Keith Allman: I’d characterize it by saying it’s a mixed bag, Susan. When we look in Europe, we did see a pullback in the consumer, and there’s some noise there with various legislation that’s been, it’s now clarified to a degree anyway, more than it was last time we talked as it relates to driving for non-fossil fuel heating systems in central Europe and Germany. and that taking away some of the consumer’s willingness to spend on, say, battery model projects and that sort of thing as they’re concerned with putting in greener heating systems per what they thought was pending legislation. It looks like that’s going to now be protracted out to 2028. So, we expect that consumer to start to come back. So, in Europe, the consumer was kind of a little later to the game in the pullback, if you will and is now coming back in Europe.
In the U.S., holding up fairly well for us. as expected, I should say, so we’re not seeing any accelerated slowdown whatsoever. Again, I think there’s a lot of volatility and uncertainty, and it’s the full impact of inflation, I think is yet to be seen in the consumer. but by and large, the consumer is still holding in pretty good for us and our products. And I think that’s driven by the bang for the buck, if you will, that the consumer sees in painting a room, and in changing our faucets and light fixtures, where it’s a relatively inexpensive investment in your home. I think with work from home, where that’s not fully going to go back to everybody working in the office, and that puts more wear and tear on the paint, and it’s not that expensive to do it and you can do a DIY if you want.
So, I think that combination has helped us.
Susan Maklari: Okay.
David Chaika: Susan, I would add to it, I mean, consumers clearly have been resilient. [indiscernible] consumers now since there have been significant increase in rates and inflation over the past couple of years. That said, they have demonstrated they are resilient when you look at home medically levels, they’re feeling very good about their home. So, we do think that when things do stabilize that, that consumer will be very interested in remodeling their homes and as Keith alluded to, we do think there will be a nice pent-up demand that we fully intend to capitalize on.
Susan Maklari: Okay. That’s helpful color. And then thinking about capital allocation, I know that you closed the acquisition this quarter. As you think about priorities for cash and especially, maybe on the buyback side, any thoughts on how that could come together over the next couple of quarters?
David Chaika: Yes, Susan. Our typical philosophy is to allocate all of our free cash flow after dividends to share repurchases or acquisitions. So, with our significant cash flow and our pausing of share repos in the third quarter, we do tend to be fairly aggressive here in the fourth quarter. And then we talked about allocating $225 million likely towards share repurchases. If you look at ‘24, I think if you follow that basic formula of excess free cash flow, free cash flow after dividends allocated to share repurchases or acquisitions, you’d be right in the ballpark on how we’re thinking about share repos for next year.
Susan Maklari: Okay. That’s helpful. Thank you. Good luck with everything.
Keith Allman: Thanks.
Operator: Our next question comes from the line of Garik Shmois of Loop Capital. Please go ahead.
Garik Shmois: Hi. Thanks for taking my question. Question on DIY paint, just if you move to down low teens year-on-year versus down a little single digits, I think in the second quarter. Just curious that was a sizeable change on year-on-year basis, just curious how trends performed sequentially there.
Keith Allman: Yes. On DIY paint, we did see softening in 2Q actually, and continued softening here in 3Q. I think you have to look at the low-level existing home sales, which are a 13-year low. We haven’t seen this level of existing home sales since 2010 at the end of the housing crisis. So, we think that is affecting DIY paint sales. So that market is softer here in 3Q, roughly in line with our revised expectation coming out of 2Q.
