I know we’ve said working capital will be neither a source or a use for 2024, but we do have some Goodyear Forward work streams that will help us offset that, particularly around procurement. When it comes down to, and this was your question, James, what it comes down to is what you want to assume on volume, price and mix for the rest of the year. I think if you look at Asia-Pacific, we have been seeing steady growth of mid-single to high-single digit in our consumer replacement business. If you wanted to model that Q2 through Q4, I think that would give you another $35 million or so on volume and unabsorbed. And then you get to the mature markets where you have to balance this slower volume growth environment, call it up 1% or so against the declining raw material environment and what you think that means for our price mix.
James Picariello: Super helpful. Thank you.
Operator:
Emmanuel:
Emmanuel Rosner: And congratulations, Mark.
Mark Stewart: Thank you.
Christina Zamarro: Good morning.
Emmanuel Rosner: Good morning. So Christina, I appreciate all the good color around the work. I frankly didn’t have a chance to put it all into my little calculator and so back in real-time. So just trying to understand maybe in terms of bottom line versus your view in November, I think when you presented the plan to all of us, I think your high level view at that point was, look, we’re exiting 2023 with a fourth quarter margin of 7%, which you clearly over delivered on. So that’s, call it like at the time you said $1.4 billion, sort of like annualized SOI and then on top of that, we can have net cost savings of about $100 million. So, like the gross savings minus the inflation. And so you were sort of, I think, suggesting that like 1.5 [ph] is something that is potentially a reasonable target. What does this year look like now that you have all the other puts and takes in place versus what you were describing a few months back?
Christina Zamarro: Sure, Emmanuel. So tracking back to our November 15 announcement, you’re right. We said that the run rate of the business exiting the back half of the year felt like about $1.4 billion. If I look at it today and adjusting for first quarter seasonality, we do have a big step down in Q1 always, because we generally sell about 4 million units less in Q1 than we do in Q4. We also drag in some inefficiencies from the holiday shutdowns into Q1. But what I would say, on top of all that, we do have to absorb about $60 million in OER [ph] mines that aren’t in the run rate. So on a run rate basis, I would start, knowing where we closed at the end of the fourth quarter, I would start our run rate at 13.50. And then we know that we have the positive of Goodyear Forward of 350, we have a negative inflation of 135.
And then outside of inflation, I articulated on the year-over-year walk just a $75 million headwind in the second half, driven by higher insurance premiums. And then some of these manufacturing inefficiencies related to our recently announced factory shutdowns in EMEA. So that’s new news. And then against all that, again, that $60 million in OER [ph] mines that we’re going to absorb, that’s weighted to the first half. It’s even more weighted to Q1. And then that leaves your assumptions on how you want to build volume on top of that Emmanuel. So hopefully that gives you some clarity around the run rate.
Emmanuel Rosner: Sorry, just to clarify, the changes versus the new news, I guess, versus the November framework, is a little bit of a lower run rate. Call it like 50 million as an exit rate, and then sort of like this, 75 million headwind in the second half, and then your assumption on price mix volume. Is that it, or did I leave something out?
Christina Zamarro: Well, yes, and I would say OTR [ph] mines, we knew back in November, and when I answered the question, Emmanuel, in November, we said we’d have to come back in February and lay out our guidance for the full year. And so OTR [ph] mines are certainly a piece of it. Insurance premiums are a headwind against the run rate. And then we have these transitional manufacturing costs as part of the recently announced closures in Europe.
Emmanuel Rosner: Okay, thank you. And then on the cash side, so the CapEx was guided to, I guess, quite a bit higher than it’s been recently, I think $1.2 billion to $1.3 billion. I don’t remember it being sort of like a piece of the plan. Can you maybe just elaborate on what this is sort of related to? And then, conversely, I think the restructuring cash in the initial plan was going to be $600 million outlay in 2024 and now it’s $300 million. What does this relate to? Are there incremental efficiency or timing of spend? And does that impact the timing of savings?
Christina Zamarro: Yes sure. So I’ll start on the CapEx question and our guidance implies a $200 million increase at the midpoint to support new programs. We’ve given a range here. What I would say is, if you assume a weaker environment over the course of 2024, we’ll find ourselves at the lower end of that range, and at the higher end is in a more constructive volume environment and that’s typically how we’ve managed our CapEx spends historically. The step up is really driven by two different new programs in the Americas to drive mix up. One is the factory modernization, one is the factory expansion. And the modernization is going to convert about 9 million units from LVA to HVA, and that will be at its annualized run rate by the end of 2025. And then another. I mentioned an expansion that’s going to add, call $2.5 million dollars of HVA capacity for us in annualized run rate by the end of 2026, so getting the full year benefit of that in 2027.
Emmanuel:
Emmanuel Rosner: Okay. And you’re talking about the spending here, the cadence you just gave?
Christina Zamarro: I’m sorry, Emmanuel, I didn’t quite hear you.
Emmanuel Rosner: The $300 million, the $350 million and then the remainder, this is the timing of the spending?
Christina Zamarro: That’s the timing of the $750 million of announced restructuring.
Emmanuel Rosner: Understood. Thank you.
Christina Zamarro: Sure.
Operator: Thank you. And this will conclude our Q&A session as well as our conference call. Thank you all for your participation and you may disconnect at any time.
