Elizabeth Suzuki: Okay. So, more of the margin headwinds going to be on the growth side. And then, theoretically going forward as owned brands become a larger percentage of your total that should result in some gross margin expansion in the years ahead? I mean, this is all pending, whatever the strategic review comes out with, but just thinking about that one piece of the gross margin story.
Tom Greco: Yes. That correct. In the back half, we expect more to leverage from gross margin. And as I just mentioned to Michael, 30, 35 basis points of that is this accelerated transition of products into CQ.
Elizabeth Suzuki: Great. Thank you.
Operator: Our next question comes from Chris Horvers from JPMorgan. Chris, your line is now open. Please go ahead.
Chris Horvers: Thanks. Good morning. So, following up on an earlier question, the improvement that you’ve seen in the business in the last eight weeks, was that, I guess, to what degree did the DIY business improve? And then on the Pro side, you mentioned both national accounts and up and down the street business improved, but, was it weighted to one side versus the other side of the Pro?
Tom Greco: Yes. Good morning, Chris. Yes, we’re pleased with DIY. It’s our third consecutive quarter of growing comp sales in DIY, and it did improve in the quarter. So, the availability investments that we’re making benefit DIY too. Our e-commerce business is performing well. Pro, did has improved more, as you know, in the last half of 2022, we slipped in Pro. So, disproportionately in the last several weeks Pro has improved better. And, the national accounts versus up and down the street, we’re seeing improvement in both. So, there is good progress there. TechNet is performing better. So, really, all of our professional businesses benefiting from the actions we’re taking, and I will call out, that the field is doing a very good job executing as well. They’re getting out there, meeting with the garages, moving up the call list, all the things that we need to do to win the business with our installers up and down the street and national accounts.
Chris Horvers: Got it. And then, there’s a lot of questions around Worldpac sizing the business, the margins of the business, is it as a potential way to create shareholder value. I guess, can you talk out loud for us as you think about the strategic relevance of having Worldpac in the argument from the start of the acquisition and through your tenure as always been the expansiveness of the catalog, the one-stop shop, that Worldpac brings on top of what Advance brings. So, what do you lose? And then secondly, is there any cash flow dynamics that we’re concerned about here, obviously your free cash flow guidance has come down, does it — are you concerned that, this could start to unwind some of the vendor financing programs that you have in-place and there’s some compelling reason to create cash flow, and better sort of financial leverage on the balance sheet?
Gene Lee: Hi, this is Gene. Yes, there was a real lot in that question. I’m not sure where to get to all of it, but let me just start off with, I think the first part of the question asking about Worldpac’s role in the organization. I think Tom, should — can give us opinion on that, but this is going to be, Shane’s decision on how — and after we do the strategic and operational review, he is going to need to be the one who decides what role Worldpac plays in the organization, whether you integrate it or you don’t integrate it, run as a separate business and how does it play with all the other assets in the organization. So, I think that’s really, it’s important. Now, I think Tom can give his opinion on how he thinks about the business, but this is going to be a Shane decision as we move forward.
Tom Greco: Sure. So, I mean, the big thing Chris is the enterprise assortment. It gives us a broader assortment than anybody in the industry. Obviously, we’ve got national brands, we’ve got our own brand line-up, which we’re very proud of. And then, obviously, the OE products that Worldpac brings to the table, gives us up to 350,000 in market stock parts. So, that that gives us an advantage there, and we’re able to leverage that through all of the banners that we sell to the customer. So, that’s the big thing. But, again, as Gene said, we’ve got to go through the review, and find new ways to flow through profitability to the bottom line. So, that’ll come out of the review.
Chris Horvers: And then anything on the balance sheet side?
Tony Iskander: Hi, Chris. This is Tony. So, we’re not seeing any changes in our supplier finance programs or any attractiveness in there. So, we disclosed that and you’ll read more about that in the queue later today.
Chris Horvers: Got it. Thanks, very much.
Operator: Thanks, Chris. Our next question comes from Bret Jordan from Jefferies. Bret, your line is now open. Please go ahead.
Bret Jordan: Hi, good morning, guys. On the Carquest private label strategy, I guess you’ve been losing some commercial market share in the last quarters and obviously are talking about price investment now around the brand. I guess, is that something that’s either is the commercial perception of that an issue in the share loss or is an availability issue in the share loss?
Tom Greco: I think, if you look the back of last year and into the first part of this year, it was primarily availability, Bret, as you highlighted, a minute ago. But I do think our availability improvements that we’ve made there have been, the biggest driver of the change. Our on-hand rates are up very nicely in the key categories we transition, which you know, engine management, undercar, etcetera. And that’s been the bigger driver, and we expect that to continue to be a benefit for us in the back half. Our professional installers love the Carquest brand. Our brakes are the best. We have the best brake program in the business. And, transitioning these products has been very difficult. It’s taken us more time than we would like. But once we get them in and, the customer gets a chance to install them, this is a product that we get repeat business off of.
Bret Jordan: Okay. And then a follow-up question on that supplier base. I guess, yes, obviously, the fact the payables program given the leverage ratio might be under some pressure. But in the transition to more private label, is that going to support the payables or those vendors willing to take a longer term than maybe a national brand would?
Tom Greco: I mean, we obviously factor in all those changes, Bret. When we make change from a national brand to Carquest we know what the change in the terms are. So, we factor all that in. And it’s part of the calculus, right, when we make the decision. We look at the margin rate. We look at the quality. We look at the vendor itself, most of which our OE providers so they make a very high quality product and then we evaluate the terms. So, it’s a holistic decision that we’re making in terms of selecting our suppliers.
