Heidi Petz : I’ll start with that and ask Al to jump in. I would say we’re not going to obviously comment on materiality because that’s certainly something we would ask our customers to comment on. But I think it goes without saying that as we’ve all come through the last few years, wanting to come into the season in a very strong position is a signal that there’s opportunity ahead. And Alan, anything you’d want to add to that?
Allen Mistysyn : Garik, I mean, think about our first quarter is a small quarter for consumer in North America and it ramps up as the architectural season ramps up. So we have seen this in the past and it’s not overly material. You think about a couple of percent on $800 million, it’s not huge.
Operator: Your next question is coming from Steve Byrne from Bank of America.
Steve Byrne : You made the comment about your sales forces out there hunting for new accounts. And clearly, that’s been the model. My question for you is, how are you incentivizing that or driving that with your investments. Is it headcount related? Or are you doing something to drive more servicing to existing accounts? And is this really to drive share gains? Or can this also drive mix shift to higher-performing products?
Heidi Petz : I would say a few things. I think if you look at we use the word ecosystem a lot to talk about what it is that we’re trying to bring to our contractors. So it’s basically everything you said. When you look at the reps and certainly our suite of digital tools, the goal here is, regardless of where these contractors are at — in their business maturity, their selling cycle their growth plans, we are going to intercept them exactly where they are in that cycle. And so it differs by segment. The needs, obviously, of those contractor is different by segment, if it’s residential repaint versus new res versus commercial. So the readiness of our team and the digital tools to support them to intercept these contractors is where we’re investing.
We obviously won’t go into a lot of details on that for obvious reasons. But when we’re out hunting and I mentioned the word surgical, it is just that. We’ve got the data. We’ve got the team prepared. We’ve got the right set of tools to help make our team more efficient to help make our customers more successful.
Allen Mistysyn : Steve, the only thing I would add to that is we often talk about surveys painting contractors and the number one driver of their loyalty is who helps them make the most money. So the more reps we have in the field and our ability to spend more time with those painting contractors and doing demos with higher-quality products we can show them the efficiencies that they can gain so that they can grow their top line and their bottom line with the same number of painters because the labor markets haven’t improved dramatically. So that’s a value add that I think we can provide.
Operator: Your next question is coming from Arun Viswanathan from RBC Capital Markets.
Arun Viswanathan : Just maybe two questions on Paint Stores Group. So first of all, historically, I think you’ve been underpenetrated on the West Coast. And given one of your competitors now there has shut at stores. Is that something that you could maybe pivot and increase your store openings towards? And then my second question was basically on growth and margins. So it looks like you face your easiest comps in the second half in Paint Stores Group. Last year, you were up 2% to 4% or so in those quarters. So would you expect to be up kind of mid-single-digits in Paint Stores Group in the second half of this year towards the upper end of your full year guide for sales?
Heidi Petz : Yes, Arun I’ll start with the first one, and then I’ll hand it over to Al to cover your second one. And by the way, nice job getting two questions into the one question. You did that really gracefully. So on the first one, yes I think your point on what was happening in the West. We’ve recognized the Kelly-Moore closure. And I would tell you that we have long and aggressively competed against Kelly-Moore with a lot of respect for them as a competitor. We are well positioned and are already beginning to serve some of their former customers. We expect to gain continued share here. We’re not going to comment on the potential size of the gains. But as I said earlier, you can expect us to be very aggressive. And I wouldn’t look at this through the lens of opening new stores necessarily there.
I think when something like this happens in our industry, we want to make sure that we’re very thoughtful about where real estate makes sense for us, talent that we’ve taken the steps and the actions to take the best of and we’re ready to go.
Allen Mistysyn : Yes, Arun, I think you’re right. We would expect that our second half would be in that mid-single-digit range. Of course, as we see the summer selling season unfold. We’ll look at those trends, look at indicators and certainly give an update to the street on our July call as appropriate.
Operator: Your next question is coming from Laurence Alexander from Jefferies.
Laurence Alexander : Just a quick one on industrial coatings, can you just characterize the landscape for bolt-on M&A how appealing it is currently and our multiples in discussions starting to drift down?
Allen Mistysyn : Yes. Laurence, as you said, I think in this type of uncertain environment, you do see multiples start to decline. You also see maybe a smaller pipeline than you would typically see in a growing market. That being said, I think we’re out — we know our — we’re confident in our strategy in industrial. We are actively pursuing bolt-ons that fit that strategy and accelerate that strategy. And as the markets turn and as there’s better line of sight to growth and that will be certainly well positioned with our balance sheet to make any acquisitions that we want to make and that fit our strategy.
Operator: Your next question is coming from Eric Bosshard from Cleveland Research Company.
Eric Bosshard : I wanted to ask about SG&A that you’re making to gain share. Al, you talked as rates moderated and there were some conversation earlier about improving remodel in the second half. And obviously, I think Heidi you said it the question is when. In a scenario where perhaps rates don’t go down and the remodel doesn’t improve. Do you sustain the investment? Is there a point where you tap the brakes a little bit on the investment that you’re being made and what is in that scenario, a bit of a slower environment? And then the second is, once we cycle this incremental investment, do we get back to where SG&A grows lower than sales?
Heidi Petz : So Eric, no, we don’t see a situation or an environment where we pull back. We’re confident again in our strategy. The comment we made earlier is these are very focused investments. And so we’re not trying to be all things to all people, water all the trees. But where we know we’ve got points of differentiation that are meaningful in the market. You can expect that we’ll continue to be very bullish there. So no, I don’t see us pulling back in any regard there. And Al, I’ll let you speak to the rates relative to the what’s in.
Allen Mistysyn : Yes. Eric, as you know, I mean, we’re focused on growing operating margin and sometimes that’s through gross margin expansion. Sometimes that’s in SG&A leverage whenever we see outsized gross margin expansion, we take that opportunity to accelerate the investments, again, because it’s the confidence you have — we have in our strategy. But yes, as rates start to come down, existing home sales improve, new single-family starts improvement in the CapEx that I talked about with property maintenance. And we see those volumes improving. I would expect to start seeing leverage on our SG&A into ’25 into ’26 in the go forward.
Operator: Your next question is coming from Aaron Ceccarelli from Berenberg.
Aron Ceccarelli : If I understood correctly, you mentioned that traffic in your PSG was all-time high in March. What part of your retail network in your view has the largest upside in terms of sales density or traffic? I mean, is there any part of your stores — retail stores that is not running yet as you would like to? Where is the opportunity, I would like to understand.
Heidi Petz : It’s a great question. I would say the opportunity continues to be first and foremost. While there’s opportunity in every segment, the biggest opportunity for us, as we’ve said historically is res repaint where we’ve got more share there. And I would say that it’s on top of already very healthy growth. So I don’t think in any way this incremental traffic is going to help correct think this incremental traffic is going to continue help us to outperform kind of the flat environment that res repaint sits in today. So it will be accretive, and it’s something that we’re confident that this is an opportunity, as you mentioned — as I mentioned earlier, an increased call activity and increased unique accounts rather and active accounts, so this is evidence that we’re taking share.
Operator: That concludes our Q&A session. I will now hand the conference back to Jim Jaye for closing remarks. Please go ahead.
James Jaye : Yes. Thank you, everybody for joining our call today. I think you heard that the team is very aligned, very confident in our strategy and what we’re doing. We’ve made the right investments, and we’re driving those solutions for our customers. And we’re pretty confident that you’re going to see as the year unfolds, those share gains and those returns become more and more evident. The other thing I would do is just remind you, we will have our annual financial community presentation this year in Boston. That’s on August 29. And in addition to Heidi and Al, you’ll hear commentary from our group presidents as well. So additional information on that will be coming out some time soon. So look for that, please. And as always, thanks for your interest and we’ll be available for your follow-up calls over the next several days. Have a great day.
Operator: Thank you, everyone. This concludes today’s event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
