Genuine Parts Company (NYSE:GPC) Q3 2023 Earnings Call Transcript

Genuine Parts Company (NYSE:GPC) Q3 2023 Earnings Call Transcript October 19, 2023

Genuine Parts Company beats earnings expectations. Reported EPS is $2.49, expectations were $2.4.

Seth Basham – Wedbush Securities:

Daniel Imbro – Stephens Inc:

Kate McShane – Goldman Sachs:

Operator: Good day, ladies and gentlemen. Welcome to the Genuine Parts Company Third Quarter 2023 Earnings Conference Call. Today’s call is being recorded. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] At this time, I would like to turn the conference over to Tim Walsh, Senior Director of Investor Relations. Please go ahead, sir.

Timothy Walsh: Thank you, and good morning, everyone. Welcome to Genuine Parts Company’s third quarter 2023 earnings call. Joining us on the call today are Paul Donahue, Chairman and Chief Executive Officer; Will Stengel, President and Chief Operating Officer; and Bert Nappier, Executive Vice President and Chief Financial Officer. In addition to this morning’s press release, a supplemental slide presentation can be found on the Investors page of the Genuine Parts Company website. Following our prepared remarks, the call will be open for questions. If we’re unable to get to your questions, please contact our Investor Relations department. Please be advised, this call may include certain non-GAAP financial measures which may be referred to you during today’s discussion of our results as reported under Generally Accepted Accounting Principles.

A reconciliation of these measures is provided in the earnings press release. Today’s call may also involve forward-looking statements regarding the company and its businesses, as defined in the Private Securities Litigation Reform Act of 1995. The company’s actual results could differ materially from any forward-looking statements due to several important factors described in the company’s latest SEC filings, including this morning’s press release. The company assumes no obligation to update any forward-looking statements made during this call. With that, let me turn the call over to, Paul.

Paul D. Donahue: Thank you, Tim, and good morning. Welcome to our third quarter 2023 earnings conference call. I’d like to start this morning with a few remarks on our overall performance before turning it over to Will, to cover the highlights of the automotive and industrial businesses. And then, Bert will get into the details of our financial performance, before we open the call to your questions. To recap the third quarter, total GPC sales were $5.8 billion, an increase of 2.6% compared to last year. Total company segment margin was 10.4%, a 70 basis point increase from last year, and diluted earnings per share were $2.49, an increase of 11.7% from adjusted diluted earnings per share in the same quarter last year. I want to take this opportunity to give a call out to our GPC teammates around the globe, as we delivered our 13th consecutive quarter of double-digit EPS growth.

Our third quarter results reflect our strong operating discipline and our ability to improve our operating margins and profits despite a more challenging topline environment. Overall, we continue to benefit from solid industry fundamentals in both the automotive and industrial end markets, including rational pricing environments in both segments. In our Global Automotive business, the underlying fundamentals of the aftermarket remain favorable, increasing miles driven, an aging and complex vehicle fleet, and high vehicle prices and financing cost. Within our Global Industrial business, we benefit from a highly diversified portfolio of customers and end markets, with overall growth driven by manufacturing and opportunities with onshoring and reshoring trends.

Our automotive and industrial businesses are mostly break fix and non-discretionary in nature. And as a result, we remain focused on offering solutions that support our customers to have the right part, in the right place, at the right time, across both business segments. Sales in our industrial business were up slightly in the third quarter, and the team continues to deliver exceptional profit conversion as evidenced by a 180 basis points of segment margin expansion. During the quarter, demand trends were positive, but continued to moderate relative to the first half as expected. Over time, Motion has transformed its business into an industrial solutions provider, with a compelling value proposition. Motion serves diverse end markets with many of its product offerings being highly technical in nature.

In addition, with the acquisition of KDG, Motion has added scale and enhanced its industry leading offering of value added services, such as fluid power, automation, conveyance, and repair. The Motion team is focused on executing on our strategic initiatives to expand gross margin, while remaining disciplined on cost, driving further segment margin expansion. Turning now to our Global Automotive business, we continue to see strong results across our international automotive businesses with the eighth consecutive quarter of double-digit sales growth in Europe, and record sales and profits in Australia and New Zealand. Our teams continue to focus on our key organic initiatives, in addition to our bolt-on acquisition strategy. During the quarter, we announced the acquisition of Gaudi, one of the largest independent players in Spain, Europe’s fifth largest car park, building on our 2022 acquisition of Lausan, Gaudi mainly operates in the Catalonia and Madrid regions, and creates further scale, and a national platform across Siberia, with the addition of 22 stores to our market leading position.

We expect this acquisition to be accretive to our European business post synergies. We welcome the Gaudi team to GPC. While we were pleased with the growth internationally, the U.S. automotive business performance was below our expectations, with sales down 1.1%. Let me take a moment to share a few thoughts on the performance of U.S. auto. There is no doubt we’ve seen some challenges in 2023. From the record levels of inflation seen a year ago, which benefited the industry and have faded throughout 2023 as anticipated, it challenges across our own execution. Our year-to-date results demonstrated that we have not operated to our full potential in 2023. As many of you know, success in the automotive aftermarket is highly dependent on availability of inventory.

Particularly for the important DIFM customer, which represents approximately 80% of our automotive revenue. Further, the automotive aftermarket has demonstrated consistent performance throughout all economic cycles. As we close out 2023, we are taking actions to better service our customers, and ensure our commercial activities are where they need to be. Under the leadership of Randy Breaux, we are confident the U.S. automotive team has taken the measures to improve execution with our customers. Will, plans to discuss these actions in greater detail. And before passing the call over to Will, we’d like to highlight our 2023 sustainability report, which we published earlier this month. At GPC, we embrace our responsibility to build a more sustainable and equitable future for our planet.

This year’s report highlights the progress we’ve made as a company to measure and reduce our carbon footprint. This year, we are proud to report that in 2022, we further improve the measurement of our carbon emissions and have reduced scope 1 and scope 2 emissions by over 10%. We encourage you to build the sustainability page on our website for more information on our progress. So, in closing, our performance in the third quarter, again, demonstrates our unique and differentiated portfolio. Will and I continue to visit with our global teams, including a recent trip to Europe and Australia. The teams are investing in the right areas of the business to drive long-term profitable growth, and they couldn’t be more energized. We enjoyed a benefit of strong global brands and the GPC culture is alive and well across all our global operations.

Further, we remain committed to the strategic investments and initiatives that we highlighted at our Investor Day back in March. We believe these investments are critical to our long-term success and are contributing to our financial performance both now and for years to come. We want to thank each of our 58,000 GPC teammates for their hard work and continued dedication to serving our customers around the world. So, with that, I’ll turn the call over to, Will.

Will Stengel: Thank you, Paul. Good morning, everyone. I want to start by also thanking the global GPC team for their ongoing commitment to serving our customers. We appreciate the hard work every day to deliver parts and solutions that help keep the world moving. It’s great to see the teams work together as one GPC team to deliver customer success. We do this with coordinated focus on our foundational priorities, including talent and culture, sales effectiveness, technology, supply chain, and emerging technology complemented by disciplined M&A strategy. To that end, I’d like to take a moment to specifically recognize the global teams for the progress on our numerous in-flight initiatives around the world. We’re executing a broad set of initiatives across our global business and making strong and steady progress.

The teams are simultaneously working to evolve the business for the better, while delivering on our day-to-day service commitments to our customers. As we detailed at our Investor Day, we believe we have compelling opportunities to invest back in the business and are excited about the progress and outlook. As Paul mentioned, we have great examples of progress around the world, specific examples range from state-of-the-art distributions centers with automation and next generation technology, enhanced data visibility and analytics capabilities, added talents and expertise, modernize technology platforms to enhance growth and productivity, and much, much more. We know the teams are working hard to execute the body of work, so thank you very much.

Now, turning to the details of the business segment results. Before I get into the specifics, I should mention that the third quarter had one less selling day in the U.S. when compared to the third quarter last year. This impacted our total sales and comparable sales growth versus prior year, for both our industrial and automotive segments. During the quarter, total sales for Global Industrial were $2.2 billion, an increase of 0.6%. We estimate that the one less selling day negatively impacted Global Industrial sales growth by approximately 160 basis points. Total sales for Global Automotive were $3.6 billion, an increase of 3.9% with a negative impact to Global Automotive of approximately 100 basis points, due to the one less selling day. Now, turning to the Global Industrial segment.

Our quarterly results were essentially in-line with our expectations, and we remain ahead of our year-to-date plans. Recall that our expectation was for industrial growth to be lower in the second half of the year compared to the first half. Comparable sales growth increased 0.3% in the third quarter versus the same period last year. The same period last year was our highest quarterly comp during the year at approximately 20%. The monthly average daily sales cadence through the quarter was relatively consistent with each month of the quarter up low single digits. During the quarter, Motion saw a more mixed result across its various end markets with the strongest growth coming from industries such as food products, iron and steel, and mining, offset by relative softness in equipment and machinery.

As mentioned, Motion continues to make excellent progress with initiatives including sales excellence, pricing, e-commerce, technology, and supply chain strategies that are helping to win profitable market share. As one example, the inside sales team initially formed in 2020 now covers approximately 25% of active customer accounts. The proactive sales calls are helping to drive profitable double-digit growth across the selling channel with a lower cost to serve. Our technology investments supporting revenue growth are also helping deliver better customer experience, with nearly 30% growth across e-commerce channels year-to-date, and e-commerce now at over 30% of total sales, up approximately 6 percentage points since 2021. Motion’s second new fulfillment center in Fort Mill South Carolina is another example of exciting progress.

This supply chain initiative consolidates various older legacy facilities while improving productivity, efficiency, speed, and service to customers. Our first fulfillment center in Lakeland, Florida opened at the end of 2021 and has delivered outsized sales growth a 10% reduction in operating expenses and corresponding profit margin expansion. We’ll continue to roll out this strategy with additional fulfillment centers opening scheduled for 2024. In Asia Pac, our Motion team delivered another strong performance in the third quarter with double digit sales and profit growth. Local teams are energized as reaffirmed by recent independent survey data showing high levels of team member engagement combined with market leading customer satisfaction rates.

Motion is a trusted value-added advisor to its customers, and the team has detailed plans to win additional share in this fragmented market. Industrial segment profit in the third quarter was approximately $283 million up a strong 16.6% and a 12.9% of sales representing a 180 basis point increase from the same period last year. The profit improvement in industrial was driven by another quarter of excellent operating discipline in both North America and Australasia. The accelerated integration of the KDG acquisition has contributed to the strong performance and we will exceed our $15 million synergy estimate by the end of this year. Turning to the Global Automotive segment. Similar to the first half of the year, total automotive sales benefited from our global diversification with our international auto businesses outperforming with mid-single-digit to double-digit sales growth in local currency.

Comparable sales for the Global Automotive segment increased 0.6% in the third quarter and by geography include low to mid-single digit growth in each of our international businesses in comparable sales of negative 2.9% in the US. The moderation in inflation continues to be a significant factor in our year-over-year performance. As expected, Global Automotive sales inflation moderated in the third quarter to low single digits from mid-single digits in the second quarter. By comparison, in the third quarter of 2022, Global Automotive benefited from high single digit levels of sales inflation, which includes a benefit in the US of approximately 10%. We expect sales inflation in Global Automotive to be low single digits in the fourth quarter. Global Automotive segment profit in the third quarter was $322 million up approximately 4% versus the same period last year, and segment operating margin was 8.9% flat with last year.

In the quarter, each of our international geographies delivered margin expansion, while US Automotive segment margin was down due to expense deleverage related to planned investments and the impact of lower sales. Now let’s turn to an overview of our automotive business performance by geography. In the US, as Paul outlined, automotive sales declined approximately 1% in the third quarter with comparable sales down 2.9%, which includes the negative impact of one less selling day year-over-year as I had previously mentioned. Further, the third quarter of last year included the benefit of sales associated with our NAPA Expo. A sales event held approximately every five years, which negatively impacted our year-over-year comparisons by an estimated 170 basis point.

Collectively, these two factors represent approximately 340 basis points of headwind in evaluating our year-over-year growth performance in the US. In the third quarter, sales to both commercial and retail customers were down slightly with commercial and DIY essentially performing at similar levels. Our commercial business was mixed in the quarter as fleet and government outperformed and major accounts remained pressure driven by the impact of tighter market conditions on the end consumer. The average daily sales cadence by month was July, slightly up, August, down low single digits, and we exited the quarter with September up low single digits. It’s fair to say that our performance in the US automotive business was below our expectations, and we believe the underperformance is a combination of execution and further tightening of market conditions.

On the execution side, we have not been crisp enough in the field with service to our customers. In addition, while supply chains have improved significantly post pandemic. We’ve experienced some lingering issues with inventory availability in a few product categories. Finally, the impact of tightening market conditions, including higher interest rates and persistence levels of higher cost inflation, has created a more cautious trading environment for our customers. Despite the challenges we’re taking action, first, in terms of service in the field, we’ve taken actions to intensify our operational rigor at stores, and DCs as well as further enhanced our inventory strategies powered by investments we’ve made in data analytics tools. Second, we’ve experienced fill rates below our acceptable levels in a few product categories.

This fill rate performance has taken too long to remedy post pandemic and as a result, our merchandising teams partnered with alternative suppliers to address the issue to ensure our markets are properly stocked. Finally, while we can’t control the overall market conditions, we are working closely with field sales to drive incremental growth opportunities and we continue to be disciplined on costs, including ongoing cost actions, which Bert will discuss further. As mentioned, we’ve underperformed our expectations at US Automotive in 2023, but with new leadership enrolled for 100 days now, the team has clarity of the priority opportunities as taken actions and are quickly moving to get where we need to be. With solid industry fundamentals and the team’s competitive drive to win, we’re confident our US automotive team is positioned to overcome our recent challenges and execute on our long-term strategy to profitably grow share.

In Canada, sales grew approximately 4% in local currency during third quarter with comparable sales growth of approximately 3%. During the quarter, our automotive and heavy-duty businesses grew mid-single digits and low single digits, respectively. And we are pleased with the Canadian team execution of their strategic initiatives despite macroeconomic pressures and a cautious consumer. In Europe, our automotive team delivered another strong quarter, which total sales growth of approximately 11% in local currency and comparable sales growth of approximately 7%. We continue to drive strong growth in market share gains across our European markets due to the ongoing execution of our initiatives and strategic value creating acquisitions. During the third quarter, we delivered mid-single digit to double digit growth across each of our geographies driven by continued wins with key accounts, winning higher share of wallet with existing accounts, and expanding the NAPA brand in the region.

In addition, the team’s making excellent progress on our new National Distribution Center in France that Paul, Bert and I had a chance to visit. Scheduled to open in 2024, this 50,0000 square foot facility helps evolve the network’s strategy and upgrades the level of technology and automation within our supply chain. This effort complements a similar investment in the UK, and the teams are working well to leverage best practices. We expect these facilities to further drive productivity and efficiency as well as increased service level to our customers. In the AsiaPac Automotive business, sales in the third quarter increased approximately 6% in local currency with comparable sales growth of approximately 5%. Sales for both commercial and retail were solid in the third quarter, with retail growth slightly above commercial.

Having recently visited with this world class team, it’s impressive to see the team consistently executing at such a high level and delivering another quarter of record sales and profitability. Our AsiaPac team is driving market share gains, improving profitability, increasing its employee value proposition all while executing strategic initiatives to create long term value. In closing, the global GPC team delivered solid third quarter results, driven by the benefit of our strategic business mix, and global geographic diversification. We remain committed to our plans for continued growth through the balance of the year despite a dynamic environment. We’re confident our teams are focused on the right long term strategic initiatives that will deliver customer solutions and create value.

Thank you again to the entire GPC team for your hard work, your performance, and your dedication to taking care of our customers. With that, I’ll turn the call over to Bert. Bert Nappier Thank you, Will, and thanks to everyone for joining us today. Our performance in the third quarter reflects the operating discipline in our business, alongside the focus by our teams to serve our customers, which is evident with our double-digit earnings growth for the quarter. Before I walk you through the key highlights of our third quarter performance, I would like to note that we had no nonrecurring items in the third quarter and nine months of 2023. Our comparisons to the prior year, however, excludes certain nonrecurring items in 2022, primarily related to the integration of KDG.

Double GPC sales increased 2.6% to $5.8 billion in third quarter of 2023. This reflects a 0.5% improvement in comparable sales, which includes low single digit levels of inflation, a 1.7% contribution from acquisitions, and a 0.5% favorable impact of foreign currency. Our sales performance reflects ongoing strength in international auto, continued, but moderating growth in industrial, offset by a decline in sales at US Automotive. Further, 1 less selling day in our US businesses negatively impacted sales growth by an estimated 120 basis points. Our ongoing execution of our strategic pricing and sourcing initiatives were the primary driver of our strong gross margin expansion. Gross margin was 36.2% in the third quarter, 130 basis point improvement from the same period last year.

Given our performance year-to-date, we now expect our grow margin rate for the full year to improve 50 to 60 basis points from 2022, an increase from our prior estimate of 30 to 50 basis points of improvement. Our total operating and non-operating expenses in the third quarter were $1.6 billion or 28.2% of sales. This compares to total adjusted expenses of 27.5% of sales in the third quarter last year, or an increase of approximately 70 basis points. The SG&A deleverage in the third quarter is primarily attributable to a few key factors, planned investments in wages and benefits for our teams, and increased spending and technology to support our strategic initiatives. These investments in wages and benefits for our team members impacted SG&A by approximately 35 basis points, while investments in IT and digital impacted SG&A by approximately 25 basis points in the third quarter.

As you heard earlier from Will, within SG&A, the US Automotive team has been working hard to execute on cost improvement actions. The team has been successful in reducing headcount, implementing a hiring freeze, and driving discipline around travel and other discretionary costs. These actions are on track and equate to approximately 15 to 20 basis points of benefit which is embedded in our annual guidance and year to date results. For the full year, we continue to expect SG&A deleverage of 30 to 40 basis points based on our investments in our team members and IT. Our third quarter revenue growth and gross margin expansion drove total segment profit of $605 million up 9.6%. Segment profit margin was 10.4%, a 70 basis point increase from last year and our seventh consecutive quarter of margin expansion.

This quarter’s segment margin expansion is a clear reflection of the value of our portfolio diversification, highlighted by Industrial, which now represents nearly 50% of GPC’s segment profit. While we deliver strong overall margin expansion driven by industrial, our Global Automotive segment margin was flat due to US Automotive. We’ve demonstrated consistent improvement throughout 2023 as global auto segment margins improved again sequentially. Further, we have identified opportunities to improve execution at our US Automotive business and position the business to take share. With a combination of operating discipline and ongoing investments in strategic initiatives to drive further operational efficiencies and productivity for the year, we now expect GPC segment margin expansion of 40 to 50 basis points and increase of our previous outlook of 20 to 40 basis points of improvement.

Our third quarter net income was $351 million or $2.49 per diluted share. This compares to adjusted net income of $317 million or $2.23 per diluted share in 2022, an increase of 11.7%. Turning to our cash flows. For the first nine months of 2023, we generated $1.1 billion in cash from operations and $733 million in free cash flow. We closed the third quarter with $2.2 billion in available liquidity, and our debt to adjusted EBITDA is 1.6 times, which compares to our targeted range of 2 to 2.5 times. Highlighting our flexibility and the strength of our balance sheet. We remain committed to our four key priorities of capital allocation, which include the investment in our business through capital expenditures and M&A and the return of capital to our shareholders, through dividends and share repurchases.

During 2023, we have invested $350 million in capital expenditures, including $145 million in the third quarter. We remain disciplined investing in initiatives we believe will drive modernization and long-term growth for our business, as acquisitions remain a key element of our growth strategy we invested $211 million year to date for acquisitions, including the investment in Gaudi to expand our market leading position in Iberia. We continue to generate a robust pipeline of bolt on acquisition targets for our business. Thus far in 2023, we have also returned approximately $565 million to our shareholders in the form of dividends and share repurchases. This includes $393 million in cash dividends paid to our shareholders and $172 million in cash used to repurchase 1.1 million shares.

We remain well positioned with solid cash flows and a strong balance sheet to effectively deploy our capital through any economic environment. Turning to our guidance. We continue to navigate a balanced mix of headwinds and tailwinds as we move into the fourth quarter. With that backdrop, we are reiterating our full year sales guidance and updating our diluted earnings per share guidance previously provided in our Q2 earnings release. We now expect diluted earnings per share to be in the range of $9.20 to $9.30 an increase of approximately 10.3% to 11.5% from 2022. This compares to our previous outlook of $9.15 to $9.30. Our sales guidance is unchanged and we continue to expect total sales growth for 2023 to be in the range of 4% to 6%. By business segment, we are guiding for the following, 4% to 6% total sales growth for the Automotive segment with comparable sales growth in the 2% to 4% range.

Within this outlook, we expect international automotive to be at the high end or above this range with US Automotive below. We also expect Global Automotive segment margin to be flat to slightly down for the year. For the Industrial segment, we expect total sales growth of 4% to 6% with comparable sales growth also in the 4% to 6% range. As expected, the sales growth within this segment has moderated along with the industrial economy, and our outlook includes low-single-digit growth in the fourth quarter. For the year, we now expect Global Industrial segment margin to expand by at least 150 basis points year-over-year. We are reaffirming our outlook for cash from operations and free cash flow. We expect cash from operations to be in a range of $1.3 billion to $1.4 billion, and free cash flow to be in the range of $900 million to $1 billion.

We continue to plan for capital expenditures of $375 million to $400 million for the full year, which includes incremental investments in technology, and supply chain, among others. In closing, our third quarter double-digit earnings growth demonstrates our ability to improve earnings and expand margins and low growth environments backed by a strong balance sheet and returns to our shareholders through our dividend. Our teams are delivering on what we said we would do for 2023, including our expectations for mid-single-digit sales growth, gross margin expansion, segment margin expansion and double-digit earnings growth for the full year. We look forward to closing the year strong and reporting on our fourth quarter and full year results on our call in February.

Thank you. And we will now turn it back to the operator, for your questions.

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Q&A Session

Operator: We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Scot Ciccarelli of Truist. Please go ahead.

Scot Ciccarelli: Good morning, guys. Scot Ciccarelli. I know your Investor Day wasn’t all that long ago, but you guys had outlined some margin targets for each of your divisions, and while we’ve seen great progress on the industrial side. How are you guys thinking about your automotive margin targets given the performance from the last few quarters?

Bert Nappier: Yes, Scot, Bert. Thanks for the question. Look, I don’t think we’ve changed how we’re thinking long-term. We’ve got two years left on that cycle. And again, as we close out this year, as I mentioned in my prepared remarks, we’re looking for Global Automotive segment to be, flat to slightly down. With two years left, it’s not unusual to get to a three-year plan a little differently, maybe than you started in March, and when we announced all that, but we still, still feel confident that the levers are there. As we look at the long-term margin expansion, particularly for auto, we got pricing and category management benefits. So, when talk about pricing and sourcing benefits and gross margin expansion. We’ll continue to see those levers.

And we’ve got further long-term investments, and that’s really how we’re thinking about this. We’ve got some short-term challenges, but a long-term investment around things like supply chain, investments in IT, those remain in early innings. And so, we’re really still bullish on the long-term despite some of this near-term choppiness.

Scot Ciccarelli: Okay. That’s, that’s helpful. And then given some of the near-term choppiness, and you guys are obviously implement — implementing various improvement processes to improve the U.S. auto business. But, the way this business typically works is, once you lose market share, it’s kind of hard to get back. So how are you guys thinking about — can, can you actually — are you guys thinking that you can call that market share back or, are the changes you’re implementing really just kind of patching holes in the ship and stopping incremental share losses? Thanks.

Will Stengel: Yes, Scott, it’s Will. Let me, let me add a few thoughts. And I’ll start by just saying, the U.S. Automotive team, just to be very clear, is working incredibly hard every day to take care of their customers and be easy to deal with, and as you know, better than anyone, what that means for customers is, we got to be in a position to offer them the right quality part in the right place at the right time, and have that transaction be seamless. Once that product is available in the market, we needed to efficiently and quickly speak — efficient and quick to search for the part and then pull the part and get it to the customer. And so, when you think about what we’re working on everyday, we have the opportunities probably to be better in, each part of that.

There’s no single point of failure that has recently developed. I think this is just a call to action for the team that we need to be better across the board. The good news is, as you started with your question, and our initiatives that we detailed at Investor Day are all focused around these customer needs, and we’re making good progress. And while, we might have been disappointed with recent performance, and might indicate that we’ve given back a little bit of share, we still feel good about what we’re working on. We just need to do that body of work with more urgency at a faster pace.

Paul D. Donahue: And Scot, I would, I would just add on to that. Look, we’ve been in this business a long, long time. There’s nothing structural, that has shifted or changed in, in our business or in our, in our structure. We know the levers to pull, will hit on them. And trust me, there is a sense of urgency up and down, up and down the organization to get it done. I have no doubt we’ll get it done.