Genuine Parts Company (NYSE:GPC) Q1 2024 Earnings Call Transcript

Genuine Parts Company (NYSE:GPC) Q1 2024 Earnings Call Transcript April 18, 2024

Genuine Parts Company misses on earnings expectations. Reported EPS is $ EPS, expectations were $2.15. GPC isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, ladies and gentlemen. Welcome to Genuine Parts’ First Quarter 2024 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Wednesday, April 18, 2024. At this time, I would like to turn the conference over to Tim Walsh, Senior Director, Investor Relations. Please go ahead, sir.

Tim Walsh: Thank you and good morning, everyone. Welcome to Genuine Parts Company’s first quarter 2024 earnings call. Joining us on the call today are Paul Donahue, Chairman and Chief Executive Officer; Will Stengel, President and Chief Operating Officer; and Bert Nappier, Executive Vice President and Chief Financial Officer. In addition to this morning’s press release, a supplemental slide presentation can be found on the investors page of the Genuine Parts Company website. Today’s call is being webcast and a replay will also be made available on the company’s website after the call. Following our prepared remarks, the call will be opened for questions. The responses to which will reflect management’s views as of today, April 18, 2024.

If we’re unable to get to your questions, please contact our Investor Relations department. Please be advised this call may include certain non-GAAP financial measures which may be referred to during today’s discussion of our results as reported under generally accepted accounting principles. A reconciliation of these measures is provided in the earnings press release. Today’s call may also involve forward-looking statements regarding the company and its businesses as defined in the Private Securities Litigation Reform Act of 1995. The company’s actual results could differ materially from any forward-looking statements due to several important factors described in the company’s latest SEC filings, including this morning’s press release. The company assumes no obligation to update any forward-looking statements made during this call.

Now let me turn the call over to Paul.

Paul Donahue: Thank you, Tim, and good morning. Welcome to our first quarter 2024 earnings conference call. We are pleased to report our first quarter results for Genuine Parts Company and we are encouraged by the start to 2024, particularly when compared to our strong performance in the first quarter of 2023. Our results in the quarter reflect and highlight the value of our business mix paired with our geographic diversity. Our teams delivered results that exceeded our expectations while they stayed laser-focused on our strategic initiatives to enhance our businesses and drive profitable growth. This strong start to the year, along with the continued execution of our initiatives, gives us confidence to raise our outlook for adjusted earnings per share in 2024.

Bert will provide additional details in his remarks. A few highlights of the first quarter include: Total GPC sales of $5.8 billion increased slightly versus the same period in the prior year, which produced nearly double-digit growth; total company segment margin increased 30 basis points as continued operating discipline at motion and solid momentum in the actions implemented at our U.S. Auto business improved our profitability; and lastly, we delivered mid-single-digit adjusted earnings per share growth from the same period last year. As we look to the broader macroeconomic environment, the start to 2024 continues to present a mix of challenges and opportunities. Higher interest rates and persistent cost inflation are pressuring businesses and consumers alike.

Fortunately, our businesses enjoy supportive industry fundamentals, providing a positive backdrop for growth. Within our Global Automotive business, we continue to see an increase in the number of miles driven, the fleet continues to age, and new and used car pricing remains elevated, particularly with financing costs. On the industrial side of our business, we have recently begun to see positive movement with key industry metrics. This further supports our positive outlook for Motion business for the balance of the year. Our Motion business benefits from a highly diverse portfolio of customers and end markets. Motion serves nearly all aspects of the industrial and manufacturing economy and is not over-indexed to any one end market or customer.

In addition, we continue to expand into new areas of opportunities such as semiconductor technology. Longer-term trends around resurrect present a significant opportunity for Motion and the team is well-positioned to capitalize on those as they materialize. As we expected, sales were challenged in the first quarter as the team posted a slight year-over-year sales decline. Despite the more challenging top-line environment, the Motion team delivered exceptional profit conversion. We are pleased with the progress with our supply chain initiatives and enhanced data analytics, which are driving inventory productivity, lower cost and higher customer service levels. We expect Motion’s business to accelerate through the year, particularly in the second-half of 2024.

During the quarter, we were pleased to announce the promotion of James Howe to President of Motion North America. James has nearly three decades of service to the company and most recently served as EVP and Chief Commercial and Technology Officer. His leadership in overseeing e-commerce, strategic pricing, sales excellence and corporate accounts has been instrumental in driving the company’s recent success. James is supported by a deep bench of talent both in the field and amongst its leadership team. Last week we had the chance to visit our Motion team at their Birmingham headquarters and tour their new learning development center. This is a great example of investing for future success as we provide intensive training for both our customers, as well as our technical field teams.

So now moving on to Automotive. Our teams in Europe and Australasia continue to perform well and grow market share. In addition, our team in the U.S. demonstrated solid sequential improvement from the fourth quarter in both sales and profit after a challenging 2023. The improvement was driven by the continued progress on the decisive actions we took at U.S. Auto over the past several quarters. We’re really proud of our leadership team for their focus and execution and are confident they’ll continue to drive sequential improvements as we progress through 2024. Looking ahead, we believe the GPC team is well positioned with the right strategic plans, supportive fundamentals and a strong balance sheet to pursue organic and inorganic growth opportunities, while also returning capital to shareholders through the dividend and share repurchases.

Our results in the first quarter reflect the progress our teams around the globe are making on our key investment pillars and believe the execution of our strategic initiatives, along with our team’s relentless focus on our customers, will drive value for our shareholders both now and for years to come. So, in closing, we thank each of our over 60,000 GPC teammates around the globe for taking great care of our customers. And with that, I’ll turn the call over to Will. Will?

Will Stengel: Thank you, Paul. Good morning, everyone. I want to start by adding my thanks to the global GPC teams for their ongoing dedication to taking care of our customers. We’re pleased with the solid start to the year and our first quarter performance. We truly appreciate your hard work and commitment. As always, we’re aligned with global strategic initiatives centered on five key priorities including talent and culture, sales effectiveness, technology, supply chain and emerging technology, complemented by disciplined and value-creating acquisitions. Our global focus around these priorities drives efficiency and pace as we work to continuously improve the customer experience and deliver profitable growth. Now, turning to our first quarter results.

During the first quarter, total sales for global industrial were $2.2 billion, a decrease of approximately 2%, with comparable sales down 2.6% versus the same period last year. These results were in line with our expectations as we were up against our most difficult comparative period of the year with first quarter 2023 sales up 12%. From a cadence perspective, average daily sales were flat to slightly down in all three months with January seeing the most pressure, partially driven by a negative impact from severe winter weather that caused some customer facilities to close. Motion continues to see mixed results across our various served industrial end markets with strength during the quarter in iron and steel, as well as chemicals and automotive.

Equipment and machinery and lumber and building products were softer in the quarter relative to the average end market. We continue to receive mixed and cautious feedback from our diversified customer base. However, our overall outlook for the year remains positive. Current renewal rates for corporate accounts, which represents approximately 45% of the business, remain at historically high levels, which further validates the current strength of the Motion value proposition. We’re seeing outsized growth in our offering to physically locate Motion teammates at customers’ facilities to enable an even closer partnership. Motion’s highly technical sales expertise and solution-based selling drives deep relationships with our customers and helps to keep our customers’ operations moving every day.

Over the past 16-months, manufacturing PMI readings have experienced the longest period of contraction as represented by a PMI index below 50 since the financial crisis in 2009. Despite this, our Motion business has outperformed driven by its customer and end market diversification, business mix and strategic initiatives. Encouragingly, in March 2024, the manufacturing PMI was 50.3, representing an expansionary data point for the first time in 16-months. We obviously appreciate that one month doesn’t make a trend, but we remain cautiously optimistic about the rest of the year and the medium-term outlook. Turning to Industrial segment profitability, which represents now 50% of GPC’s total profit. In the first quarter, segment profit was $271 million, up 3% and 12.3% of sales, representing a 70 basis point increase from the same period last year.

The team continues to execute category management and supply chain productivity initiatives and operate with discipline to deliver operating leverage and margin expansion despite lower sales. Turning to the Global Automotive segment. Sales in the first quarter increased approximately 2% with comparable store sales essentially flat. Our International Automotive businesses in Europe and Asia-Pac posted positive sales growth in local currency, while U.S. Automotive was flat and sales in Canada were down low-single-digits. As expected, Global Automotive sales inflation moderated to less than 1% and we expect this to be the case throughout the remainder of the year. Global Automotive segment profit in the first quarter was $273 million, up 3% and 7.6% of sales, representing a 10 basis point increase from the same period last year and a meaningful sequential improvement from the fourth quarter.

Our first quarter results for Global Automotive segment reflect strong operating discipline and a positive initial impact that we’re seeing from actions taken at our U.S. Automotive business. We are encouraged by the sequential improvement in this segment. Now let’s turn to our Automotive business performance by geography. Starting in Europe, our Automotive team delivered another solid quarter with total sales growth of 8% in local currency and comparable sales growth of 1%. Our team continues to deliver growth with key accounts winning higher share of wallet with existing accounts and the further rollout of NAPA private label products across the region. The ongoing bolt-on acquisition activity continues to have a positive impact and create value.

In addition, during the quarter, our new national DC in France opened. This approximately 500,000 square foot distribution center represents a significant technology and automation upgrade within our local supply chain. This project is a great example of how we’re investing to optimize our network to drive productivity and increase service levels to our customers. A similar project is well underway in the U.K. and we’re leveraging best practices and technologies to deliver the project efficiently. In the Asia-Pac Automotive business, sales in the first quarter increased 2% in local currency with comparable sales growth of 1%. Similar to last quarter, this performance compares to strong double-digit growth in the same period last year. Sales for both commercial and retail were up in the first quarter with retail showing relative strength.

Despite a challenging macro environment, the team is executing well to simultaneously deliver growth and expand operating margins. In Canada, sales decreased approximately 1% in local currency during the first quarter with comparable sales decreasing approximately 3%. Our Canadian team continues to focus on sales growth in excess of the market, despite pressure from a more cautious consumer and an unseasonably mild winter. During the quarter, our Automotive business saw positive sales growth in line with our expectations, while our heavy vehicle business was slightly below driven by softer-than-expected market demand. In the U.S., Automotive sales were essentially flat during the first quarter with comparable sales increasing approximately 1%.

This represents a notable improvement from the fourth quarter in both reported and comparable sales. The first quarter performance was in line with our expectations. As we moved through the quarter, we saw a sequential improvement in average daily sales growth each month. During the quarter, we also saw positive buying behaviors from our independent owners, a trend that we expect to continue over the course of the year. From a customer segment perspective, sales to commercial customers in the quarter were slightly down, while sales to Do It Yourself customers were approximately flat. For commercial, Auto Care continued to outperform while major accounts underperformed, driven by a cautious end consumer. We believe the in-flight actions across the business are delivering a positive impact and we expect the benefits to build throughout the year.

Let me provide another quick update on some of the focus areas. First, we experienced further improvement in our inventory fill rates during the first quarter, and as expected, our actions significantly improved our in-stock levels in both our stores and distribution centers. Second, our in-store service levels, as measured by customer service and on-time delivery metrics improved following the improvements we experienced in the fourth quarter. Related, to start the second quarter of 2024, we realigned certain field teams to help focus the field on key activities, deliver excellent customer service and generate sales growth. Our elevated focus on the stores and the field operations is having a measurable positive impact on our teammates. The team is energized and we’ve seen a notable reduction in employee turnover year-over-year.

Finally, our supply chain teams are making significant operational improvements across our network. We’ve enhanced processes and procedures in our operations that are driving better safety, accuracy, service levels and operational efficiency, while simultaneously reducing errors and overtime. During the quarter, we also made progress on medium-term strategic initiatives. For example, we continue to build upon our strategic pricing and sourcing initiatives that are delivering results. During the quarter, our newly expanded DC and Indianapolis went live. This 600,000 square foot facility will more efficiently service hundreds of independent and company-owned stores in the U.S., utilizing new automation and enhanced technology. We also leveraged our partnership with Google to accelerate enhancements to our search and catalog that remove friction and drive a better customer experience.

The feedback on these technology improvements from our customers and teams has been exceptional and we look forward to building on the momentum in the months and quarters ahead. And finally, as announced on our fourth quarter call, we’re advancing our initiative to evolve our operating model at U.S. Automotive as we’re being more intentional about owning more stores in selected priority markets. In parallel, we continue to partner with our existing network of independent owners, who play an important role to help us serve our local markets. Our current in-flight initiatives are designed to improve growth and operations at both company-owned and independently-owned locations. During the first quarter, we made strategic acquisitions of 45 NAPA stores from our independent owners, an increase from the 33 NAPA stores acquired in the fourth quarter and the 16 acquired in the first quarter of last year.

We’re leveraging our disciplined integration playbook as we integrate these stores into our own store base. We expect these trends to continue over the course of the year. Our global teams are executing on our 2024 priorities and are focused on key strategic initiatives across our business. Last quarter, we announced a coordinated global initiative across each of our operations to further simplify and streamline our operations, improve productivity, increase our speed of service and reduce our cost to serve. Our efforts are on track and Bert will go over the restructuring details in a moment. In closing, GPC started 2024 well. We delivered first quarter results that exceeded our expectations, we’re cautiously optimistic about a North America industrial recovery, we’re seeing encouraging traction at U.S. Automotive, we’re making progress on our long-term strategic initiatives and we’re confident in the revised outlook that we laid out for 2024.

These results are only achieved with the hard work and dedication of each of our global teammates who take care of our customers, live our GPC values and focus to deliver performance. We remain committed to our plans for long-term growth and we’re confident our teams are focused on the right strategic initiatives that will deliver solutions for our customers and create value. Thank you again to the entire GPC team. And with that, I’ll turn the call over to Bert.

Bert Nappier: Thank you, Will, and thanks to everyone for joining us today. Our momentum from 2023 carried into the first quarter of 2024 as our teams delivered profit growth against the backdrop of low sales growth. We are pleased with the start to the year, which was ahead of our expectations, particularly as we anticipated this quarter to be the most challenging given the strong results we delivered in the first quarter of 2023. My comments this morning focus primarily on adjusted results which exclude non-recurring costs related to our previously announced global restructuring program. During the first quarter, we incurred approximately $83 million of costs on a pre-tax basis in line with our expectations, or $62 million after-tax related to our restructuring efforts.

As we look at the first quarter, total sales were up slightly versus the prior year, reflecting a 1.9% contribution from acquisitions, offset by a 0.9% decrease in comparable sales and a 0.7% unfavorable impact of foreign currency and other. During the quarter, the contribution from inflation was less than 1% in both our Automotive and Industrial segments in line with our expectations. Our first quarter sales performance was highlighted by the continued growth in Europe and Australasia, offset by slight declines in Industrial and Canada. Sales in our U.S. Automotive business were flat in the first quarter and our performance reflects a more than 500 basis point improvement sequentially from the fourth quarter of 2023. During the first quarter, our gross margin expanded by 100 basis points to 35.9%, primarily driven by the ongoing execution of our strategic sourcing and pricing initiatives.

Our investments in technology and category management capabilities are continuing to be beneficial in driving positive results and our gross margin performance. Adjusting for restructuring expenses, total adjusted operating and non-operating expenses were 28.8% of sales in the first quarter, an increase of approximately 90 basis points from total expenses in the prior year. Our higher operating expenses in the first quarter reflect a negative impact of approximately 20 basis points from planned investments in IT as we continue to invest in modernized technology to run our businesses, approximately 25 basis points of negative impact from rent expense as inflationary pressures are contributing to higher costs as we renew leases, and approximately 70 basis points of negative impact from salaries and wages as we lap the final quarter of our previously announced 2023 investments in team members and absorb continued mandatory increases in minimum wages in certain international markets.

These headwinds were partially offset by discipline in other discretionary categories and looking ahead, our operating expenses will benefit from the actions taken under our global restructuring program. For the quarter, segment profit margin was 9.4%, a 30 basis point improvement year-over-year. Industrial delivered 70 basis points of margin improvement, while sales declined slightly. Our margin expansion in our Industrial business is a result of ongoing efforts to improve the efficiency of our operations combined with strong expense discipline. As Will outlined earlier, the actions we’ve implemented to improve our U.S. Automotive business are driving benefits and we are encouraged with the margin expansion at Global Automotive and expect further improvement throughout the year.

Our first quarter adjusted net income, which excludes restructuring expenses of $62 million after tax or $0.44 per diluted share, was $311 million, or $2.22 per diluted share. This compares to net income of $304 million, or $2.14 per diluted share in 2023, an increase of 3.7%. Turning to our cash flows. For the quarter, we generated $318 million in cash from operations and $203 million in free cash flow. We closed the first quarter with $2.5 billion in available liquidity and our debt-to-adjusted EBITDA ratio was 1.8 times, which compares to our targeted range of two times to 2.5 times. During the first quarter, we invested $116 million back into the business in the form of capital expenditures and another $135 million in the form of strategic acquisitions, including bolt-on acquisitions in the U.S. to support our strategy to own more NAPA stores.

In addition, we also made a small acquisition for our Motion business in North America, which expands our value-added service capabilities like fluid power and repair solutions. In the first quarter, we returned approximately $170 million to our shareholders in the form of dividends and share repurchases. This includes $133 million in cash dividends paid to our shareholders and approximately $37 million in cash used to repurchase 261,000 shares. Our global restructuring efforts kicked off in the first quarter as we implement actions to position us to achieve our long-term targets. We continue to expect costs of approximately $100 million to $200 million, most of which will be incurred in 2024, and we will report these as non-recurring expenses.

Our restructuring efforts are expected to deliver a benefit of $20 million to $40 million in 2024 and $45 million to $90 million on an annualized basis. We incurred $83 million of costs in the first quarter related to our restructuring program, which can be categorized into two key areas, costs associated with our voluntary retirement program and facility optimization. Approximately 65% of the first quarter restructuring expenses were the costs associated with our voluntary retirement offer. The remaining costs are related to facility closures and start-up costs associated with new facilities that replace those that were shut down. Our first quarter restructuring activities, including the voluntary retirement offer, were completed in line with our expectations and we expect to start realizing benefits in the second quarter.

Turning to our guidance. While the macroeconomic backdrop remains dynamic, industry fundamentals remain supportive and we are confident in our team’s ability to drive results. With that in mind, we are raising our adjusted diluted earnings per share guidance for 2024 and reaffirming our sales guidance. For the year, we expect total sales growth to be in the range of 3% to 5%, with a more moderated first-half and stronger second-half for both Automotive and Industrial. Included in our outlook is the assumption that the benefit from inflation remains at more normalized levels, contributing less than 1% for both business segments. For gross margin, we now expect full-year gross margin expansion of 30 basis points to 50 basis points, primarily driven by our continued focus on our strategic sourcing and pricing initiatives.

This compares to our previous guidance of 20 basis points to 40 basis points of gross margin expansion. Our outlook assumes that SG&A will deleverage between 20 basis points and 30 basis points, primarily from further investment in technology. We now expect the diluted earnings per share, which includes the expenses related to our restructuring efforts, will be in the range of $9.05 to 9.20, compared to our previous outlook of $8.95 to $9.15. We now expect adjusted diluted earnings per share to be in the range of $9.80 to $9.95, an increase of 5% to 6.6% from 2023. This compares to our previous outlook of $9.70 to $9.90. By business segment, we are guiding to the following: 2% to 4% total sales growth for the Automotive segment with comparable sales growth in the 1% to 3% range.

For Global Automotive segment margin, we continue to expect 20 basis points to 40 basis points of expansion year-over-year. For the Industrial segment, we expect total sales growth of 3% to 5% with comparable sales growth in the 2% to 4% range. For 2024, we anticipate global industrial segment margin to expand by approximately 10 basis points to 20 basis points year-over-year. And finally, we are targeting corporate expense to be approximately 1.5% to 2% of sales. Turning to a few other items of interest. We are confident in the strength of our cash flows in 2024 and continue to expect cash from operations to be in a range of $1.3 billion to $1.5 billion with free cash flow of $800 million to $1 billion. In 2024, we will continue our long history of balanced capital allocation with four priorities: capital expenditures, M&A, our dividend and share repurchases.

For CapEx, we continue to expect approximately $500 million or 2% of revenue. As we look at 2024, the growth capital we are deploying, which is approximately 55% of our forecast, will drive modernization of our supply chain, including new DCs partnered with technology that enhances our customer experience. As we look at M&A, our global pipeline remains robust and we will remain disciplined in evaluating opportunities that create value, including continuing to pursue our strategy around stores at our U.S. Automotive business. With our strong balance sheet and cash flows, we are well-positioned to take advantage of opportunities that fit with our long-term growth and strategies regardless of the economic backdrop. Overall, we are pleased and encouraged with our first quarter results as our teams continue to remain agile and deliver in this dynamic environment.

Our outlook for 2024 reflects the ongoing confidence in our teams and the actions we are taking to better align our business. We look forward to updating you on our progress in July. Thank you. And we will now turn it back to the operator for your questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Your first question comes from Scot Ciccarelli with Truist Securities. Please go ahead.

Scot Ciccarelli: Good morning, guys. Scot Ciccarelli. Couple of clarifications, if I may, on the U.S. Auto. Did you guys say commercial comps were down a bit and DIY was flat? And if I heard that right, I thought you said U.S. Auto comps were up slightly. Can you just help reconcile that for us?

Will Stengel: Yes, Scot, it’s Will. Good morning. Thanks for the question. So the way to think about it, when we give you our reported numbers, both reported total and comp, that’s the total U.S. Automotive kind of sales environment. So our sales into our owners and then our company-owned and independent-owned sales out. And so those numbers reflect that concept. When we start digging into the deeper level of detail around customer segment, that is just sales out, both independent and company owned. So that would be the distinction between the two data points.

Scot Ciccarelli: Okay, understood. And that does or doesn’t include that 130 basis point drag you cited in the deck?

Bert Nappier: Yes. So Scot, on the — that’s a question for Bert, and I’ll take that one. The reported number includes the 130 basis point adjustment, but the comp number does not. And maybe I’ll give you a little color on the rebate itself. And look, we hate that there’s anything to mention about the whole thing, but it’s a new program and it’s really good for the business. As a reminder, historically, these programs were managed by our suppliers, and that was handled all outside of our P&L, and it was directly between supplier and customer. The new arrangement, those are managed by the team, and that’s a good thing for the business. The new arrangement, though has to be accounted for us. It’s a reduction of revenue with a corresponding reduction of cost of goods sold and no impact to gross profit.

It’s a better structure for us when we think about our customers. And I think it sees tangible results in some of the things that will talk about in improvements in the business, particularly with fill rates with our new suppliers. For the first quarter, as I think we noted in our earnings presentation, our total reported sales growth was negatively impacted by 130 basis points at U.S. Automotive. When we think about comp sales, it’s excluded. And our approach to comp sales excludes revenue adjustments. And this new incentive is a revenue adjustment. That’s the accounting for it. And therefore, we’ve reflected it as such and made it consistent with like items from prior years. I think the final point I’d make is the new program wasn’t in the prior year, and thus we think this is a more comparable way to present it in our view.

And really, if you were going to make any adjustment, it would be to the reported number that’s flat. That would actually probably have been positive without the drag of the 130 basis points.

Scot Ciccarelli: Okay, thanks. I’ll save my follow-up questions for later. Thank you.

Will Stengel: Thanks, Scot.

Operator: Your next question comes from Chris Horvers with J.P. Morgan. Please go ahead.

Chris Horvers: Thanks. Good morning, guys. So, first a question on Motion. You know, the down 2.6% organic, you’re expecting that to accelerate pretty sharply over there — over the balance of the year. Obviously, ISM ticks up. Can you talk about how much is your — of the expectation on the acceleration is just the macro indicators getting better versus something senior business just — versus just looking at the comparisons? And then within that, I know you said back-half much better in Motion. Would you expect 2Q to turn to positive or flat?

Will Stengel: Chris, I’ll start just kind of commercially. The Motion team is doing excellent work. And so I think as we think about the recovery of the sales growth, it’s going to come from market. We feel like we’re outperforming the market with discrete initiatives. And so as you alluded to, as that recovery happens through the balance of the year, that would be a driver of improvement. The other thing I would just tell you, in the first quarter, we did call out the commentary around weather that impacted the business. We estimate around 80 basis points of impact to the top line associated with customers that had facilities closed in Q1. We don’t want to make too big a deal of that. The other thing I would call out is the Easter holiday.

We had the last day — business day of the quarter on Good Friday, and so we saw some customer order sluggishness associated with the holiday weekend. You put that — those two together, the Easter Holiday is probably another 80 basis points. So you got about 160 basis points of negative impact to the top line. And then you marry that together with macro acceleration through the year and we feel good about the revised guide that we gave everybody. And Bert, I don’t know if you got any additional color.

Bert Nappier: Yes, look, I’ll just say, Chris, when we think about the guidance for the year, we raised the outlook to $9.80 to $9.95. We really raised and tightened around a solid start to the year, the progress we’ve seen at U.S. Automotive, little bit better than expectation first quarter results and our restructuring activities being in line with our expectations. So we’re making great progress, but we’ve got more work to do. As you noted, our guide assumes that U.S. Automotive and Motion accelerate through the year sequentially improve. First half is still going to be a bit moderated for all the reasons we’ll just outline. And the second-half, we think gets better just on the general expectation of an improvement in industrial production and easing interest rates.