Marc Bitzer: Yes, and here’s what I’d say, Michael, and whenever we’ve looked at a lot of these tax things because they flow through very unevenly from a GAAP perspective, so we normalize them typically from an ongoing perspective. The first thing is the cash benefits of what we realized within this quarter and we’ll realize this year and then what I’m about to talk about next year will come over a multiyear period of time. So, we will see ongoing cash benefits just from some of these tax benefits that we talked about. I’d say the second thing with that as you look at next year. Listen, we expect our rate to be below 15%. And once we close the EMEA transaction and we’re able to realize the benefits of some of the losses we’ll have from investments we’ve made in there, we will see, also in 2024 a significantly lower tax straight than we historically have.
Then as I alluded to over the period of multiple years, we’ll continue to realize cash benefits from that. And so right now, we’re not going to give a full guide on next year’s tax rate because it’s very dependent upon when we close the EMEA transaction, but then additionally, as we look forward beyond that, right now, I’d say, absent of any changes in the tax environment out there. At some point in time in the much more distant out future, we could see the rate going closer to 20%. But over the next couple of years, we will continue to see benefits from this transaction.
Operator: Your next question comes from the line of Liz Suzuki from Bank of America. Your line is open.
Liz Suzuki: Just had a question about the cash flow again and just the lowered outlook implying that the majority of your free cash flow this year is being paid back out to shareholders in the form of the dividend. So at this point, how are you thinking about addressing the debt and reducing your ongoing interest expense burden?
Jim Peters: Yes. So, this is Jim. And I think the first thing, we still intend to pay down $500 million of debt in the back half or in the last fourth quarter here. That will come from cash on our balance sheet. As you pointed out, our free cash flow is funding our dividend, which will be around $400 million that will return to shareholders here. Obviously, the incremental $100 million goes towards debt pay down, but we also have cash available on our balance sheet that we will use to pay that down. And then as we head into next year, we expect to continue to focus on, paying down debt and reducing our level of leverage.
Marc Bitzer: This is maybe just adding to this one, because again, also going back more in time. As you know, we held quite a bit of cash balance on our balance sheet now for a couple of years, and some of you may have asked, why do you take home with debt? We actually our decision a couple of years ago was while the interest rates are very low, we wanted to lock in some long-term debt at favorable interest rates and that’s why we kept a fairly significant cash balance. Now, we use the cash balance, some of that, to pay down some of the floating interest rates, which was the temporary loans, which also partly came from InSinkErator. So, we basically now use that cash balance to pay down the more expensive part of the debt.
Liz Suzuki: Just kind of thinking about long-term, I mean, you did mention that your cash balance has been high for the last. But historically, it’s been somewhere over a 1 billion. So, I guess how comfortable are you at a cash level below that threshold or what is your minimum level of cash that you like to have on the balance sheet?
Jim Peters: Yes. Liz, this is Jim again, and part of that is driven by remember us as a geographically diverse company. We have cash in multiple jurisdictions. And to certain extents because some of those businesses are also separate publicly traded entities, there’s restrictions on some of the usage of cash that we can use outside of those areas. And so, I think as you’ve alluded to typically we’ve always had a cash balance around $1 million or maybe slightly above that and that deals more with our geographic dispersion. Now, as we exit, EMEA, obviously that will not be an area that we’ll be retaining cash. So, I would still on an ongoing basis to expect us to be in the neighborhood of $1 billion, but it could be a little higher, a little lower at times depending on what our funding needs are as well as where we’re generating cash and our ability to repatriate that into the U.S. and use for other things.
So, that’s really more the driver, it’s just that we have such a diverse geographic footprint.
Marc Bitzer: So, Liz, maybe just adding to this one and Jim alluded to this one a little bit earlier. Basic question is why do you have to have cash on hand at all? So the simple reason is within the quarter, we have cash volatility. That’s just the nature of our business when you collect it and when you build inventory, et cetera. And that was historically around this 1 billion. A very significant portion of that intra-quarter, but also intra-year, volatility was driven by our European business. Once you close the European transaction, you don’t have that same kind of volatility in our cash flow streams, both intra-quarter and then pause within the year. So, what it all means is, in a post Europe transaction environment, we do not expect that we will hold $1 billion of cash because it’s just not needed. We can — we will quantify coming to next year how much it will be, but it will not be a mid level of 1 billion.
Operator: Your next question comes from the line of Mike Rehaut from JPMorgan. Your line is open.
Doug Wardlaw: Doug Wardlaw on for Mike. I just wanted to kind of clarify and see if there’s any type of trade off between share and margins, and is it somewhat of a zero-sum game? And if you continue to gain market share, could we see similar margins in North America to what we see now moving forward?
Marc Bitzer: So, it’s Marc. I mean, obviously I mean, the simple answer is, no. As we demonstrated in Q3, we picked up share and margins year-over-year. So, it doesn’t need to be a trade off, and in the case of what we just demonstrated in Q3, we deliver both share and margin expansion. And that is also our objective going forward. The key to have both share and margin expansion ultimately still comes back to having a strong product pipeline. With the products which we launched and which Jim showed earlier, we were able to expand both share and margin. If you wouldn’t have these products, yes, then you’re right, then it probably will turn at one point into a zero-sum game. And that’s why we’ll continue to invest, that’s why you may have seen also in Q3, we both year-over-year, but also sequentially continue to invest even more in product and brands, and that’s really the key to avoiding this trade off.
Doug Wardlaw: And then secondly, and this is just another clarification question because I know you guys have done it throughout the call is in terms of the raw material and cost savings carry over into 2024. Do you guys have any sense on the size of dollars of what that might look like?
Jim Peters: No. At this time, we’re not really giving any precise guidance on that because as we mentioned before. The trends do seem very positive. We go through during our fourth quarter. Typically, the negotiation process with many of our suppliers to help us bring more clarity to that number, and then we don’t give that number until we get to January. So right now, we would just say we expect it to be positive. And once, we get to January then we’ll give a much more specific number.
Marc Bitzer: Okay. So with that, let me just close the call. First of all, I appreciate all your, attendance today and good questions. I mean, obviously, as you’ve seen before, we feel actually good about Q3. We had revenue growth, we expand our share. I think we’re delivering on our operational priorities. Did we come all the way on the EBIT percentage? No, and we openly talked about it, but we feel good about the fundamentals of our business, both in Q3 and also as we look into Q4 next year. And we look forward to kind of give you a more detailed picture on Q4, but then more importantly about ’24 in January of next year. Thank you all for joining us.
Operator: Ladies and gentlemen, that concludes today’s conference call. You may now disconnect.
