Michael Sison: Got it. Okay, thank you.
Operator: Your next question is coming from Vincent Andrews from Morgan Stanley. Your line is live.
Vincent Andrews: Thank you. If I could just ask, if you think about the 2 halves of the year, and it’s well understood that you’ve got some visibility in 1 half and you don’t in the back half. And it’s also well understood now what the key macro drivers are and so forth. If you think about the back half of the year and the back half of the year winds up coming in worse than you anticipated in the different segments. What do you think the key risks are in those segments that we really need to be watchful of to sort of be on guard in case that back half wounds up actually being worse than what you anticipated to be?
Allen Mistysyn: I think, Vincent, the thing that — I would say it this way, the thing that we’re watching specifically is within TAG and within new residential — and the — it’s not an exact science when you look at the timing of a potential slowdown as John talked about, and the macro headlines of single-family starts slowing. You see some of the national homebuilders talking about the lower orders, but it’s really as the homes get to completion is what impacts our sales the most and there’s variability in that. So as we continue to work with our national homebuilders and get a clean line of sight of that and the impact that not only has on our new residential and TAG, but also kitchen cabinets, flooring and furniture on our Performance Coatings businesses, that’s going to be the main driver of whether the second half is stronger or less strong than what our current outlook is.
Vincent Andrews: And can I just ask 1 quick follow-up would be in Consumer Brands and in Performance Coatings. In Consumer Brands, are there any shelf space issues that we should know about? And likewise, are there any share gains or losses in Performance Coatings?
Allen Mistysyn: I think there’s no impact on the shelf impact shelf restriction on consumer, but I think there’s a huge amount of market share gain opportunities within our industrial businesses, and that’s all of them. As John talked about, we do not have 100% market share in any of our businesses, segments or regions and that’s the way we’re going into 2023. We’re marching aggressively. So there are terrific opportunities that we’re going to be pursuing. And we often talk about the coiled spring as this business comes back and we grow share, grow customers and it returns, it’s going to spring.
Vincent Andrews: Okay. Best of luck.
Operator: Your next question is coming from Arun Viswanathan from RBC Capital Markets. Your line is live.
Arun Viswanathan: There’s been a lot of discussion here on the new housing market. Obviously, we’ve seen a slowdown there. We did see that permits are also down 40% year-on-year. I guess my question is there has been a greater correlation though with architectural gallons sold in existing home sales. And there’s probably a lag between starts in existing home sales as well. So could you comment on what’s your outlook for existing home sales and how that ties into your guidance? Do you see any risk that maybe the low end is not low enough if the existing market gets worse from here? Thanks.
Jim Jaye: Arun, on the existing home sales, I’d remind you that drives a portion of our res repaint, but there’s other factors as well that drive that repaint business. And I think, as John said, in his comments, that’s an area we’ve been investing in more stores, more reps to go after res repaint. So I mean if you look at existing home sales, they’ve been down for 16 straight months but you’ve got other things that might offset that home price appreciation is still up year-over-year. You got the aging housing stock. You’ve got the baby boomers aging in place, all these things we’ve often spoken of. So while that will be a headwind, there’s other things that will help drive that repaint. And along with the share gains that John is talking about, we think got a good outlook and high expectations for res repaint next year.
Allen Mistysyn: Yes. Ron, the only thing I would add to that is, as you know, res repaint is our fastest-growing segment. It’s our largest segment, and it’s our largest opportunity for market share growth. And I think that’s what the focus of our TAG team is on with the specific investments in dedicated new res repaint stores and dedicated res repaint reps.
John Morikis: As part of what gives us the confidence as we compare this to the last slowdown, we came out of the last slowdown determined to grow that residential repaint business to help offset, we call it almost a resilient segment, having the growth that we have had and we continue to invest. I think I don’t know what the number is out. What the number of stores that we have now versus the last slowdown were up, how many?
Allen Mistysyn: A little over 1,200 stores since 2010.
John Morikis: 1,200 more stores now versus the last slowdown, probably a near similar number of reps focused on this area. And so it shouldn’t be a surprise that we’re growing the last 10 years over 11.5% and the conviction and determination that we have, I think, is an all-time high. And we expect, as we work through this challenging times to grow more share that we’ll enjoy as the business — through this as well as when the business comes back.
Heidi Petz: So I would add to that, too, I think over the last 10 years. I think while the marketing dynamics certainly are similar to back 2008, 2009, I would say it’s almost even better now. There’s so much change in the market. I think as you mentioned, our incremental store count, we’ve been aggressively adding stores. Our competition, I would say, has been aggressively closing down stores. So with these changes, there’s been some confusion in the marketplace that we believe is our opportunity. So we’re adding a new store about on average every four days. And I think we’d all agree we’re confident in our long-term strategy, but our near-term ability to execute.
Arun Viswanathan: Okay. Thanks. And just another follow-up, I guess, was given that a lot of your growth, you’re investing is mainly on the organic side. Are there inorganic opportunities as well that may present themselves in a downturn like this? What are some of the areas within the portfolio that you’d need to buttress if at all? I know you made the bolt-ons in some of the raw material and technology areas, but anything would it be more like in those areas? Or is it industrial? Or what are you looking at for potential M&A?
John Morikis: Well, we’ve been investing in a number of transactions that we think are terrific. We’ve been investing primarily on our Performance Coatings side. We’ve invested in industrial businesses, general industrial in Germany, industrial wood business in Italy. We’ve got a number of flooring businesses that we’ve welcomed into the family. And our goal here is not — we’re not portfolio managers. We don’t bring them in and run independent businesses. These are going to be contributors on a much brand or scale to the overall business. So technology that we acquire in some part of the world we’re immediately looking at how we leverage that across the entire platform. So as you’re watching and absorbing the acquisitions that we’re making, I hope everyone understands, we’re really not interested in buying small positions in different parts of the world.
We’re making these acquisitions, and we’ll leverage them across the entire platform around the world. So these have been good investments, we think, and there’s still a considerable amount of opportunity ahead to better leverage them going forward.
Arun Viswanathan: Thanks.
Operator: Your next question is coming from John McNulty from BMO Capital. Your line is live.
