So as you can imagine, very, very cost conscious. And we’re bringing them the solutions they need for those different levels of buyers. One other ones that we’ve talked about many times is Cemplank, right? And we introduced that early into the year. And I think there was a lot of fears of are we going to let this product get out of control because I know that happened before. We’re managing it appropriately. And I think it’s evidenced when you see the type of margins that the North American team has been able to generate. One of the things you asked about was Trim. That’s an on-purpose strategy and focus for us from a North American standpoint is really to increase our Trim attachment rate. We are doing that. I think probably it’s best to let a whole year to go by before we would talk to that, Peter.
But when we look at every single one of our product segments, we’re bringing the right solutions to our customers. That’s what we’re focused on.
Peter Steyn: I’m going to be cheeky and just sneak one quick one on cash flow for Rachel. Sorry. $82.7 million worth of working capital unwind; we haven’t seen that in the second quarter typically. Rachel, how much of that is structural versus sort of a seasonal some other effect that’s playing through there. So I guess how much HOS are we seeing in that number?
Rachel Wilson: Well, Peter, you’re absolutely right to point out there’s two factors, right? You can’t ignore that there is some seasonality, but then what part is structural. And when you dig into the working capital, I know you guys have just gotten the numbers, you’re going to see the 2 key drivers are inventory and accounts payable. And what does that reflect? So on the inventory, we’re doing a lot more with customer integration. So with the customer integration, we’re specifically getting a tighter look on their inventory with our top customers, largely driven the North America. From that inventory, look, we are getting that close inventory. Look, not only is that a demand signal for us, but it is also a great way for us to efficiently manage their inventory and our inventory.
So that is a number that is clearly part of the HOS. As we look at the accounts payable, that also is a reflection of the procurement group that Aaron had discussed. So really, when you say things like it’s our phone bills. I mean it’s something so basic as some of that we’re having a global procurement focus is letting us access some of that opportunity.
Operator: Your next question comes from Harry Saunders from E&P.
Harry Saunders : Firstly, just one on primary demand growth. I think you alluded to sort of 4% previously. Just wondering any idea how this is tracking. It seems it’s well ahead of that sort of 4% in the quarter given the end market growth that you talked about?
Aaron Erter: Yeah. Harry, we set this back in March, right, the end of March when we kicked off our fiscal year at 4%. And if you remember the year prior, I think we came in North America, roughly 3%. So 4% was a goal that was not a layup for our team out there. I would say right now how we’re tracking is we’re very pleased with our performance relative to PDG. If I look at PDG, I think we need to evaluate it annually versus 1 or 2 quarters. And I think what’s really encouraging for us is we continue to take share with our superior product out there. I mentioned before, I think to Peter, of just the opportunity from a material conversion that we do have in front of us. Over the last 10 years, we’ve taken substantial share without doing a lot as it relates to demand creation. We’re putting more behind demand creation, so we expect to see our PDG growth just accelerate.
Harry Saunders : Right. So when you say accelerate, so FY ’25, you could expect the higher PDG than that 4%?
Aaron Erter: No. Harry, you know better than to try to get me to talk about FY ’25. We’re just going to give here Q3 guidance.
Harry Saunders : Okay. My other question relates to the seasonal uptick you typically see in the fourth quarter. Is there anything to sort of change the view, I guess, that you usually would see a seasonal volume increase?
Aaron Erter: Yeah. And Harry, I think probably you might be referring to our people buying ahead as it relates to price increases. We’re seeing normal order patterns right now. So we’re not seeing anything different.
Harry Saunders : Right. And sorry, but in the March quarter, you typically will get a sort of a volume increase over the December quarter, right, look at historical trends. Just wondering if there’s anything to change sort of that usual seasonality view?
Rachel Wilson: Yeah. I think we expect — the seasonality is there with us as part of the Q3 guidance. And so there’s nothing unusual in what we have seen so far.
Harry Saunders : Sorry, I might just sneak one more in on the HOS cumulative savings. So just to be clear, that’s a cumulative number. So can you give an idea of the run rate broadly that you might be sort of factoring in by the time you get to FY ’26?
Rachel Wilson: Yeah, I’ll start by saying these targets were set as of our fiscal year-end, right? And they’re through FY ‘26. So it’s a bit premature to be talking about where we are particularly on a quarterly basis. But I think Aaron talked about what are some of the key drivers we’re looking at. He took you through in each month what we’re tracking with R&D and procurement and also what I was talking about with the customer integration, particularly working cap at some of the initiatives. So that’s coming together to be that. But again, I’ll remind you, we just set that baseline, and it is through FY ‘26.
Operator: Your next question comes from Brook Campbell-Crawford from Barrenjoey.
Brook Campbell-Crawford: It was a follow-up actually on the HOS savings. Are you able to just clarify or provide some color on what the uses of those savings are going to be? Are you looking to move it around and invest elsewhere or are you more keen to that drop through to earnings or maybe it’s a mix of both. So any sort of examples or further color on the use of those savings would be great.
Aaron Erter: Yeah. Look, the way that we look at cost savings, Brook, is really, it’s going to help offset non-controllable costs, right? Another benefit of HOS is it’s going to help us add incremental capacity. And it’s going to allow us to continue to invest in the things to grow our business. I talked about the marketing tent-poles, things like that. It’s going to help us invest in people. So the list goes on and on, but that’s how I look at the HOS savings. It’s not a one-for-one transfer over to the P&L.
