And there is a lag effect of when the Fed raises rates and how it filters into, you name it, you know, car loans, housing rent, mortgage rates, et cetera. Now I’m playing economist and I’m not very good at that. But you know you’re going to have student loans that are going to begin to have to be paid starting this month. So there is a lot of different elements out there that I think make people hesitant. The last comment I’ll say, and I think we’re doing a pretty good job of this. And so I look at RPM sometimes, I think, what are trends. So our capital spending is really solid. And so I think most of our manufacturing customers who are doing capital spending, that’s really solid, and we see that in the results of our PCG and our Construction Products Group to a lesser extent.
On the other hand, RPM is meaningfully and sustainably improving our working capital ratios, which means we’re bringing down levels of inventory. So are most of our customers and so are most of our competitors. So those trends are continuing. And so I – hopefully, that answers your question.
Arun Viswanathan: Thanks, Frank. And one quick follow-up. How much of the MAP savings are volume-dependent? You mentioned a portion there. What would you quantify that as? Thanks.
Frank Sullivan: I would say 80% or 90% of them, they are very targeted at efficiencies in our plants, so lower conversion costs, a better cash conversion cycle. So that’s all about how you get raws to the door, what you pay for them, how quickly you add value and how quickly you get it out the door. And then even a lot of the data decision-making is helping us drive a positive mix, but that’s about what we sell. And so that’s why I do think you’ll see a nice rebound into the mid or upper teens in terms of EBIT margins in our Specialty Products Group when the volume returns. They’re doing the work and it’s having a real impact in their operations, but they’ve been through now seven months or so of negative unit volume growth.
So the benefits of the work there aren’t going to show up until we start seeing positive volume growth. So, very volume-dependent. It’s why you’re seeing the nice leverage in our Construction Products Group. When you have positive unit volume and the MAP savings are real, you’ll see really nice leverage to our bottom line.
Arun Viswanathan: Thanks.
Frank Sullivan: Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Frank Sullivan for any closing remarks.
Frank Sullivan: Andrea, thank you very much. 2024 started out with positive momentum, and we look forward to leveraging our strengths to build on this strong start for the rest of the fiscal year. We appreciate your joining us today and hope you will join our Annual Meeting of Stockholders online tomorrow. It will be done virtually. It’s at 01:00 P.M. Eastern time, and it can be accessed through the RPM website, www.rpminc.com. At tomorrow’s Board Meeting and our Annual Meeting, we will be announcing our 50th consecutive increase in cash dividends to our shareholders, and our Board will be deliberating tomorrow about what that will be. I’d like to put that in perspective. If you like the power of compounding interest, you’ll love the power of an annually growing cash dividend.
My father, Tom, started our consistent consecutive growth in cash dividends 50 years ago, in 1973. Since then, we have had a compounded annual growth rate over 15 years to our shareholders, including reinvested dividends of 15.1%. To put that in further perspective, if you invested $1,000 in the S&P 500 in August of 1973, today you would have $178,000. That same $1,000 invested in RPM stock in August of 1973 with reinvested dividends would deliver a $1,150,000 value today. And as far as I can tell, about a third of that value creation was driven by our annually growing dividend. It’s a track record that we’re very proud of. It speaks to the stability of RPM strategy and businesses, and we’re excited about the outcome of our 2025 MAP to growth initiative, where we are focused on significantly improving our cash conversion cycle and on reigniting organic growth in most of our businesses.
