Good morning. Thank you for joining The Sherwin-Williams Company’s Review of Third Quarter 2020 Results and our Outlook for the Fourth Quarter and Full Fiscal Year of 2020. With us on today’s call are John Morikis, Chairman and CEO; Al Mistysyn, CFO; Jane Cronin, Senior Vice President, Corporate Controller; and Jim Jaye, Senior Vice President, Investor Relations. This conference call is being webcast simultaneously in listen-only mode by Issuer Direct via the Internet at www.sherwin.com. An archived replay of this webcast will be available at www.sherwin.com beginning approximately two hours after this conference call concludes. This conference call will include certain forward-looking statements, as defined under the U.S. federal securities laws, with respect to sales, earnings and other matters. Any forward-looking statements speaks only as of the date on which such statement is made and the company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. A full declaration regarding forward-looking statements is provided in the company’s earnings release transmitted earlier this morning. After the company’s prepared remarks, we will open the session to questions. I will now turn the call over to Jim Jaye.

Thank you, Rob, and good morning, everyone. I hope you and your families are remaining safe and healthy during the pandemic. Let me begin with some high-level summary comments on the quarter. All comparisons are to the third quarter of 2019, unless otherwise stated. Sherwin-Williams delivered outstanding results in the third quarter. Total company consolidated sales were well above the original guidance we provided on July 28, and also slightly above the increased guidance we provided on September 29. We saw continued unprecedented demand in our DIY business during the quarter, double-digit growth in residential repaint, very solid demand in new residential and positive momentum across our industrial end markets. We delivered year-over-year improvement in gross margin and record profit before tax EBITDA, diluted net income per share and net operating cash. Third quarter 2020 consolidated sales increased 5.2% to $5.12 billion, inclusive of a negative currency impact of 0.9%. The estimated impact from COVID-19 on consolidated sales in the quarter was not material. Consolidated gross margin increased 220 basis points to 47.9%. Consolidated profit before tax increased $165.8 million or 23.4% to $875.6 million. Diluted net-net income per share increased 24.4% to $7.66 per share. The third quarter of 2020 included acquisition-related amortization expense of $0.63 per share. The third quarter of 2019 included acquisition-related amortization expense and other adjustments of $0.49 per share, as described in the Regulation G reconciliation table included in our press release. Excluding these items, third quarter adjusted diluted earnings per share increased 24.7% to $8.29 per share. Adjusted EBITDA increased $185.7 million to $1.11 billion, or 21.6% of sales. Net operating cash increased 54.3% year-to-date to $2.56 billion. From a segment perspective, sales in the Americas Group and Consumer Brands Group were in line with our updated guidance, while sales in Performance Coatings Group were slightly better than expected. All segment delivered very strong flow-through in the quarter. Segment margin in the Americas Group improved to 25.1% of sales, resulting from operating leverage on the topline growth, favorable mix, and lower input costs. Adjusted segment margin in Consumer Brands Group increased to 26.4% of sales, resulting from operating leverage on the strong double-digit topline growth, favorable product mix, lower input costs, and actions taken over the past year to improve our international operating margin. Adjusted segment margin in Performance Coatings Group increased to 16% of sales, driven by returning sales growth and lower input costs. Additional details on our segment performance are included in the slide deck provided with our press release and available on our IR website. Let me now turn the call over to our Chairman and CEO, John Morikis, for some additional commentary on the quarter and our outlook. John?

Thank you, Jim and good morning everyone. Let me begin by expressing my appreciation to the over 61,000 employees of Sherwin-Williams for their continued determination and their resilience. I could not be more proud of this incredible team as they delivered record results in a very challenging environment. Our leadership team and their many years of collective experience have been true differentiators throughout this entire year, enabling us to drive significant improvement across many measures, while serving our customers at a very high level. We generated very solid sales growth in the quarter, with all three operating segments growing year-over-year, exceeding the original guidance we provided at the end of July and improving sequentially. The gross margin expansion in the quarter was driven by sales growth, effective pricing, favorable mix, and lower input costs. The industry basket of raw materials was down by a mid-single-digit percentage in the quarter compared to the prior year, though a bit less than what we saw in the second quarter. SG&A as a percent of sales in the quarter decreased slightly year-over-year to 27.5%. SG&A increased on a dollar basis as we continue to make investments to drive long-term growth. Let me talk a bit more about trends we're seeing in each of our segments before moving on to our outlook. In the Americas Group, we saw a significant sequential improvement from the second quarter to the third quarter in all regions and all segments served. Most regions and segments also delivered growth in the quarter on a year-over-year basis. We're especially encouraged by the return of double-digit growth in residential repaint, our largest segment. Interior work has picked up significantly. As a reminder, this segment has been our fastest growing over the last several years and continues to offer us the largest opportunity…

Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] Thank you. And our first question comes from the line of Ghansham Panjabi with Baird. Please proceed with your question.

Thank you. Good morning everybody.

Good morning, Ghansham.

I guess, first off, within TAG, the commercial and property maintenance sub-verticals improved significantly, relative to what you saw in 2Q. How do you disaggregate that improvement between pent-up demand from the 2Q dislocations versus an improvement in underlying growth? And then what time line do you think for each vertical is it reasonable for volumes to inflect higher year-over-year?

Well, thank you for that question, Ghansham. I think the -- if you start with commercial, as you've mentioned, jobs are coming back online. And as we mentioned, sequentially, we've seen some improvement. I think when you look at the ramp-up there, I think a lot of that's going to have to do with the progress our contractors make on getting more painters out on projects, social distancing and the restrictions that go along with those requirements have proven somewhat challenging to our customers. So I'd say that as we go into 2021, we expect more and more progress, if you will, in that segment. You asked about each of the segments, and maybe I'll make one overarching comment regarding all the professional segments. And that is, as I've mentioned before, no one hopes for any experience like this pandemic that we're experiencing. That said, our commercial contractors, as well as every other contractor we serve has found this market to be a challenge. It might be getting approval to go in to work into one area, and getting pulled out for that area and pushed into another, start exterior, have someone say they might be going out of town, can you do an interior project? All of these create conflict for our customers. And at the same time, it creates the opportunity that we look for, which is to be there with solutions for our customers. And so we're working hard. I mentioned earlier, how grateful I am for our teams. Our teams in the field are doing just a wonderful job in responding into each one of these professional segments in a way that very few people can. As it relates to the segments, I might, again, here, begin with the way that I'm looking at these segments.…

Yes. Thanks, John. This is Allen Mistysyn. We know DIY demand is a question for -- on everybody's mind moving into next year. Let me try to put some color around it, and try to quantify the increase. If I look at the second in third quarters together, sales this year are just slightly below last year. The combined DIY increase for Consumer Brands and our Americas Group is up 23% and represents about a quarter of our total sales in those quarters. The remaining 75% of the businesses segments are down approximately 6% and are sequentially trending better in the third quarter versus the second quarter. John talked about TAG and our expectations for strong res repaint, new res sales, turn to growth, commercial, property maintenance and then P&M being less of a headwind when in 2021 versus 2020 due to the easier comps. In our Consumer Brands Group, investments and customer programs to drive volume are expected to drive incremental sales growth into next year, but unlikely able to offset a more normal return to DIY demand. And then Performance Coatings Group is seeing strong packaging demand, which is expected to continue in early part of next year, continued improvement in auto refinish, industrial wood, and coil, with general industrial gradually returning to sustainable growth in North America. And Ghansham, it's really the investments we've been making in our programs, our reps, our tools and services to provide solutions to these customers that give us great confidence in our ability to grow those other segments to help offset that DIY potential harder comp next year.

Okay. Thank you. And just for the second question, John, you mentioned that you expect demand to be choppy. That seems reasonable, given what we're seeing. You also have higher raw material costs that seem likely higher operating costs with freight, et cetera, and just cost to serve the customer, just given the omnichannel shift across your TAG store network. In that context, how should we think about pricing, as it relates to an early outlook for 2021? Thanks so much.

Thanks, Ghansham. I'd say our response here is going to be pretty consistent with past discussions that we've had, Ghansham. As we look at all costs, the raw material baskets and everything that you laid out there from healthcare to energy, every aspect of the business, we look at that on a 30-day basis, every 30 days with our management team, we evaluate where we are. We make that decision. We immediately then proceed out with any increases that we've decided on, with a goal of talking to our cost customers first. Once we talk to the customers, then we bring it to the financial community. We've not announced any increases now, or we're not out with any right now. And should we, like I said, we'll be out in front of the customer first and then come to you.

Yeah. And, Ghansham, we're in the middle of our normal next year operating plan reviews with their divisions. And, as you know, we'll push back on our suppliers. We'll try to internalize and offset as much of the raw material and other increases as we can. And then, absent that, we'll have to look at a price increase.

Thanks so much, you guys.

Thank you, Ghansham.

Our next question comes from the line of Jeff Zekauskas with JPMorgan. Please proceed with your question.

Thanks very much.

Good morning, Jeff.

Hi. Good morning. Is DIY growth in the stores business very different than the rate of DIY growth in consumer brands in North America?

No, they're very similar.

But, Jeff, as you know, DIY and our TAG organization is a much smaller percentage overall.

Yeah. And in your Performance Coatings Group, you had very, very good growth in coil, but negative growth in general industrial. What's the difference between those two markets, so that coil is growing and general industrial is down?

So it's the market that we serve, Jeff. If you look at coil, we've had the benefits of appliances, as an example, in coil as the commercial projects have picked up extrusion and some of the applications into the commercial space have been positive. And the other thing I'd say about the coil, give this team great credit. They have been winning business across all regions. So we talk a lot about share of wallet in our TAG business. But if I were to use that kind of description for our coil business, I'd say, they've been doing very well in that space as well. General industrial, if you look at those applications for coatings in our GI space, again, choppy is a good description here. We did have growth, as we talked about in a few of the geographies: Asia, Europe, LatAm, I believe, in local – in same currency would have been slightly positive. It's mainly the U.S., and it's a choppy market here in the U.S. for GI.

Okay. Thank you so much.

Thank you, Jeff

Our next question comes from the line of Steve Byrne with Bank of America. Please proceed with your question.

Yes. Thank you. How would you characterize this COVID DIYer is being different from your legacy DIYer? Are they more inclined to buy higher quality paint? And are you – there's a couple of comments in your earnings release about product mix. And I was just curious whether you're seeing that in terms of whether it's in consumer or it's in TAG, are they buying higher quality paint?

I'd say that we are seeing a positive mix shift, Steve. I would say that there is a difference between these customers. If you look at the DIY customer in a Sherwin store, they're typically looking for that specialty store experience. Al just mentioned, a small percentage of our business, 10%, roughly of our business. The expectations there are just that. They're looking for that specialty store service and expectations in areas that might include color, selection and so on. If you look at the overall, though, what I would say is that our experience this go around is that these are people that are, in general, home, as we've described, nesting, and in many cases, finding themselves looking at a wall that may not have been painted in the next decade. And I think I mentioned on one call that in some of our stores, they've kind of jokingly referred to these as what the heck projects, where they're sitting around, kind of bored out of their minds, and they're saying, 'What the heck. I might as well go ahead and paint this room.' The reason I share that with you is that we've often gotten a question about do we have a concern that we might be leveraging or mortgaging residential repaint customer sales to a DIY customer. We've not seen that. In fact, our residential repaint customers bidding activity is actually increasing not only sequentially but year-over-year. So our customers on the res repaint side are quoting more now this year than they were last year, and they are telling us that the success rate is actually increasing. So we have a DIY customer, who's home. They want a good experience. They are typically moving up and we have a res repaint customers backlog that's growing.

Steve, the only thing I would add to that is it's really by design in our Consumer Brands segment. The programs that they're putting in place, the training at store level, is really trying to drive to the higher-quality products because that – as we've talked about customer solutions, that helps them drive their top line and bottom line, and it also helps us drive our top line and bottom line.

And overall, the customer ends up with the best experience. So it helps our brand position with our customers as well.

And so you had what was a 3% same-store sales in TAG. Was that all priced, given there might have been a price/mix lift from this DIY initiative?

You could – price would have been a little bit below 2%. The rest is volume. The one thing I would point out, though, Steve, if you look at our North America stores at 3%, as you know, P&M has been a drag. If you backed out P&M, architectural would be up mid-single digits. So I put it in perspective to say if price is a little bit below 2% volume, would be more mid-single digits on architectural.

Okay. Thank you.

Thank you, Steve.

The next question is from the line of Arun Viswanathan with RBC Capital Markets. Please proceed with your question.

Great, thanks. Good morning. Congrats on the great results. I just wanted to ask about your comment on margins and SG&A. Could you elaborate on maybe some of the increases in SG&A you're expecting in Q4? And then maybe even to next year, do you think you've entered a new gross margin level, just given the volume uplift here and some of the cost reductions you guys have undertaken? Maybe you can just elaborate on some of those issues? Thanks.

Yes, Arun, as you know, since we don't go down item by item on the P& L for our guidance, but let me try to give you some color around our fourth quarter in general. First off, we believe we have a pretty strong fourth quarter, with adjusted EPS about 10% increase over – at the midpoint over a really strong fourth quarter last year that was up over 20%, on top of a 12% increase in the fourth quarter of '18. That tells you our flow-through is in the mid-20% range at the midpoint, while investing back in our business. And let me start by saying what we talked about at the second quarter – in the second quarter. What we talked about, at FCP is that, these are the investments in products, services, customer programs that provide solutions to our customers, allow them to grow share and be more successful. These are investments in new store and reps. In our e-commerce platform, North American stores, I talked about the consumer brand, investments and expanded customer programs that will allow our customers to sell more of the right gallons through the department, which helps drive their profitability. And then also performance coatings investments in reps, services and programs that add value to our customers, allow them to be more productive. And you talk about what that means going forward. And we believe this cycle is very, very similar to 2008. We continue to invest and lean forward into our customer success and these are the right investments. And the 3, 5, and 10-year compounded average growth rate of our North America architectural sales were high single digits coming out of that period and we believe that was a multiple of our market demand over the same period. So we believe this similar environment. We expect these current investments across all our segments allow us to grow multiple of end market demand over the mid and long term. The only other comment I would make on gross margin, Arun is that, in the fourth quarter, we do expect to see a typical seasonal architectural slowdown in demand, which does impact our gross margin. Historically, our third quarter is a stronger gross margin performance than the fourth quarter. Part of why we had such a strong performance last year here we did see a sequential improvement in our gross margin last year from third quarter to fourth quarter. And as you know, we get to year end, it's a small quarter, we get into inventories, LIFO, a number of adjustments that kind of drove that improved margin in last year.

Thanks for that detail. And then also just wanted to ask about your capital allocation. You spent over $400 million on buybacks in the quarter. So nice to see that. Is that generally how you're going to be running the balance sheet now that, obviously, not building cash? Maybe you could just also discuss the M&A market, if there's any opportunities that you can take advantage of in the near future? Thanks.

Al will talk about capital first, and then I'll talk about M&A.

Yeah. Let me just highlight the fact we did have bigger amount of cash on our balance sheet at the end of the quarter than normal. I would not read anything into this. We've not changed our capital allocation policy. And to your point, we are not going to hold cash. We'll put that cash to work. And it was really a timing issue at the end of the quarter. We have stronger receipts in the second half of September. The strong teams are generating stronger operating margin and cash flow from outside the U.S. that we're certainly going to keep bringing back to the U.S. and putting to work, but it's just a timing issue there. I think you're right. You look at the strong cash generation, $2.6 billion in the first nine months. We've returned over $1.6 billion to our shareholders in the form of dividends and buybacks. That's an increase of 86% to last year, and then we've invested $190 million in the form of CapEx. And we also took the opportunity to reduce our debt by just under 400 that got our – really got our debt to EBITDA leverage back to 2.5. Going forward and looking out into next year, you're going to see the same type of process from us. And I'll let John talk about M&A.

Yeah. I'd say, first, Arun. I think it's important to acknowledge that in challenging times, I think you get a sense for how much discipline and conviction you have in your strategy. Things get tough, you can find your way to want to buy a book of business, or let's just buy sales or sales – that's not who we are. I'm really proud of our teams on an organic basis as well as in the M&A space. We've got a very defined strategy that we're working here. And we're very much determined to stay on that, and that great pride in the fact that our teams are doing just that. Now that said, I'm also very pleased with the progress that we're making in this area. We've got some very good discussions going on and feel good about the targets that we're pursuing. As a reminder, the targets that we pursue largely will be in the industrial space, targets that fill either a technology gap or strength in a region that would help us in accelerating our existing businesses and their goals or in establishing a position in a geography where we're underrepresented. Now that said, our goal is not to be everything to everyone, everywhere. So we talk a lot internally about our rights to win, and how we'll go about this and bring into the market a unique and differentiated value that would help us to create shareholder value. So I'm pleased with the progress, and I think the discussions have gone pretty well here.

Thanks.

Thank you, Arun.

The next question comes from the line of Bob Koort with Goldman Sachs. Please proceed with your question.

Thank you. John, just curious, to that end, in terms of – it sounds like mainly you're interested in bolt-ons. In the past, you've talked about maybe optimizing the portfolio. Are there also some assets you might look to invest? Are you pretty comfortable with the portfolio you have at today?

Well, comfort is not a good word here at Sherwin-Williams. We don't like comfort, nor do we like complacency, Bob. I think you know that. So we're constantly reviewing programs, SKUs, brands, businesses. I think we owe that to our shareholders. So I think there's a very disciplined approach that we take. We're very blessed to have four terrific group Presidents that understand that, and lead that. It is not something that Al and I and David are pulling on. I think these are terrific leaders that understand how to make money, how to create shareholder value. So there's a constant review on all levels, from businesses, all the way down to the SKU, including programs. And those programs are sometimes difficult. If you're launching a program, it's your baby, you want to stay close to that. But I think these terrific leaders are demonstrating a willingness to look at every decision and ensure that it's creating value.

And most of your markets, we sort of come to expect the performance that you delivered. It's been very strong. I'd say, a wide outlier was how well you did in refinish. So can you contextualize this for that? Of a $5 billion sales quarter, how much is auto refinish, and what markets you're in? And how did you capture that market share, that dramatic market share, relative to what the industry was doing? Thanks.

Yeah. So thank you, Bob, for that question, because it's an opportunity to talk about a wonderful team here there that's been working really hard. And it's been unfortunate because they've been gaining a lot of ground in the midst of a COVID experience that's not allowed those numbers to shine through. We don't quantify the size of the business itself, but I will tell you that it's been trending positive. To your question, or point, we believe that we're aggressively growing market share here. We think it's a combination of the technology. People have been asking about synergies with Valspar and Sherwin. This is an excellent example of some of those synergies that come through as we've combined the legacy Sherwin technology, along with the legacy Valspar technology, to come up with a system that's been -- well, been understatement to say, that's been well received. It's been terrific. I spent some time with these large customers who have converted many of those shops over to Sherwin. And I'd say it's a combination of the technology as well as the channel model that we have. Our own stores servicing these customers. We have the same mentality through our automotive stores as we do our own architectural stores. And it's working. And it's working aggressively, and it's a bit of a pun, but we plan on putting a lot of gas in this tank.

And Bob, this is Jim. What I'd add to that is auto, we saw growth in every region. So it wasn't just one niche there, it was every region that we operate.

I like the gas on the tank.

All right. Thanks, Bob.

The next question comes from the line of P.J. Juvekar with Citi. Please proceed with your question.

Yes, good morning.

Hi, P.J.

Your margins were up almost 600 basis points. Can you roughly break that down between what benefit you got from higher volumes versus lower input costs? And earlier, I think you mentioned the mix effect. Even if it's a rough breakdown, can you just give us an idea how that breaks down?

Yeah. P.J., I know you've heard me say this a bunch of times, but it always starts with volume. And I talked about the mid-single-digit volume growth in architectural and TAG, or North America paint stores, where they talk about the high 20%-plus growth in our Consumer Brands Group. And we started seeing a return to sales growth with our Performance Coatings Group. So that's always the biggest driver. We did talk about the favorable product mix, and it was a little bit less than what we saw in the second quarter. As you know, raw materials moderated some. And again, we talked about our third quarter being less of an impact than the second quarter. And then we also had pricing that we had put in earlier this year. So, if you wanted to force rank them, I'd start with volume being over -- well over half of the increase, and then the other three kind of bucket rest of it in fairly similar order or size.

Okay. And John, a question for you. I mean, your execution on so far during this pandemic has been excellent. But just in case of scenario planning, if we have another wave of COVID, and it seems like it's already beginning, how do you think about the different businesses? Do you think DIY consumer will continue to be strong? And maybe the contractor recovery is a bit slower? I'm sure you're doing internal planning with all this, so can you just walk us through your -- how you're thinking in your decision entry?

Sure, P.J., you're right, we do a lot of what we call war gaming out. And again, I'll come back to the points that I made earlier about the leadership teams that we have. We don't know exactly how it will unfold. What we are blessed with is a lot of experience, maybe I might refer to it as scar tissue, by teams at all levels that understand and can execute. And if you don't mind, maybe I could just take a second just to talk about why I have so much confidence in our ability to respond to whatever it might be. Because yes, you're right, we have thoughts and ideas of different scenarios. All of them come back to execution, and all of the execution comes back to the people that we have -- the terrific people we have in the field every day. So, if I could just take a second and explain why I feel so bullish about that. I mentioned in our financial community presentation last month, about the fact that our MTP program in our stores was reaching 40 years, and this is 40 years of recruiting outstanding talent, training and developing talent and retaining talent. And so when you ask, why do we have confidence and why we are able to execute? We're recruiting 1,500 college grads annually. That means we've got 10,000 of these college graduates throughout the company right now. When I say throughout the company, I'm not just talking about in TAG, I literally mean throughout the company. These are people that have maybe entered in through TAG. They understand our culture. They understand our strategy. They understand our expectations. They understand our aggressiveness. And that helps us so much. In fact, the fact that people come in through that…

Great, fantastic. Thank you.

Thank you, PJ.

Our next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your question.

Thank you, good morning. John, just going back to the SG&A investments in Q4, is there any way to quantify what the increase is either versus the prior year or versus Q3 in terms of this increase or this added investment?

Yes, David, we haven't quantified them because we're just trying to tell you what we've done versus tell you what we're going to do. I would kind of frame it this way. In the fourth quarter, you do see seasonal reduction in sales related to architectural. Our typical cadence is our SG&A spending tends to be flat from the third quarter to fourth quarter, if you go back and look at it over a period of time. So you delever a little bit on a sequential basis. It doesn't -- I said we'll potentially delever a little bit year-over-year and not see as much benefit in SG&A as we saw in the third quarter. That's really dependent on -- I gave you a pretty wide sales range because of some of the uncertainties around different segments, general, industrial and some others that we had talked about. So as we see the continued sales momentum into November and December, that will tell me the cadence of what we can put in as investment. So we're trying to do the pedal and clutch, as one of our group presidents likes to talk about. We don't want to get too far ahead of ourselves, but we're also looking at it from the long term, and that will tell you where SG&A comes in as a percent.

Very helpful. And now just going back to what you said earlier, are DIY sales up 23% combined in Q2 and Q3 year-over-year?

That would be pretty close. Yes.

Thank you very much.

Thanks David.

Our next question is coming from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your questions.

Yes. Good morning. A couple of questions on the subject of inventory. If I look at your own balance sheet, inventories decline’s about 8% year-over-year in the third quarter, despite sales growth. And I suspect that many of your customers have been trying to manage for cash and liberate working capital as well. And so in that context, I'm wondering, do you expect to run assets harder than normal over the winter? And would you expect your customers to do the same, such that we might see a slightly different seasonal pattern through the first quarter of 2020, 2021 relative to normal?

Yes, Kevin, to your first point, you're right. With the impressive DIY demand we've seen, we've been not building inventory as much as just maintaining our -- keeping up with the sales out the door. We absolutely are going to run our supply chain harder this fourth quarter and going into the first quarter to build inventory ahead of the spring selling season. As far as how we work with our customers, we want to make sure we're building the right products and getting to them at the right time. We don't think it's about just loading up inventory at store level, whether it's our stores or our architectural and consumer customers, but we're working with them. And it's going to also depend on what the trend that we see in DIY demand out of -- coming into the winter here in November or December and the early part of next year, and then ramping up to the spring. So that's going to be a constant. And I would tell you, we are working with our customers on a daily, weekly, monthly basis to make sure we're getting them the right products that they need.

Yes, Kevin, I'd echo the point, and I'd like to just emphasize as we look, particularly on the consumer side. Heidi Petz and her team are working closely with each of those customers. We're going to drive inventory to support those customers. And if it means putting a little more in working capital, we'll do that, but we're going to serve those customers.

Yes, Kevin, I guess I'd be remiss if I didn't say on the other side, where we've been under a little bit of pressure on the Performance Coatings side. I think that team has done a really, really nice job controlling inventory, so we didn't build the wrong inventory. And they've got a lot of different programs in place to try to drive complexity out of that supply chain, whether it's SKU rationalizations, platform consolidations. And I give that team a lot of credit for maintaining a disciplined approach to inventory, whereas on the DIY side, we're just full out. We're making as much as we can possibly make.

That's really helpful. And then, as a second question for Jim, perhaps. I was curious about raw materials. You referenced some recent cost inflation probably since June is my guess. But just curious, if we flat line raw materials from October, what do you think that would say for the basket in 2021 versus 2020?

Yes, Kevin, what I would tell you in – just based on our commentary that we gave in our prepared remarks, I mean, third quarter was down a mid-single-digit range. And the third quarter was mainly driven, again, by lower costs on resins, monomer, solvents. Going into our fourth quarter, we think we're still going to see a benefit year-over-year, but maybe not as much. We've seen some sequential tick up in some of the feedstocks, propylene has ticked up here, ethylene has ticked up even HDPE on the packaging side has ticked up. So we're seeing that. I think we start to think about 2021. It's probably a little bit early to be thinking about 2021. We'll give you that view in January as we typically do. But again, what I would say from a directional perspective is a couple of things. We're seeing sequential increases. Certainly, we've seen a rise in oil prices, which are putting pressure on some of those feedstocks, they're not always totally connected, but there is some pressure there. We've seen the upstream capacity from refineries, crackers, PDH units, they're managing tighter through this pandemic. So we're seeing some tighter supply demand and scenarios there. And demand is picking up. So all of those could be factors that we're looking at. On the TiO2 side, again, we're watching that closely as well heading into next year. And it's all about, I think, what demand is going to do. To this point, North America and chloride been pretty stable. Chinese TiO2 players have been out with some increases here recently. So a lot of moving parts there, but still a benefit in the fourth quarter. In 2021, we just don't have a lot of clarity yet.

Okay. Thank you very much.

You bet.

Your next question is coming from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question.

Thanks very much. A quick one on interior paint, are you noticing any regional trends, whether it's a state level or just a section of the country level as it relates to interior, just thinking in terms of COVID virus trends, or is there any sort of differences between how fast interior is coming back to which part of the country you look at?

Not really, Vincent. I'd say it was a bit slower in some of the more urban areas, but we are starting to see some pickup in those areas as well. So I can't just – I can't explain it. If people are just getting tired enough to the point where they're saying just come on in, or they're leaving, or what's happening, but we are – it's pretty well even across the country.

Okay. And then just one last question on your cost side of the equation. In the stores, now that we're a few quarters into this, has it become apparent that you have higher costs associated with servicing customers because of COVID that you might need to recover next year, or is that not the case?

Not the case.

Thank you very much.

Thanks, Vincent.

The next question comes from the line of Rosemarie Morbelli with G. Research. Please proceed with your question.

Thank you and good morning, everyone. If we could go back to the consumer brands and, in particular, for the DIY business. Can you talk about the margins and growth expectations when DIY slows down to a more normal environment post-COVID? And can you give us an idea as to how much you lowered the breakeven point when you look at what you did this year versus nine months versus last year?

Yeah, Rosemarie. I would say, our expectations don't get any easier. We're expecting that the investments we're making in the programs across each of the customers are going to drive continued volume. And that could be on DIY. It could be on the Pro. We expect that, like we've done over this past year, is really focused on where we're not performing as well as we could be. And we talked about the improvements we've made in our international businesses. And just to kind of put that in perspective, I mean, our international sales for the quarter were up 26%. And flow-through is over 65%. So we're seeing the benefits of those actions as well as we had talked about the favorable product mix, and part of that was exiting the ACE private label business. We're looking at our cost structure on how we support that field organization and making those changes as we need to. So I wouldn't say, just because DIY slows, we should automatically expect to see our margins contract back to prior year levels. I think the high-teens to low 20s that we talked about. As you know, when we set a new high watermark, that is the new target, and we'll talk about what we expect on those operating margins going forward in the future here.

And. following up on that, is there a difference? And I know you cannot talk about customers specifically, but nevertheless, is there a difference between the profitability level at the Lowe's versus all of the other smaller type of retail?

You're exactly right, Rosemarie. We're not going to talk about that.

Well, I said, I would try.

You can repeat the question now.

And then looking at the interest expense level, just quickly, is that 83.3 million, a new level, or should we expect it to go down because of the timing of your debt repayment?

I'm sorry, Rosemarie, I lost the first half of that question.

Interest expense declined to $83.3 million in the third quarter. Is that a new level, or is it going to decline some more, depending on when we paid $400 million in this quarter?

Yeah, it's probably a good estimate going forward. We're looking at some things with next year and even into the 2022 tranches to do something with. But I think that's a good level right now.

And at 2.5 times net leverage, it sounded based on previous comments that debt reduction is no longer a priority?

I would agree with that. We talked about not really looking to reduce debt coming into this year. But based on the circumstances, and what was happening, I thought it was prudent to take it down. So – but yeah, you are absolutely correct.

All right. Thank you.

Thank you.

The next question is coming from the line of Mike Harrison with Seaport Global Securities. Please proceed with your question.

Hi. Good morning.

Good morning, Mike.

I was wondering if you can talk about what you're seeing in the independent peak dealer channel within consumer? Are they seeing as robust of a DIY pickup as you guys have? I guess the question I'm trying to get to is, are they maintaining share, or are they continuing to see migration toward maybe your stores or other company-own stores as well as big box retailers?

Hi, Mike, as you know, we don't get POS data from those independence. We do believe though that third quarter was strong across most of the independent dealers. It's an environment where they're probably doing pretty well. Hard to say that they're gaining or losing share right now, real time, but I would say that they are likely benefiting to some degree from the same nesting issue that most people in the paint business are in urgency right now as it relates to DIY.

I think, Mike, on the long-term, though, I think this channel will likely continue to lose share. The Pro DIY shift continues because we do believe it will go back. I know it's shifted a little bit to do-it-yourself in this cycle. But longer term, we expect this shift to go back to do-it-for-me, and the continued market share gains that we see in the home centers.

All right. And then in terms of the packaging business, your results there, that seems to be another area where you're doing quite a bit better than the underlying market or where some of your competitors are it sounds like beverage can demand is really strong. Is that an area where you have relatively higher share? Can you maybe talk about differences in your mix that might be contributing to the strength in that packaging business?

Mike, I would tell you that is an area of strength for us. But I would tell you, as it relates to packaging, we've got a terrific team there that's doing a wonderful job as well as wonderful technology. I think we're growing share pretty aggressively in both food and beverage. And we expect that to continue.

All right. Thanks very much.

Thank you, Mike.

The next question comes from the line of John McNulty with BMO Capital Markets. Please proceed with your question.

Yeah, thanks for taking my question. So you made some compelling comments earlier in the Q&A around, I guess, you kind of called them, easy comps. And so it kind of sets the Stage 4 for what should be volume growth next year. I guess, with that in mind and the fact that volumes tend to be the biggest drivers of your margins, should we be assuming that there's room for updraft in the margins as we look to 2021, or are there some offtakes that we need to be considering, whether it's raw materials or temporary cost rollbacks or mix or what have you that maybe hampers that a little bit? How should we be thinking about that?

Hey, John, I'm going to have Al answer that, but I want to make sure that I correct it. We never said, easy comps, we said, favorable comps.

A fair point, a fair point.

In that entire TAG leadership team down there, having their chests suggesting that nothing is easy down there. They're doing want to acknowledge that and say that they're favorable, not easy. Now, Al, you could answer that.

Yeah, John. We do expect to see a more normal demand environment as we go into next year. Some of the favorableness we saw in the two quarters that I talked about on favorable customer and product mix, some of the strength in DIY and volume that we're starting to see on performance coatings. So as a company, our mix of businesses is going to get to a more normal level is some of these businesses where we have opportunities start coming back. That being said, I mean, we're going through our planning process. We're going to continue to look at driving or operating margin leverage. And that's going to come from continued expansion in the gross margin and continued leverage on SG&A. And depending on what we see from a raw material environment, from a pricing environment, from a -- that will kind of tell me what we can continue to invest in or where we have to get more leverage on SG&A. But we're not that far along in that process yet. And as we have typically done, we'll come back to you at the end of the year with our 2021 guidance to give you more color around that.

Got it. Fair enough. And I appreciate the color. And then the other question would just be on the capital deployment side. When you look at the M&A pipeline that you see right now, would you say the bid asks have started to narrow at this point or are they still relatively widen? And you kind of need to see things kind of further shrink down on that before pulling the trigger? How should we be thinking about that?

John, I'd say they're beginning to narrow down. We're feeling as though some of what's happening in the marketplace right now as people looking hard at the mirror and asking how much further and how much harder they want to run. And others that are saying, I want to be a little more realistic. So, I'd say that the gap is narrowed.

Great. Thanks very much for the color.

Thank you, John.

Thank you. And our next question is from the line of Greg Melich with Evercore ISI. Please proceed with your question.

Hi, thanks. Got two questions. Just on the pricing, has there been any pricing in Performance Coatings, especially considered in that there's a capacity increase that's now coming? And then I have a follow-up.

On a targeted basis, there has been, Greg.

Okay. Could we say that overall that there was some help to the top line in Performance Coatings year-over-year?

Yes.

Yes, Greg, I think the way I would look at that is because Performance Coatings businesses are so diverse and product quantities and the like, I mean, if you take FX out of it, in currency neutral, it'd be up 2.6. You probably could split that evenly between price and mix, because mix plays a part there and volume.

Got it. Thanks for that. And then on capital allocation, I just want to make sure I'm getting the pieces right here. Thanks for reminding us of how you're doing it with the dividends and the buybacks. CapEx, once you start working on the new headquarters and the R&D center and everything, should we expect that to go up to sort of sort of $400 million? I'm just trying to figure out, if the cash from ops are $2.5 billion that the balance sheet is de-levered?

Yes, Greg, we're going to have probably a couple -- two years here, where the facility projects are going to take us up over -- certainly, over $400 million. Depending on timing and where we're at in that construction process, it could approach $500 million for a year. So, it will be up about 2% for a couple of years. But long-term, we'll still trend it back below 2%.

Got it. And then it sounds like this $400 million run rate for the buyback then could become a run rate, not just a quarter?

Yes, Greg, you look at $600 million, we had sitting on our balance sheet in the third quarter. I do expect to have, again, strong cash generation here in the fourth quarter and we'll use that excess cash to buy back stock.

That's great. Good luck everyone.

Next question is from the line of Duffy Fischer with Barclays. Please proceed with your question.

Yes, good morning. Just question on China, because it's recovered much faster than other geographies, it's not a huge business for you. But can you go through kind of the end markets in coatings there? And how you see those coming out of this dip? And then second follow on to that would be, is China a fruitful area to look for M&A for you guys now that you've got more expertise there with the Valspar acquisition?

Yes. Duffy, I'd say that if you look at our Performance Coatings business, 5 of the -- actually, all 6 of the industrial businesses, 5 of the businesses were positive in the third quarter in Asia. We feel there's some good momentum there. And our ability to bring solutions to those customers, we think, helps to differentiate us. So yes, we expect that to continue to grow. I'll add in the architectural piece as well, although I don't know that you were asking that as much as maybe the industrial side. But we've got, I think a terrific opportunity long-term there. So we're doing some work there and some, we believe, good groundwork that will help generations down the road, not next quarter, as we establish the brand and channel for the architectural side. But if you look at our industrial businesses there, they're all pretty strong. And as far as M&A in that market, yes, we're interested in the right businesses there that could help to accelerate our strategy. Again, I'll go back to the very disciplined approach that we take here, which is not just buying a book of business, but something that brings value to our shareholders. We find the right targets in there that can help us, yes, we'd be interested.

Terrific. Thank you, guys.

Thanks Duffy.

Our next question is from the line of Chris Parkinson with Crédit Suisse. Please proceed with your question.

Good morning guys. So just taking a step back from COVID factors. How should investors think about the key long-term growth pillars in PC? I assume packaging is just one area of growth enthusiasm, given your consistent outperformance already. But how should we think about the other substrates and your positioning in order to outgrow the respective end markets? So just trying to get a sense of your normalized PC growth algorithm? Thank you.

Yes, Chris, we do believe that we're growing faster than market right now. And you're right, packaging from a technical standpoint, approval process standpoint, nearly every aspect of packaging is pointing in our direction. So we're feeling really good about that. We talked about coil and the process that we've been going through and new wins or share of wallet, as we like to say, and we expect that to continue to grow. And so our expectations of that team are very high as well. I'd say, we didn't really talk all about it in great depth, but we're really proud of the industrial wood business and the performance. It wasn't long ago, that business was something like made your head hurt. But I'd say it's moving in the right direction here pretty aggressively, and that team is really demonstrating the fact that they've got their hands around this business moving in the right direction and got the lot of confidence, particularly when you look as I mentioned in the prepared remarks about the new residential business and the linkage between that industrial wood business and the growth there in industrial wood. Auto, we talked about the positioning that we've had and how we're growing there already, and it's just not been as visible as we would like because of we're only about 75% back on the road. So we often say, we don't want to be ambulance chasers, but the more roads on – the more cars on the road, the more refinished business there's going to be. And so we're feeling really good about this. Next, then come to areas GI that we've talked about. We love our position here. And to your point, or the question earlier, I believe, I think, Greg or Duffy asked about, our Asia position with leadership? And we look at that Valspar leadership that came with that acquisition. And we've often referred to that as the greatest infusion of talent in the company's history. And so when we look at the auto business and GI, we look at terrific technology and talent that has come here. And we expect to help – that to help up our business in this GI business. Aaron Erter, our Group President of this business, is really doing a wonderful job in a very challenging market, and we've got confidence that each one of these are going to drive. We talked earlier in the life cycle of this acquisition, about our goal to drive the operating margins here in the high teens, low 20s, and we have every bit of expectation and confidence that we're going to do that.

Yes. Chris, I'd just add to that point. I mean, you look at our third quarter small sales increase of 1.2% and a 110-point operating margin improvement. That just goes – and I got to highlight the team and give them credit, that goes to all the hard work. They've been putting in even the second half of last year as we saw things starting to slow outside of the U.S., they've done a really nice job of working on reducing complexity, reducing SKUs, improving their operations so that when they do get volume, they'll get more leverage on that volume coming out of this pandemic than when we went into it.

Very helpful. And just the follow-up would be, when we're sitting back and thinking about DIY trends, just drilling down a little bit more, can you just comment on the end market demand for stains and sealants versus interior paints? It seems the former, on the demand front, was very strong and you had to rise to the challenge in terms of reduction. But if we're parsing that out next year, are there any major considerations on the best way to think about that as we head into 2021? Thank you.

I think, Chris, it goes back to the DIY comment that I talked about the stain and sealants are in there, and it's part of that 25%. That's up – 25% of our company, that's up over 20%. And I still think we have such great opportunities in the other 75% of our company to offset any declines in DIY that we see next year.

We do. And we also have most powerful brands in those areas to build on as well. And a wonderful team that understands that, that we'll execute on that. So I think we will kind of be approaching this from both sides aggressively.

Thank you very much.

Thanks, Chris

Our next question is from the line of David Bellinger with Wolfe Research. Please proceed with your question.

Hi, everyone. Thanks for taking the question. So first on the Consumer Brands segment, you characterized DIY demand is elevated throughout the entire quarter. Can you walk us through what you were seeing towards the end of Q3? Was that business strengthening further, even as you move into a typically lower volume Q4 period from a seasonality standpoint?

Yes. David, it's pretty flat. I mean, if you look at it on a same-day basis, it's pretty flat throughout the quarter.

Got it. Okay. And then just a follow up on an early earlier comment around the --?

About what? I'm sorry?

The Pro business and the Pro contractor business. Can you just give us an update there in terms of project backlog and bids? Is there any way to quantify that trend? And you also mentioned an uptick in the sales of spray equipment. What has that told you about the business historically? And how long do the sales typically track higher after those type of purchases?

Yes, I would say that we have seen and heard from our customers that the backlog has grown on the part of our contractors. That's evidenced by the fact that they are busy more and have more customers now allowing them in their homes, but still a long list of people that are hopeful that the projects would be coming in soon. I think some pace of that is going to increase with more allowing people in as they're going to be spending more time perhaps in their homes, preparing for the holidays, whatever it might be. So, I'd say that the backlog is good, strong and growing on the part of our residential repaying customers. So, as it relates to the spray equipment, I'd rather not give you any specifics on how long or what that means from a timing perspective. I will tell you that we see a direct correlation between the confidence of the spray equipment sales and the mentality of the contractor has before making that purchase. So, when they're plucking out a couple of thousand dollars or so on a piece of equipment, they're betting that these projects that they have coming up will allow them to pay for them. So, it's a good precursor for what's down the road.

That's fair. Appreciate the color here. Thanks guys.

Thank you, David.

Our next question is from the line of Garik Shmois with Loop Capital. Please proceed with your question.

Hi thanks. Just a follow-up on the discussion of favorable comps in certain parts of TAG, thinking about commercial and property management, in particular, can these verticals be positive next year, just given some of the green shoots you're seeing right now?

Yes. Very much. So we're excited about this. Yes. I mean, these are -- I use the term I was thoughtful in using that term favorable comps. Yes. You got commercial down low single-digits, property maintenance, mid-single-digits here in the quarter, and we have a wonderful position here, great people, great products, great relationships. Yes. We're going to -- yes. The answer is yes.

Okay. Thanks. A follow-up question is just going back to a comment in the prepared remarks. If there's an infrastructure bill, say, in the first half of next year, how quickly could your wastewater business with Protective & Marine see the benefit?

Well, so you're talking about how long before a bill is passed and paint is applied? I mean, it would vary, obviously, by project. But I'd say you could see that in a quarter or so, likely. That's a guess on my part. I'd say our position there is very strong, particularly on water and wastewater. It's been a good position and growing for us. But I'd say when you look at general – or I'm sorry, the protective and marine, and the contractors that typically do that type of work, those are typically areas that we do very well with. So as soon as it hits the Street, we would be right on top of that.

Great. Thank you very much.

Thanks, Garik.

Your next question comes from the line of John Roberts with UBS. Please proceed with your question.

Thank you. Is there an opportunity to further optimize your store's footprint, given all the changes going on in the commercial real estate market, malls closing down and so forth? I'm sure not all of your stores are in the most optimum location?

Yeah, John, we look at that on a regular basis. And the opportunity for us as markets turns, change and develop. And so the beauty of our approach is how we structure those decisions are as close to the customer as possible with support. So those decisions and opportunities are something that we leverage figuratively.

Yeah, John, and I would just say, we have taken the opportunity to do that. We've closed. And when I say closed, it's a lease expiration that we then moved to a different location, about 16 stores in the U.S. and Canada. We did about six last year. So a little bit stronger pace this year than last year. But like John said, it's a regular process for us.

All right. Thank you.

Thanks, John.

Your next question comes from the line of Eric Bosshard with Cleveland Research. Please proceed with your question.

Can you break out at all, within the pro business, the difference between interior and exterior growth on the res repaint side? I know that 4Q and 1Q are bigger interior quarters. Just trying to see what the momentum and the growth profile looks like between interior relative to exterior?

Now, Eric, I would tell you that we've spoken about the double-digit growth that we've seen in exterior, the very strong high single-digit growth in interior. Obviously, the interior paint market is much larger than the exterior, but we're not going to provide any more detail on our sales of those products and help you understand that.

Yeah. Eric, I think what I talked about in the -- either the second quarter, or at FCP, was the fact that in the out quarters are interior to exterior ratio is four to one, on the interior -- on the two biggest quarters, it's three to one. So it was a little bit less than that in our third quarter just because of the strength of exterior.

And then the momentum within interior, is that stable, or is that month-to-month improving? And it couldn't even be anecdotal, John, I understand sort of detail of this, but just trying to get a sense on the comfort of consumers and pros getting more active interior?

Eric, I'd say that it is an area of comfort and confidence that we have. It's moving. And as I mentioned earlier, it's, for the most part across the country, and for the most part, nearly all of our residential repaint customers. You'll hear some pockets of concern. But for the most part, I'd say there's a strong excitement inside our building about the interior growth.

Okay. Thank you.

Yeah. Thank you.

Thanks, Eric.

Thank you. Our next question comes from the line of Kevin Hocevar with Northcoast Research. Please proceed with your question.

Everybody on the -- looking at Consumer Brands businesses, the Australia business, in particular. If we rerouted the clock, about year ago, this was an area of disappointment. But here we are, sales are growing strong double digits. I think you guys said total international up 26%. I don't know exactly what Australia is in there, but you guys said double digits. So curious it seems things have turned around. I'm curious how much of this is the product of the environment that everything is doing well versus the actions that you guys have taken to really improve the business? Curious of the progress that we've seen there?

I'd say it's a little bit of both, Kevin. I'd say we've got a terrific leader. Brian Patton has done a very nice job of running all of those industrial -- I'm sorry, the international architectural businesses for us. This business, as you mentioned, delivered double-digit growth and it improved its profitability. And we think that we've definitely seen an increased effort to develop the right platform channels for distribution through our team. They've done a nice job of taking out costs and the actions associated with that are not always easy or fun, but this team did a really, really nice job of taking the right steps and right actions and a double-digit growth with reduced expenses, and you start to see an improved bottom line.

And then in terms of the guidance for the performance segment in the fourth quarter of sales being flat, plus or minus low single digits, it seems like -- it seems to imply that we kind of stall from what we saw in the third quarter, but it seems like momentum is building in all the different subsegments within the segment. It looks like the comps are a little bit easier in the fourth quarter. And I would think that FX would be better sequentially. So that all seems to add up to some acceleration, but it seems like the guidance implies kind of similar results in 4Q versus 3Q? So curious your thoughts there.

Yes, Kevin. I think one of the comments we made on GI is this an inventory build. Or are we going to be able to see sell-through on that inventory? And so -- and there's momentum. But outside some of these markets and some of these businesses, there's still choppiness that we're accounting for.

I think yes, sequentially, we've seen improvement in -- the other thing they like to build on Al's point, even in these challenging times, the 5 global business units that sit in PCG all grew in all regions. So I mean, there's some pretty good momentum that we have coming along here.

Okay. Thank you very much. A – Al Mistysyn: Thank you Kevin.

Thank you. Our final question today comes from the line of Justin Speer with Zelman & Associates. Please proceed with your question.

Hey good afternoon. Thanks guys. I just had a couple of questions, one being the SG&A side of the ledger. And I apologize if this has already been addressed. But on the Analyst Day, you mentioned you're making incremental growth investments in the fourth quarter, and you weren't going to see as much leverage there. Maybe -- can you articulate maybe how much margin headwind is expected from that investment? Maybe can you speak to the nature of those growth investments? And maybe how we should think about that going forward as you make those important growth -- continue to invest in your business? A – Al Mistysyn: Yes. Justin, what I try to say is, we haven't laid out the amounts that we're investing. Some of them get into very specific customers, others we'd rather tell you what we've done versus what we're going to do. But part of the leverage will depend on the cadence of how we put in new stores and reps across each of our segments, how much in the e-commerce platform are investing relative to what our volume looks like in the fourth quarter. If we're at the higher end of the volume, we may be able to get more investments in, and still see an improvement and get SG&A leverage year-over-year. If we're at the lower end of that volume range, we're probably not going to see leverage on SG&A, because I think it's important that we stay the course. We're taking a disciplined approach to it. We know it's the right thing to do long term. I'm not trying to get to a perfect quarter in the fourth quarter. But, we're managing it as we go through the quarter.

Yes. And Justin, it sounds like you mentioned that you may have missed the earlier response. I think it's important to build on the point Al made earlier, which is – this is very similar to the 2008 run that we experienced. We've got a long-tenured leadership here at Sherwin. It's been through many of these movies here before. And we know how to invest. While it hits the SG&A line. I would tell you, Al and the other control – the group controllers that work with Al, there's a very disciplined approach in this. So this is not money that we look at spending, these are investments. A very high level of discipline and expectations come along with those investments.

Makes a lot of sense. I’ll just leave it there. Appreciate your time and attention. Thank you, guys.

Thank you.

Thanks, Jason.

Thank you. At this time, we've reached the end of our question-and-answer session. I'll now turn the call back to Jim Jaye for closing remarks.

Thank you, Rob, and thanks to everyone for joining us today. Really appreciate your interest there entire leadership team. I hope you feel came through, we're very confident very optimistic about our fourth quarter prospects and where we're heading into 2021. I will be available along with my colleague Eric Swanson for your follow-ups today and the rest of the week. And please, contact Natalie Darr to get in the queue. So thanks again for your interest. Have a great rest of your day. Thank you.

Thank you, everyone. This will conclude today's conference. You may now disconnect your line lines at this time. Thank you for your participation.