Heidi Petz: Yes. I think, first and foremost, I think it’s indicative that our strategy is working. And when we look at this business and this portfolio, it’s really important. I’ll share with you what we talk about internally, which is we’re not trying to be all things to all people. And so when you look across these businesses, making sure that the discipline and how we’re thinking about investment, the discipline and when we’re investing is certainly a key part of this. So maybe just a little bit of across some of these divisions on the — John, rather jump in as well. You start with — you mentioned Industrial Wood. There’s been a lot of wins here against some regional competitors. And while we mentioned earlier, U.S. housing is continuing to soften.
We think this is an opportunity for us just coming out of completing some key acquisitions that we mentioned in our prepared remarks, with Oskar Nolte and Klumpp. It feels like we’re in a really good position here to continue to drive increased value and return of value to our shareholders. Our gallons per day appeared to have bottomed out in all regions, again, so as the New Residential swings back, we expect Industrial Wood to absolutely come along for the ride there. I’ll comment briefly on Automotive Refinish. I think importantly, we’ve had some really good share gain here. Year-to-date installs in North America have been up strong double digits, and our core users are growing. We talked a bit about our Collision Core technology and business.
That momentum and adoption is continuing. And this is a suite of digital tools and solutions that truly is helping to benefit our business here. And I would also add along with our North America footprint. Similar think of our Paint Stores Group similar to that footprint. We’re really able to have a better opportunity to control a more consistent customer experience beginning to end here with our Auto Refinish, which we think is an incredible differentiator for us. We talked a bit about General Industrial, heavy equipment market is rolling up, especially in Ag, and we continue to — we expect to see that continue. Building products, general finishing is soft, but we’ve expected that the team is laser focused on pivoting and adapting to the market.
In the Coil side, North America is holding up better than the other regions, still soft, but the team is working really hard against some new business wins. And then nearshoring in Mexico continues to create demand for us. So we’re managing that across the regions very carefully. One comment on Coil as well. I would say that most of the China coaters are running at about 50% capacity. So we expect there to be some forward opportunity there as well.
John Morikis: Yes, Arun, I think you mentioned on your question about P&M. I think the team there is doing a terrific job of really staying focused on the value proposition as we bring into high-value projects. So EV battery plants as an example, semiconductor plants, Heidi, and I were just recently out at one of the largest plants I’ve ever been on. And our floor coating teams are all over these businesses. I think the offshore wind and other alternative energy investments as well as water infrastructure. I mean, these are all areas that we’re focused on. And I’ll remind you, it wasn’t long ago, we were talking about our Protective & Marine business at a time when it was under pressure. We reminded our investment — investors that we take this long-term approach.
And I believe these are terrific examples of our continuing to invest, even when times were a little tough, knowing that these projects can be delayed, but they can’t be canceled. Oftentimes, you’ll find highly corrosive areas that needed to be coated. You might get an extra year or a year or 2 out of those. But they needed to be coated. And it’s those types of high-value projects that are almost kind of a return repeat businesses as you maintain those that add to the attractiveness of these coatings. So we’re really proud of Karl Jorgenrud, the entire leadership team within our PCG business for what they’re delivering. And importantly, if you — I’ll remind you of the operating margin goals that we had set for this team at 19%. It’s come in at 19%.
Our goal of getting up into the high teens, low 20s. So they’re doing it, and they’re doing it by bringing value to our customers and to us.
Arun Viswanathan: Great. And if I could just ask one follow-up on the M&A side. Given what you said in those different verticals, do you see the need to add capacity inorganically in any of those areas and similarly divesting businesses or what would you share on that side?
Heidi Petz: Well, we’ve said certainly in our investor call recently and we say this consistently, but we don’t need M&A to grow. There’s a lot of confidence in every segment that we have for us to continue to take share organically. And so from a capacity standpoint, we’ve continued to be very strategic about where we are laying that capacity in. And I’ll go back to Al’s point, all of that is by design. As we look at our 10-year CapEx plans, our 10-year demand plans, certainly, we don’t want to put anything that’s net new to the system if it’s not needed. But where we need that capacity, we’re going to do that.
John Morikis: The one point I do want to add, I don’t know if Heidi mentioned, Packaging or not, but that’s an area that we continue to invest. It’s not so much needed through acquisition or M&A, Arun. It’s more through our investment of a very unique technology, so the packaging business, particularly our V70 product is a very unique technology. And as quickly as we can bring capacity onboard, it’s sold out. So I think that’s an area that we will continue to invest in.
Operator: Your next question is coming from David Begleiter from Deutsche Bank.
David Begleiter: On your gross margins, they were near your long-term target in the quarter. And it sounds like it will be above that target in Q4. So given that, how high can it go this cycle? Can they approach or even exceed 50%?
Allen Mistysyn: David, one caveat to that, that I would make. When you look at our quarter gross margin because you typically see an — seasonal architectural slowdown in volumes and sales. The fourth quarter margin may or may not be sequentially improving. It’s our smallest quarter. You have year-end adjustments and other year-end adjustments that have — could have a material impact on the gross margin. Also, just reiterate that price increases aren’t going to be as big of a tailwind in our fourth quarter than what we saw in our third quarter. And the other side of that Paint Stores Group is going to grow faster in our fourth quarter that will help drive gross margin. As we talked about at our Investor Day, we are at a current range of 45% to 48%.
We set aggressive goals for our teams. And as we consistently achieve that current range, we’ll adjust the range. I don’t think we’re ready to sit here today and make a change to any range or talk about 2024 at this point. But we’re going to be consistent in our approach going forward.
