Good afternoon, everyone. Welcome to Cleveland, Ohio. Glad you're with us, as well as all those that are listening in via a webcast. We're really glad that you're with us, and welcome to our 2023 financial community presentation. My name is Jim Jaye. I'm the Senior Vice President of Investor Relations and Corporate Communications for the company. On behalf of our entire leadership team, we're really pleased that you've taken the time to come to Cleveland and be with us today. We have an excellent program for you today. I will kick it off with a brief overview of the market. Our chairman and CEO, John Morikis, will follow with a company overview, and then you're going to hear from multiple members of our leadership team in a fireside chat format, something a little different for us this year. You're gonna hear them share why they are so excited and confident about the many profitable growth opportunities that we have in front of us. Following those prepared sessions, we'll have a moderated Q&A session, take your questions, and for those who are here in person, we'll have a reception afterwards where you'll have a chance to engage with our management team. The slides that you're going to see today will be available on our website after the program. And before we really dive in, I would like to just recognize a couple of people. Putting on an event like this is no easy task, so, first, I'd like to recognize Eric Swanson, our VP of Investor Relations. Many of you know Eric does a great job for us. In the back, Mandy Pavlish, who's running point for us in producing this extravaganza. And then last is Natalie Darr, our admin extraordinaire, who many of you speak to and interact with when you're looking for me or Eric. So thanks to my great team here. I'd also like to point out a cautionary statement for us about forward-looking information and any third-party market data that we're going to cite today. And so, without further delay, why don't we jump into some industry data and some current trends? So, let me begin with the U.S. architectural paint industry. And most of you know that this makes up about 60% or so of total Sherwin revenue. Chart on the left shows you total U.S. gallons, and I'd say that the data here is not an exact science. It's based on multiple sources, our own market intelligence. You'll notice that in 2021, that number has been revised a little bit lower from some of the previous presentations we've given, as we got additional data from the American Coatings Association and others that showed the impact from the supply chain in 2021 was maybe a little bit bigger than people originally thought, and 2022 also saw some of that. We know that over the last several years, it's been a turbulent time, right? We've had COVID, the supply chain disruptions, inflation, but if you believe this chart is accurate, gallons from 2019 to 2022, it's basically flat. The good news is, if you look at our paint stores group, we've been much, much better than that, and over that same period, we've grown at a CAGR of about 2.5%. We clearly believe we're outgrowing the market. We expect that to continue, and you're going to hear from our team today why we think that's the case. The only truly significant period where you've seen a sustained industry decline over the last 20 years was related to the housing-led Great Recession. In that period, single-family starts were down, which impacted new residential. You also had a huge increase in foreclosures, which meant a lot of homes were not maintained, i.e., painted, exterior or interior. The overall pace of growth in square footage also slowed, but the takeaway is that square footage did continue to grow. So today, if we look at this, we're at about 25% more square footage out in the market in residential and non-residential since the prior peak, 25% more. So what's the takeaway there? A lot more to paint than there was. In addition to that repaint, there's a lot of new construction to come as well. So, the next slide here shows each of our major architectural end markets and also an estimated industry percentage of the gallons on the top of those columns there. To be clear, those are industry percentages, not necessarily Sherwin percentages of the total. But as you look at this chart, the real strength of our company is that we're super well positioned in all of these, and we've deliberately structured the company that we can pivot between these as different market conditions emerge. So if I take a quick look at a few of these, in new residential, we've got softness in single-family starts, which are now impacting the completions. We've been very open about that. Starts may be bottoming. We don't know that yet, but we're starting to see some momentum. Home builders are a bit more optimistic. Builder incentives and lack of existing homes are driving demand, and over the long term, household formations are going to drive that long-term view. On res repaint, there's been some slowing in remodel demand, but low-cost, high-impact projects like paint are likely going to hold up better. They have in the past. We expect that to continue. Existing home sales have been weak, but at the same time, there's many other drivers which I'm going to touch on, and all of those are intact and moving in a positive direction. On the commercial side, strong starts in 2021 and 2022, leading to strong completions for us in 2023 and into 2024. Property management, apartment demand is strong, driven by rising home prices, higher mortgage rates, and fewer existing homes that are available for sale. And higher rent is also driving some churn in the apartment market. We're also seeing modifications of office space, as a tailwind. And then in DIY, we've seen some softer demand as consumers are impacted by inflation and the end of the COVID stimulus, but at the same time, those DIY projects are also, fairly low cost and more highly impactful. So if you believe that, U.S. demographics are important, then this next slide is going to be meaningful to you. We believe that U.S. demographics are going to support demand for many years to come. Now, you have baby boomers aging in place and remodeling. You have Gen X and millennials moving up. You have waiting in the wings, the largest generation in U.S. history, Gen Z, who's going to drive another wave of household formation. So we see all those demographic trends as a real tailwind for us. So maybe just a few more details on new res, if you go to the next slide. Here's the recent dynamic. Now, as we've said before, new res painting begins 3 months -6 months after a start. And when you look at the starts data, I think it's important that you look at single-family and multifamily. So when we talk about our new res business, we're largely talking about single family. That multifamily falls a little bit more into our commercial side. But from October through April, we saw single family starts down anywhere from 20%-35%, and that's the yellow line that you see on this chart. So as we've been very transparent and talked about, we're going to see some slower completions from that, and our guidance for the year reflects that. But at the same time, we are, and we're going to continue to outperform the market as we gain share. You're going to hear our team talk a little bit about that in just a few minutes. Our home builder customers, you see many of them are publicly traded. You read their reports, they're a little bit more optimistic than they have been. And we also believe that mortgage rates eventually are going to start to moderate, maybe not necessarily to the 2% or 3% that we saw a few years ago, but something less than today, and that should help drive demand as well. So if those single-family starts to pick up later this year and start to move forward, that could be supportive for us into 2024, but we'll have to see how that market unfolds. I think the better news, if you move to that next slide, is while the near term is choppy, household formation has remained very strong since the Great Recession, and we've significantly underbuilt homes during this period of time. And at the same time, we've lost hundreds of thousands of homes because of demolition or natural disasters. So you talk to and you read various pundits, they will tell you there's a deficit of anywhere from 2 million -7 million housing units out there. It's going to take some time over many years to fill that gap. So the takeaway is, I think that the strong demand in new res is going to be there for a lot of years, and nobody is better positioned than Sherwin-Williams to support those home builders. If I look at the res repaint area, I'll remind you that it's our largest segment, but it's also where we have the most opportunity, even after seven years of double-digit percentage growth. It's also the area, res repaint, where we've been investing over the last several years in terms of stores and reps to go after and attack this market. So we feel very good about where we're at. One of the data points that we look at in res repaint is the leading indicator of remodeling activity, which is here, and you see that slowing a little bit in 2023, and they're thinking that it might dip into negative territory in 2024. But again, I would tell you that painting, as you know, is an affordable, high impact type of project. And so what we've seen in the past is paint has held up better than this and outperformed this. We expect that to happen again. Existing home sales, no secret here, it's been challenging on existing home sales. They've been down year-over-year for 23 straight months, and that's the green line there. But I think there's three silver linings if you look at this chart. So silver lining number one would be, people who are locked into their homes because of low mortgage rates and don't want to move into a higher mortgage rate, they're repainting or remodeling in place. I think silver lining number two is people who are tired of waiting to find an existing home are moving into new res. They're, they're talking to builders and looking for that. And I think silver lining number three is that existing home sales is just one element that drives repaint. There's a number of other elements that make up the bigger portion, and those are intact. So what are some of those other drivers? Well, I'll walk you through just a few of them. Number one, America's homes are getting older. There's about 42 years old is the median age of a home in the US, meaning they need more repairs. Home price appreciation, that gives homeowners confidence to remodel and invest, and home prices have generally gone up since 2012. Some other drivers, the baby boomers and Gen Z, as I talked about, they want to age in place, and that often means modifications for entryways, bathrooms, stairwells, all of which often require paint. And the home office trend also appears to be here to stay. So with more people working from home, many are creating or modifying those spaces, and guess what? There's paint. Another couple that I'd point to as well that are more emerging, the increased frequency of extreme weather events drives repair spending, and we're actually seeing more people move into disaster-prone areas than moving out of those areas. So again, many factors beyond existing home sales that are driving repaint. And when those existing home sales eventually do recover, that's gonna be a nice tailwind for us. As you'll hear, there's nobody better positioned to go after that repaint business. Switching to the new commercial market, touch on that quickly. As you know, there's a lag of anywhere from 12 months -24 months from the time a commercial project starts to when it ends. We've seen a sustained period of commercial starts, which you see on the chart in the yellow there, from mid-2021 to 2022, and that's been driving the strength of our commercial business. We've been up strong double digits in new commercial for four straight quarters, and we see the strength in new commercial continuing well into 2024 for us. You're seeing the same sentiment if you look at the Architectural Billing Index, strong in 2021 and most of 2022, and that's leading to strong completion activity here in 2023 and into 2024. It is a little bit softer more recently. That could mean a little bit of turbulence as we get into 2025. We'll see. Should that occur, though, we're gonna offset that with continued share gains. We're gonna offset it by pivoting to other parts of the market, repaint, property maintenance, and if we start to see new res come back, that would be helpful for us as well. Overall, if you look at the market on architectural, pro is becoming, continues to become a larger and larger part of the market than DIY. But the good news is, whichever way this table tilts, whichever way it goes, Sherwin is there. Sherwin is well positioned. Let's move on to the industrial side of the business briefly, and we're continuing to build a strong and differentiated industrial business here. We're very excited about what we're building, and you're gonna hear more about that. Since we're in a variety of different end markets in our industrial business, we look at a lot of different drivers, but one of them that gives us sort of an overall directional view, near term, is the Industrial Purchasing Managers' Indices. As a reminder, the largest part of this is new orders, and the red lines on these charts show you what's happened here in 2023. No surprises. In the U.S., our largest region, PMI's been in contraction. Eurozone has been soft for 13 consecutive months. Brazil's been choppy. In China, the recovery that we thought we might see coming out of post-COVID was very short-lived. But we know that our job here is not to accept these charts or merely report these numbers, but our job is to find areas where we can grow share, and those areas are really numerous. So let me share just a couple of high-level trends in our industrial business, which give us great confidence in the long-term of that business. So first, if I look at our packaging business, we've been very clear about some near-term choppiness as some destocking in the channel is occurring, but longer-term, we're very bullish on the trends, including a shift from plastic to cans and the adoption of non-BPA coatings, where our V70 product is a leading solution in the market. We and our customers are investing in this business. In auto-refinish, the near-term and the long-term outlook is strong. Industry consolidation of multi-shop owners is creating opportunity for Sherwin. We believe our waterborne technology is differentiated, and installations of our systems have been robust over the last couple of years. If you move to our wood business, the near term is a little softer, driven by new residential cabinets, flooring, and furniture. But as I say, if you look at the longer-term trends on U.S. housing, it's strong. And the recent acquisition that we've made in ICA is gonna add to our momentum here. For coil, the Americas right now are a little bit stronger than Europe and Asia, but longer-term, again, if you look at U.S. housing and other drivers, I think our coil business is positioned really well. Extrusions, appliances, window frames, decorative metal products, these are all great opportunities for our coil group. In both of these businesses, customers are looking for sustainable products, they're looking for color expertise, and they're looking for productivity solutions, all of which play to our strength. I'll end with our last two pieces of our industrial business. General Industrial, our largest. Lots of different end markets there, and we're uniquely positioned with our small batch capabilities, which let us differentiate and provide solutions for general finishers of all types. And then our Protective and Marine business, that's our strongest industrial performer right now. Manufacturing plants of all types, onshoring, chip fabs, electric vehicle plants, these are all opportunities for high-end coatings. And then you also have water, wastewater, infrastructure, pharmaceutical plants, and oil and gas infrastructure. All of these are great opportunities for us. We expect the strength of demand here to continue into 2024, and the acquisitions that we've made in this division are actually hitting it out of the park. So if I had to summarize everything, I would say, Sherwin-Williams, we are really built to thrive. And what I would tell you is that in choppy and difficult macro environments, we're gonna focus on serving our existing customers, we're gonna focus on growing our share of wallet, and we're gonna focus on winning new accounts. In robust and growing environments, we're gonna focus on serving existing customers, we're gonna focus on growing share and winning new accounts. In all macro environments, you're gonna see us continue to invest in strategic growth initiatives. It's really simple. You either believe in your strategy or you don't. And in all macro environments, we expect to outperform the market. So that's a quick snapshot of where we are in the market. It's now my pleasure to introduce Sherwin-Williams Chairman and CEO, John Morikis. Thank you, Jim. Welcome to all of you here in person, and to those of you that have joined us virtually. This is a really exciting time for Sherwin-Williams. As you heard from Jim, there are a lot of opportunities ahead of us, and we're really excited about about those. There's no shortage of those opportunities for Sherwin-Williams. He mentioned a few of the things that the company's faced, and I'd say it's not just the company, it's the industry, in fact, the world. You know, things like a pandemic, our industry, supply chain issues. I think through each of those, we've taken an opportunity. As he mentioned, we continue, in the face of adversity, to invest in our business. We continue to learn during those times, and quite frankly, we get better during those times. I'd say this, in my nearly 40 years now with this company, I don't think that we've ever been better positioned to drive value for our shareholders, to drive value for our customers, and to drive opportunities for our employees. Over the rest of the day here, as you're going to hear and see our team up in front of you, they're going to explain to you why we feel Sherwin-Williams is a very compelling investment thesis. To level set, though, I'd like to begin with a quick overview of the company and our reportable business groups. As you can see here, Sherwin-Williams, and most of you know this, is a global leader in the manufacturing, distribution, development, and sale of paint and coatings and related products across our professional, our industrial, our commercial, and our retail partners. We didn't, quite frankly, set out to be the biggest. What we have been keenly focused on, and will continue to focus on, is to be the best. Revenue last year grew to a record $22.1 billion. We also set records in gross profit, EBITDA, and earnings per share. We operate in over 120 countries with nearly 5,000 stores. We have manufacturing and distribution around the world and an industry-leading portfolio of brands. But the most important number on this slide, 64,000. 64,000 wonderfully talented, dedicated employees. 64,000 employees that understand what it is that we're trying to do. 64,000 employees that execute our strategy every day. And quite frankly, it's a very simple strategy. Our focus every day is to differentiate ourselves from our customers, our competitors, and align with our customers to bring them solutions that help their productivity, to help make them more successful, to help make them more profitable. That creates value, creates success and opportunity for our most important stakeholders, for our customers, for our shareholders, for our employees, and for the communities in which we operate. At Sherwin-Williams, we measure everything, but our most important metrics are our growth, our ROS, our return on net assets employed, and our cash generation. We know if we're driving these numbers, we're working on and executing on the right things. The strategy, you know, Jim, Jim mentioned what we do in these different frames or situations in the world or in the market. The reason that we continue to invest is because we believe in that strategy, and the strategy is the same across all our business units. We continue to invest in it because we believe in it. Let's take a quick look at our business groups and why we believe in it. First, our paint stores group, our largest group, our most profitable group, focused on the needs of our painting contractors and the niche DIY business. We have a terrific platform of nearly 5,000 stores, nearly 4,000 highly trained, fantastic reps, and we've been very deliberate on positioning ourselves to be able to capitalize on these end markets listed on this slide. We use our controlled model to ramp up and attack the opportunities that exist in the market. As the markets change, we're there. And that's on display right now. Jim talked about new residential. I think it's a great example. As new residential slows down, we know household formations continue, and when that proverbial table tilts one way or another, we wanna be the ones to capitalize on the market, whichever way that market shifts. Next up, our Consumer Brands Group. Largely focused on DIY. However, I will say that our growing position in the Pro Who Paints is an exciting investment and an endeavor that we're really determined to continue to accelerate. We mainly serve the markets through our premier group of retail partners by offering hero brands and terrific services, and you're gonna hear about those here in just a moment. Largest part of this business is here in North America, but we also have a number of businesses that are growing profitably in both Europe and Latin America. You'll hear shortly about the momentum that we have in this business and the steps that we're taking to accelerate both our growth and profitability in this business. In addition, in our Consumer Brands Group, we roll up our global supply chain. It's embedded in there. And here's another area that we're working very hard to differentiate. Our global supply chain, we believe, is a competitive advantage, and we differentiate by bringing the services and the quality in ways that many can't. In this operation, we continue to drive for more efficiency and more resilience through every chain in the link - every link in the chain. Next up, our Performance Coatings Group is our global industrial business. The industrial coatings space, as you just heard from Jim, are large, extremely diverse, very fragmented. We are unique at Sherwin-Williams in that we're not chasing everything. We're not trying to be everything to everyone, everywhere, as it relates to opportunities. We choose to focus on specific end markets. Those markets that value solutions, that are looking for true partnership, that provide a win-win opportunity, where we drive the profitability and success of our customers, we expect that our shareholders participate in that. We avoid commodity specs. Where price is often the only differentiator, is likely not where you're going to find Sherwin-Williams. We're going to be aligned with customers that when we help speed up their line, increase the quality, make them more productive, and make them more successful, that's where we'll be focused. And there's opportunities, terrific opportunities, quite frankly, in both new accounts and share of wallet as it relates to our Performance Coatings Group. And that's in every division, in every business, every region around the world. Additionally, I think it's a call-out that needs to be mentioned. This team is doing a terrific job in optimizing and simplifying this business as we drive towards our range of margin that we've been talking about. We're confident we're going to reach and maintain this targeted margin of the high teens and low twenties in our industrial business. Most of you that are here in person today, and those of you that have joined us virtually, are likely here because you're either current shareholders or you're considering becoming shareholders. We know that in that space, we're competing for investment dollars, not just amongst coatings companies, but across all sectors with really good companies. We think Sherwin-Williams is a really good company. This slide summarizes why we believe Sherwin-Williams is a compelling investment. We have the strategy, we have the people, we have the competitive advantages and the discipline to drive profitable growth for years to come. We absolutely believe in our business model, we believe in our strategy, and we continue to invest in it. We aim to continue to win and to exceed and outperform the market. I am absolutely convinced and confident that we're just getting started here at Sherwin-Williams, and that the best for Sherwin-Williams truly is ahead. With that, we're gonna break into a little fireside chat, where you're gonna hear a little more about that. I'd like to ask our President and Chief Operating Officer, Heidi Petz, and our Chief Financial Officer, Al Mistysyn, to join me here on stage. While they're coming up, I'll tell you a little bit about them. Heidi, as President and Chief Operating Officer, runs all operations in the company. In 123 countries, those operations all report into Heidi. She's, prior to this position, she was the president of our paint stores group, and prior to that, president of our consumers group. She joined Sherwin-Williams in 2017 as part of the Valspar acquisition. We talk a lot about these challenges that the industry has been through. Heidi has been the tip of the spear for many of those. While I talk about our company learning and getting better, I've watched this terrific executive herself get stronger and better, with each of those challenges that we've worked through. Having watched how she leads this team has just been terrific. Next, Al, our Chief Financial Officer. Al has been on my side as CFO since basically I became CEO, and he's been here since 2017. He joined the company in 1990. He's held a wide variety of operational and corporate finance positions in the company. Blessed to have both of these two executives on my side as we run the company. There's no one else I'd rather have. So let me step over here, and we'll get into a little discussion on some of the key exciting enterprise-wide opportunities for the company. Welcome. Thanks, John. You guys made it up here without stepping on the stairs and tripping here. Always my concern as you're talking here, so good. Dodged a bullet there. There we go. All right. First, we have some slides here that these areas that we're gonna talk about, I think are important. These key strategic priorities cut across the entire company. So as we get through this discussion here, we're gonna tick through each one of those. And I think I'll start with this first question, and I'll, and I'll ask it, maybe, Heidi, you can start now, and you can jump in here. So when we think about enterprise priorities, which we're gonna be talking about here, in my mind, it always starts with talent and our culture. Our number one differentiator is our people. We just talked about our secret weapon here. So maybe, Heidi, you can start. When we talk about this important strength in building our talent, I mean, what in your mind comes to mind as to those important levers that you think about? Well, first of all, good afternoon, and absolutely, talent, culture is at the core of everything that we do, and I might start with a few comments about where we are and then importantly, where we're going. I will tell you, this is a very deliberate area of focus for us. It all starts with hiring the right talent, the right hires. As we think about talking to potential talent, you know, we don't wait for day one when a new hire is onboarding with the company, but day one is the first time that this talent is in front of our company. We like to have a best-in-class candidate experience, so we're really intentional in making sure we have the right talent coming in. But I wanna talk about what happens on day one, and we, we talk a lot as a company, many of the leaders in the room, about success by design. We don't wanna leave it to chance. So day one, we're getting this talent, our, our new hires in front of our products, exposing them to rolling products out, making sure that they're up to speed on our technologies and our differentiation, getting them in front of customers. We'll talk a lot about customers here later and listening to what they're saying, observing what they're not saying, and certainly exposing them to our culture. And we spend a lot of time making sure that day one, we don't wanna wait until, you know, 30, 40, you know, three months later that they're catching all of that. We want them to come in really well prepared. Justin's gonna talk a little bit about our management trainee program in our paint stores group, and I won't go into detail here, but if you look up here, you can see roughly 1,400 trainees -1,500 trainees that we bring through the program annually. And if you look at our 64,000 employees that John shared, one in six of those employees graduated from our management trainee program, so about 10,000 of those employees. We're really proud of that. And then as we look at some of the depth of experience, once we've brought the talent in, and we'll talk about engagement and retention here in a moment, we've got a lot of depth of talent here in the room. We've got many of our division presidents in the back. I'm sure many of you spoke to them last night and today. Across the organization, that same 64,000 group of employees, we've got 7,000 of those employees have over 20 years of experience. So, you know, we're really leveraging not just how we're onboarding and getting the right talent, but how we're taking advantage of a lot of that tenure and experience. We just completed a recent engagement survey, and 85% responded that they would recommend Sherwin-Williams as a place to work. So we're gonna go find those 15%, but we're really proud of that, and again, we don't leave that to chance. So that's where we are. I do wanna take just a brief moment to talk about where we're going. There's three key areas that we're really focused on here. The first is making sure that we are filling that talent pipeline, not with numbers and bodies, but with the right focus on what we need to solve problems for our customers and what we believe is the right cultural fit. So that's a really key area of focus. The second area is making sure that we are driving engagement and retention of this talent. I don't think we're unique here. I think a lot of people are taking new, creative, different approaches, but, you know, increasing the level of communication, making sure that we're really instilling in our organization this sense of belonging, that, you know, we'll talk a lot about diversity and inclusion, but everybody belongs, and we want people that come into Sherwin-Williams to know that, you know, regardless of your background, your education, your age, your ethnicity, there's a, there's a role for you here and a place for you here. So we're really excited about that. That's terrific. Al, from your perspective, CFO, you know, you see a lot of opportunities. Heidi talked about a lot of those, but you're driving the financial piece of this, maybe the intersection between CFO and, you know, how, how that helps us to lead a culture and retention of these great employees. Yeah, I'd start with, we're very excited about our new headquarters and R&D facility, which many of you saw this morning, and we expect to get to begin occupancy towards the end of 2024. And these facilities will allow us to bring our employees together in a world-class environment, and we believe that will help us attract and retain talent. So we are a 157-year-old company, and as Heidi mentioned, we have a lot of long-term employees, including myself, with over 33 years of experience, but we're not complacent, and I think what we're trying to do is get the right resources in the right environment. We're trying to create an environment that challenges the status quo and embraces change with really a focus on driving a better employee experience that we believe drives shareholder value. Yeah, terrific. And I've seen your support in that in some way, but it's terrific. Heidi, earlier, I talked about this point of differentiation that we strive for in our strategy and how we try to align with our customers. Maybe it'd be good, as Chief Operating Officer, for you to talk a little bit about- Mm-hmm. what that vision looks like to you. Well, differentiation, you mentioned a couple of times earlier, is key. I think if you look up here, I'm gonna talk about the customer, of course, and talk about our unique distribution platform, certainly product and services. But I'll start with the customer and a relentless focus on our customer. You've obviously heard that repeated throughout, and making sure that we're looking through our customer's lens, understanding not just what their pain points are, their challenges, many times helping them plan for upcoming work, helping them find ways throughout their business, if it's helping them to look at hiring, staffing, recruiting, how to be more productive on their production line. So there's a whole host of things that we're doing to try to help them, you know, deliver a customized solution to make them more productive. But I wanna start with, after the customer, our unique distribution platform, because I think if we're honest, we could have the best products and the best services, but without being able to leverage nearly 4,800 stores, 3,600 reps, we're able to really customize by segment using that store platform, you know, how we can show up and help these customers in a way that wouldn't be, you know, allow us to outperform the market if we were just relying on our products and services. So we're really proud of that platform. I know we're gonna talk about supply chain here shortly as well, and things that we're doing to continue to build strength. But I'll hit briefly on product and our thoughts on innovation, and, you know, I think demonstrated in a lot of discussion earlier on the R&D facility, you know, it is an acknowledgment of where we are today and importantly, where we're going. And being able to combine top talent and all these technologies across our architectural businesses and our industrial businesses will allow us to accelerate how we think about technology across and leverage talent across. So we're really excited to continue to go down that path because there's a lot of potential in the future there. And then, of course, from a services standpoint, this is an area that we're really continuing to focus in on and hone and add to. You'll hear a lot from the group presidents today, where there are nuances in how we show up with services, so different in our paint stores group than it is with Karl and the industrial side and the role of tech services, how we're leveraging our field out there, our tinting, our blending facilities, and allowing ways for us to reduce time in which we're serving customers. So I would say our competitors probably have one, two, maybe even three of these, but nobody can match what it is that we're able to do to truly tailor solutions to our customers. Yeah, I think that's the key, is tailoring it to the individual customer. Yeah. You mentioned earlier, let me follow up on your comment. You mentioned global supply chain, and I'd mentioned in my prepared remarks about how we, how we learn, as we go through these different experiences. Maybe, maybe you can build on that. Yeah. Just the global supply chain resilience, what that means to you? Well, resilience, I think, is probably the new word that we all have been hearing about a lot, too. I think, first of all, it is about looking at the turbulence and the disruption over the last few years. It's about a self, an honest self-assessment. You know, where do we need to strengthen every link of that supply chain? And it's making sure that we're not going back to where we were, but coming out stronger. So I'm gonna touch on how—what we're doing there to build resilience, but just wanna maybe take a moment here to hit on the Garland, Texas, incident over the last week or two. You know, it came up in some discussion, and I think first and foremost, if I'm putting myself in your shoes, we are absolutely a safety culture. It is the core of who we are and what we do. In fact, we usually start every meeting with a safety grabber. We probably should have started that today, and... But we were very fortunate that we did not have any loss of human life. We had one minor incident, and the gentleman was released the same day, so we're very fortunate there. We did take that as an opportunity to recast a message of safety to our entire global footprint. So through the group leaders, we were able to do that, the same day. There was no impact to our architectural business, and where we did have some disruption on the global industrial side, a lot of the people in this room are working very closely with our customers, and we're activating some contingency plans so that we're gonna minimize those disruptions as much as, excuse me, as much as possible. But I wanna get back to the question- Well, I would just add before that- Oh, yeah, please. Just to, because I think it's important. This incident will not have an impact on our third quarter consolidated sales or full-year consolidated sales and earnings guidance, just to be clear. When we talk about resilience, there's a lot up here. I would maybe just share a few areas. I think if you start with procurement, there are four key areas of focus for us here. The first, not a surprise, is around cost management, making sure that we've got continuity of supply, both from our suppliers to us and from us, obviously, to our customers. I would also say that a lot of focus on complexity reduction, and that isn't just true for global supply chain, it's certainly not just true for procurement, but it's a big opportunity for us, that Colin Davie and his leadership are helping us to, to really sort through. And then when we talk with our suppliers, you know, there's a lot of turbulence, as I mentioned, over the last few years, and we've really been able to separate out where we've got transactional relationships and where we have strategic partnerships, and making sure that there's a clear understanding across the supply base that we don't just wanna be in line for the next technologies. We wanna be at the front of the line so that we can continue to stay on the cutting edge of innovation for, for our contractors. Next, if you move into production, four areas here. You know, this is more about both product and process simplification, so truly looking end-to-end where we can create some opportunities. Execution, we've just come online, our Orlando expansion, at the end of 2021 with incredible capacity down there, and we're seeing that right now, which has been fantastic. Statesville, North Carolina, another big capacity expansion will be coming online officially, in 2024. And then on top of the additional capacity, focus on making sure from a production standpoint, the resilience that we're building in and making sure that the assets that we do have, we talk a lot about flow-through and make sure that, you know, we get the working capital as tight as possible. So we're really looking at what we call hidden factory, to make sure that those assets are as, as productive as possible. And last, I'll just briefly hit on logistics. Certainly, an important component of how we go to market, and there's a lot of data that we extrapolate, not just from our stores. You know, we have thousands of transactions every day that Justin and his team are able to help our teams there. But the data that we have and the analytics that we have from a logistics and a supply chain standpoint are really helping us to be more planful, you know, from, from end to end. So we, we really believe we're creating some further competitive advantage here, and simplification and digitization are embedded in that. Well, let's, let's build on that, simplification and digitization, and maybe I'll ask you both to comment on that. As we look forward, maybe talking a little bit about what are some of the largest opportunities that you see in this space and, and how they can translate into, you know, business results, and maybe, Heidi- Yeah, I'll start. You're on, you're on a roll. Why don't you continue, and Al, maybe you can jump in? I'll give the easy one and hand out the rest. How's that? In all seriousness, the simplification, when we talk about... I mentioned it in supply chain and procurement, but it really is enterprise-wide, and it really is looking end-to-end. You know, our goal here is to improve not just our cost position, but we wanna start by improving our quality position and our ease in which we're working, not just internally, but with our customers. So we think there's a lot of opportunity here, and Al, I'll give it to you. Yeah, and I, and I think, Heidi, you said it earlier, everything we do is from the lens of our customers and what adds value to them. And you know, for example, as we continue to improve our cash flow, we take that cash, reinvest it in programs and services our customers value that drives top-line growth. And, you know, we have a similar mindset with digitization, and we're, we're focusing on improving and simplifying our data systems and processes that drive better decision-making and making it easier for us to interact with our customers. And I think that's very important for us to continue to, to drive as we go forward here. Mm-hmm. Terrific. Well, let's move on to another key area, and I think, you know, ESG is a topic that, while we're traveling with investors, we get a lot of inquiries, and maybe, Heidi, you can take this one as well. Maybe, what should our shareholders and investors understand about our position as it relates to ESG? Well, I think the first is, it's not an initiative, it's just how we operate, and there's key pillars up here that we're setting really ambitious goals towards, and we're well on track to deliver that. I think there's certainly more work to be done, and there's a long journey ahead, but we're really confident that we're at pace on working towards these goals. We're fully engaged with our board, as you would expect from a governance standpoint. And, if you're interested in learning more about specifics, we've just recently published our sustainability report. I'd encourage all of you to go on and online and check that out. You can see more of the specific goals and projections that we have. I would go back to maybe what we're talking about here, John, is we're committed to building on the good that we've already begun. Yeah. So Al, maybe turning to you here, just, you know, we've put this list of enterprise-wide priorities, and maybe you could just talk a little bit about how, how these all roll up into what it is that we're driving for from a financial perspective, the goals that we set and what we're striving for. And then I'm gonna follow up just to get you thinking a little bit about how that, how that drives your thinking from a capital allocation standpoint. Yeah. This is also a question we get- Let me go through each of these numbers in exhausting detail, which I think everybody would enjoy. Believe it or not, they would. We're not gonna do that, though. So let me start with, you know, you look at the timeline from 2019 to 2022, and we've continued to invest in our long-term growth opportunities through some pretty difficult times in our company history, including a pandemic and an industry-wide supply chain shortages. And you can see from this slide, the aggressive investments we've made, which is driving a strong financial performance over these years. So as you mentioned, John, I think we are very focused on how we drive shareholder value, and the metrics that drive shareholder value is above our average market share growth, ROS and EBITDA margin, and RONA improvement, and driving strong cash flow. And if I talk to the next slide, and let me highlight a couple of these midterm financial targets. I always start, any of the investors, analysts in here, I always start with volume. If you look at our sales target, and this is very consistent what we've said in the past, we expect to grow a multiple of the market of market growth... Paint Stores Group, our largest segment, will also continue to be our fastest-growing segment and growing mid- to high-single digits. Consumer Brands Group, we expect to grow a low single-digit%. Then our Performance Coatings Group, we expect to grow mid-single digits, including acquisitions, which may mean you have periods of time where it's high single-digit, low double-digit, depending on the acquisition. I think that you'll hear from the group presidents later on their confidence and plans to achieve these, these targets. The other one that is, gross margin, and our current target is 45%-48%. But, but let me be very clear here, 40% is not a long-term ceiling, and I'll, I'll talk a little bit more about approach here in a second. And then you can see the other financial metrics, and I'm not gonna go through all of them, but our approach is very simple. We set challenging targets, we execute on our strategy to achieve these targets, then we raise the target. And the, the, you know, our group presidents over here and their teams, that's the expectation of all of them, and they all understand that. So I think that's the, what drives our, our performance over the long term. Maybe to capital allocation, maybe how this all rolls into your thinking on capital allocation. Yeah. We have a consistent capital allocation philosophy. It hasn't changed. We don't hold cash. We hold CapEx less than 2% of sales. We pay a dividend of 30% of prior year EPS, and 2022 was the 44th consecutive year of dividend increases. And then for M&A, we target companies that accelerate our strategy, and it could be bring us new technologies, it could be fill a geographic gap. But I'd also like to say, you know, equally as important for us is we continually review our portfolio of businesses and programs. We set targets in sales, ROS, cash flow, and if we don't believe those businesses or programs can achieve those targets, we take action. And a recent example is our recent divestiture of our China Architectural business that we closed in the second quarter. So over time, our strategy has led to returns that have outpaced the market and our peers, and we expect to continue that as we execute our strategy and drive improved performance. We continue to build on our strong foundation and core focus on our core operating disciplines. We're confident in our strategy and about delivering strong results in the long term in all economic environments. So just to kind of recap- Yeah ... and put a bow on this, we're just very focused on driving these financial metrics. And I'll hit them again because I-- it's in our DNA and how we drive our decision making: above average market share growth, driving ROS, driving RONA, and driving cash generation. And I'm really excited for you to all to hear from our group presidents on their confidence and their strategy, driving the right customer solutions to drive volume, and then certainly their confidence in expanding their operating margins. Yeah, I think that's the key, right? That's right. I mean, you can have these goals, but we achieve them by executing this strategy- That's right ... that we keep referring to, that's driven on this uniqueness and differentiation. And I think it's gonna be great. We are gonna take a short break here, and I'm gonna leave you with Heidi and Al, and we're gonna bring our group presidents up to share some insight with you on how these corporate priorities roll through into each of the businesses. And I'm really proud of these group presidents, the two key executives here to my left, but also to our division presidents in the back. Each of our business unit division presidents are here. And I think what's very unique, and maybe an overused word here today, but that's how we think. But this uniqueness goes well beyond just the products, the services, and the customers that we focus on. I think another element that's very unique about Sherwin-Williams is this: I'll use these two terrific executives to my left as an example. I'm blessed to have them individually. Same with the group presidents, same with the division presidents. But I think what's so unique about it is that you can field a team of all-stars, but if they perform as individuals, you don't reach the level of success that you can when people work as a team, like Sherwin-Williams leadership does. I'm really proud of the individual leaders that we have, but I'm even more impressed and proud of how they work together, how we work together as one Sherwin. And I believe that when we face challenges, and we seek opportunities, it's the way that we work individually and together that sets us apart. You're gonna see it on stage here in just a minute. All right, let's do this. All right, well, I'm pleased to introduce Justin Binns. He's our President of our Paint Stores Group. Justin has been with our organization for 26 years. Most of that time has been within our Paint Stores Group, in a number of roles, starting from all the way to the very early days, all the way through progressive to Vice President of Sales, ran the Eastern Division, and obviously now he's in this role. Before this role, he was in our industrial side. He spent some time over there, Automotive, P&M and running the Performance Coatings Group. So I'm really happy to have Justin here with us today. So welcome, Justin. Well, thanks for having me. Okay. All right, well, we'll get right into it.... We talk a lot about our differentiation. John hit on some of it, I hit on some of it. Justin's gonna walk you through. We're gonna ask him a series of questions so that you have an appreciation of what our differentiation really looks like. So Justin, maybe why don't we start with what gives you confidence that we will outpace the market? Yeah, I think just starting off, what I would say is just you either have a strategy or you don't, and you either believe in your strategy or you don't. And we believe in our strategy. When you look out, it's about clarity of mission. And if you went through our entire organization and talked to our people, what they would talk to you about is that our top priority is to help our painting contractor make more money and be more successful. And I think one of the things that we'll talk about today about that ecosystem and how that looks for us, but realistically, you know, one of the key components that's in that ecosystem is unique. I think I've heard that word a couple of times today. Yeah, just a few. I'll add another one, unmatched, and that's our controlled distribution model. We're excited about that controlled distribution model. You hear us talk a lot about it. Our customers value that. That's part of the ecosystem that they value, and that's part of the ecosystem that they will pay for. The other element would be is that we uniquely own everything from start to finish. From the time that that gallon of paint is made, through the process of it going to a store, being tinted at a store, being put onto a wall, run through our POS, which, you know, we own the data there, too. I'm gonna get to that a little bit later. We own it. We own it from start to finish, and I think that element in and of itself is absolutely critical to what we offer. What puts us in a really unique position. Maybe we go on to... Maybe walk us through some of the elements of the model that you think differentiate us. Yeah, I think first and foremost, the first one I would talk about is the one thing I enjoy talking about the most, and that's our people. When you go out into our stores, you see what type of relationships our people have formed with their customers that come into their store day in and day out, and the multiple touch points that we have and the depth of the relationships, how we actually become integrated and embedded into that customer's business. And it's not just about being business partners. There's friendships that are formed there as well, and I would say the level that we operate at in that space is just unbelievable. You touched a little bit on the MTP side of it, and that manager trainee program for us, I mean, we bring in roughly 1,400 manager trainees in a year. When you look at it, I think that onboarding process starts essentially on day one. You know, we work diligently on day one to get them in front of customers, embedded and integrated into customers' businesses, so they better understand what those pain points are and what proven solutions we can provide out to that contractor to help them be, you know, more profitable. And then the other one that I would touch on, too, would be our sales reps, and they're kind of the unsung heroes. We don't talk about our sales reps, I think, enough. We have 3,600 reps that are out in the market day in and day out, and one of the neatest things about those reps is that they're segmented. You know, so I have residential repaint reps, we have property management reps, commercial reps. And when you look at what they do every single day, by being segmented, they become experts within those segments. And again, embedded in the customer's business, but embedded with knowledge that they can provide to that customer that helps them become more successful in their business. And lastly, I think what I would touch on is our stores, and I've already touched on it, you know, with talking about our unique distribution model and unmatched distribution model. But when you look at those stores, those 4,600 stores across the platform of, you know, the United States and Canada, you know, I look at them a little bit differently. I don't look at them as a distribution platform, which they are, but I look at 4,600 knowledge centers. Mm, yeah. They're really the epicenter of that ecosystem- Yeah. that I touched on earlier, that, you know, includes the premium products, the premium suite of tools that we offer from a digital perspective. They're, they're the epicenter. And I think the other element with those stores is that they're segmented as well. They have missions. You know, you might visit some stores, and as you get into the market, you'll see one with maybe a little bit smaller footprint up front in the, the front room, but a larger back room, and those are set up to service our commercial painting contractors. And what they deliver to those commercial painting contractors is speed, quality, keep them on the job, help them with their throughput. You get into a residential repaint store, might have a little bit larger footprint on the sales floor, but a different product portfolio, different resources for those stores, maybe more area for the contractors to gather, because as I talked about being the epicenter, if you go to any of our stores in the morning, you'll see that. You'll see the networking taking place. But ultimately, those stores are the core of what we do. Mm-hmm. Yeah. So, Justin, you mentioned data, and I think data for us is huge. Maybe you can talk and highlight how does Paint Stores Group use that data to drive next best action, to drive volume through your segment? Well, I think you hit it right there, is when you look at it, we own that point of sale, we own that data that goes through that point of sale. And I think what's absolutely critical is if you go into any distribution model that doesn't have controlled distribution, one of the things they constantly talk about is: We wish we had more end user data. Well, we have that end user data, and I think the way in which we use it is absolutely critical to how we grow. I talked about our CRM system, our unique CRM system. Well, all that data that we get on that end user that comes through our store ends up in that CRM and ends up being pushed out as next best actions to that sales rep force that I talked about earlier. It's also pushed out to our store managers, our assistant store managers, who make calls or interact with those customers on a daily basis from the hundreds and thousands of transactions that they run every single day. So, you know, ultimately, it's a key driver, and we recognize how important it is that we own that, you know? A couple other elements, too, that I would just touch on real quickly just to kind of round it out and finish it out, would be, you know, our distribution. We talk about the distribution model, but in addition to that, you know, the delivery service that we offer up. You know, we do millions of same-day deliveries every single day, or every single year, and when you look at what that, what that encompasses and what it gets us is, you know, it keeps that contractor on the job. And if you take all the statistics and add them all up, you know, we know that our customers that frequently use our delivery service, same-day delivery service or delivery service, stay on a job site for an extra day a month. And when you look at that number, I think that truly separates us in the way that we go to market. Yeah. The last thing I would touch on is innovation. I think we touched—we talked a little bit about it already. What's interesting for us with innovation is, you know, we really have it coming from two sides for us, from, from our perspective. You know, we obviously have the R&D aspect of it, and, and we challenge our suppliers every single day. I think you said to be first in line. Mm-hmm. That's exactly where we wanna be, is first- Right In line on that side. But those 3,600 reps and 4,600 stores, day in and day out, are close to a customer. And I wanna highlight the fact that a lot of our innovation on our side comes from that customer feedback, comes from where their pain points might be and how we can bridge that gap. And that connectivity that our teams have with that customer absolutely drive those decisions. You know, a couple that I would highlight, you look at our Gallery cabinet paint. You know, that opened up. It's a high-quality, premium finish. There's some technology there that we've leveraged from other business units. You talked about how we work together. And you look at it, that opened up in a completely new market for residential repaint contractors, which are highly profitable. Where we set ourselves apart is how we return to service in those projects, and it helps the customer be more profitable and more successful. Another one would be our Latitude, our exterior product line, which ultimately takes the painting season and extends it, so allows our exterior contractors to be, you know, in paint longer, which allows them to make more money and have better seasons. It's a great example. You mentioned the Gallery Series, you know, with industrial wood, you know, having some softness, being able to partner, leverage some of those technologies. So a res repaint going in, painting the walls of a room, they're now able to go to the next project and offer nearly a factory finish for the kitchen cabinets, because we're seeing new res come down. So it's a great example. Absolutely. You know, I think another piece here is, you know, we talk a lot about outperforming the market, and I have a lot of confidence in the Paint Stores Group and what you're doing, Justin, but I think for you to share with the, you know, the audience, what your thoughts are on our ability to out-deliver and to hit a multiple above the market. We're extremely confident that we can out-deliver. I think it comes down to when you look at our breadth of solutions and back to what I started with, you know, we own it from start to finish. We talked a little bit about that new residential market. Jim had that in his slide deck as to where it goes and where it's been headed, and it's been a little choppy, and we talk about that table tilt all of the time, and we truly believe in it. We're not relying on one single market to deliver results. We know that when one single market may be down, there's other markets that we can lever up. Ultimately, if you talk to the teams in the field, where we have them focused as a top priority is what we can do from a share of wallet perspective, utilizing some of that CRM data. You know, examples of that would be a contractor that buys a specific product where we know maybe there's a brush or roller that works better, that makes them more productive in that product. We get queued up and can see that, and we work towards... Or they're not buying brushes and rollers from us. You know, we can work towards that share of wallet number. The other element would be our new account focus, and we've been hyper-focused on that for multiple years. That continues to be a key driver to our overall success and our top-line performance. Excellent. It's a lifeline. Yeah. So let me just build on that a little bit, Justin, 'cause we often get asked, how do we incentivize our people to ensure they're focused on the right things, to grow our business? Maybe you can just weave that into this, discussion here. Yeah, we don't talk a lot about that, and I... It's a great question, Al. I—we do incentivize our people to act like business owners. I mean, they own that P&L, and they have the autonomy within their markets to make decisions for their customers, and make decisions for their business to help them grow. And I think it's absolutely critical that we give them, give them that opportunity. You know, they own, they own the decisions that they make to grow the market. They own the culture in those walls. They own that team, atmosphere, and environment that they create, and I think it absolutely, positively... It, It, it differentiates us from the competition. You know, because of those environments that, that they create, I would tell you, it also allows us the opportunity to hold on to that price without losing that customer base. Demonstrating value, right? It's that value. Yeah. Yeah. And on that price, that price piece of it, why we hold on to it, it's not about that, that day that we go out and have a pricing conversation, the day that the price increase goes into effect. It's about what we do the 364 other days of the year to demonstrate that value to the contractor and to the customer, that, that's how we get it. And I think the last thing I would touch on there, too, would just be, you know, something that we talked about a little bit earlier, as well, is the digital side. And, we get asked that question a lot, and I would tell you, the epicenter of what we do is the store. That's the epicenter of that premium ecosystem, but we definitely have the opportunity on that digital side to intersect the customer digitally and interact with them any way that they'd want to interact. And- Gives them choices. Gives them choices- Yeah. We're confident that, you know, we have the right tools. I talked about that suite of tools to be able to go find knowledge in the digital space that we offer our PRO+ app, and it puts us into a different space. Great. Good. So Justin, I wore my green cash tie- I've noticed that. -to signify- Yeah Also operating margin expansion. And I often talk to the street about our ability to expand our operating margins and, and sustain them over a long period of time. But maybe, maybe you can talk to why you believe in your confidence in being able to do that, and what are the levers that you, that you have to, to make sure it's sustainable over the long term? Yeah, well, first thing I would say is that value- Yeah. is what drives volume. Yeah. And volume is what drives those sustainable margins. And, you know, we are focused on volume growth. There's absolutely no doubt about that, our focus is there. I would also tell you, too, where our team excels and does a phenomenal job is our mix and driving customers to those higher value products. If you take a look at when a contractor comes into a store, or when we go out and acquire one of those new customers, I talk a lot about that premium ecosystem. And our people at our stores, our people in our territories, know how to talk to a customer and get them into a product that's gonna make them more productive and make them more successful, and it's that premium space. You know, the other element on the simplification conversation that we've already had this morning or this afternoon is how we simplify our portfolio, and we optimize it. I mean, if you take a look at where we are now, comparatively speaking, to maybe 2 years -3 years ago, from a regional product to a national products standpoint or footprint, we're much closer to a national product footprint, which allows better optimization, right? Better use of raw materials, purchase of raw materials, but ultimately helps with the throughput in other spaces of our business. And, you know, the last thing from a confidence factor that I would touch on, Al, would be take a look at our past history. Absolutely. You know, we, we've seen this movie before. Yeah, yeah. You know, if you go back to 2008 or 2009, in the Great Recession, and you look statistically at how we outperformed the market, coming out of 2008 and 2009, you know, we're confident that we can do that again. You look at our growth and our investment, as we've talked a lot about, you know, from 2020 to 2022, we had five price increases in 32 months. We continued to add stores, 193 stores, 263 territories. So we've seen the movie before. We're confident that we're gonna be rewarded for our efforts as we move forward, and we know that we provide that value that the contractors, they cherish. That's a really good segue. We've seen the movie, and I'm going to tee up a discussion on res repaint here, so. There's a res repaint movie? In 2,000- There is in my world. There is. Yeah, yep. 2008, 2009, when we saw what was happening with new residential, Jim shared some of those slides. But our ability to see that coming and then lay those reps and invest, to your point, making sure that our capital's aligned with what our strategy is. Residential repaint is the biggest area of focus for you. It's also the biggest opportunity for you. Maybe you could share how you're focused and where, where you've got the team targeted to make sure that we continue to take share here. Yeah, there's absolutely no doubt that it is our biggest growth opportunity. And those investments that I just talked about on the store side and, and the sales and, and sales rep and territory side are very heavily weighted to that segment. And I would tell you, I talked a little bit about what our sales representatives do, what our people in our stores do every single day to earn the business. One thing that I definitely want to highlight with this group is our people are not gatherers, they're hunters. That's what they do. So if you were to go work or travel with them, they're constantly hunting. They're hunting for opportunity, and they're hunting for opportunity specifically in this space. And that share of wallet, it's new account growth. It's, it's success by design. When they get that customer, and they hunt that customer, and they get them into the premium ecosystem, it's about the solutions that we provide for that res repaint contractor. We've been hyper-focused on this segment since 2008, and the suite of tools that we've provided and created and developed with their input- Mm-hmm. is second to none. Mm-hmm. You know, whether it's virtual color consultations, it's you know, webinars or education process on how they can better manage their business that's available to them. You know, bidding tools online or in markets like we're currently in, or economic markets like we're currently in, how they better market their business. Mm-hmm. It's those types of things that I would tell you give me confidence in the fact that we'll continue to outperform in this segment as we move forward. It's definitely a form of differentiation that our competitors are taking that level of focus and care for the business side, not just the product side. So- Cer- certainly- Yeah and I think that's, you know, speaks to that segmentation side, mission of store like we talked about. So why don't we do the same and hit on new residential? Just your thoughts there in terms of where you're directing the team and how is it that we continue to win there? Yeah, I'll stay relatively brief here. Jim covered a lot of data earlier. You know, just to level set, it's a mid-teens percentage of our number at Paint Stores Group, and, you know, there is that 3-month-6-month lag that Jim talked about. He also talked about the mortgage rate side of things, and, you know, we saw those inflated mortgage rates. They paused the market a bit, but we truly believe that those rates will moderate. You know, a couple of items that I would say are good indicators as well. There's a very low availability of existing homes in the market, as we all know. And because people are still moving and, and wanna move into different homes, their options right now currently are really to buy new, and I think we've seen that across our home builder network. We've seen that in different pockets across the United States as well. But we continue to stay focused on how we differentiate here as well. So even when a segment is down, and I talked pretty heavily there about residential repaint, when a segment's down, we're still looking for growth opportunities. And I think how we differentiate, you know, with some of those relationships that we've earned with the exclusives with some of our national home builders, is just the way that we take care of them. You know, you could take some national home builders across the country. We run more than 200+ transactions for that home builder across the country every single day. When you look at the consistency that we provide, whether it's on the color aspect, price aspect, all the way through that ecosystem, it's a differentiator. There's no doubt. I would say this, I think that near term, you know, in the last 60 days, we've started to hear that sales activity is starting to pick up in some of those sales centers for those national home builders, which gives us, you know, a good indicator of where we're headed. And again, that 3 -month to 6-month lag that's out in front of us. But what I really wanna hit on here is we haven't sat back, right? We haven't gathered. We've hunted. Right. The opportunities exist out there from a regional and customer perspective and, custom home builder perspective, and we're gonna stay diligent there. Yeah. 'Cause as times slow, we learn. As we face adversity, we get better, and it's like that in every single segment that we operate in. No, it's well said, and I think there's opportunity here with some good signs of good signals in new residential. We won't see it this year, but plan to see it next year, so. Absolutely. So Justin, as you've covered a lot of ground here, just maybe your, your highlights that you want investors walking away with. What's in your mind as the, the key summary takeaways here? Well, I think I hit on it to start, and you either have a strategy or you don't, and you believe in it or you don't, and we believe in it. You know, we differentiate. That's what we do at Paint Stores Group, and we've become true partners with our contractors, and we've delivered above-market performance and growth in the past, and we're gonna continue to do that in the future. Because we all have faith in the model, and we truly are the destination for the professional painting contractor. Great. All right. Thanks, Justin. Thanks, Heidi. Appreciate it. Thank you. All right. Now we'll welcome Todd Rea, Group President of the Consumer Brands Group. Todd has been with our organization for how many years now, Todd? 26? A few more, but that's about right. He's on his 30th year with the organization and spent a lot of time with Todd, working together and is a fantastic leader and couldn't be more confident in having Todd at the helm here. So we're gonna do with you what we just did with Justin and walk through a series of questions that I'm sure are top of mind for everybody. So there's no doubt this has been a challenging, I would say, year or last few years for the Consumer Brands Group. You guys have been weathering a lot of storms, and despite all of that, you guys are still working through a few key important decisions that you've made, some highlights in your business. So maybe talk about what you've done in the last few years to strengthen kind of the CBG portfolio. Some highlights. Sure. First of all, good afternoon. It's great to be here. You're right, it's been a challenging few years for Consumer Brands Group, but I just wanna level set first and start talking about our volume performance. If I look back at our volume in North America, specifically between 2019 to 2022, despite a lot of the industry impacts that everyone's very familiar with, as well as some strategic portfolio adjustments that we've made with our business, if I factor those into our volume performance, we saw our volume grow from 2019 to 2022, and I think it's important to start there in terms of the performance, but more importantly, how we're positioned going forward from a volume standpoint. But to your question about highlights, Heidi, first, despite a lot of the challenges in the environment, we launched some new products that were critical to our business over the last few years, and I'll start with at Lowe's, we launched HGTV Home by Sherwin-Williams EverLast, which has innovation, self-cleaning technology in it, and I'm pleased to announce that in 2022 at least, we won a Lowe's Innovation Partner of the Year because of that, and really proud of the team there. We also launched a new exterior stain line, which at Menards, which was new for us. It was an expansion of the Dutch Boy brand at Menards, and we're really pleased with that. Then finally, we launched a new Valspar, new and improved Valspar line in our independent dealer channel, this year, and we're really excited about what that'll bring us going forward. In addition to some new product launches, some additional highlights. You've heard us talk about this pro paint segment. We're a couple of years into our journey here on this particular segment, but I would tell you is great progress over the last couple of years. We've established some terrific momentum, but we're getting better every single day in this segment. Mm-hmm. There's a ton of opportunity in front of us. The teams are executing very, very well. I'm confident in this particular segment and what it's gonna mean for us going forward... We strengthen our brands. We've got a stable of brands that we really lean into, and we strengthen those brands by investing in our media strategies. We've done a lot to enhance our digital capabilities, and so all of this will pay off for us going forward. And then last, but certainly not least, and I know we'll talk about this more, is we've taken a lot of cost and complexity out of our business over the last couple of years. We've simplified it, and this will pay off in the returns of improved operating margin, and I know we'll talk more about that. We'll talk about operating margins, don't worry. But let's start with. Maybe we could start with, you know, I said earlier, my expectations were that this segment would grow low single-digit percentage, and maybe you can talk about your confidence in not only, you know, achieving that number, but exceeding it. Yeah, well, we also like our Paint Stores Group partners, and we expect that we'll outgrow and outpace the market. It all starts with our brands. I mentioned we have this portfolio of brands. Many of these brands are top in their respective categories, and I'll just mention a couple of them here. So we have Valspar, that's been at a, you know, kind of leading position at Lowe's since 2007, so it's had great traction there. We also have HGTV Home by Sherwin-Williams. It's also at Lowe's, and we've established some really good momentum with that brand. We have Dutch Boy, that's been at Menards since the mid-1980s and really established a great following there, an important brand for us. We also have brands like Purdy, which is the number one applicator brand for the Pro, which has terrific distribution across all of our channels, and we're really proud of that brand. We also have important brands like Minwax, Cabot, and Thompson's, also leading brands in their respective categories. They're all positioned for growth based on the distribution platforms. We also go to business through some really important partners. And let me just start with, we go to business with partners that believe in a model that we bring, which is a value-added model, and I'll talk about that more in a second. You know, these are companies that are positioned for success long term. They're investing in their business, both in the short term, but also for long-term sustainable growth. These are companies that have a right to win in this home improvement space. Lowe's is an example. I can tell you that I've been around the Lowe's partnership for seven or eight years now, and I can say for certainty, the partnership has never been stronger. Mm-hmm, agree. The teams are collaborating better than ever, executing at a high level. I just point to the momentum that's been established with the pro-paint business at Lowe's. High levels of execution, plenty of opportunity for more. Also, proud partnership with Menards. You know, this is a retailer that has terrific loyalty from a consumer base, and they're always poised for growth, and we think there's tremendous opportunity there. And then finally, we've got some great partnerships with companies in the independent channel, companies like Orgill, Do it Best, and Ace, which also are investing in their business and present terrific opportunities for distribution of our brands. Well, you guys have done a nice job with the, I'd say, taking a lot of complexity out with that Valspar line and the industrial channel, where there was a lot of fragmentation earlier. So with that, you've got the right brands and the right partners. What services and solutions are gonna also help you to support driving that growth? Yeah, so it starts with, as I mentioned, we focus in on bringing value to our partners, and that comes in the form of high-quality products, differentiated services and solutions. And John talked about this a minute ago, but we, we determine our success based on our partner's success. So if they're not achieving success, then we don't find success in what we're doing. So we really focus in on differentiated model. Sounds like a really familiar theme that Justin talked about. That's right. So we do this in a number of ways. First, as category experts in paint, we take the role of category management really importantly. So that comes in the form of making sure that the right product line designs are in place. We do a lot of data analysis to make sure that inventory positions are there. We work closely with them on what does the in-store experience look like, and how does it connect to the online experience so that there's a seamless experience between the two, omni-channel, if you will. We work closely with them on promotional and advertising strategies that drive traffic and ultimately convert customers. You've been driving strong growth with the pros who paint. We've talked about that a little bit here. I think just for the sake of... You know, as you look at the differentiation between this segment and the segment that Justin mentioned, how would you talk about how they're different or how they complement each other? Yeah, so I think an important word is they complement each other. I think this complements what Justin and his team are doing. This is a different type of pro. This is not the pro painting contractor that's, you know, that's going to work every day and painting. This is a pro that's remodeler, handy person, maybe a general contractor, and they're using paint as a part of their job. They're buying other. So they're cross-shopping in our retail partners, so they're buying plumbing, electrical, drywall, lumber. So they're, you know, they're cross-shopping that store, and paint is a part of their project. It's maybe a smaller part of the project, but it's a very important part of their project, and so that's the target customer that we're going after. Remodelers- Remodeler- Handyman. Yep. House flippers. Handy person, all that. Yep. So that's who we're targeting here, and they prefer a different shopping experience. Their, you know, their preferred shopping experience is that one-stop-shop value proposition where they can go in, they can pick up some lumber, some tools, and then, of course, paint, and they value that. And, and I'd say that the partners that we go after this segment with are well-established, and they have a right to win with this particular customer, and there's a lot of momentum here. So let's hone in on the pro paints. You had a lot of excitement about the where we're going and the momentum here. Maybe just talk about what your focus is with your team and the organizations that we can continue to chase the growth that we know is in this segment. Yeah. So I'd start with, as I mentioned earlier on in my comments, it's a newer initiative for us, and we've seen this business grow by double digits the last three years or so, and so we've absolutely been outpacing the market. We absolutely expect that type of growth rate to continue. There's tremendous upside for us here, and I'm confident in our plans. But it all starts, first of all, with understanding the customer's needs, making sure that we understand what products they need that have the right attributes that they desire for the job. It involves understanding their service expectations and what we need to do to meet their expectations, as well as how we can support their business so they can be successful. Number of ways we do this: First, we've been investing heavily in pro reps. We've added over the last couple years, we've added over 225 reps solely dedicated to driving this initiative. These reps are key to our growth here. They understand the customer. They're experts in this segment. And let me be very clear, we're not done yet with this investment. It's one of our top priorities, so we've invested this year. We're gonna continue to invest in the back half of this year. We have plans to invest in more pro reps in 2024, and we're prepared in 2025 and years to come to keep the momentum going. Great. But I would say, you know, we got to get a return for those reps. So, you know, how do you make sure they're being productive, they're being... They're driving volume? Yeah. So rep productivity is an important part of what we work with our team on, and this is something that we leverage across the enterprise. So we use some of the best practices that we've learned from other parts of the company, and one area I'll point to is how we utilize our CRM tool. We've built a robust CRM tool that we're now able to push data. So we're using data analytics to push data through to our sales organization so that they have the right cut. So lead generation is pushed down so that they understand the right customers that they should be going after. They're prioritized, they can see the opportunities with those customers, and then they can work as fast as possible to drive profitable sales and gallons and service. I just want to comment one more time, one more thing on the, the pro paints business. Our customers are investing in this space as well. They're investing in their infrastructure to support the pro. They're investing in their service model. They're investing in programs and tools like rewards and loyalty to really build out that, that experience. Good alignment. Yeah. You know, so, so Latin America Architectural recently moved under your leadership. Maybe you can remind the audience why that change was made and the confidence you have on building the successes of that group over the recent past. First of all, it was the right decision to make, and I'm highly confident that we can continue what's been terrific momentum in this region. But if you look at the Latin America business, the model is very similar to the model we have in Consumer Brands. So they go to market through some controlled distribution, depending on the country that you're in, but it's home centers, it's dealers, it's, it's distributors, which is very similar to the Consumer Brands Group model, and we have deep experience in these channels. And so as that continues to trend more and more like our business, we moved it over. Just simple example is, home centers is a terrific opportunity in that region. We have deep knowledge of home centers here in North America, and so we're gonna apply that knowledge, and the team's already running with some best practices. And so it's gonna present opportunities, and they go both ways. So synergies will go both, both ways there. That team has done a terrific job, and they've had high single digits to low double-digit gallon growth over the last few years, and that comes through a disciplined execution of their strategy around channel segmentation, new account growth, rep productivity, and they've done an exceptional job. They've implemented multiple price increases, as they've had to offset inflation like the rest of us across the world. And then I'd say their operating margins have hit a point where they're high teens, and that's a sustainable- Yeah. what we believe is a sustainable target for us and with room for growth. But going forward, we expect to keep the momentum going. We're gonna invest in stores. We're gonna invest in bringing in more dealers and new territories. I'm confident in growth there. Yeah, I think the team has done a terrific job over the last number of years. So switching gears to Europe and building on that Latin America answer, and how are you leveraging best practice across not only Latin America and North America, but now into Europe and driving margins there? Yeah. So first, I'd start with our market, our business in Europe, I'd say, is stabilized. It's been a tough couple of years and, which is encouraging. We think we've kind of hit the bottom, and now we're, we're starting to see that stabilization return. And we're leveraging a lot of the same best practices, whether, you know, it's home center business or some of the dealer business. So a lot of the same best practice sharing. In Europe, we go to market through Valspar and Ronseal brands, and we've got a lot of terrific partners over there, but I'd highlight that, you know, we're partners with Kingfisher, who's the largest home center organization in Europe, and we've got terrific positions with B&Q in the U.K., Castorama in France and Poland. And that market's a little different. It's very package color-oriented, unlike North America, where it's very heavy custom color mix, and we're the exclusive partner or sole partner with Kingfisher in those banners on their custom color program, and we're excited about the opportunity to grow our footprint. They've also done a lot of really good work in that region to simplify their business, to your point about operating margins. So simplification, we're taking complexity out, as well as adding getting price in that region. We're starting to see the operating margins get back to more acceptable levels. We've already talked about the China Architectural divestiture, but maybe, Todd, just share some of your thinking on criteria, or how did you get to things like the aerosol, the non-strategic part of that business, and what implications does that have on CBG in general? Yeah, so we conducted. And this is a continuous discipline process for us, looking at our portfolio, and we look at our brands, products, regions, segments that we do business in. And if we don't feel like we are getting the right shareholder value and returns out of it, then we have to make some tough decisions. And so, it's a disciplined approach to optimizing our business to drive more acceptable returns. And so in the case of China, we did a deep dive, and for a number of reasons, didn't feel like we had a long-term path to achieving it, and that could have been for a lot of different reasons. But we felt like it wasn't for us, and so we made the decision to divest that business and say, you know, ultimately, same thing with the aerosol business, which was too complex. It wasn't core to what we do, and just was added cost that was a drag on our operating margins. And, you know, we have resources that we have to deploy, and Al has thresholds that he has for us to hold us to. Actually, I think the goal line constantly moves, but that's okay. So we just, what's- Another theme. Yeah, right. So we've, we're not gonna be all things to all people, and that's okay, and we're gonna make decisions that are gonna have a positive impact on our returns, and those decisions will have that. Yeah, and I give you a lot of credit. That's not easy to do, but you've stayed focused on that top line, bottom line. I wasn't gonna bring up operating margins, but since you brought them up earlier, you know, I've spoken a lot about my confidence of getting this segment to high teens, low twenties. You know, but maybe you talk again about your confidence, what levers are you pulling to make sure we not only get there, but it's sustainable for the long term? Well, I am confident we can get there because we've been there before, and it all starts with volume. That's our number one lever here to drive operating margin improvement, and it's all about the volume in the right segments, the right volume in the right segments. That's where our team's focused on. That goes back to our, you know, decisions that we've made with our portfolio, very disciplined about the right volume. So it all starts right there. Mm-hmm. Agree. We're continuing to invest in innovation and drive best-in-class new products, which are accretive to us. We talked about price, and that we have to hold price. We bring a value-added model to our partners, and in order to support the business and invest in the business for growth, we have to have price, and we expect to hold on to the price that our teams have worked very hard to get across all regions. We focus in on taking complexity out. Just a couple real quick, high-level stats here. In North America, we've reduced our SKU count by 45%, over the last number of years, which is a ton of complexity that we've taken out, that our supply chain team doesn't have to manage. We've reduced our direct shipments in North America by 35%, which is just a lot of extra strain on our distribution centers. We're also looking at doing some of the same things in Europe and LatAm, but we're making steady, steady progress already in 2023, and we're heading in the right direction. So, Todd, anything from your mind, key takeaways that you want all of our investors to, to understand about the Consumer Brands Group? Yes. We have a portfolio of leading brands that are positioned well for growth, both in the short and long term. We've partnered with the right companies that are invested in their business, that are also positioned both for short term, but long-term sustainable growth. We're being smarter than ever with how we're using our dollars. We're constantly measuring against, are we getting the right return on our investments and the right shareholder value? We've adjusted our portfolio in North America, and we have upside in both LatAm and EMEA. I'd also be remiss if I didn't mention the talent that we have in our organization. As you said, I've been with the company for 30 years, and I can honestly say, in my humble opinion, our team has never been this talented, this deep, and this diverse- Mm-hmm. in my time. And I can say, going back to 2014, when I was put into a position, an executive position, I can tell you, we have a strong bench, and they're ready to make sure they continue to deliver. But finally, our leadership team is aligned. They understand our targets, they know what we need to achieve, but more importantly, they know how we're going to achieve it, and I'm confident in their ability to deliver. That's the clarity of mission we always talk about, right? So one comment here, just I think for the as you all are listening along to what Justin covered and what Todd covered, you know, we take a lot of thought to understand how we look at the entirety of the architectural market, and so the word complementary, I think, is the perfect word to summarize what you heard in terms of these unique segments that, candidly, we aren't designed and set up in the Paint Stores Group to really focus on a DIY customer that's coming in once every five to seven years. We want that frequency and that loyalty and the Pro Who Paints, to your point, is buying a whole host of other categories. So it really allows us to capture a broader view of the architectural market between these two models. Thank you, Todd. I appreciate your comments. Thank you. Thanks, Joe. All right, now we'll bring Karl Jorgenrud up from the Performance Coatings Group. So Karl is a 29-year veteran of the company, comes from the Valspar acquisition, as did I. So welcome, Karl. Yep, thank you. Karl's had multiple leadership roles over his 29 years, including running our protective and marine business, our general industrial business, before becoming president. Karl's a wonderful leader, great followership. I'm excited to have him here today, and we're gonna just jump right into it. Perfect. Thank you. All right. So, Karl, you've got a lot of different segments, and your leaders are in the back here, one of the most complex businesses that we have. When you think about end markets and how you look to define a common value proposition across these segments, maybe you can talk about how you look at that and use that as a point of differentiation. Yeah, so how we differentiate with our, you know, versus our competitors, you know, really starts with our people. And that includes our now famous division presidents back there that have had numerous call-outs, I think, all afternoon. You know, really top to bottom, though, within our organization, all the way down from our sales reps, our tech service team, our R&D experts, we really promote this customer-first culture, and that's our North Star. That's what drives everything that we do every day, and including our value proposition. And, you know, our value proposition across the businesses is really finding and differentiating solutions that drive customer productivity and profitability within their organizations. So how we're able to, you know, really deliver on that promise to our customers is leveraging what I call our kind of four key core competencies. You know, the first one that I would highlight is this essence of customer-driven innovation. You know, we really listen to our customers to understand what's important in their processes and how we can add value and again, come back to driving productivity and profitability within their operations. You know, kind of building on what John mentioned earlier is, you know, we don't have to be all things to all people, and we take that notion from an innovation perspective. We really find solutions that are gonna allow our teams to differentiate, that customers are willing to pay for, and ultimately, that we can generate a return for ourselves and our shareholders. So that's how we kinda take a look at it from that side. You know, these innovations are really about share gain, right, and looking for opportunities to grow our business. I could highlight just a couple here today. Probably the first one would be our Valpure V70, you know, a BPA-free coating within our packaging business, which Jim, I think, mentioned that really exciting innovation there. This has been a technology that has really allowed the teams to differentiate in that coating space, and it really focuses on our customers and the brand owners and helps them navigate kind of the ever-changing regulatory and environmental challenges within that space. Another great example is in our automotive finishes business. We've got our Ultra 9K, which is a refinish, waterborne refinish solution that really delivers what every collision center is looking for, and that's improved productivity and efficiencies in the shops. So again, these are great examples of where we're really focused on driving value and productivity within our customers, to drive share for the company. How do you tie all of these together? You've got—you listed people, technology. How, how do you, how do you pull all these together? Yeah, well, I mean, the second one is you bring it up is people. So, you know, we look at our connected global expertise, and I started talking about, you know, how important our people are to our value proposition. In fact, you heard Justin, Todd, I think every one of us talk about, you know, how core our employees are to what we do every day at Sherwin-Williams, and it starts from how we attract, you know, retain, develop, and really, in this business, in particular, it's their skill sets, really, that allow us to differentiate with our customers and understand our solutions, and then ultimately, just as importantly, how that applies to our customers in driving value. And, you know, I would highlight our sales reps. You know, these folks are not order takers. They don't deliver donuts every Monday morning. I mean, these are really professional business development individuals that are working with our customers up and down their organizations, looking for value, driving value, and allowing them to be more, more profitable in the value proposition. So we've got 120 countries, I think you saw on the slide, that we operate in within Performance Coatings Group, and I think that's important because we're able to meet our customers where they are, anywhere in the world, but still have that segment-level expertise and value that, that we kinda bring within that organization. Our third area that we, you know, within our core competencies is color and kind of the design element of that. We've got some of the best tools, experts, processes when it comes to color in the entire coatings industry, and it starts from the inspiration of color early on in the process, all the way down to execution at our customers' locations when they develop their and apply it to their products. Just a couple of examples that we can point to within our divisions. I'll come back to our automotive refinishes group. We're really investing a lot of time and energy in our solution, our tool, which is called Collision Core. We haven't talked a lot about that externally about this, but it's really exciting because it's a set of tools that allow our customers to be more productive and more efficient in their shops, you know, with our coatings. We're gonna continue to invest in that area, you know, specifically, particularly in this refinish segment, where color efficiency is such a key component of painter efficiency. Making sure that we work together with our customers in driving that forward. Another example is in our industrial wood business. We've got a really exciting new platform that we've launched called Color Express, and why that's exciting is historically, for that industry, it might take you up to a couple days or maybe even a week to get product produced for that segment. This system and platform takes that down to hours. So you think about that. If each and every one of you were running your own operation, and your current supply chain was days to weeks to order material, and now you're down to hours, you can see the efficiencies that you gain in your processes that's being delivered, you know, by Sherwin-Williams and our team. So another great example of that. And probably the last one I would point out on the, on the color side is our, our traditional kind of brick-and-mortar design houses. And the interesting thing here is this allows, designers and color experts within our customers to come into our studios and work with our experts on color trends and really developing that, that new color, you know, for each of their businesses. So we get brought in on the early part of that process, and again, it really, tying it back to the value proposition of how we're helping them drive, you know, drive their efficiencies. Man, I get excited about our, how we differentiate with facilities and branches. Yep. Maybe you can dig into that a little bit more. Yeah. So that's our fourth pillar, is the facility side. And, you know, if I bring you back to that example I just gave you with Color Express and the ability to get products in hours versus days, it really doesn't matter if you can't distribute the product to your customers, right? And that's where we step in, and we have the capabilities to do that far better than any other competitor in this space. And, you know, I think if, you know, why that's important is that local connectivity- Mm-hmm. That fast turnaround and ability for us to serve that small to mid-sized customer that needs the, again, that rapid delivery and quick, quick response, that's a huge differentiation for us. And, you know, you look at our customer breadth, right? We've got large customers that take, you know, tank wagons, large quantity shipments, you know, right from factories. But there's a huge part of that population that's in that smaller and requires that smaller and faster turnaround time. And again, so we have the ability to service up and down that entire supply chain. Fair point. The local connectivity is key. Yeah. Yeah. Yep. Yeah, so I guess, Heidi, you asked a little bit about, you know, how we tie these together. Yeah. You know, these are why we win, right? These are the core competencies of what allows us in that right to win. But I just want to pile on a little bit more to this, you know, the people that are driving it. We've got 1,700 sales reps that are driving this value proposition, you know, across our businesses. By the way, that 1,700 has an average tenure of 15 years. So these are people that know what they're doing. They're highly trained, and I'll tell you what, they're incredibly passionate. They're very competitive and very determined to execute on this value proposition. So if I were to kind of tie this all together, it's not just the core competencies, but it's the ability for those teams to work together and ultimately deliver on that value proposition to our customers. Great. Great. Yeah, I think determination is a great lead-in to our next discussion about operating margins. And- Yeah. you know, I think your teams have made nice progress over the last few years. You've taken the brunt of the raw material increase, and still, you look at the 18% margin in your second quarter, highest since we've had Valspar, which is really great progress. So, but I think Wall Street is tired of hearing from me- Yeah talk about my confidence in us getting there. What's, how's your confidence, and what levers are you pulling to make sure it's sustainable? Yeah. I'm, I'm very confident. I know you're very confident. Yeah. The green tie is very confident. More important than that is our teams are confident. Yeah. Top to bottom, within our organization, they understand the mission, and they're extremely confident in our ability to deliver on these metrics because it's about the solutions and services that we're providing to our customers and the value that we're providing them. We're really making the right choices as well. As I said earlier, we don't need to be all things to all folks, right? We're laser-focused on the segments and the customers in the regions where we can differentiate the most, that they're willing to pay for, and we can get a fair return for that. So really good progress. You know, you look at 2022, you know, we've carried that strong momentum into 2023 here- Yeah, yeah. -as you said. You know, on a first half basis, we had around 17%. You know, in the Q2 here, coming off of that, we just hit 18%. Yeah. So I feel like the team is confident in our ability to continue to drive that forward. Yeah. It's discipline. It's, it's resisting the urge to be all things to all people- For sure. that you talked about, so I think continuing down that path. Yeah, and we're not done yet. We have work to do. No, we have work to do. We're early innings in this. For sure. Let's talk about, you know, let's get deeper into the levers on- Yeah ... on how we get there- Yeah and sustain that. Yeah. So there's really kind of four levers that our teams are looking at, and I'll get into a little more detail on each one of them. But starts with number one is profitable volume growth. Number two is a disciplined pricing action. Number three, we're gonna simplify our business as well. You heard Todd talk a lot about that. That's a key area of opportunity for us. And then number four is good cost control, but more importantly than, you know, that, the cost control is prioritized investments, and we're gonna lean into areas that allow us to differentiate and support our value proposition that I talked about. So if we go back to the profitable volume growth, this is again, it's driven by our value proposition. You know, the entire organization is aligned on driving customer productivity and profitability, and working with our customers to deliver on that. We've continued to take share, right? We have a high level of confidence in our ability to take market share with that approach, and you know, profitable volume growth is gonna remain one of the key opportunities there. We look at pricing discipline. You know, why we're able to win there, again, it comes back to the value, right? Whether it's the technical service and support, the global connectivity, you know, working with them, you know, it's helping solve their problems. All these core competencies that we've been talking about, it's really coming back to earning that value every single day. I think Justin mentioned that, too. It's every day that we're out there working on these solutions for our customers to show and demonstrate the value of what Sherwin-Williams provides for them. And I think we do it in, you know, from a pricing perspective. I think we do it the right way. I think we're very communicative with our customers. We're transparent, and again, we're working on solutions that they value, that we work to demonstrate that partnership. So pricing discipline is number two. Number three, again, simplification within our business. There's a tremendous opportunity, particularly in our material utilization side, to make some improvements in all six of our divisions, to be honest. So all the division presidents back there, they've all got actions and activities looking to make our businesses less complex, which in the end, is gonna be better for our customers because they're gonna have faster lead times. They're gonna have better quality and more consistency of product. So again, that circles back to that value proposition that we provide of really working with them and making driving operational improvements in their business. Then last one, I know you love this one, good cost control. We're very smart with how we use our resources, but and I think that's a staple of all of our divisions, just how we run the business at Sherwin-Williams here. But I think what more importantly is we're really leaning into investments. Again, you thought you heard both Todd and Justin talk about that as well. Rep territories, technical support, you know, we know the areas where we can differentiate. We're putting resources in there to keep continuing to execute on this value proposition and take market share. So again, those would be- Yeah. Those are the kind of the four key areas that we're looking at. In addition to those four, we've talked a lot about M&A, I think, over the last few years. Sure. And, you know, looked at it as more of a bolt-on in the industrial space, and just your thoughts of the role of M&A and where you see that playing out. Yeah. So let me just kind of level set my version of M&A or what it means to our business. First of all, we don't need it. I'll start with that. We've got tremendous opportunities in every single one of our divisions to organically grow. And unlike many of our competitors that have to use M&A as a growth lever, we're very blessed with the team that we have and the value propositions that we have to continue to take market share. So I'll start there. But M&A is a very key component of our strategy from an accelerant perspective. So we see as we continue to go down our journey of this profitable volume growth, there are opportunities where, you know, we start looking through the lens of specifications, unique or differentiated technology, or a geographic, area that we want more or better share in to give us, growth from a strategic perspective. Those are the lenses that we look at of using M&A from an accelerant perspective- Mm-hmm. but not from a requirement perspective for growth. Yeah. So maybe you can run down on some of the recent deals- Sure. where we're at with integration, some of the successes we've had. Yeah. So I'll start with our protective and marine organization. Jim called them out and highlighted that. We've acquired Tennant, Dur-A-Flex, and the industrial coatings business of Sika here recently, and all of them brought on fantastic technology and a great group of individuals. And in the Sika case, it really accelerated our position in a particular strategic growth area for that division. But another example I'd highlight from that acquisition would be here in the U.S., and you know, I think obviously everybody's familiar with the investments the government's making with some of the stimulus money in some of the infrastructure opportunities that, quite honestly, our P&M team has been able to take advantage of, you know, quite well. But one of those areas is in the EV side, electric vehicle batteries, production plants that are kind of going up all over, all over the country. And, you know, what we've been able to do with that is take some of the technology through these acquisitions, bundle it together with some of the core Sherwin technology, and more importantly, also the services, the distribution points, and the individuals, and provide a really strong solution for that customer base. And it's one that's driving efficiencies in their operations. You look at the timelines required for some of these construction projects are getting compressed and compressed, and our coatings offer solutions to help drive value in that process. So that would be a great example of where, again, our value proposition of productivity and profitability within our customers- Yeah, it's a great example. is on full on display. Another example would be in our industrial wood business. We were very fortunate enough to have the team from ICA join us here last year, and I tell you, a great group of individuals, very passionate as well from an R&D and commercial perspective, fantastic technology and brands... that we've been able to leverage into other regions of the world that we participate in, and again, execute on our value proposition within those markets utilizing that technology. To support industrial wood. Yeah. Right. It's a great, again, great example- Yeah of kind of how we tie that together. And, you know, just one final comment on the M&A side is, you know, one of the hard areas when you're going through due diligence and you're evaluating a potential opportunity is you don't, you don't know the talent that you're gonna be having join the organization. And we have been extremely fortunate with the individuals that have been able to join Sherwin-Williams as part of this process. And, you know, we take a lot of pride in our approach to these transactions. You know, many competitors are gonna come in a little more heavy on the cost and reduction side. We really take the opportunity to assess the talent, put our arms around them, and see how they can really help, and we can learn, you know, from them and within Sherwin-Williams. And, you know, again, there—some of these individuals that we've brought on are gonna deliver so much value year in and year out for forever, that you would have never shown up on a pro forma, that you put in originally part of the deal. So really, really happy to have the- Mm-hmm. The people and the capabilities joining our organization. Good. Well, Karl, we're at that time. What do you want our investors to walk away with, a clear understanding of? What are some of your highlights? Yeah. So what I would hope that the audience walks away with is, you know, a greater appreciation for how strong of an industrial business we have at Sherwin-Williams. You know, I hope you can share the confidence and the excitement that I have within this business, and the fact that we are positioned and structured for aggressive, profitable growth. And we talked about our performance in 2022 and carrying that momentum on to achieving our goals of... and I'm sure the goals will keep moving, but are achieving our stated goals today of getting that- And well. Yeah, that adjusted margin target for our business at that high teens-low twenties. We've got a rock-solid plan on how we're gonna get there, and we're delivering world-class solutions and services for our customers. Yeah. You know, every one of those division presidents back there, they all have tremendous opportunities in each one of their businesses for us to grow, and they're laser-focused on the segments, again, that differentiate, allow us to get paid for them, and generate a return for us and our shareholders. I started with this, and I'll end with it. We've got the best talent globally, period. Their ability to understand and deliver on our value proposition, which is incredibly strong around driving customer productivity and profitability, there's nobody that I want to be working with. So that's what I hope everybody walks out of here with. Great. Awesome. Yeah. Well, just a few, I think, highlights from all three groups, and I hope what you heard is, one, clarity of mission that has been distilled down from these group presidents throughout their organization. Two, is determination and aggressively chasing market share gains. We are very deliberate about where we take aim, where we are making sure that we're laying our investments in, how we're deploying capital. And I think ultimately making sure that we are just getting started here. John started with that. You know, the golden goose of our company is our paint stores platform. We've got a lot of opportunity to complement architectural business with our consumer group. Our task, my task to Karl is to get the economics of the industrial business to start to mirror what we have in our Paint Stores Group, and that's gonna take time, but it takes a lot of discipline and making sure that we're doing it the right and sustainable way. So appreciate you taking the time. Yeah. With that, I think we're gonna take a five-minute break, and then we'll come back with Q&A. All right. Well, thank you all for returning so promptly. And if we can get the doors back there. Okay, so this is a time where we'll open the floor up for questions. We have Natalie on this side, Jara and Meg in the middle. I would ask, as you have a question, just raise your hand. They'll get a mic to you. We have our corporate team here on our right and our group presidents, and we'll make sure we get a good answer. If you don't mind, if you would, as you receive the mic, just introduce yourself and your firm, and we'll handle any question you have. So, Meg, why don't we start with you? We have one right here. Kevin? Thank you. Kevin McCarthy, with Vertical Research Partners. Question for you on the subject of controllable costs. You know, if you think about some of the macro charts that Jim showed at the top of the conversation, you know, it must be tempting to continue to look for efficiencies and cut costs on the one hand. On the other hand, as I listen to you, you know, it's very clear you're making a lot of strategic, purposeful investments here, maybe to take advantage and gain share. So appreciate, you know, your thoughts. We have a couple of questions, will be: How are you striking that balance today, and how has it evolved maybe over the last year or so as the cycle has progressed? Yeah, let me start very briefly with that. I wanna make a clear and quick point, then I'm gonna turn it over to Al. I have in many calls and for many years, talked about the coiled spring of the company. And, our belief is, in fact, that this is yet another terrific opportunity for us to demonstrate that coiled spring to the investment community, and part of that comes from the organic, assets that we have executing, as well as the continued investments that we have. So Kevin, your point is a great one. In times like this, we see opportunity. You know, a calmed down version of me says we see opportunity.... The John Morikis in me says, "We see blood in the water," right? I mean, and I love that opportunity, and so we are quick to invest, but we're very disciplined in that because the cost control that comes along with that and the responsibility that we have to apply discipline to that. So Al, maybe you want to just talk a little bit about our process and how we do that, and the types of things that we're investing, as well as how we control it. Yeah, I think, Kevin, as we've, I've talked about in the past, it's, we really focus on driving operating margin growth. So as we've talked about, even on our second quarter call, as we've seen our gross margin expansion be a little bit stronger than what we had planned, it's allowing us and giving us an opportunity to reinvest in the long-term growth opportunities that you heard each of the Group Presidents talk about. Stores and reps within our Paint Stores Group, field tech service, and field sales and tech service reps within our Performance Coatings Group, and the Pro Who Paints, so reps within and Consumer, and we take a disciplined approach to that. So we're really focused on driving the long-term, but we need to get a return from those, and we measure that. On the other hand, we're looking at our G&A side of it and really trying to control the G&A side to say, "Okay, what are the levers we can pull to drive those costs down?" And then you also heard a lot about the simplification efforts, that there's a controllable cost that you see within our global supply chain that we're really focused on. I would say getting leverage on those. As our volume grows, we can drive our costs lower. Disciplined approach, a lot of focus on long-term growth, but truly focusing on our growing operating margin. And I just highlight, 2018, with a full year of Valspar, our operating margin was 14.5%. You fast-forward, ups and downs, hit a high of 17.4 in 2020, which I would say is a little bit of an anomaly with the, the pandemic and how the different, shift in our business between DIY was heavy, res repaint was heavy. But you look at our first half of 2023, we hit 17% and compare it to 2019, that's 170 basis points. So we're looking at it over the long term. We're not trying to run for the perfect quarter, and you can see it growing. And when we get to a more normalized, whatever normalized looks like, we expect to grow not only a multiple of the market, but accelerate that to multiple of that multiple. Kevin, one thing I would add to that, you asked also, what, how do we think about it and what's changed? I don't know that a lot has changed, but I think everything that, you know, Al was talking about, the separating the S from the G&A, it's also, you know, the leadership team, and we talk about the plate regardless of where the plate tilts, but it's the leadership team looking around the corner so that we're not waiting to lay in these investments when the market's changing. We're getting in front of that. Res repaint is a great example. So the discipline has always been there, but I think reading the market and the timing of some of those strategic investments is an area that I'm really confident we're continuing to get better at. Yeah, and it's a funnel. You know, I think back to coming out of 2008, 2010, we, we did a postmortem to say, "Okay, as we came out of this, what could we have done to weather some of that storm a little bit better?" And to Heidi's point, making some of those investments, we really knew that residential repaint could help offset some of those things. So we started investing earlier, and as Justin talked about, we've had 7 years of double-digit growth, and yet while things were good, Heidi and Justin both talked about this new product that we launched, and it's, it's one product, and you might say, "Well, why are we dialing in on that?" But it's, it's indicative of how we're thinking. Big projects slow down. We're thinking about how do we keep that res repaint customer busy, profitable, and loyal to Sherwin. Well, so we introduce a product that helps them come in and refinish these kitchen cabinets, as an example, a new factory finish to those kitchen cabinets. And you're coming up with those product launches, those ideas while things are going really well. No one's thinking, "Well, we're gonna need this," except Sherwin. We're thinking as it starts to taper down and our customers are looking at, well, things are slowing down, what do we do? We give them another avenue to go in and talk to a customer, "Hey, you're not gonna spend the money on kitchen cabinets. Here's a way to get a new feel, and you're gonna stay in your home and feel better about it. So we're to Heidi's point, we're looking around the corner, and we're willing to invest in those segments and those opportunities to capitalize on them. We go right here. Great, yeah. Matt, Matt Krueger from Robert W. Baird. Just expanding on that, that coiled spring idea that you, you referenced, John. You know, we've heard quite a few comparisons to the 2008 and 2009 timeframe, and we've talked quite a bit about how significant the incremental margin opportunity is, for when volume growth inevitably returns across the business for this cycle. But following the 2008, 2009 housing cycle, it took the better part of a decade to surpass the, you know, the prior margin profile peak and about five years to surpass the level of operating profit from 2007. You know, what's different or unique about this current cycle, and what are some of the specific actions that you've taken to ensure the outperformance coming out of, you know, this challenging volume backdrop versus, you know, what we've seen previously? Yeah, so let me ask Al to talk initially about the comparison, and then I'll have the group presidents talk a little bit about what we're doing from a group side, because I think that detail is gonna be really interesting to you. Yeah, Matt, so when you looked at going into that 2007, 2008, and 2009, our new res to res repaint ratio is 1:1. And John talked about all the investments that we made focused on res repaint store mission, res repaint focused reps, and you fast-forward to 2020, and residential repaint versus new res was 2:1. So you think about a higher margin profile. ... a lot bigger opportunity for growth, market share. It's our biggest segment. John talked about, we've grown double digits each the last seven years, and still our biggest opportunity. So that, that is one of the key differences between now and then. Let me talk. I'll start with, because I wanna make sure we get a lot of questions. Maybe just start with Justin and Karl, because I think Justin speaks to the path that, you know, Heidi mentioned, is gonna always be the engine of the company, and so some of the things that we're doing there. But the other important point that Karl made, that I think is equally important is, you know, our view of getting the operating margins and the metrics of performance coatings to mirror what we have in this paint stores group is really important. And maybe, Karl, you can talk about that as well, so. Yeah, absolutely. I, you know, I'll start with it, and Al touched on it, I think already. When you go back to 2008, 2009, like you referenced, I was around, I was obviously in architectural for that time, and we weren't focused on residential repaint, to be honest. You know, John talked about that post-mortem, and that's where we focused. And if you look at the investment that we've made over the course of that time, from 2009, 2010 into current state and where we're headed, you know, that's been our primary focus of where we've invested. The suite of tools, that ecosystem, that premium ecosystem that I referenced multiple times, when you look at the things that we offer within that segment and the value that we provide in that residential repaint segment to that contractor, day in and day out, that's where we're truly separating ourselves. You know, as we move forward, we're gonna continue to invest in that space. If you look at our historical and how we now have the ability to hold on to price, I touched on that as well. We're able to expand and hold on to that price because of the value that we're providing day in and day out to that contractor. We are truly integrated and embedded in their business and helping them grow and be more profitable and be more successful. In a much more enhanced way, I think. Yeah. When I was running the business in that timeframe, You were doing a phenomenal job. Yeah, thanks. Yeah. But I think we're much, much better at that now. But maybe from an industrial side. Yeah, from our side, you know, we've got six different divisions. Every one of them, as I talked about, have tremendous opportunities in each one of them. So again, we're really focused in those particular subsegments where we know we can differentiate and are growing, growing faster. So, we talked about the investments that we're making on our side. You know, it's the reps, it's the tech service teams, it's that quick, fast delivery. We're investing in those areas with a very disciplined approach to really go after share gain. And every one of the divisions have a very articulate plan on how they're gonna deliver on that. Matt, why don't we grab one from you, and then, Natalie, we'll be to you next, okay? Arun Viswanathan, RBC Capital Markets. I wanted to ask a question about growth. So, it seems like I think you put up a slide in the earlier presentation that you had 9% EPS growth between 2019 and 2023 on somewhat flat market/gallon growth. And you're obviously a lot of other challenges around COVID and supply chain and raw material inflation. Do you see a path maybe to get back into the double-digit EPS growth range? And could you do it with CBG still in that low single digits and PCG maybe mid to high? Why not just focus a little bit more on paint stores if that's really the fastest-growing segment within the company? Yeah, I think the paint stores group growth, I wanna be very clear, is the engine, and we're gonna always fuel that tank with anything it needs. And the aggressive goals that we have for Justin are not goals that we'll talk about publicly, but they're much more than than Al even put on the slide. So we have high expectations from that business. But I think it goes back to the point that I just made about our industrial business, about our determination to drive that business up and to maintain the operating margins that are very similar in mirroring of the paint stores group. So you're gonna see us continue to invest in that business. The architectural side, consumer investments, that's a strategic and important element to our business. You know what, Heidi talked about the residential repaint side and the pro who paints side. There's a strategic reason that that's important to us, and we're gonna continue to invest in that because we think it, in the long run, pays dividends to the company overall. Can I just add that- Yeah. Arun, what... Embedded in our consumer business is our global supply chain, and with all of the ups and downs, you mentioned COVID, the industry-wide supply chain challenges. Last year, trying to recoup all our inventory, and now, as we talked about, we were gonna have, you know, 4%-5% decrease in volumes just because we didn't have to rebuild those inventories. I mean, it's been a drag on the consumer segment margins. We don't break that out because that's a little bit too granular than what we wanna get. But as we get to a, you know, if you go back prior, 2019 and before, when we had steady state growth and more stable raw material environment, it wasn't a headwind. So as we get back to that more steady state, and we get, you know, a half capacity, Heidi talked about Orlando, we have Statesville that's gonna come out in 2024. That, again, gives us more capacity, allows us to be more efficient on where and how we produce, where and how we distribute. We'll start seeing the benefit of that coming back in, so- Well, Heidi, maybe it'd be good for you to talk a little bit about- For sure. Some of those initiatives on the global supply chain. Yeah, I think, so I think in addition to, Arun, some of the one-offs that Al mentioned in terms of the, you know, service above all over the last few years, which we obviously you're seeing in those financials. The other part is just the mindset. We talked about simplification and resilience, but making sure that it isn't just a one and done. It is a constant every time we're walking through a plant or a facility, or we're questioning, is there a way to get better? Is there a better way here? Every link of that supply chain, I would expect, and I think you should expect, that we're going to continue to see improvements there. Again, once we get through the one-time outliers and get back more into whatever steady state is, challenging the normal processes in which we go about doing business is part of the ongoing work to look for some of that resiliency and some of that simplification. That's everything. Everything. Karl mentioned everything from raw materials, you know, sourcing, every formulation- Manufacturing, throughput, automation, cost per gallon, all of that. Right. Terrific. Good. Natalie, we're gonna go to you. No question? All right, we're gonna go right here to Meg. John? John Roberts, Credit Suisse. Brent crude's gone from low 70s to mid-80s. Most of your raw materials are hydrocarbon-based. Can you give us a refresh on the raw material outlook? And most of your performance coatings, I think, are solvent-based. Do you need more price over in performance now? Well, let me just take the last piece first, that we don't announce price increases in a forum like this. If in fact we do, which we review on a monthly basis as a management team, and we look at every input, raw materials, energy, transportation, every aspect of cost, we review on a monthly basis. If in fact we deem that there is a price increase warranted, the first people we talk to are our customers. We've not announced anything, but I would tell you that it's a regular review, and I think as I don't remember if it was Justin or Karl mentioned, you know, our success in pushing those prices through are a result of what we do every day, not how well that meeting goes. So we're trying to add value every day as part of our relationship to justify those. But as far as the pricing, Jim, you want to just talk a little bit about what's happening on raw materials? Yeah, John, for sure. As you all know, the petrochemical side of our basket is the biggest side of our basket. And yes, oil has ticked up here, but we haven't seen a meaningful impact on the feedstocks that we buy to this point. I think you'd have to see that sustained for a period of time. It tends to be choppy, oil prices, so right now there hasn't been a real impact from that, John. We've talked about this year, our raw material guidance is that deflation will be in the mid- to high single-digit range. We haven't made any further announcements on that. We'll update that as the year goes on. I think it's probably reasonable to expect if things stay where they are now, we'll still see some relief into the early part of next year. But beyond that, visibility is pretty, pretty muted. Sure, I can see Eric. Jerry Rah, I see Eric has a microphone here. Eric Bosshard, Cleveland Research. Wanted to connect the dots a bit between the coiled spring and the green tie, and the pace of which the margin progress happens. And here you're talking about performance coatings on its way to a margin profile similar to stores. And so just trying to understand, not so much the timing, perhaps a little bit of the timing, but also what needs to happen. Is this a volume that unleashes this? If you could help us put that together. Yeah. Why don't I have Heidi and Al talk to that? Yeah. So So I'm gonna connect the dots, but I really want Al to attack the green tie question specifically. So a couple of things, Eric. I think if you think about how we get there, and I agree with the way that you framed the question, the sooner the better is what we'd like, but the real answer is starting. I'll use the industrial segment as a great example here. It starts with improving the ROS. And so we want to make sure, and I go back to the conversation and comments that Carl shared out earlier, that there's still a lot of growth to be gained across every division, but it's not trying to be all things to all people. It is about more discipline of looking for the subsegment within each segment that values what we do, they're willing to pay for it, and we have a sustainable model there. So as we continue to grow our ROS on the industrial side and continue to look for expansion on top of that, and Karl, I'd love to kick it to you. I'm talking about your business here. Anything you would add to that in terms of how you look at that path? Yeah, I think, you know, timing is a hard, you know, it's a tough question just because there's a lot of, you know, small economic things that do come up out of our controls. But, in terms of, you know, the, the plant, the path forward that we're going, it still comes back to the strong volume, profitable growth, disciplined pricing, you know, making sure we work on these simplification projects within our business, and then, you know, again, managing our costs, but, but also leaning in on the investment side for us to continue to accelerate those, those growth opportunities. So I don't know if there's necessarily a timeline, but as much as- No, we're not going to give a time. I think it's the four points that you talked about during the conversation. I mean, there's no secret here. I mean, you find really good customers, you bring them solutions to help them make- Right ... more money and be more profitable, and we align with them, and we share in that success. We're gonna do that in a disciplined way. Can I just add one point to that? Yeah. Because I think it's important to see the trend. If you look at, again, going back to that full year with Valspar, 2018, our operating margin in, in our industrial businesses was 12.9%. We saw an uptick over two, next two years, we had the big raw materials. But you look at our first half, 2023, it's 16.9%. You compare that to the first half of 2019, and we're up almost 300 basis points. So the things that-- what, what that tells me anyway, is the things that, Karl and Justin, prior to that, and the team are doing, are making progress in, in making it a more sustainable model and paring businesses back, and that's through price, through simplification, through SKU rationalization. All those things add up, and I'm confident then, as you look at the acquisitions that we made last year, and we integrate those, we realize the synergies because of the platforms we have, and we drive technology. ... we have, you know, really good chance of getting there. You have one up here, Steve? Hi, yeah, Steve Byrne, Bank of America. In resi repaints in paint stores, you clearly have a focus on driving loyalty by helping your contractors. But my question for you, is there any merit to trying to drive up that business and your share gains by focusing on the homeowner? How many homeowners know about these more innovative products that you have? Like, you were talking about that self-leveling kitchen paint, you know, kitchen cabinet paint. I mean, how many homeowners even know about something like that? Or the rain fast exterior paint. Is there merit in going after the homeowner population with an advertising budget? Yeah, obviously, this is a question for Justin, but maybe, Heidi, if you don't mind, if I could just ask you to maybe talk about the complement between the DIY and, or focus between DIY and res repaint, and then you could talk a little bit about that as to how we're focusing on... The messaging is really important. Yeah, and I think it's a great point, Steve. I mean, we do have concerted effort to make sure that the homeowner has awareness and the role that they play in that influence channel. I'll I'll have Justin speak to that. But clearly, it's you know, a lot more of a direct-to-consumer play on the DIY side. I think if you look at our DIY strategy and our Paint Stores Group, it's a complementary and different DIY. They're not as value conscious as a home center DIY consumer, so they are looking for value. They're looking for those upgrades. So there's an opportunity for us to be very targeted within that kind of group of that DIY segment, but I'll hand it over to Justin from here. I think you hit the DIY side, the nail right on the head on that standpoint. You know, that type of customer that comes in into one of our stores is a little bit different. The connecting point I would tell you is, and I think Jim showed this one on the slides, too, you continually start to see that more people are having it done for them, right? You know, where we connect the dot on that is that, you know, our contractors are in the know, obviously, through that rep force, about all those products that you just mentioned. You know, it's us being on that job site with them, those sales reps being on that job site with them, walking through and talking to that customer about what the benefits are of us utilizing those products, those premium products on the job, what they're gonna deliver, whether it's, you know, longer open time for them to get their exterior done on the time frame that they want, the cabinet paints that we've talked about, you know, that factory finish durability all the way through. So there's true connectivity there. I would also tell you one of the other things that we do is we've got virtual color consultations that we do that tie that do it, do-it-yourselfer that's gonna have it all of a sudden change their mind and says, "I'm gonna have a contractor do it." They go to that color consultation, and, and that's walked back through as we explain those products there as well. So, multiple different avenues, but definitely connectivity all the way through them, so. DIY represents about 10% of our sales through stores. We advertise it's to help pull through with our residential repaint. We've got an army of residential repaint contractors that are out there every day talking to homeowners, finding the exact dart bull's-eye on the consumer that's, I mean, it's part of our messaging, see. We're, we're really broadcasting brand more frequently than we are a specific project. But, but having those res repaint contractors aware and, and leaning into this is a, is an important element of how we strategically go after it. Got one right here. Thank you. Dave Begleiter, Deutsche Bank. John, it's been about a month since Q2 earnings. How many things gotten better? How many things gotten worse across your businesses that you're seeing? I'd say that, you know, nothing that we haven't seen in the public. You know, you can hear what's happening with interest rates and housing starts. I don't think there's anything that we would change coming out of our last quarter right now. Allen, anything you want to- No, that's it. You want to give any upgraded or updated forecast? No. I'm good. Thank you. No. Appreciate the opportunity, but no. Here's your chance, if you wanted to. Yeah. Meg, you have one here? Yeah, thanks. Josh Spector with UBS. Actually, I'll, I might try Dave's question again a different way. So in, in Justin's comments, when you were going through the stores group, you made a comment about the last 60 days starting to see a tick up, and I think that was in regard to new res. Your, your guidance implies that the stores group has volumes down in the second half, so are, are you seeing anything different there that you'd comment on? And maybe any general comment on the health of backlogs. I think some competitor and tangential comments have been that things are still relatively healthy, so just curious what you're seeing there. Thanks. Mike? Yeah. The tick-up that I referenced was through the sales centers at the new residential side, and if you... The other thing I mentioned there, too, is a 3-month-6-month lag, as far as when we get to paint on that side. So, just to clarify and to kind of level set on that comment. And then, you know, as far as backlog goes, I would tell you what we've talked often about, and I've talked last couple of days about, is that I would feel like in, you know, specific segments, we're starting to see more normalized cycles on the backlog side. Obviously, from the last 2 years -3 years, when you look out as to what we saw, they weren't normal times, right? As we move forward, we think we're in more normalized cycles on the backlog piece. I might add to that, you know, our view of the world isn't waiting for that to happen. You know, we're not a retailer that unlocks the door and waits for customers to come in. We're very aggressive. The sales reps that Justin mentioned and the pursuit of those customers is really important. So our activity, while it's not an adjustment to—you're asking the question a different way, it's not an adjustment to the conversation that we had. But I do think it's important to point out that while there might be upticks and, you know, new starts, this or that, quite frankly, we're hunting every day, and we're out there trying to find new customers or share of wallet opportunities with those customers. And so those are important for us to watch, and we do. We're not here to inform you what is in the newspaper or what's on the news. We're here to drive results, and if things slow down a little bit, that's okay. You know, that's gonna hurt our competitors. We're gonna be out hunting for new customers and share wallet opportunities. Hold on one-- Yeah, go ahead. Go ahead, John. John Robertson, Credit Suisse. Home Depot seems to be not only going after the pros who paint, but they're also interested in the pros who only paint and need a paint that meets local building codes and so forth. What do you think of the merits of using the big box retailers to reach some of those pros? And does Sherwin have any products or programs to provide building codes, specified paint to those kind of pros? Yeah, John, we're not gonna talk about any specific competitor, and our success is gonna be determined by the execution of our strategy. We have great confidence in our strategy. I hope you've heard that here time and time again. We're gonna execute that very well. Our view on the market is, it's filled with opportunity, and we're gonna capitalize on it. I'm not gonna talk about any of our competitors. Go ahead, Mike. Mike Sison, Wells Fargo. You talked a lot about SG&A and people. As I recall, you had a lot of the capacity to paint volumes over the last couple of years, or maybe last year or so. Can you remind us where you're at in terms of filling that capacity up, and when it does sort of fill up, you know, where do you think your return on capital will sort of get to over time? And I'm sort of disappointed you didn't ask for my resume. I mean, you've been asking people to work here. I'm joking. Well, we'll take your resume right now. Let's start with that. So I want to clarify, you're talking specifically around Paint Stores Group and capacities to support that. So let me maybe take you to maybe 30,000-foot view, and then I'll come back to that question. It's how we think about our demand outlook and make sure that our CapEx plans and, you know, as we look at our asset base, where we, you know, we laid in our Orlando facility, our expansion down there for capacity that will help us to service our business in a 2x capacity where we were previously. We expanded our Statesville facility that will give us capacity that will support 75% of Lowe's business on an annual basis. So we are in a great position to meet not only our current demand, but an outlook of demand as we recover here with the coiled spring. We'll continue to watch that and monitor that. As the market changes, you know, we work closely with our global supply chain partners and our finance teams to lay these ten-year CapEx projects out based on where we see the market going, and we're continually refining that, refining that. It's not always about a net new facility. You know, I think it's important as we look at our footprint and our asset base, everything that we talked about earlier, I think Arun's question hit this as well. We talk about hidden factory, productivity, resilience, simplification, wanting to get more out of the asset base that we have today. I'm confident through a lot of expansion projects and then bolt-on expansion projects, that we'll be in a great position to support that demand. The only thing I would add, Mike, is that, you know, each of these capital projects, we look at have a return to them. We look at probably 70%-75% of our capital that goes in, has a return. And I include our new facilities in that and how we look at driving value out of those. So when you look at a return on net assets employed, that as we would measure it, we were in the mid-teens last year. I think we'll be closer high teens this year, driving to, you know, mid-25 and from there. And you can go back prior to Valspar and all that goodwill and intangibles, and we were almost at 40, on a PBT basis. So the targets keep moving up, as my friends on the far left have said, you know, we'll keep driving that number higher, and then as we each reach the next level, we'll move the target again. Mike, I might twist it one other way to say that it also should be seen as a vote of the confidence that we have and the plans that we're executing and the line of sight that we have, that we're going to need that capacity. We're not adding it for the sake of exercise. I mean, it's, we've got a line of sight of what we're aiming for, and the success that we have will fill that capacity. I think you had one right next door, right? I can't see who that is. Oh, I see, in front of Dave. Yeah. Jim was talking about existing home sales, right? And acknowledging that they're at a pretty low level and also factors that could help offset that. So let's suppose that existing home sales stay at this level. Are you expecting the overall market to grow, let's say, repaint plus DIY market, or would it still stagnate or even decline? So we really do need existing home sales to recover or the total market. I would say existing home sales, as I mentioned, have been at a trough here for a while. I think eventually they are going to come back as you start to see interest rates come down, and people can get out of their current place and get into a new place. So I think you'll see that happen. I think the market will grow, but regardless of whether it does or not, I think Justin's laid out pretty clearly the aggressive plans that we have to take share. So even in a market that is flattish, we're gonna outgrow that and outgrow it. And I'd add the other point that Jim mentioned about household formation. I mean, people are going to continue to need shelter, and we've worked very hard, and we've talked about this proverbial table, whichever way it tilts. If it's not resale and people are moving into apartments, we're gonna work really hard to be on the apartment walls when people move in there. And if apartments are, rents are getting too high and people are saying, "I'm gonna then just buy a new home," we're gonna be in that new home. And if, in fact, they're gonna stay in their existing home, and Jim mentions, where it's a very low-cost, high-impact project. I mean, we're gonna find a way to continue to grow market share and do it as we grow. We're gonna- our expectations are we're gonna outpace the market as a result of that. Again, we're not opening our doors just waiting for things to happen. I'll mention- Okay, I'm getting a sign here that we got- Just add to that, John. I mentioned that demographic slide that I showed. You see that wave of household formations continuing to happen. There's really three places that you can live, right? A new home, an apartment, or mom and dad's basement. Every one of those, we're there. There's paint opportunities, so we feel very good about what's ahead of us. We don't let Jim near the marketing department because he wanted to brand it: Mom and Dad's Basement Paint. There was a label. It didn't go anywhere. We have time for one last question, so if I can, do I have a hand anywhere or... Right here? Okay, Arun. If it's about Mom and Dad Basement Paint, you're gonna have to see Jim directly. I got it. Thanks. So I guess I just wanted to ask about the M&A side. Carl said that you don't need to do it, but obviously, you know, the Valspar transaction was very beneficial. It diversified the portfolio, brought in some great talent, obviously, that's sitting up there with you right now. So I guess, how do you think about M&A going forward? There's still a lot of fragmentation in the industrial coatings markets. There's still several potentially attractive, you know, targets out there. Have multiples come down, why wouldn't it make sense to do another large transaction like that, given your buying power, given, you know, the capabilities you have, and especially the investment you're making now in Cleveland as well with R&D and so on? Thanks. Yeah, so there's a lot packed in there. Mm-hmm. Let me start with why don't you just do another big deal? We had prepared and kept discipline, a disciplined balance sheet, trying to work towards a Valspar acquisition for at least nine years. I was involved at the COO level. It was because of the strategic fit, the complementary nature of the two assets coming together. We do have competitors that think about acquisitions as their means of growth. If you look at Valspar, it created shareholder value. Not all acquisitions for all companies do that, so we take a very disciplined approach in evaluating strategically why an acquisition would make sense. It's not. We We don't buy a book of business here. We buy strategy, strategic fits, and we often say that one plus one has to equal three or five as a result of that. There are companies for sale all the time, public and private. Many of the acquisitions that we've made here recently weren't, in fact, not even for sale. We went to the owners, and we talked about why the asset may be of more value to us, perhaps, than they even saw. And so I think what you should expect to see going forward will likely most likely be on the industrial side. And you should expect to see more complementary bolt-on than a large, another Valspar-type acquisition. We look for opportunities that bring value in a number of different ways. It might fill a strategic fit in a geography, it might be technology, and it might bring another unique asset. For example, the resin company that we purchased helped create, solve another issue for us. So we're constantly leaning in with a disciplined approach on how that asset would bring value to us in a strategic way, not just a book of business. And I think most of that will be on the industrial side. We're also looking technology that we can plug in, that we can use around the company or the country, I'm sorry, the globe, or the company, in ways that that are unique to Sherwin as well. Anything I missed, Heidi? I would just add, here's another area where we're not complacent. We'll continue to review the portfolio, and if there's not a return, we'll talk about, you know, one conversation, but we are always scanning to look to see if there's a technology. ICA is a great example. We weren't interested in that technology to be great in Italy. We wanted that, of course, but then how does that scale throughout Europe and then globally, to John's point? So I think as we're looking at this, the disciplined review of the portfolio is taking nothing for granted. If there's a better way, a better owner, we should be having that conversation. If I could, I like the way you said that, Heidi. It's a disciplined review, and it goes both ways because we do see that as capital allocation. And so the divestitures that we've had, we look at with the same amount of discipline. So that review at times, so Todd's point on the architectural China, you know, we could have worked really hard, spent a lot of time, a lot of effort, and not reached the acceptable returns in that architectural business. We could take that cash and put it in Atlanta and get a return. So we're constantly reviewing our business through a lens of opportunity and through discipline. And And we're not afraid to make the difficult decisions if they need to be made. Okay, so thank you very much. Appreciate, your attentiveness there, and I'm gonna turn it over to Jim to wrap up, and we'll go from there. Yeah, thank you, everybody, again, for joining us today. Really appreciate those of you who came to Cleveland and those who listened online. I hope you found the presentations from our entire leadership team and the discussions very helpful. You know, on behalf of the team, what I would say is, I'll leave you with just a couple of things. Number one, I think you heard we have a clear strategy, and certainly, we're committed to that strategy, but even more important, we have the talent to execute that strategy. And we're aligned across the organization, all 64,000 people. Got great opportunities in every one of our businesses. You heard Justin, you heard Carl, you heard Todd. These are the gentlemen that are gonna make that happen for us, seize those opportunities. They've got their teams very focused. We're confident in the solutions that we provide for our customers, and that's ultimately, we believe, and we're very confident, is gonna lead to strong returns for you, our shareholders. So thank you for being here. Those of you in person, we have a reception with the management team right outside the doors here, and thank you again.