Frank Sullivan: I will let Rusty Gordon handle that question about both the Specialty Products Group performance in the quarter and year-to-date and kind of where we see it going.
Russell Gordon: Yes. In terms of Specialty performance in the quarter, we really did not have any disaster restoration business to speak of, Mike, during the quarter. No weather events really drove sales. So as a result, we really suffered from under-absorption. We continue year-over-year to have an unfavorable comparison like we did in the second quarter and that we divested our furniture warranty business. And then in general, OEM volumes looks soft, not as bad as it’s been. It’s getting a little bit better. So we do have some reason to hope that, that will improve.
Frank Sullivan: And then I would add to that, Mike, that the impact of weather-related events last year was very significant in Q3. We don’t have exactly that same challenge comparatively in Q4. And the Guardian warranty business which was really not core to us, it was an insurance business and had nothing to do with products was a very high-margin business and that was sold last year in the third quarter. And so again, we will not be seeing the negative comparison of that when we get into the fourth quarter as well. So as Mike Laroche commented, we’re starting to see in the core OEM coatings categories, things flattening out. And we won’t have the same big challenging comparisons of the Guardian divestiture or the significant weather-related events at Legend Brands that have impacted Q3.
Michael Harrison: All right. And then I was hoping that maybe you could provide some initial comments as we’re starting to turn our attention to fiscal ’25 think about earnings growth. Consensus is looking for EBITDA to be up by kind of a high single-digit number compared to fiscal ’24. Is that a reasonable starting point for now? And maybe talk a little bit about some of the puts and takes as we’re thinking about earnings growth next year.
Frank Sullivan: Sure. Other than reemphasizing some comments that we’ve already made which I’ll do in a minute, we’re not really prepared to provide guidance for fiscal ’25 with any detail. We will do that when we report fourth quarter results in July and then we’ll provide some more detail for how we see fiscal ’25 shaking out. The comments that we have made are, we’re going to be rounding easier comparisons as we just talked about in our Specialty Products Group. I think at some point, as we get into fiscal ’25, we’re going to see both easier comparisons and some market share-related wins, some positive unit volume growth coming back to our Consumer segment. And we see continued good momentum in the economic and market and infrastructure dynamics that we’ve been talking about for Construction Products and Performance Coatings.
So we are planning on our tenth consecutive quarter of record sales and earnings in Q4. And I think we’ve gotten some good dynamics as we go into fiscal ’25 but we’ll provide more details on a consolidated basis and broadly by segment when we report Q4 in July.
Operator: Our next question comes from John Roberts from Mizuho.
John Roberts: Frank, can you tell us if RPM would be interested in PPG’s North American architectural paint business? Or any thoughts around that?
Frank Sullivan: We generally don’t comment about our acquisition activity until things are done. Certainly, M&A is picking up and it was publicly announced that the — I believe it’s about $1.8 billion in revenue, PPG architectural — North American Architectural Coatings business is going to be sold, divested or realigned. And so I think like anybody in the paint and coatings interest industry, we have some interest in pieces and parts and we certainly intend to be part of any process and take a look at that. And that’s more of the specifics that we generally would provide but it’s relatively unique that a divestiture process like this would be announced publicly and has been. And so we’ll take a look at it.
John Roberts: The final year of MAP 2025 begins in a few weeks. Do you think there’ll be a MAP 2028 program? Is that the right cadence to think about? Or do you think RPM will pivot to a different approach to strategy beyond MAP 2025?
Frank Sullivan: That’s a great question. And I think we’re highly focused on achieving our MAP 2025 targets. And if you look at our performance through 9 months, I’m really proud of the incredible work of the RPM associates around the globe. You can see our MAP ’25 initiatives having tremendous impact. We are improving working capital. We are improving margins. We are focused on driving a more favorable mix and whether it’s operating improvement initiatives in our plants, whether it’s taking some of the MS-168 disciplines into the commercial area. We’re having a lot of success. You can see it clearly in our cash flow which is at meaningfully higher record levels. And so the things that we can control are working really well.
One thing that we’ve talked about and makes sense when you look at the areas that we’re focused on in MAP ’25, when we have a return to unit volume growth in Specialty Products and Consumer, you’ll see even better results out of those businesses, much like the real strong leverage we generated in Q3 with Performance Coatings and Construction Products, both of whom had positive unit volume growth in the quarter and we’ve had it throughout the year. So we’re pretty excited about that. There will be a new program and it will be something that we will be talking about publicly either next spring or next summer, exactly what we call it. I couldn’t tell you yet. But the MAP initiatives have a lot of legs, particularly on the commercial side and the data side.
And there will be a new program and we will provide details, I would say, roughly a year from now. But in the interim, we’re going to be focused on hitting the 42% gross margin goal and the 16% EBIT margin goal that we set out a few years ago.
Operator: Our next question comes from Dave Huang from Deutsche Bank.
