Jonathan Lock: Hey, Hassan, you were breaking up there a little bit, but let me just say, yes, a number of the input costs have come down this year. And obviously, as we look into next year, we’re driving, you know, further reductions, you know, through our procurement team across a number of input. A lot of the cost focus so far has been on really our fixed costs with the Kuan Yin closure. Other efficiency gains in our plants, and other focuses on yield improvements, both in our pigment plants and at our mines. So listen, we’re — as I said, you know, we’re committed to the $100 million, but you should take from my comments that we’re not stopping there. We’re focused on driving all forms of cost reduction in TT, both on the fixed and the variable side, you know, given the current market dynamics.
Hassan Ahmed: Super helpful. Thank you so much, Mark and Jonathan.
Operator: Your next question comes from a line of Laurence Alexander from Jefferies. Your line is open.
Laurence Alexander: Good morning. Just two quick questions. One, on the TT productivity program, can you flesh out how you think about changing your incremental margins when volumes recover? And then secondly, on the data center cooling initiative, what you see is the CapEx required to support the growth out through 2030?
Jonathan Lock: Hey, Lawrence this is Jonathan here. You know, obviously as we look at the kind of controllables in TT, we’re taking the cost out today. And as we, you know, as the market recovers, hopefully, you know, starting here in 2024, those cost savings will accrete to the bottom line more rapidly as we can spread the cost over a larger tonnage base. Today, we’re not manufacturing, we’re not operating our plants at anywhere near the optimal levels in order to get the right amount of fixed cost absorption. So the gains from market recovery are going to come hopefully starting in 2024. We’re not counting on that as we kind of look at the cost opportunities, but as they come that will just compound on top of the $100 million cost savings that we’re putting into place today.
With respect to the CapEx, we haven’t guided to ‘24 CapEx or even ‘25 CapEx. But just to give you an idea of how the immersion cooling plan would roll out, we’d start with a smaller pilot plant. That’s not a significant capital outlay. At some point here, pre-commercialization. And then depending on what we think the volume needs are, we’d [Technical Difficulty] for, you know, a larger facility to bring it more fulsome to market, probably sometime ‘26, ‘27 timeframe. But those are plans yet to come. We’re really excited about getting the product commercialized in the first instance and also finding the right set of hyperscaler partners to really make a mark in terms of how data centers are built and the amount of energy and water that get consumed.
Mark Newman: Hey, I just wanted to — Lawrence, I just wanted to echo Jonathan’s comment a minute here. Clearly with the closure on the TT question, clearly with the closure of Kuan Yin, we’re now down to three large plants to service all our customer needs. And what we typically see is we probably have more fixed costs leveraged than some of our other competitors, given how large our plants are. Obviously, as we look at a more gradual recovery, we’ll see how that translates into margin recovery, but again, we remain very focused on both fixed and variable cost. And then on the immersion cooling side, again, we’re very focused on how we commercialize that in a very thoughtful way. And then the last point I would make is, you know, we are very disciplined around capital allocation.
