And so in the first half of fiscal ’22, the higher wages and salaries, insurance costs, all the things that impact us and all our peers are there. The other element is really twofold. One is being much more deliberate about driving mix. I mean you’re talking to a CFO and CEO in a company who maybe five years or seven years ago wasn’t very good at analyzing mix with great accuracy in hindsight. And today with the data initiatives we have in place on the ground at the operating level, we’re much better at driving mix going forward.
