Patrick Baumann: Okay. And then my follow-up as it relates to the first quarter, I think you also mentioned something about price timing as a factor for gross margins being kind of down year-over-year. So curious if you can give some more color on that, too, like did you put through price early last year and you’re not doing the same thing this year? Or is it something else? .
Deidra Merriwether: Yes. So no, we always put through price if prices warranted early in the year, but it’s more like a seasonality question. So I’ll probably respond to it in that way. We do expect a lot of the outlook that we’ve given for 2024 to be back-end weighted. We talked a little bit about pieces of it, which was sales starting slower, tougher comp. Q1 last year was a very strong year for us, which included a whole lot of price in that quarter with a price outlook of 0 to 1. Of course, our price for this year, the quarter will be more muted versus that. And we expect price to become more favorable throughout the year and for gross margins to be relatively stable versus the outlook that we have given. And so that’s what I mean when you talk about kind of sales and price in the first quarter versus the prior year.
Donald Macpherson: Just to add to that, I think the practical reality was that if you think back to 2022, we took a budget price midyear that from a 2023 Q1 to 2022 Q1 comparison made 2023 have very high price increases relative to the year before because we took them in the middle of the year and those — so it wasn’t all taken January 1 last year, but all the inflation run up in 2022 made last year look a little unusual from a first quarter price increase.
Deidra Merriwether: Q1 and full year.
Donald Macpherson: Q1 and full year. Absolutely.
Operator: Our final questions will come from the line of Nigel Coe with Wolfe Research.
Nigel Coe: Sound like suffering. So I feel — if you repeat yourself here. But just on the seasonality comment, are you saying gross margins much flatter from quarter-to-quarter through the year. Obviously, normally, we see a bit of a seasonal pattern there. So is that the comment? And does that therefore imply that as we go from 4Q to 1Q, we’ve got a pretty flat Q2Q gross margin structure then. And if it is flattered, I just want to understand why that is. I mean, I get the fact that price is coming through a bit stronger for the year. But any other factors we need to consider? .
Deidra Merriwether: Well, like we’ve talked a little bit about freight. We’ll continue to get freight and supply chain efficiencies and some product mix. But again, it all starts with the fact that we don’t expect to have a lot of price in the market this year, just generally so. We expect gross margins to be reasonably consistent from what we talked about all through the year. So that’s the basic reason for that muted price.
Nigel Coe: Okay. That’s fair. And then the comment you made about SG&A. I think you mentioned some SG&A deleverage in the first quarter. So again, it sounds like the model is here is going to be pretty clean in terms of — it sounds like SG&A can be pretty flat across the quarters, maybe is that the way you’re seeing it? We got some front-end other investments this year?
Deidra Merriwether: So yes. So yes, SG&A is going to deleverage in the first quarter because we’re going to continue, as noted, to ramp our investments in marketing and sellers and others and the like. But we do expect leverage will improve as the year progress, flipping to more of a tailwind in the back half of the year for us. And then just if you kind of move down a little bit, we think operating margin in Q1 will be at its lowest point as well and EPS will be flattish year-over-year in the first quarter as well.
Nigel Coe: Got it year-over-year. Okay. Got it. And since some last question, I feel like maybe I can just squeeze one more in, if I can. Just I want to just clarify the customer mix comment from earlier on in the call. I mean, I noticed the medium-sized customers outgrew large customers. So I’d assume that mix would have been positive, but if I’m wrong [indiscernible] now.
Deidra Merriwether: I missed that last part. I heard you say that. Could you repeat it? .
Nigel Coe: The customer mix. I assume that maybe customer mix was slightly positive given that medium-sized with large size dynamic. But if I’m wrong there, please let me know.
Donald Macpherson: Yes. I think it was basically neutral. We did have — you’re right, midsize customers did grow faster than the largest customers. Overall, it was not a meaningful impact, as I understand it. Dee and I are in different rooms, so she’s sequestered. So we’re looking at each other through a camera here.
Operator: We have reached the end of our question-and-answer session. I would now like to turn the floor back over to D.G. MacPherson for closing remarks.
Donald Macpherson: All right. Sorry, we’re a few minutes over. Thanks for joining the call. What I would say is that and we’re certainly proud of the results we had in 2023. We are very focused on continuing to drive forward and create value for our customers in 2024 and a lot of that is really the same despite the more muted growth in the market that a lot of that’s just a continuation of driving forward the initiatives that matter, both from a growth perspective and a productivity perspective. And we remain very positive about the outlook and our ability to gain share profitably for years to come. So thanks for the time. Hope you all have a great weekend. Take care.
Operator: Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect at this time. Enjoy the rest of your day.
