Operator: Thank you. Our next question comes from the line of Michael Rehaut with JPMorgan. Your line is now open.
Michael Rehaut: Thanks. Good morning, everyone.
Don Allan: Good morning.
Michael Rehaut: I had a question on the growth investments and just how to think about the cadence about longer term. I think you talked about it a little bit earlier in the call, but can you talk about in totality, I think alongside the 35%-plus gross margin and enabling $300 million to $500 million of growth investment, I was hoping just to get a sense of what those investments were in ’23, what you expect it to be in ’24 and ’25, and how much of that is going to be kind of an ongoing level of investment, and if that would all be on the income statement in the tools and storage, or if there would be some in corporate? Thanks.
Pat Hallinan: Yeah, Mike. I’ll give you a few points. I’d say ’23 was a bit over $100 million, will be around $100 million for ’24. And as I referenced on our earlier question, it’s about three quarters around innovation and then the marketing and field resources to activate that effectively. And the rest of it is around capability building. Some of it in our business segments, a relatively small amount of it in corporate. And I think if you’re getting to the broader question of you’re sitting there with a model and you’re trying to figure out is SG&A permanently at 21% of sales or something else, if that’s kind of behind the essence of your question, I’d say as we get back to share gains and as we jolt our brands and our innovation up for a few years, I expect in the medium-term, to be more in the back to the 20%-ish range, if that’s kind of what you’re trying to unpack.
But I would expect us to be elevated in ’24 and potentially in ’25 and ’26 depending on the macro and some of the things we’re prioritizing in the medium-term around that 20%-ish level. And then, I think, beyond the medium term, to the extent we can be exceptional at driving gross margin improvement, the SG&A will move with the rate at which we can drive gross margin improvement.
Operator: Thank you. Our next question comes from the line of Eric Bosshard with Cleveland Research. Your line is now open.
Eric Bosshard: Good morning. You talked about normalizing promotions and you talked about, I think, volumes relative to ’19, just curious if you could give us a little bit of insight into promotional activity relative to ’19, where we are now, and what is embedded in the guidance, and what you’re seeing in the market in regards to an appetite for promotions either from consumers, professionals or retailers?
Don Allan: Good morning, Eric. So, I would say that the level of promotional activities we’re at now and we would expect in ’24 is probably pretty consistent with what we experienced in 2019. And so, we’re kind of back to where we were, which I think was a healthy balance of normal core operating selling activities and promotional activities. As we think about the year, our customers are not really talking to us about, what I would call, unusual levels of promotional activities. They’re looking for the normal set of activities, and I think that’s going to likely be the case throughout the year. And we tend to — in demand markets like this that are somewhat stable in the sense where you don’t have a lot of growth and you don’t have a lot of retraction, it tends to be a more normal promotional environment in that setting.
If demand retracts in a more significant way, then promotional activity does pull back a fair amount, because the impact of promotions is not as significant. If we see a back half of the year that gets better, which there’s — we talked about in our presentation that our guidance doesn’t necessarily include that, but if the back-half demand environment is an improved environment, and you could potentially see a little bit of tick-up in promotional activity related to that. But at this stage, based on our guidance, I think it’s probably balanced to say that our view is that promotional activity will be consistent with what we saw pre-pandemic.
Operator: Thank you. This concludes the question-and-answer session. I would now like to hand the conference back over to Dennis Lange for closing remarks.
Dennis Lange: Shannon, thanks. We’d like to thank everyone again for their time and participation on the call. Obviously, please contact me if you have any further questions. Thanks.
Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.
