Operator: The next question comes from Vincent Andrews of Morgan Stanley. Please go ahead.
Frank Sullivan: Morning, Vince.
Steve Haynes: Hi, this is actually Steve Haynes on for Vincent. Thanks for squeezing me in here. A question on the guidance. You know first quarter was a bit better than expected. Looks like 2Q is also kind of a bit better than expected and your macro views don’t sound, you know, that much worse at the margin versus kind of where we were last quarter. So I guess kind of what’s keeping you from being more biased towards the high end of your guidance range?
Frank Sullivan: Yes, great question. The volatility we’ve experienced over the last two years or three years is what’s keeping us from being more bullish. We have seen sharp turns in economic conditions that we didn’t expect. We’ve seen trends that look great for a while and then reversed. And there’s nothing about all the headlines. Not to get too big picture, but, you know, whether it’s government shutdowns or you know, anticipating things might get a little dicier as we get into an election year. And as bond rates actually start to rise, maybe we’ll see a normal bond cycle in terms of the reverse of the current interest rate inversion. There’s nothing that suggests that the economy is getting better. And so we’re focused on delivering what we can control, anticipating that we’re going to see challenges.
Boy, if, you know, we hit a soft landing and the start of calendar ’24 is peaches and cream with our MAP initiatives and positive unit volume growth across our organization with easy comparisons, we’ll have a blowout second half. Most of our reading of the economy is people are anticipating that if we’re going to have recession, it’s going to start at the beginning of next year. And so we don’t have any confidence that the economy is getting better. We just know the things that we can positively impact are continuing to happen. So we’re pretty confident in Q2. And beyond that, we’ll give you our level of confidence or lack thereof for the second half of the year when we have a chance to talk to investors in January.
Steve Haynes: Okay. Thank you. Helpful context.
Frank Sullivan: Thank you.
Operator: The next question comes from Arun Viswanathan of RBC Capital Markets. Please go ahead.
Frank Sullivan: Good morning. Yes, good morning, Arun.
Arun Viswanathan: Good morning, Frank. How are you?
Frank Sullivan: Good. Thank you.
Arun Viswanathan: I just wanted to go along those lines. I had kind of the same question as to potentially why you’re not raising guidance for the full year, but also wanted to add on there, you know, a lot of folks that we speak to are speaking about destocking and inventories coming down. You mentioned 300 basis points, but you’re – again, you’re a little less – a little bit more cautious on the rest of the year from a volume standpoint. No confidence that things are getting better. Is that what your customers are saying too? I mean shouldn’t they be thinking that they’re more of in a coiled spring kind of situation where as soon as somebody bites, maybe they all start buying and we see a little bit better performance? What do you think is really holding them back as far as making greater commitments? And if you think that, you know, restocking is not going to be as pronounced as in the past, why is that the case? Thanks.
Frank Sullivan: Sure. So a couple of comments. Number one, we’re hesitant to really comment much beyond what we’ve done, particularly in the second half. I’d point out again, I think MAP ’25 and our growth initiatives are delivering because we anticipate a record level of sales and earnings in Q2, albeit somewhat modest on top of the quarter last year, where sales were up 9% and earnings were up 36%. So unlike some peers, we’re not rounding easier comps or modest comps. We’re rounding an all-time record second quarter, and we’re going to beat it. As it relates to the broader question, I really think that interest rates are biting more people in more parts of the economy. It was the fastest rate increase in the history of the United States.
