Mike Rehaut: Great. I appreciate that. I guess, and I apologize if this is something that I missed in maybe the supplemental or some of the other comments, but I’d just love to get a little more detail on SDA for 2024 in terms of the overall size. I know you talked about the margin or the profit cadence, a quarter of profits to the first half, three quarters in the back half. But just how you’re thinking about that segment and where the margins were in ’23 just to get a comparable there?
Marc Bitzer: Yeah, Mike, I can take this. And first of all, apart from the supplement, that we will spend a lot more time on February 27th in our Investor Day to show you a little bit of a history of KitchenAid, the margin run rates, the seasonality. So, there will be a lot more color to your question. So, on a high level right now, the seasonality is similar to what you described. So, there is more skew towards the back half around the holidays. But even in the first half, there are some important holidays which always matter for KitchenAid, like — and we manage accordingly. The broader margins, and again, we will show that in the supplement that you will see soon, are 15.5% which we guide to ’24, is slightly higher than the ’23 one. But even if I look at a multi-year KitchenAid SDA margin, it typically hovers around 15% EBIT. So, it’s a very solid and margin-accretive business for us, which, of course, we want to grow significantly more going forward.
Jim Peters: Yeah, Michael, I think the other thing to highlight, you’ll see in all the supplemental materials we provided, is really if you look at the historical run rate of the business, it has been around $1 billion-plus and 15.5%. And so, some of the information that we did provide, obviously showed a time period when that business benefited from some of the trends that were going on during COVID. But I’d say today what Marc highlighted in there, the size and all that is really more representative of what the trend that business has been on and why we were excited about the growth in the margins we have within there.
Operator: Your next question comes from the line of Susan Maklari from Goldman Sachs. Your line is open.
Susan Maklari: Thank you. Good morning, everyone.
Marc Bitzer: Hi, Susan.
Susan Maklari: Good morning. My first question is, you mentioned the $300 million to $400 million of cost actions that you expect to take this year. As you think about the ability to continue to reduce the cost structure, how are you balancing that relative to the growth initiatives that you have and the targets to get the business closer to those long-term goals?
Jim Peters: Yeah, Susan. So, this is Jim. And I think the thing you’ve got to look at there is as we talk about the cost takeout is, you saw this year, to begin with, we significantly invested in technology and engineering and in our products, and you saw that in our overall walk. And so, if you really look at how that $300 million to $400 million breaks down, the first $100 million of that is just cost savings we already implemented this year that are in areas that don’t affect our ability to grow and drive innovation. Then, we talk about maybe the next $100 million to $200 million within there, and that’s really driving efficiency both within our supply chain, our factories, and that comes from ongoing initiatives that we have that are just to become much more efficient in terms of how we manufacture or much more efficient in how we get product to our consumers in the end.
And so, again, those are not areas, those don’t affect the investments that we make. And then, if you think about the third bucket there that we’ve talked about is really SG&A reductions from a simplified organizational model. That also is just us looking at how we operate as a company and how we operated in the past within a much larger business, including EMEA, how do we simplify it? How do we make it more effective? Our investments within our products, whether it be engineering or capital, will actually be relatively consistent to even up this year. So, the areas where we’re cutting cost are not the areas that affect our ability to deliver growth and innovation. We’re actually invested. What we are is we’re reducing cost in other areas, so we can invest more in those areas.
Marc Bitzer: So, Susan, just to echo what Jim is saying, and to be really crystal clear, we will — we have and we will continue to invest heavily in new products and brand investments. Last year, despite all the pressure, we invested 75 basis points more into new product marketing and technology. We will continue to do so in ’24. And as you’ve seen also in capital plans, we are prepared to invest in new products. That’s ultimately the lifeblood of our company and creates future growth. At the same time, we’re also very mindful that we got to create the funds for that. And these funds, to Jim’s point, they come from carryover actions. They come from manufacturing efficiency. And, frankly, after the Europe transaction is closed, we have a simpler business, and we will take advantage of relooking at our SG&A base in terms of how can we take advantage of now what it’s globally a much simpler and easy business where we don’t need to have all the complexity in its current structure.
Susan Maklari: Okay. That’s very helpful color. And then, my second question is thinking about the cash flows. You mentioned that you came into the year with inventories a bit higher than what you had anticipated. Any thoughts on the timing of working that back down, and what that might mean for the cadence of the cash generation this year?
Jim Peters: Yeah, Susan, so this is Jim. And listen, here’s what I would say. As we talked about within our numbers, the overall cash flow guidance for the year that will reduce working capital by about $100 million at a minimum. I think what you’ll see is you’ll see some of that come more probably within the second and third quarter, as we just look at where things are, because we did already talk about that retailer inventory levels at the beginning of the year were higher than we anticipated. And so, obviously, we believe that will put some pressure on shipments in the first half of the year, and our goal is to make sure we keep our inventories in-line with the shipments, but then begin to reduce those inventories as we have the opportunity, but also then as we expect to see sales ramp up a little bit later in the year.
