And there is some real complementary efforts there with our Construction Products Group that is already in that asset management business. But we regularly look at opportunities to divest. And as you all know, the M&A market has been pretty dead and so the — whether it’s on the buy-side or in the sell-side, we’ll have to see interest rates come down and M&A activity and valuations come back up and that plays both ways.
Stephen Byrne: Thank you.
Operator: The next question is from Frank Mitsch with Fermium Research. Please go ahead.
Frank Sullivan: Good morning, Frank.
Frank Mitsch: Hey. Good morning, and Happy New Year. if I could just follow up on that last question, it kind of begs the — it does beg the question about your thoughts on uses of cash, and you just discussed that the M&A market is all of it and made the comment before about your buybacks today overstated. I don’t know if that was a 40 and slip, but to try and signal that you guys are thinking about increasing your buybacks at these levels, what are your thoughts there, M&A versus buybacks?
Frank Sullivan: So, we are committed to buying back the dilution in every year. And then, boy, throughout my career here, we’ve been pretty strategic as to whether we get aggressive in buybacks relative to how we perceive value, and that will continue. But, we will be a more common, more regular buyer of our stock quarter-by-quarter-by-quarter, along with increasing our dividend. Frank, if you look at the opportunities we have with a higher level of permanent cash flow, a year ago we talked about, and I think it might have been a question from you, focus on cash generation and we indicated it would be to pay down debt. We’ve done that very successfully. But our dividend payout ratio over 20 years has gone from the mid-50%s to the mid-30%s.
Our cash flow has increased dramatically and we’re in a better position to be a regular buyer of our stock and/or continue our dividend program, unless in relationship to buying our stock, we see some sizable acquisition opportunities at the right value.
Frank Mitsch: Got you. Very helpful. And if I can come back earlier, I believe it was Matt made the comment that, unabsorbed fixed costs are kind of masking the benefits of the MAP program, what have you, and I guess, I was thinking that for fiscal 2024, unabsorbed fixed costs would be materially less than they were in fiscal ’23, how are you thinking about the interplay between this fiscal year and last fiscal year on that item?
Frank Sullivan: Sure. They should be less than fiscal ’23 in the second half. Unfortunately, not as much of a recovery as we had hoped because of our original expectation on volume growth, which is, we covered in today’s call, we’re not seeing yet in Consumer or in the Specialty Products Group. But you are seeing in this quarter, and you’ll see in future quarters, a real strong leverage to the bottom-line of our Construction Products Group and Performance Coatings Group, because of the MAP 25 benefits. When we have good volume and it’s going to be coming, you’re going to see nice leverage.
Frank Mitsch: Very helpful. Thank you.
Frank Sullivan: Thank you.
Operator: The next question is from Kevin McCarthy with Vertical Research Partners. Please go ahead.
Frank Sullivan: Good morning, Kevin.
Kevin McCarthy: Yes. Good morning, Frank. A question on your sales mix by geography, if I look at Slide 5, it seems to me that there is a very large disparity between your negative 3% in North America and what looks to be an average of positive 9% to 10% overseas. It doesn’t look like currency was a big factor this quarter. So, I’m curious, can you speak to why you’re doing so well overseas, what are maybe the two or three most important drivers in your view, and how sustainable those might be? And do you think that in future quarters, we’ll continue to see faster growth overseas versus the U.S.?
Frank Sullivan: Yeah. So, I commented earlier in the call, Kevin, that, what we’re seeing, particularly in Europe, is just a better focus and better organized approach. Think of it as a MAP to Growth for Europe. And so, we are driving efficiencies there. We’re also having a more focused sales effort in a bunch of our businesses. And then, lastly, we’re rounding some easier comps, particularly in UK, that went into a recession before most of the other markets that we serve. We also organized in what we call a platform approach for the developing world and it’s having real positive effect. So, unless there is a some type of further disruption in a world with plenty of disruptions, I would expect that we would see really solid growth in Europe and the rest of the world and the growth in North America probably is not going to be a lot different in the coming quarter than you see here, again because of the year-over-year flat to negative in Consumer and Specialty Products Group.
Hopefully, that will change in Q4, but we will see.
Kevin McCarthy: Okay. That’s helpful. And then, I wanted to follow up on the discussion regarding Specialty Products. Can you speak to the margin level and outlook there, Frank? I’m cognizant that you had a step-down when you divested the higher-margin Guardian business there. First half of the year, it seems to be running 9%, 10%, how would you characterize the current level versus normal? And do you have a target for that segment margin? Looking out a couple of years, how can we think about the likely trajectory there?
