Jeff Lorberbaum: For the first two years or three years after this thing is over, the pent-up demand for houses — for housing, for improvements and remodeling that hasn’t been done, we don’t lose it, it just comes back later.
Stephen Kim: Yeah. Yeah. There’s no — I certainly agree that there is a somewhat longer term rebound on the way. And so getting to that, I think, you are — I think Joe was asking about the timing of a rebound or maybe somebody else, but you talked about it with the U.S. I think you said you are looking for — you are bracing for a tough one first half next year, you think by midyear it’s going to materialize. Let’s say, you are right and it does actually start to materialize by midyear. I am curious how you are planning to run your — carry your inventory levels. I think of relatively higher levels of inventory as being something that leads to strong service levels as soon as demand rebounds and I am curious as to whether you are planning around inventory in the U.S. particularly is going to be such that you sort of like to build inventories or carry higher inventories than maybe normal in anticipation of wanting to try provide strong service levels maybe at the beginning of 3Q.
And then also could you just broaden your view beyond the U.S. to, let’s say, Europe and LatAm. Do you similarly think midyear next year is when we may see a turn?
Jeff Lorberbaum: Let’s start with the first part. The inventory levels are based on two things, one is what the market is and other is in our ability to respond. Given the low volume rates we are at presently, we have a significant upside in capacity to react to it and so we probably won’t build much inventory until we see it coming and then we think we have the ability to utilize the capacity that we already have to solve it to satisfy it as it goes up. On the other side, the different regions. I think that is possible, Latin-America will come out of this first and then Europe is a little hard to know. I would guess Europe may trail, the U.S. If I had to pick Latin-America may come out of it earlier, U.S. in the middle and maybe Europe a little later, would be my present guests, but we will have to see how it evolves.
James Brunk: And Stephen, one thing…
Stephen Kim: Okay.
James Brunk: … on your regional question is, well, the restructuring actions that we are taking, part of that is to lower — permanently lower our cost structure which then does help us in good times and bad.
Stephen Kim: Okay. Yeah. It makes sense. Thanks very much guys.
Operator: Our next question comes from Keith Hughes from Truist. Please go ahead with your question.
Keith Hughes: Thank you. Question on the — you changed your LVT product rigid to direct expansion, in terms of the direct extrusion. Can you talk a little bit more about that, what kind of cost savings and how long it’s going to take to do the conversion?
Chris Wellborn: Yeah. Keith, our Georgia rigid production is presently being converted to direct extrusion to lower our costs. We are also installing new technology in both plants that will provide unique styling and features and these changes will give us more flexibility to ship the products from both the east and west plants and we will have savings of more than $20 million annually when it’s executed.
Keith Hughes: And it — will this change all of your rigid LVT production to this method versus the partial conversion?
Chris Wellborn: No. It will all be changed to this.
Keith Hughes: Okay. And does — what — does this drive just more efficient machine time or how do you get the savings from it?
Chris Wellborn: Well, we are changing from a heated press technology to an extrusion process and this allows for a lower cost formulation and it’s just currently in the startup phase. We should be substantially operational in Q1.
Keith Hughes: Q1. Okay. All right. Thank you very much.
Operator: And our next question comes from Phil Ng from Jefferies. Please go ahead with your question.
Phil Ng: Hey, guys. Energy prices have kind of bounced off the bottom. Are you starting to see any upward pressure on your input costs more broadly? I know it’s somewhat tied to oil, presumably there’s a lag. And have you started seeing your price mix in your different respective business stabilize here or there is still some pressure as we kind of look forward?
Jeff Lorberbaum: Let’s see if we can answer it in few different ways. One is, we think that the material costs have probably bottomed at this point, as well as there’s a good chance maybe the pricing is also maybe bottomed, but we will have to see. As the oil and energy prices go up, is that — the basic cost of it, but also supply and demand. So I am not sure how it’s going to actually flow through given the low demand of the industry and categories using the different chemicals, it may take a little longer for it to flow through this time than normal. Usually, as we come out of the recession, what happens is, the demand goes up and then the chemicals have to recover their margins as it goes through and when that occurs we have to pass through the increase in costs as it goes — as it happens.
