Thank you for standing by. And welcome to the James Hardie Third Quarter Fiscal Year 2023 Results Briefing. Today’s briefing is hosted by James Hardie’s CEO, Aaron Erter, and CFO, Jason Miele. [Operator Instructions] I would now like to hand the conference over to James Hardie’s CEO, Mr. Aaron Erter. Please go ahead.

Thank you, operator. Good morning and good evening to everyone. I am Aaron Erter, CEO of James Hardie and I’d like to welcome all of you to our third quarter fiscal year 2023 briefing. Turning to Page 2, you will see our standard cautionary note on forward-looking statements. Please note that the presentation does contain forward-looking statements and the use of non-GAAP financial information. For today’s call our CFO, Jason Miele will start by discussing our third quarter fiscal year 2023 financial results. And I’ll follow up with him on a strategic and operational update. We will then open it up for questions. While Jason will spend his time discussing our current fiscal year results. I will spend the majority of my time looking forward and explaining how we intend to continue to derive differentiated results into the future. Before I hand it off to Jason, I would like to take this opportunity to thank all of our employees around the world who remain focused on safely delivering the highest quality products and services to our customer partners despite the significant headwinds we are facing in all three of our operating regions. Our employees truly represent the very best in our industry. And I feel fortunate to work with them. With that, I will hand it off to Jason to discuss our third quarter financial results. Jason?

Thank you, Aaron. And let's start on page 5 to discuss our global results for the fiscal year 2023 third quarter and year-to- date nine months. In the third quarter, group net sales decreased 4% to US $860.8 million. Global volume was down 11% due to the deceleration of the housing markets we participate around the world. However, in every region, our teams continue to deliver a strong price/mix growth, leading to group net sales down only 4%. In each region, our teams continue to drive strong product mix while executing strategic price increases, leading to price/mix growth of 10% in North America, 6% in Asia Pac and 14% in Europe. In regards to earnings, global adjusted EBIT decreased 19% to $165.4 million and global adjusted net income decreased 16% to $129.2 2 million. Every region's earnings continued to be negatively impacted by inflation. Nine months year-to- date results are much stronger buoyed by the stronger market in the early months of the financial year. For the first nine months, global net sales increased 8% to $2.9 billion and adjusted global net income increased 4% to $459.3 million, both our records for the first nine months of the fiscal year. As you are aware, the housing markets we participated in have decelerated during our current fiscal year and inflation continues to pressure margins. For the full year of FY23, we are estimating inflation to be between a $160 million to a $170 million headwind globally as we adapt to the changing market conditions and as Aaron will discuss further, we are making adjustments to our global workforce by balancing our manufacturing networks and reducing SG&A headcount. In total, we reduced our headcount by approximately 6%. globally. We incurred restructuring costs of $6 million in the third quarter, and will incur…

Thank you, Jason. Jason just walked you through our fiscal year 2023 third quarter and year-to- date results. As such, I'm going to spend most of my time discussing how we intend to drive differentiated results moving forward. In addition, I will provide you with a framework on how we intend to run our business as the markets and segments we participate in soften. Whatever challenges we face, it is our job to outperform the market while providing our customers solutions. That is what we have a history of doing and what we intend on doing moving forward regardless of market conditions. With that, let's turn to page 11. Some key takeaways as we look at fiscal year ‘23. First, significant inflation impacted our operations in all three of our regions. Second, we experienced a rapid and unexpected deceleration in the housing markets we participate in. And third, our teams remained focused on what they can control, like bringing our customers the solutions they need, and delivering strong execution of our strategy in a challenging environment. Let me briefly talk to each of these items. First, in regards to inflation. Our current estimates are that for the full year, we will incur approximately $160 million to $170 million of inflation globally. That is not only a significant headwind to our financial results, but also a significant change from our expectations entering the year. You will remember that during our February 2022 results call, we stated our expectation for fiscal year ‘23 was global inflation to be between US $40 million to US $60 million. We have been able to minimize this impact through pricing and productivity initiatives driven by the Hardie Manufacturing Operating System, or as we call it, HMOS. Net, let's discuss the housing market segments we participate in,…

[Operator Instructions] Your first question comes from Brook Campbell-Crawford with Barrenjoey.

Good morning, thanks for taking my question. Just went on guidance for FY23, and the implied fourth quarter and parts about $150 million, which is a step up from $129 million in the third quarter. Can you just step through the drivers of sequential pickup and part quarter-on-quarter from 3Q to 4Q, pls?

Yes, Brook, thanks for the question. Start with price increases. Second would be the expectation that volumes are roughly in line in most regions to Q3. The expectation was better landed cost through HMOS and some inflation decreases in our input costs would be and then the lack of a restructuring charge would be the items walking from the Q3 net income, which I think is where you're starting from.

Thanks. What's the fourth quarter North America EBIT margin expectations?

Yes, as we talked about on slide 18, our expectation is to sorry, not on slide 18, we expect to drive EBIT margin according Q4 based on higher net price and lower landed cost.

Your next question comes from Keith Chau with MST Marquee.

Good morning, everyone. Thanks for taking my questions. Just one on price/mix. So I guess the commentary suggests that prices are going up. But obviously with market share gains and new sequences a chance to mix is impacted. And if you look at the price/mix number between 2Q and 3Q, there was a very slight decline quarter-on-quarter, but that might just be quarterly variability. But Aaron, can you help us understand where you think the outcome overall, we'll be for price/mix in the context of price increases still coming through? Is there an expectation of mix to revert back to historical levels, at least to an extent, if you can help step us through that that would be much appreciated. Thank you.

Yes, thanks for the question, Keith. I think part of this is the price increase that we will realize in Q4, I'll have Jason walk you through the steps to this. Jason, why don't you go ahead?

Yes, Keith, we're still obviously focused on the same, winning in the same market winning in every market, every segment, there certainly be mixed impacts. Our focus is that, as Aaron described on page 18, in every region, we expect, net of all those movements, net price to increase year-on-year. So certainly as we went through the presentation, Aaron described the competitive nature of single family new construction, we're doing really well in multifamily. We have an opportunity to better serve interiors than we did during the past couple of years. And so there'll be quite a few different mix impacts that occur. But net of all that and our price increase, we expect to drive a higher net price year-on-year. And as we give formal guidance in May, we can unpack that a bit more. But that's what we see moving forward.

Your next question comes from Andrew Scott with Morgan Stanley.

Thank you. Good morning. Aaron, this follows on nicely from Keith's question. I know that you commented on the relaunch of Cemplank, obviously, that's a pretty important strategic decision. Can you talk about the parameters you're putting around that and how far that extends?

Yes, Andrew, thanks for the question. Look, we talked about before bringing solutions to our customers, understanding their needs. So obviously, particularly if we look at our big builders, they're becoming more and more price conscious. It's becoming more competitive out there. So Cemplank is an asset that we have in our arsenal that we brought back, but on this call, I'd rather not go into the specifics for commercial sensitive reasons. But as I mentioned before and Jason that I'm really confident we're going to drive a higher net sales price as we move forward. And again, we're going to continue to partner with our new construction building partners to ensure they have the right solutions that allows them and us to be successful together.

Okay, thank you. And Jason, just interested in the cost environment, obviously, we've seen transport come away your expectations, and when we might see some bottom line improvement, whether it's just cycling the cost comps from a year ago, or where you're seeing some of those leading indicators pointing to some relief.

Andrew, we continue to see inflation be pretty stubborn into Q3. But we would expect as we move into Q4 and onward, to deliver a lower landed cost as we shift production to more efficient lines as Aaron discussed. And we have seen some improvement in freight that we're currently not seeing while inflation is stubborn, and prices are high. We have seen them; the other basket of goods starts to flatten. So yes, we expect to start to not seen landed costs impacted as much as it has been the first three quarters of this year.

Yes, Andrew, I'll just add on to that. Jason mentioned, the high level of inflation that we saw this year unexpected almost three times the amount, but as we move forward, it's our responsibility to offset those. So whether that be price/mix, combination of both of those and our HMOS, we're going to work hard to make sure we're offsetting any type of inflation that comes across us.

Your next question comes from Lisa Huynh with JPMorgan.

Oh, hi, morning, guys. In the context of North American volumes paying off 10% in the third quarter, can you give us an indication of how sharply R&R was off, relative to new construction?

Yes. Hey, Lisa, thanks for the question here. If we look at our expectations for North America, R&R remained a little stronger than single family new construction. But we did see that dive into negative territory for us over the last quarter.

Yes, Lisa, then, on the call, Aaron referenced a basket of providers we use to measure the different markets. And that same group is signaling R&R in calendar year ‘23, to be down 6% to 7%. And then obviously our fourth quarter would be a part of that year. So while we thought, last quarter, we were signaling kind of flattish R&R activity is certainly our second half down in the low single digits.

Okay, sure. And then I guess in the context of that you did highlight as well, the competitive market environment out there, can you just make a comment about market share [inaudible] how you're seeing competition in the scheme of things?

Yes, look, we have a lot of good competitors out there, I would say two of our best are vinyl, substrate and wood substrate. And if you remember, Lisa, I mean 65% of our business is repair and remodel, 35% new construction. And R&R is less sensitive, as we just talked about, new construction is much more price sensitive. And thus a much more competitive market at the moment. But we're prepared for that. We talked about some of the things that we're doing out there, we talked about bringing Cemplank back. But some of the other things is we have the largest and most knowledgeable sales team in the category, right? So they're focused on bringing solutions to our customers. And we're staying really close to our customers to better understand their needs. We talked about it on the call, but we're really proud of the fact that if you look at the Top 25 production builders in North America, we've signed 20 for them, and with pride for us to be their primary hard siding provider nationally. We had 23 last year. So we continue, we believe to gain share, not only in R&R, but also in this space as well. So in offline, we can go through that calculation with you, if you're interested.

The next question comes from Simon Thackray with Jefferies.

Thanks very much. Hi, Aaron. Hi, Jason. And, Aaron, just followed drilling to a point -- for a point of clarification on slide 18. You've got EBIT margins 25 plus percent. You referenced in your pre prepared remarks long term North American margins of 25% to 30%, sort of understand whether though that 25 plus percent applies, you said you want the team to deliver that applies from where we are going forward, and to really feel how your confidence is built around that long term 25% to 30%. How much of it is cost versus how much is prospects? Thank you.

Simon, good question. Thank you. What I went through that on slide 18, today is really I was trying to describe the framework of how I'm going to lead this team and how our executive leadership team will lead the business moving forward. I wanted to provide some clarity on how I plan to operate. And the outcomes that we expect, I believe a margin above 25% is highly achievable moving forward. I believe that's achievable based on our pricing position, our superior value proposition. It's not something that we're forcing, because share gain is my number one priority. But that said as I've looked at this, and a lot of the volume scenarios for the next 18 months, I really believe we can operate above 25% while still investing in driving growth as well.

Thanks, Aaron. That's very helpful. And then Jason, can I just roll back to you for a comment you made about APAC decelerating quickly? Just specifically, which geographies are you seeing that in the order book?

Yes, Simon, in Australia, New Zealand, we've certainly seen channel destocking and then market activity lower than what we would have entered the year expecting. So the change in market activity from where we were entering the year in Australia to where we're at, we believe we'll exit, it's probably about 8% change, which is quite significant. And as we talked to everyone in the channel, that just wasn't something that people saw coming in as late as September. And Aaron might add some commentary around that. But we've definitely seen the markets in Australia, New Zealand flow quickly, including some channels destocking, which is impacting the third quarter, and the fourth quarter.

Yes. Simon, I'll just add to that being here when I first began in the September timeframe, and sitting with some of our largest customers as we looked for the outlook was pretty positive. But as we look now, as Jason talked about, with rapidly rising rates home prices, not having the affordability. We see some challenges with the business moving forward in Australia and New Zealand.

Your next question comes from Sam Seow with Citi.

Oh, morning, guys. Thanks for taking my question. Just want to kind of go back to November, I guess it was halfway through the quarter. We talked about single digit volume declines. And we asked I guess, multiple times in the call about margins, which you said, potentially, we're going to be towards the higher end of range. So I assume that's what you're seeing at the time, does that imply the exit rate where margins were close to kind of 25 to make that math back up? I guess that split of the margin decline, could you perhaps talk us through what was kind of the fixed cost deleverage and input cost?

And yes, thanks. Thanks for the question. Comes down to volume certainly, so volume, we had our expectations. We talked about on the call R&R been flat, the back half of our year, market activity, new construction down 30. You fast forward to today, new construction starts or minus 26 in Q3 and decelerating pretty quickly. So we'd expect that number to be higher in Q4, our Q4 and as I mentioned earlier, providers of the R&R data, we get signaling this calendar year ‘23 being down six or seven points in R&R, and we certainly saw R&R fall quicker than we expected in November. So the margin is primarily volume driven. Our expectations, you're right, we were talking to you early November, we comped the positive October. We knew that it was starting to decelerate, but obviously the deceleration was faster than we expected at that point in time.

Okay, cool. And then I guess, also back then you talked about the unusual building practices, I guess this result probably showed there's a difference between Hardies and home builder completion correlation. So I just wanted to check if those practices still around and I guess when you would expect that correlation between your volumes and completions to kind of show up again.

Yes, Sam, a great a great question and look, just being out in the field quite a bit in North America. As in the metro DC area, and then Texas as well. We do see some of that still. It's not as widespread. And thanks for the question. I think it provides me an opportunity to really clarify something I think might have been misconstrued on the last call. We saw some of this phenomenon in some regions where the product was going on first or before other historical practices. We noted that we saw instances where siding was going on new construction before roofing or windows, like you said, and we said that's caught us by surprise, and it did. Essentially builders and new construction, were consuming our product first, because we were a manufacturer who was able to keep up with the demand, and not compare the suppliers who were on long backlogs. We were feeling the downturn and new construction ahead of those manufacturers whose products were on backorder. So I just want to make a clear, our explanation last quarter, that was not intended as a reason for why our volumes were declining. But really rather reason why it was happening sooner than we originally thought. So we still see it. I still have pictures on my phone, because I've seen it in person. But I would say as the supply chain has caught up, it's not as widely spread, as we once saw it. But thanks for the question.

Your next question comes from Niraj Shah with Goldman Sachs.

Hi, good morning, guys. Hope you can hear me. Just one for me. How are you thinking about I guess; the multiyear CapEx spend program in light of some pretty quickly changing dynamics on the ground?

Yes. Hey, Niraj, thanks for the question. Just to really restate our expectations, we did -- me being new, I continue to review all our CapEx projects, right. Want updated assumptions as the market is ever changing, but at a high level, we still expect to spend around $1.5 billion, I think probably what you're going to see is instead of that spread out over three years, it might be a more extended time period here for us, as you can appreciate.

The next question comes from Peter Wilson with Credit Suisse.

Hi, good morning. Good evening. Just a question on gross margin. So North American gross margin for the quarter was down 190 bps. So this seems to be in the context of the strong price/mix, high value product mix. Aaron, you mentioned earlier that inflation for the group was $160 million to $170 million for the full year. So that's $120 million higher expect at the start of the year. That should be more or less taken care of by the June price increase, I would have said like 4% is about equivalent to that. So just wondering why gross margins continued to decrease in the quarter, even after that extraordinary June price increase and in light and in the context of your high value product mix?

Yes, Peter, great question. Just being completely transparent, even though we've done a great job, from pricing as of late the team's been able to go out and utilize our strong value proposition to get price, as I look over the year and hindsight is always 2020, we should have had probably two more price increases, or the earlier price increases should have been greater than what they were. That's really the gap that you're seeing right now.

Okay. And just a quick one on SG&A. The changes made, did they come through in the third quarter, or is that further decrease has to come in the fourth quarter and beyond?

Yes, Peter, you will start feeling it completely in Q4. And we also had the restructuring charges above the line this quarter. So it'll be Q4 will be favorable to Q3.

Your next question comes from Harry Saunders with Evanson Partners.

Hi, guys, thanks for taking my questions. Just firstly, I think you were alluding to multifamily outlook for ‘23 being better than single family. And so given the improved outlook being provided by US home builders, I'm just wondering if you could give some color on your expectations for single family new construction in calendar ‘23.

Yes, Harry, I think it's all relative, right, when we're looking for pockets of hope out here, right, multifamily, it's exciting because it hasn't been an area that we've really attacked much because capacity constraints and we are going after it. And we're seeing in our Q was leads more than we ever have in multifamily. What I will say as we look forward single family is expected to be a down 17, multifamily suppose -- is expected to be down 14 by the data we look at. So, not as severe as single family. But as we look forward, we think it's a huge opportunity for us in an area where we really have the right to win. And what I'm excited about, as we've opened up the multifamily desk, we're seeing a tremendous response as it relates to leads that are in our Q.

And one thing I would add here is, I think, as Aaron was mentioned on the call, the thing you were referring to is calendar year ‘22 multifamily was up 14% and starts, whereas single family was down 11. So you're starting from a better base and moving forward. Yes, we're excited about the multifamily opportunity.

Great, thank you. And just one follow up, if we could just move over to price. You talked about price/mix growth year-on-year, but I'm just wondering with price increase in January, and then the mix impact we could expect. Should we be expecting to the fourth quarter sequential price/mix great.

Sorry, are you saying fourth quarter versus third quarter?

Yes, sequentially.

Yes. So we took our price increase on January 1. So we'll achieve some of that, if not all that in Q1? sorry, our Q4. And we do expect as Aaron mentioned on page 18, net price per unit increasing going forward.

Your next question comes from Anderson Chow with Jarden Group Australia.

Oh, yes. Thank you. Good evening and good morning. I just have a question away from the results for a moment, there has been a few additional senior management roles appointed, I just want to know a little bit more about Mr. Joel Wasserman, he is going to run a Corporate Communication and Global Brand Management. What is the focus on a brand management and how involved would he be with the regional sales team?

Yes. Hey, Anderson, thanks for the question. We always like to talk about our people. We have made a few changes here. And Joel is going to lead corporate communications and global branding. The corporate communication spot is new for our company we've never had before. So we think that's important and critical function as we move forward. And global branding is really when you think about a lot of the investments we're making in the James Hardie brand, is to ensure that we're projecting and displaying the brand the right way across all the regions. So to your point, Joel is going to work very closely with the regional marketing leads to ensure we do this, Joel is someone that I've worked with before in my past, at Valspar and at Sherwin-Williams, and he has a really extensive background. And I know you didn't ask about it, but I’ll just throw two more in there. Tim Beastrom, is our new general counsel. So we're excited to have Tim. Tim also had worked with me in the past, most recently was at Ecolab. So Tim is going to be a great addition to our team. And then having a CHRO, strong CHR is really critical to our business moving forward. So Farhaj Majeed is going to join us and his first day is going to be next week, and we brought Farhaj over from Whirlpool, where he was sitting CHRO for the EMEA region over there. So we're really excited about these three new additions to our ELT team.

Your next question comes from Daniel Kang with CLSA.

Good morning, everyone. I'm just interested in your comment on driving a higher net sales price. If I look at slide 23 of your packet looks like net sales price slipped in 3Q for North America and flatten in APAC. Just trying to reconcile how you expect to grow net sales price given the relaunch of Cemplank, and I guess a tougher market where arguably you'd have to grant rebates.

Yes. Daniel. Thanks for the question, Daniel. Yes, Q3 versus Q2, our last price increase was in July. We achieved that in the second quarter. So we got a price increase on January 1 that we've put through, as Aaron talked about on the call, 65% of what we do is R&R, not price insensitive, I should say. And so we'll achieve that in the R&R segment, and then you shift to smaller portion of our business, the 35%. And Aaron went through all the things you just talked about, relaunching Cemplank on a limited basis, et cetera. So there'll be some mix factors there. It's also the expectation that new construction decreases more significantly than R&R, so you should get a mix benefit from that. So there's a lot of moving pieces this quarter or sorry, moving into next year, net-net, we think you take all those things together with the price increase, we're going to drive a higher net price moving forward.

Yes. And hey, Daniel, I'll just add to what Jason said. We intend to do this. This is all after discounting as well.

Got it. Okay. And I guess one of the key highlights remains that ColorPlus volume continues to perform very well. It has slipped a little bit, but what's your outlook going forward for that sort of range for ColorPlus volume?

Yes. Look, Daniel, it's a great question. I mean I think the performance has been just outstanding. Right. As you look at, I think it's over the last six quarters, we've grown this about 30%, and most recently, we grew at 18%. And you have to remember, this is a big focus area for us when we think about our marketing efforts and where we're targeting really very good R&R markets like the Midwest and the Mid-Atlantic and the Northeast out there. We expect to continue to grow this at double digit rates out there and above the market. So it is a high focus, and we expect to continue to deliver those types of results.

Your next question comes from David Pace with Greencape Capital.

Hi, guys. I know it's early days, but some of the calls have done with some homebuilders of late have spoken about a response to a lowering of the 30-year mortgage rate, just in terms of foot traffic, reduction in cancellation rates, slight improvement in sales. Again, I guess referring back to the earlier question regarding the lag between activity at the housing level and you guys actually selling board? Can you make reference to first of all, are you getting any of those sorts of signals from the home building companies? And secondly, redress that lag question for us.

Yes. Hey David, I know there have been a few positive comments out there from some of the recent, from some of the big builders on results calls, but just to ground things, and I hope they're right, but I would be cautious there with some of these comments. If we look at some of the data providers that we utilize out there, the projection we have for 2023 is for single family new construction to still be down call it 17%. And even though there were some positive comments around foot traffic, of the 12 publicly traded big builders who released earnings in the past few weeks, to my knowledge, only four of them provided guidance for orders for their next quarter. And that guidance Jason checked me here, if I remember, was for orders to be down 18%, 20%, 50% and 60%, respectively. So not trying to be negative, just realistic, I think we need to be balanced here. So for the most part, I mean, the fundamentals are still there in that we have affordability issue with housing that may take some time for the markets to fully adjust to. So as I said before, I mean, I keep saying this to the team over and over, we're going to focus on what we can control and we'll win in the markets we participate in, but those things we can't control.

And with R&R continuing to outperform new construction, is 65:35 still a fair representation?

Yes, it's a really good question, David. I would say for now, yes, but it's something we're keeping our eyes on, so it's a really good question, but yes, I would say for the foreseeable future.

Your next question comes from Paul Quinn with RBC.

Yes, thanks very much. Just a question about your balancing the manufacturing footprint. Why reduce shifts across the network as opposed to shut one specific facility and lower the overall cost?

Yes. Hey, Paul, great question and I'll have Jason jump in here because he's very experienced and has lived through this. But as we analyze what to do with the team, one of the things that we at James Hardie always want to be is long on capacity to make sure we're servicing our customers. When you take a whole plant down, it takes a considerable amount of time to get it up and running. And we want to be there and be responsive to meet our customers’ needs and be able to fulfill the demand that they have out there. So it is a little bit of an investment for us, but we think the right one to make.

Your next question comes from Shaurya Wasan with Bank of America.

Hi, Aaron, Jason. Thank you for taking my question. Can I circle back on pricing, please? Now just curious, have you seen any pushback on pricing from the builders? And I ask that because we're increasingly hearing from some building product categories, right, like roofing and flooring come to mind. They're seeing a pushback on pricing from the builders. I'm just curious, especially given that both these categories are also highly skewed towards R&R. I just want to get your thoughts on any pushback on pricing from builders. Thank you.

Yes, Shaurya, as you can imagine, in this really competitive time when the big builders are seeing volumes down, certainly they are price sensitive. So, as I mentioned before, one of the things that we try to do by having the largest sales team out there who are hand in hand with our customers is understanding the solutions that we can bring to our customer base, whether that be an R&R or a single family new construction. So we are utilizing tactical pricing where we need to, and we are bringing in lower cost alternatives like Cemplank where it makes sense. So I would say we're adjusting and working with our customers to help them drive their business in this time.

Thank you. Just a quick one, quickly on just a mix by exterior and interior products. Could you just give us a sense of where that number is right now? Is it, like, still 90: 10? Also, how did the growth look like during the quarter?

Yes, Shaurya, I didn't get your second question, but you hit the nail on the head. It is a 90:10 exterior interior mix, roughly. I'm sorry, what was your other question.

And what was the growth rate like in the third quarter on those two categories?

They were both right around minus ten, so they were pretty consistent.

Your next question comes from Lee Power with UBS.

Hi, Aaron. Hi, Jason. Can you just talk a little bit about inventory levels in the channel? Like, where do you think they sit now? Particularly just thoughts around risk of further destocking, given your -- kind of your outlook commentary.

Yes, Lee. Hey, thanks for the question. It really does vary by customer by customer, and certainly we're seeing some customers still trying to get their inventory levels lower with the lower demand out there. But I would say in general, just in building products and some of the products that are, I guess, adjacent to us, we're still seeing some pretty robust inventories. But I would say with our customers, our James Hardie customers, they're in a better place with our products. I don't want to give an exact number of days, but I would say that they're in a pretty good place at this point in time.

Okay, thanks. And then I mean if we think about CapEx for capacity expansion, like, the management pack still has that $1.6 billion to $1.8 billion number in there. I think you talk to $1.5 billion in particularly and potentially stretching out the spend. But it's still coming. And so it seems from when I piece that together with your comments, just around margin, that you're continuing to preference share over margin, like given your kind of market outlook, what do you think is an appropriate share growth number that we should actually be putting in, given that preference for share? And maybe if you're not willing to give a range, do you think share growth will be kind of above the five year average? Or is there something else going on that despite you adding capacity and potentially being margins at the lower end that you're not going to get the level of share growth that we've kind of been accustomed to over the last five years.

Yes. Hey, Lee, I look forward to talking to you about that in May because that'll be some guidance. But I will say this, I'll give you this nugget. The expectation is we're going to grow above the markets we participate in.

Your next question comes from Peter Steyn with Macquarie.

Hi, Aaron and Jason. Thanks very much for your time. Aaron, just a quick question in relation to some of the conversation about margins and how you lay that up against your LTIs for both North America and APAC at that 27% to 32% range. Obviously, that's forward looking view but how do you contrast your conversation today around margins versus those targets?

Hey, Peter, you can appreciate I wasn't around when those LTI goals were set. So as we think of the changes in the market, they've been changing dramatically. So as I look moving forward, I got to give that some consideration. But as far as the LTI targets, right now, I wasn't here when those were set, but there's something that we have to live with. But as we look forward, I mean it's certainly something that I'll look at.

Yes, Peter, I guess I'll just add I was obviously part of the board sets those, but they obviously relied on our data, et cetera, and at the time we set those prior to the year starting. And the expectations around the market, as Aaron walked through earlier in the deck, we didn't see the downturn as significant as it is. And so now Aaron's laid out the framework of how we'll run the business with margins above 25, STIs are set at a point in time, our LTIs are set in a point of time, and now you got a market that's decelerated over 10% since that time, we'll have to adjust and run the business accordingly.

That is all the time we have for questions today. I will now hand the conference back to Mr. Erter for closing remarks.

Hey, just I want to thank you all for joining the call. And I would like to end reiterating what I said earlier on the call. Whatever challenges we face, it's our job to outperform the market while providing our customer solutions. That's what we have a history of doing and what we intend on doing moving forward, regardless of market conditions. I'm proud of the team. I think we are managing decisively and aggressively. And hopefully you've heard here we're laser focused on driving profitable share gain in every region while delivering strong financial returns. Thank you very much.

That does conclude our conference for today. Thank you for participating. You may now disconnect.