Steve Bender: Matthew, it’s Steve. I would say that as we look across the landscape, we look equally hard at both the material side in our PEM segment as well as in our building products space. We’re looking for opportunities where there is compelling value, good compelling synergies that are immediately accretive to the bottom line. And so as you’ve seen, we’re willing to invest where we find the right opportunities as we have over the last year or two. But we’re looking for opportunities in both segments, not necessarily focusing on one or the other, but those that really drive real value at the bottom line. And while we do have cash on the balance sheet, it doesn’t compel us to really go out and do just a transaction to spend that cash.
It’s incredibly easy to spend the cash. It’s always more challenging to get the return. And as you know, we’re really focused on that return basis. So, that’s where our focus will be as synergistic opportunities in either the HIP or the PEM segment, and we’ll continue to look for those.
Matthew Blair: Sounds good. And then, Steve, you mentioned the raw material tailwinds in HIP. Would that be PVC? And if so, are there any other raws that helps you out in the quarter? And also, were there any onetime boost in HIP?
Steve Bender: The impact on the onetime items were — or the period items were really all in PEM. And as it relates to the reduction in inputs, it was really vinyl. We’ve seen actually that being the biggest input that had a benefit to the contribution of margin expansion in the HIP business.
Operator: Our next question comes from the line of Michael Sison from Wells Fargo.
Steve Bender: Maria, maybe we put Mike back in the queue, and let’s take the next question.
Operator: Our next question comes from the line of Arun Viswanathan from RBC Capital Markets.
Steve Bender: Arun, are you there? Maria, do we have a connectivity issue?
Operator: Not that I am seeing. Everything looks clear. Do we want to try to go on to the next person?
Steve Bender: Yes. Let’s put Arun also in the next queue and let’s go to the next question.
Operator: Our next question comes from the line of David Begleiter from Deutsche Bank.
David Begleiter: Thank you. Can you hear me?
Steve Bender: Yes, David, we can. Thank you.
David Begleiter: Thank you. You mentioned some — in PEM some onetime impacts in the quarter. How much were they and should they all be a tailwind into Q4? And are there any other one-timers in Q4?
Steve Bender: David, I see none at this stage in terms of impacts in Q4. And I would say these all were attributable to the PEM segment, and this was a $20 million item that we called out.
David Begleiter: Very good. And Albert and Steve, looking at ‘24, do you have an early view on HIP volumes next year given the weakness you’re seeing in North American construction.
Albert Chao: Yes. We expect the HIP — general housing industry to still be impacted by the high mortgage rate, high interest rate. So, until the Fed start lowering rates, we don’t see any recovery in housing demand or in building-related demand.
David Begleiter: So, would you expect your volumes to be down next year in HIP?
Albert Chao: Possibly.
Operator: Our next question comes from the line of Duffy Fisher from Goldman Sachs.
Duffy Fisher: Question around epoxy. With the oversupply we’re seeing largely out of China, which of your end markets are being impacted by that, which are not? And have you seen kind of a change in global trade flows for epoxy?
Albert Chao: I think the coatings generally are the largest market for epoxy and as well as areas such as composite and wind mills, I think, generally, China has the largest capacity in the world by a big stretch over the next producer. And the economy in China really has not recovered, even though government has put in several steps of incentives. Again, we’re heading into the winter season and things are slowing down in China as well. So, I think it’s — the impact is across the board in all epoxy activities.
