John Morikis : Not really, Chuck. I’d say we have really deemphasized DIY last year to serve our customers. And so we now have a product to sell. And — so it’s on a smaller base because of last year. And again, I think it’s important to mention that our focus and our success is going to largely be determined by the professional sales that we have, representing about 90% of what goes through our stores. So we’ll take the DIY business. We’re there. It helps us, but the focus is on our PRO business.
Operator: Your next question is coming from Garik Shmois at Loop Capital.
Garik Shmois : I wanted to follow up just on the inventory field that you saw in Consumer Brands. Was that across both DIY and Pro? And do you expect any of that to bleed into the second quarter?
Allen Mistysyn : No. Typically, what we see in our mid spring and summer selling months are, you’d start seeing the declines in inventory as we come out of the season. So I wouldn’t expect to see inventory builds like we saw in our first quarter. So I think you’ll see a more typical seasonal inventory pattern this year. Raw materials are in a good place. Like I said, we’re through the total supply chain Inventories are in a good place. So just to put it in perspective, we’re back to servicing our customers at the level that we expect to service them at, and they expect to be serviced at. So I would expect that management of inventory will happen similar to the flow of past cycles.
Garik Shmois : Got it. I just wanted to follow up. It doesn’t sound like it, but I just wanted to confirm if you’re seeing any trade down or any change in mix at all, be it in paint Stores or in Consumer Brands?
John Morikis : No, the opposite. It’s a positive mix shift. Customers that have labor as a percent of sales continue to learn that a higher-quality product might cost them a little bit more per gallon, but that they actually make more on a project. So our mix is positive in our stores.
Operator: Your next question is coming from Eric Bosshard at Cleveland Research.
Eric Bosshard : A follow-up for you, Al, I guess. On gross margin, the upside performance in the first quarter or strong performance, however you characterize it, I’m assuming there was some benefit from strength in volume. What I’m trying to figure out is the volume behaves differently in the coming quarters as you’ve talked. Do you build from the 1Q gross margin? Is that having an impact on the gross margin? How should we think about the linkage between volume and gross margin as we move through the balance of the year?
Allen Mistysyn : Yes. It certainly because Paint Stores Group had a better — had increased volume, and it’s our highest gross margin segment and certainly improves our gross margin going in the first quarter for sure. I think as we’re moderating some volumes, but still Paint Stores is still going to be our best performing segment in our second quarter. And we do also expect to hang on to the price and see that sequential raw material moderation. So I think the volumes help for sure. And when a Paint Stores Group is stronger than the other segments, because of that mix dynamic, it will help our gross margin. But I do expect to see sequential and year-over-year improvement in gross margin in our second quarter. And then we’ll give you an update, Eric, on the rest of second half after the second quarter.
Operator: Your final question for today is coming from Jaideep Panaya at On Field Research.
Jaideep Pandya : The question really is on Industrial Wood. Could you tell us when did the destocking actually start? And is there any signs of really destocking or weaker demand coming towards? And then the second question really is on the multifamily homes. One of your competitors was sort of alluding that there is a decent backlog this year, but there could be some air pocket next year as the projects sort of finish. So do you expect weakness in the multifamily homes or for that matter in commercial/property management in 2024? Or it’s not something you worry about?
John Morikis : Well, on the Industrial Wood and multifamily, I’d say — let me start with the multifamily work backwards. I’d say our line of sight right now on both commercial and multifamily is strong for the balance of this year and certainly going into next year, we’ll see what happens as we move forward. But right now, our confidence is high and the pipeline is full. We’re bidding a good amount of activity with the contractors in this space. So I’d say our future looks pretty positively on that. In the industrial Wood, timing, it’s been under pressure likely along with housing. So if you want to look at housing starts is a good precursor for this business. It’s not exact, but we’ll give you some insight as to how that business has behaved.
And again, our expectation is that there are opportunities in this business to outpaced the market in both — in all the segments you talked about, multifamily as well as Industrial Wood. We have teams that are out there focused on growth every day.
Operator: We have reached the end of the question-and-answer session, and I will now turn the call over to Jim Jaye for closing remarks.
James Jaye : Yes. Thank you, everybody, for joining us today. I did want to remind you that please save the date for our annual financial community presentation that will be in Cleveland, as John said, on August 24. The event will also be webcast. Registration details on that will be available soon, and we look forward to seeing many of you here to close out the call here, you heard today that we’re off to a very good start to the year with today’s results. And at that same time, our team knows we still have work to do, and we’re prepared to do that. We know there’s going to be macro headwinds as the year progresses, but we’ll deliver strongly in those conditions. And we’re going to remain focused on what we can control. So thank you for attending today. And as always, I will be available along with Eric Swanson for your follow-up phone calls. Thanks for your interest in Sherwin. Have a great day.
Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.
