Heidi Petz: I will tell you that we don’t see a downside here and the level of — again, if we didn’t have access to, we talk about leading indicators, the data that helps us to really understand our contractors. And I’ll give you a little bit of color here without going too far is what they’re buying, what they’re not buying, what their projects are, current and their future pipeline, where they’re looking to travel as they’re looking to grow and expand in the different territories. And so we’re able to then, Josh, take our data, sit down with our reps and our sales managers and make sure that they are armed to truly help bring value to these contractors in a way that a competitor that doesn’t have a specialty paint store just doesn’t have those levers to pull. So I don’t see a downside in this environment.
James Jaye: Thank you, Josh.
Operator: Your next question is coming from John Roberts with Mizuho.
John Roberts: Thank you. Heidi, I think when on John’s first earnings call as CEO, he used the [indiscernible] meet the new boss, same as the old boss. Is that still on the playlist at Sherwin-Williams? Or you do think you came up through a different career path than John. So do you bring a different perspective to the role?
Heidi Petz: I do. And I also think, I really find your question very interesting, because I think there is a commonality of, certainly, first and foremost, the belief that our strategy is working. I think John has contributed, we say his fingerprints are all over this company, and they absolutely are. So I have the fortune of inheriting an incredibly rock-solid foundation on which to build. And when we talk about just getting started, I couldn’t agree more that we are just getting started. I think in terms of having a different background and bringing perspective into the business, I think it’s important to share that my values and John’s values are spot-on in terms of culture, customer focus, desire to grow, determination to win.
And so bringing a perspective from outside of only a paint category, I think, only helps to continue to put our foot on the gas on what’s working. And I would characterize it more maybe as a healthy challenge on where we might have opportunity to strengthen our model and just continue to grow.
James Jaye: Thanks, John.
Operator: Your next question is coming from Arun Viswanathan with RBC Capital Markets.
Arun Viswanathan: Great. Thanks for taking my question. Good morning. I guess I had a couple of questions around Paint Stores Group. So first off, is there any way that you could help us understand the magnitude of share gains? It would seem that given the strong growth in Resi Repaint that you’ve enjoyed share gains for a little while. So is there any mechanism to keep those going? Or maybe you can just help us understand how much share you’ve gained over the last couple of years. And then furthermore, on the sales guidance, low-to-mid single digits, usually PSG is at the upper end of that. So is that still your expectation for ’24? And would you expect that to improve as you go through the year, i.e., maybe second and third quarter at the upper end of that mid-single digit range or even above? Thanks.
Heidi Petz: Yes. Hi, Arun, I’ll start with your first question, and then I’ll kick it over to Al for your second one. You mentioned Res Repaint, so I won’t touch that. But in terms of — I won’t get into the numbers, but you asked about the magnitude of share gains. And I would point to, candidly, the rest of the segment. So New Residential here is where we’re obviously playing a long game, but we’re continuing to take share by expanding the number of agreements that we’ve secured. Even in these very challenging times, we’ve been able to secure incremental agreements. And we’re doing that at a time when there’s a lot of pressure on starts. And so as you fast forward and play this out and as the cycle plays out, and it will, our position here is going to be even more significant as these new agreements begin to really pay off with the acceleration of housing starts.
Property management, we hit on that a bit — I hit on that a bit earlier. But I would say that it’s very similar in terms of our ability in this environment to demonstrate our value and secure some of these incremental agreements, again, in property management, that will be true, certainly at the national, regional, and the local level. Our teams have been able to really penetrate based on a lot of the data that we’ve got access to there. Certainly, a lot of benefit Commercial, Protective & Marine, two segments that I would say are largely focused on product technology, specifications, and really great distribution. These businesses are both strong, and we’re working very hard every day to put distance between ourselves and our competition.
And I would go maybe a step further on commercial, where we’re confident is we’re well positioned in every subsegment within commercial. So when Al mentioned, we’ve got stronger view in the first half, it might look more soft in the second half. We’re prepared to meet our — these contractors where they are as they’re looking to shift and transition within subsegments. So I’m confident that even despite where the market goes, we’re going to intercept them.
Allen Mistysyn: Yes. So Arun, with our consolidated forecast being up low-to-mid, that would tell you on a consolidated basis, we expect volume to be flat to up low-single digits. And to your point, Res Repaint certainly would be above the high, be up low to mid. But where we think the second half will play out and could we be above that range is really what Heidi just said on New Residential, the timing of that recovery and the timing of projects on Commercial through our first half into our second half. And that will dictate how our second half outlook will be determined.
James Jaye: Thanks, Arun.
Operator: Your next question for today is coming from Duffy Fischer with Goldman Sachs.
Duffy Fischer: Yes, good morning. A question on SG&A. So historically, you guys have had positive leverage on growth in SG&A growth that changed last year. It still seems like it’s going to be negative in the first half of this year, maybe going to neutral in the back half. Structurally, has something changed in the market or with your model? Or will that revert back to positive leverage in ’25 and ’26, and what this will be is just kind of a short-term bump maybe to kind of push through the high pricing that you’ve put through on raw materials? But just structurally, SG&A versus sales longer term, do we get back to a positive leverage there?
Allen Mistysyn: Yes, Duffy. I think what you’ve heard us talk about in the past and going forward is our focus at driving operating margin leverage, and that’s either going to come through gross margin expansion or SG&A leverage. And you’re right, as we see a stronger top line, stronger gross margin expansion than we were planning, we are going to take the opportunity because of our confidence in our strategy to add incremental investments or accelerate investments in our long-term growth strategies, because we know based on our history from our data, from our metrics that we’re going to get a return for those investments. And ad nauseam, you’ve heard me talk about 2008 and ’09 a continued investments through that cycle in the high-single, low-double digit 10-year compounded average growth rates.
