Operator: Thank you. Our next question comes from the line of Julian Mitchell with Barclays. Your line is now open.
Julian Mitchell: Hi. Good morning and welcome to Chris. Maybe just my question was understood just now that bridge from first half to second half of this year, but just wanted to check on any color you could give on the bridge from this year as a whole into next. And I suppose, if we look at your second half guidance for this year, it’s about including some sort of outdoor seasonality assumption. It’s maybe 3.50 of annualized EPS based off your second half guide at the midpoint. You had talked about a $5-ish EPS for next year previously, so I just wondered sort of any updated thoughts on that EPS step-up into 2024. And sort of related to that, it looks like your inventories will still be well above historical norms at the end of December, but you talk about production normalization during Q4, so I just wanted to sort of square that away when thinking about next year. Thank you.
Donald Allan: Thank you for the questions. And I’ll kick it off and then pass it over to Pat for a little more detail, as far as our perspective on next year. We have talked about in previous calls a $5 — or a $4 to $5 range for 2024 for EPS. Given what we’re seeing in the back half and what we’re currently projecting for revenues, the improvement in the gross margins, we’re making some investments in SG&A that will plant some seeds for future share gain activity. We do think we’re positioning ourselves to be in that $4 to $5 for next year, depending on a couple of factors. Does the revenue maintain itself or grow? Or do we see continued pressure due to economic reasons? And how much more investment do we want to do to really drive that share gain opportunity across the globe?
Those are questions that we’ll figure out in the back half of the year. And when we provide guidance in early ’24, we’ll give more insight, but we think we’ve built a foundation that allows us to achieve that range I mentioned. I’ll pass the inventory portion of the question over to Pat and let him give you a little more sense of where we think we are in the journey of inventory and where we go from here.
Patrick Hallinan: Yes, Julian, I’ll pick up where Don left off. I think, from an operating performance and productivity range, we’re targeting towards that EPS level, but as Don said, as we get to next year’s guidance, we’ll look at the macro and we’ll look at our investment level for long-term growth. And I think that will decide our EPS for next year. In terms of gross margin this year and into next year, following on that opening question, we can really already see on our balance sheet and already in our savings rhythm the gross margin levels that we’re projecting for the back half of this year. So those rates of gross margin delivery are, for the most part, on our balance sheet already for this year. And then your question around how do we step that into next year.
Think of every one of the next few years going through the end of 2025 as $500 incremental million of COGS savings off of our revenue base. You’re talking 200 to 300 basis points a calendar year of gross margin improvement. And so we continue to track on our long-term cost transformation. And so if we finish this year at 28-ish percent gross margin in the back half of the year, you could kind of expect that 200-plus basis point level of gross margin improvement to be carried into next year. And that’s the kind of momentum you should be expecting the next couple of years. In terms of inventory, we’re going to make significant inventory progress this year, but you’re correct to point out that, by the time we get to the end of this year, our absolute inventory dollars at the end of this year will be in the $5 billion-ish range, which is around 155 days-ish range, which is higher than our long-term history of inventory levels, which have obviously changed since we acquired an outdoors business from the legacy Stanley Black & Decker levels, but still below 155.
