So how quickly that comes online is probably the biggest variable at this point and we don’t know exactly what that’s going to look like. What is in our control when we look forward is the growth that we can drive, particularly in the second half tied to the strategic initiatives. We’re very optimistic about that. And then obviously, any tailwind we’re getting from macro, the earlier that starts the better.
Stephen Volkmann: Okay. Great. And then sort of longer term, is there any way to ballpark, I don’t know, maybe on an ADS basis or something, the kind of business wins that you think you have for the second half so that we can get some sort of comfort in how that progresses?
Kristen Actis-Grande: I wouldn’t size it specifically, Steve. What I can — what I’ll give you color to maybe when we look at the strategic initiative progress in the second half and how we pressure test that internally, we’re basically looking at all of what I kind of call our core growth initiatives, our existing growth initiatives and one inflection opportunity we see there. So we are pressure testing the wins that we already have, the growth that we expect in our largest customers what inclusion opportunities we see that to come online. And then we’re looking at where we think public sector sales will sustain and then where like our Class B sales will sustain. So we’re pressure checking all of that. And then within the newer things that Erik touched on in the prepared remarks, like what kind of benefit do we think we’ll see from the web enhancements or the list price repositioning.
What we’re really looking at is a range of outcomes, particularly in the core customer segment and how quickly we could see an inflection in that slice of the business. And so obviously, we went into the pilots with some assumptions on what that would look like, and we’re proving those things out through the pilots so it’s still early days, but we are reassured by what we’re seeing. We’re happy with how the pilots are going and that’s giving us confidence in the second half.
Stephen Volkmann: Okay. Fair enough. We’ll see how that goes. Thank you so much.
Operator: Thank you. And our next question today comes from Chris Dankert with Loop Capital. Please go ahead.
Chris Dankert: Hey. Good morning. Thanks for taking the question. I guess to kind of pull the — I guess to kind of pull the thread on that last question a little bit more here. Is it too early to give us a glimpse that’s kind of what level of sales acceleration you’re seeing on those repriced SKUs versus those that haven’t been repriced yet?
Erik Gershwind: Chris, good morning. I would say, so look, as Kristen described and maybe just zooming out for a second, looking what we’re seeing now versus back half? Obviously, when you do the math on what has to happen to ADS and growth rates in the back half, it’s a significant step-up. I think you’re looking at sort of three buckets. One is, economic improvement. Two is, the existing — overlaying the existing growth drivers, which do have a proven path to them in terms of implant and vending and their contribution to growth. And then three, what you’re hitting at now, which is some of the newer ones. I would say, look, on the web price realignment, we’re 30% of the way through the process. It’s — look, it’s still, I would say, a bit early.
And I say it’s a bit early, Chris, particularly because one thing I did want to highlight we really weren’t expecting, I mentioned in the prepared remarks that until we’re through the entire offering, we’re not really marketing this actively to customers because it’s hard to market a pricing realignment for some SKUs and not others. And so the expectation out of the gate wasn’t to see a massive lift. I think in the early going, the hypothesis we were proving out here was particularly around the ability to be margin neutral, which has proven out. So I think the fact that we’re actually seeing a discrepancy in performance and it’s a couple of areas. One is just, in general, the SKUs that have been touched versus the ones that haven’t. I would call that a modest difference but a difference, but it’s a difference.
And the second thing being some more operational metrics like web conversion rates, which just give us a sense as to how customers are responding to the changes when they see them. So I would say the results that we’re seeing now are encouraging, but still relatively small compared to where we anticipate them going once we actively market this in the back half of the year. The other thing, Chris, I would say is, we’re not hinging the entire back half on this initiative by itself because our expectation is this pricing combined with the product discovery on the web will take time and will continue building. So it’s a combination, the back half improvement that we need to see and that we’re assuming in our outlook is based on all three of those factors I mentioned, economy plus current growth drivers that have been accelerating plus these new ones that then build as we move through ’24 to ’25.
Chris Dankert: Got it. That’s really helpful. Thanks so much, Erik. And then just touching on the profitability improvement kind of opportunity wrapped up in mission critical here. I know we’re getting away from explicit dollar targets, but maybe you can just kind of walk us through some of the initiatives on the profitability improvement piece there and just kind of the confidence level in driving SG&A leverage that kind of hitting the incremental margin target nearer term?
