Welcome to the Fourth Quarter and Full Year 2023 Stanley Black & Decker Earnings Conference Call. My name is Shannon, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Vice President of Investor Relations, Dennis Lange. Mr. Lange, you may begin. Thank you, Shannon. Good morning, everyone, and thanks for joining us for Stanley Black & Decker's 2023 Fourth Quarter and Full Year webcast. Here today, in addition to myself, is Don Allan, President and CEO, Chris Nelson, COO, EVP, and President of Tools & Outdoor, and Pat Hallinan, EVP and CFO. Our earnings release, which was issued earlier this morning, and a supplemental presentation, which we will refer to, are available on the IR section of our website. A replay of this morning's webcast will also be available beginning at 11 A.M. today. This morning, Don, Chris, and Pat will review our 2023 fourth quarter and full year results and various other matters, followed by a Q&A session. Consistent with prior webcasts, we are going to be sticking with just one question per caller, and as we normally do, we will be making some forward-looking statements during the call based on our current views. Such statements are based on assumptions of future events that may not prove to be accurate, and as such, they involve risk and uncertainty. It's therefore possible that the actual results may materially differ from any forward-looking statements that we might make today. We direct you to the cautionary statements in the 8-K that we filed with our press release and in our most recent 1934 Act filing. I'll now turn the call over to our President and CEO, Don Allan. Thank you, Dennis, and good morning, everyone. Stanley Black & Decker's performance in 2023 reflects our relentless focus on the execution of our strategic business transformation, which resulted in us building a strong foundation for improved profitability in 2024. Stanley Black & Decker today is a more streamlined business, built on the strength of our people and culture, with an intensified focus on our core market leadership positions in tools and outdoor and industrial. Despite a challenging market backdrop that pressured volumes during the year, adjusted gross margin improved in each quarter, and we generated over $850 million of free cash flow. These results demonstrate significant progress against two of our most important areas of focus during 2023. Here are just a few additional examples of our accomplishments from the past year. We improved the health of our cost structure as a result of the momentum from our supply chain transformation. We achieved our 2023 target and delivered over $1 billion of savings programmed to date. We remain on track for the expected $2 billion of savings targeted by the end of 2025. Our fourth quarter adjusted gross margin approached 30%. This result outperformed the plan as our teams accelerated efforts to deliver profit and cash in response to the soft volume environment. Our strong free cash flow generation was primarily the result of $1.1 billion of inventory reduction as we successfully executed our supply chain initiatives. We continue to actively manage our portfolio of businesses. In December, we announced the agreement to sell our infrastructure business and currently expect that transaction to close at the end of the first quarter. This aligns with our simplification efforts and focus on shareholder value creation while advancing our capital allocation priorities. We strengthened our leadership team with the addition of three new highly capable, seasoned, and respected leaders in Chris Nelson, Pat Hallinan, and John Lucas, each of whom brings a fresh and exciting set of perspectives. Stepping back over the past year and a half, we have transformed Stanley Black & Decker into a different company, refocused and re-energized. Together, our talented and motivated leadership team, along with our diverse and high-performing associates across the globe, are executing our transformation strategy with urgency and diligence to ensure we continue to achieve our goals. Our performance to date is encouraging and reinforces our confidence in making investments to pursue the compelling long-term growth opportunities in the markets that we serve. Shifting now to our fourth quarter performance. Revenue was $3.7 billion, which was down mid-single digits versus the prior year, primarily due to lower outdoor and DIY volume, as well as infrastructure customer destocking. Our profitability exceeded our plan as we recorded adjusted gross margin of 29.8% in the quarter. Adjusted gross margin was up over 10 points versus the prior year and improved 220 basis points versus the third quarter. As a result of our focused efforts, this is the fourth consecutive quarter that we delivered sequential adjusted gross margin improvement. We also reduced inventory by $240 million this quarter, which brings our total inventory reduction to $1.9 billion since mid-2022, when we began this journey. 2024 will be the next chapter of transformation, an opportunity to demonstrate our ability to further improve profitability and cash flow as we plant the seeds for future growth and success for Stanley Black & Decker. While it will be a transitional year, we are continuing to strengthen our foundation to create greater future earnings power. We will remain focused on delivering differentiated product innovation through our portfolio of world-class brands, implementing cost efficiency measures within our control, and driving share gain in our core markets, all aimed to improve margin, earnings, and cash flow. Turning to the markets we serve, our view is that these markets will remain dynamic in 2024. Overall, we expect relative strength and demand from professional tools and portions of our industrial markets. However, we believe the consumer and outdoor demand trends will continue to be weak. Together, this results in a modestly negative outlook in aggregate for all of our markets. Our global trade-weighted GDP estimates are slightly positive, with U.S. real GDP growth projected to slow but remain positive in 2024. Global commercial construction is expected to moderate, and industrial tool markets are expected to remain supportive. The global industrial fastener end categories will be led by aerospace, while automotive and industrial production markets will be relatively flat. There are a few key macroeconomic indicators that more directly impact our larger markets in North America, which are somewhat mixed. Examples of this mixed North American tools and outdoor market are as follows: New residential builds are forecasted to improve from current levels, yet remain modestly negative year-over-year. Residential repair and remodel is currently expected to retract, and the outdoor power equipment industry continues to show signs of customer destocking, and we don't expect a pivot to growth during 2024. In summary, we're focused on the pro user and the healthiest market segments to generate share gains. We are prepared for weak consumer and outdoor demand trends to persist. The midpoint of our 2024 plan represents a continuation of the current demand environment, which in aggregate is slightly negative for all markets. We will remain agile and ready to serve incremental demand if it accelerates in the second half. We believe that with our powerful brands and strong innovation machine, we have the opportunity to capture new wins with our customers and outperform the market. Our plan for the year is underpinned by the continued supply chain cost improvements that are broadly in our control. We expect to deliver gross margin accretion, earnings growth, and strong free cash flow. Pat will discuss this in more detail in just a few moments. 2024 will be a year of focus, excitement, and purpose, and it is fitting that we are celebrating the 100-year anniversary of DEWALT, a noteworthy milestone and a reminder that we have been revolutionizing job sites for a century. We will always relentlessly innovate for our pros and all our end users, allowing them to achieve better, safer, and faster results. I want to thank our 50,000-plus employees around the world for their persistence and commitment to our mission in 2023. They each have contributed to the progress we've made on our transformation journey. Now, stepping into the business segment results. I will discuss our industrial business performance and then pass it to Chris Nelson to review the tools and outdoor results. Fourth quarter industrial revenue declined four percent versus last year. Price realization was more than offset by lower volume, which was driven by the continuation of customer destocking and infrastructure. Within the segment, Engineered Fastening fourth quarter organic revenues were up seven percent. This includes aerospace growth of 27% and auto growth of 10%, as we benefit from recoveries in those markets. This growth was partially muted by market softness and general industrial fastening. The fourth quarter industrial adjusted segment margin was 11.1%, down 40 basis points versus prior year, as lower volume more than offset price realization and cost control. For the year, we are very pleased with the performance of our industrial segment. While organic revenue growth was flat, Engineered Fastening, which is our focus moving forward within this segment, was up six percent organically behind the strength in automotive and aerospace. The team delivered full-year adjusted segment margin of 11.8%, up 210 basis points versus 2022. This expansion was driven by price realization and cost actions taken to improve productivity throughout the year. I want to thank the industrial business team for their strong execution in 2023, and I'd like to especially thank the infrastructure team for their valuable contribution to Stanley Black & Decker. I am confident that the business is positioned for a future of innovation and growth with Epiroc. I will now turn the call over to Chris to review our Tools & O utdoor performance. Thank you, Don, and good morning, everyone. Now turning to the tools and outdoor fourth quarter operating performance. Fourth quarter revenue was approximately $3.2 billion, down eight percent organically versus prior year as a result of lower volumes, primarily from soft consumer, outdoor, and DIY market demand, while price remained flat. We made substantial progress improving profitability through the year, driving adjusted segment margin to 10% in the fourth quarter. This was a sequential step up of 70 basis points versus the third quarter and 900 basis points better than the fourth quarter of 2022. We achieved this by realizing lower inventory destocking costs, delivering supply chain transformation savings, and capturing the benefits of shipping cost deflation, which were partially offset by lower volume. Now, turning to the product lines. Organic revenue for hand tools declined six percent, while power tools was up one percent organically as pro-driven momentum offset pressures in DIY demand. Outdoor was significantly challenged as customers right-sized their inventory levels. We expect that trend to continue into the start of the 2024 selling season. In tools, we finished the year with a relatively stable market backdrop supported by pro demand. For example, power tools organic performance improved each quarter in 2023 and exited in a growth position. This demonstrates the demand for our iconic pro-centric DEWALT brand and the best-in-class products that we are bringing to the market. As the outdoor market achieves post-COVID normalization, we are focused on improving our cost structure while prioritizing investments to capture targeted share gain opportunities with customers and accelerating innovation in handheld electrification, which is a growing and highly profitable category. Now, turning to fourth quarter performance by region. North America was down 10% organically, with the tools product line down low single- digits. The commercial and industrial channel, which has a heavy professional user base, grew low single- digits organically. Fourth quarter U.S. retail point-of-sale demand remained negative versus the prior year, but above 2019 levels, supported by price increases and strength in professional tools. European organic revenue was down one percent, with outperformance in the Nordics and Italy, which generated double-digit organic growth as we continue to invest in expanding our professional product offerings and activating new battery-powered innovations within the region. Emerging markets grew mid-single digits organically, excluding the impact from the Russia business exit. Including this impact, organic sales declined one percent. Solid emerging market performance was led by high teens organic growth in Brazil, marking the seventh consecutive quarter of organic growth in the country. I want to thank the Tools & Outdoor team for their focused efforts throughout the year, which has positioned us well as we continue to focus on winning with our customers and capturing long-term, profitable growth and market share. Now, turning to the next slide, I would like to now introduce our new groundbreaking equipment system, DEWALT POWERSHIFT. We are proud to bring this to market later this year, as it demonstrates the company's commitment to innovation and electrification for the pros. The DEWALT POWERSHIFT system was unveiled at the World of Concrete trade show last week and is designed to meet the critical needs of concrete professionals. The electrified line will allow the pro to transition away from gas-powered equipment without compromising efficiency and performance. Each of the six concrete tools in the system uses the DEWALT POWERSHIFT 554 W-hour battery and high-speed charger to streamline efficiency. The battery can deliver up to 5,000 W of continuous power. That is equivalent to 6.5 horsepower and is designed to withstand the toughest job site conditions. The POWERSHIFT battery leverages pouch cell technology, which DEWALT first brought to the industry in October 2021. Pouch Technology enables the cordless job site of the future, bringing more power, runtime, and efficiency. Take, for example, the POWERSHIFT vibrator used for concrete placement. It is 85% more efficient than gas vibrators in the market today. POWERSHIFT vibrators deliver 60 continuous minutes of nonstop work, which gives the user about 30% more runtime than a tank of gas. There are electrified vibrators in the market today that can only deliver 15 minutes of runtime. Adding to the extended runtime, this tool is 5 lbs lighter than a gas unit and is 10 lbs lighter than any other electrified unit available. DEWALT POWERSHIFT represents the next addition to the 100-year legacy of the DEWALT innovation mission to deliver comprehensive end-to-end workflow solutions. Raymond DeWalt's founding principles of innovation, safety, and productivity remain the core ethos of our company today. DEWALT's future remains strong, and we will lead the way in empowering tradespeople to succeed while defining the next era of industry innovation and minimizing environmental impact. Thank you. And with that, I'll pass the call over to Pat Hallinan. Thanks, Chris, and good morning. Turning to the next slide. I would like to highlight the progress we have achieved, streamlining the business and transforming our operations. We are on track to deliver our $2 billion pre-tax run rate cost savings target by the end of 2025. We achieved approximately $160 million pre-tax run rate cost savings in the fourth quarter, bringing our aggregate savings to over $1 billion since program inception. This performance is slightly ahead of plan as our teams accelerated savings efforts to offset macroeconomic volume headwinds that were greater than expected throughout the year, including during the fourth quarter. Strategic sourcing initiatives remain the largest contributor to our supply chain transformation to date. In addition to the program, freight rate and demurrage savings also contributed to margin improvement starting early in 2023 and holding throughout the year. Consistent with expectations set at transformation inception, we expect strategic sourcing to be the leading contributor to savings, and we expect this to be the case in 2024. Our Operational Excellence program continues to leverage lean manufacturing principles to improve productivity across both business segments. This work stream will expand in scope during 2024 and drive further cost efficiency in our manufacturing base. The footprint-related projects are progressing on schedule, and production transfers into centers of excellence are in the various stages of qualification, testing, and execution. Similarly, logistics network optimization programs are also on track, with regional distribution center redesigns underway. Concerning complexity reduction, our teams have identified approximately 85,000 SKUs for discontinuation and are assisting customers as they transition to replacement products. We have successfully eliminated over 45,000 SKUs as of the end of 2023, with more expected in 2024. These actions are expected to generate approximately $500 million of savings in 2024, supporting the funding of additional growth investments in our core business. As we move into the next phase of our transformation, footprint and product changes, such as those from platforming, will become more important and result in a lumpier cost savings trajectory, as you would expect. We remain confident that our transformation can support the sustainable cost efficiency needed to return our adjusted gross margin to 35% or greater. Moving to the next slide, two of our primary areas of focus during 2023 were free cash flow generation and gross margin expansion. We reduced inventory by approximately $240 million in the fourth quarter, inclusive of approximately $100 million attributable to the infrastructure business held for sale accounting. This brings our inventory reduction to approximately $1.1 billion in 2023 and $1.9 billion since the middle of 2022. Our disciplined inventory reduction efforts throughout the year supported $853 million of free cash flow generation, which we used to fund our dividend and reduce debt by approximately $280 million versus the prior year. We remain focused on working capital optimization in addition to improving profitability to generate significant free cash flow. In 2024, we plan to reduce inventory by $400 million-$500 million as we continue to prioritize working capital efficiency. CapEx is expected to range between $400 million-$500 million, increasing versus 2023, predominantly in support of the footprint-related transformation initiatives planned for 2024. These items, in combination with organic cash generation, underpin our full-year f ree cash flow range of $600 million-$800 million. As a reminder, we expect a typical profile for our working capital as we build inventory for the 2024 Tools & O utdoor spring selling season, resulting in the typical first quarter operating cash outflow. Our priority for capital deployment remains consistent, making transformation investments, funding our long-standing commitment to return value to shareholders through cash dividends, and further strengthening our balance sheet. Turning to profitability. Adjusted gross margin of 29.8% in the fourth quarter was up 10.3 points versus the prior year, driven by lower inventory destocking costs, supply chain transformation benefits, and lower shipping costs, which more than offset the impact from lower volume. Adjusted gross margin finished ahead of plan as we intentionally accelerated supply chain transformation actions in 2023, while navigating weak consumer and outdoor demand and channel inventory conservatism to meet our profitability and cash flow objectives. Additionally, pricing was half a point better than our expectation due to lower promotional mix in the quarter. We will continue our measured and disciplined approach to cost management to moderately improve on our second half 2023 adjusted gross margin gains into the first half of 2024, while managing the margin pressures that accompany the outdoor selling season. This is notable, given that we were able to deliver second half 2023 adjusted gross margins one point above the high end of our initial 2023 guidance, demonstrating the transformation is on our targeted trajectory. We are planning for adjusted gross margin to approximate 30% for the full year of 2024 and expect to exit the year in the low 30s, consistent with prior expectations. We are leveraging our $500 million of cost reductions from the supply chain transformation and working hard to navigate another year without a macroeconomic tailwind. We made significant progress throughout 2023 on our journey to restore our historical 35%+ adjusted gross margin, and our efforts are enabling incremental investments to accelerate long-term organic revenue growth. Now, let's turn to our 2024 guidance and the remaining key assumptions. To reiterate, we are planning for 2024 to be another year where we prioritize cash flow generation and gross margin improvement. We are initiating a full-year free cash flow guidance range of $600 million-$800 million, GAAP earnings per share range of $1.60-$2.85, and an adjusted earnings per share range of $3.50-$4.50. We expect relative strength in demand for professional tools in some of our industrial markets. Conversely, we are prepared for weak consumer and outdoor demand trends to persist. Together, these dynamics result in a modestly negative outlook in aggregate for our markets. We are planning for organic revenue to be relatively flat at the midpoint, supported by targeted share gains in our businesses. Our EPS range contemplates ±2 points of volume growth, with the variation representing the market demand scenarios in the plan. Tools & O utdoor organic revenue is expected to be relatively flat at the midpoint, behind our focus to win with the pro through industry-leading innovation, investments in field resources, and consumer share gains, leveraging our strong portfolio of brands. The industrial segment revenue is expected to be relatively flat to slightly positive organically, primarily driven by aerospace market recovery, as well as leveraging our core business model and electrification to deliver share gains. Industrial growth in 2024 is expected to be moderated by infrastructure destocking in Q1 before the closure of the signed divestiture and expected softness in general industrial fastening markets. We will continue to invest for long-term organic growth and share gain throughout 2024, and plan to invest an incremental $100 million to accelerate innovation, market activation, and to support our powerful DEWALT, CRAFTSMAN, and STANLEY brands. Our planning expectation is that SG&A, as a percentage of sales in 2024, remains consistent with our recent fourth quarter, around 21%, which includes investments. Turning to profitability, we expect total company adjusted EBITDA margin to improve to approximately 10% for the full year, supported by the benefits of the transformation program. Segment margin in tools and outdoor is planned to be up year-over-year, also driven by continued momentum from our ongoing strategic transformation. The industrial segment margin is expected to be flat to up slightly versus prior year, as operating improvement in Engineered Fastening is offset by the dilution from the previously announced divestiture of the infrastructure business. For additional context around infrastructure, our guidance assumes approximately $100 million of first quarter sales, with the divestiture closing at the end of the quarter. Thereafter, we have excluded the profit and assume the proceeds will be used to reduce our commercial paper debt balance. With these assumptions, we've established a $1 adjusted EPS range, with the largest contributor being market demand variability. We will work to optimize adjusted gross margin through our transformation program. We will manage SG&A thoughtfully throughout the year, given the macro uncertainty, but we will be working hard to preserve investments to position the business for longer-term growth. Turning to the other elements of guidance. GAAP earnings include pre-tax, non-GAAP adjustments ranging from $290 million-$340 million, largely related to the supply chain transformation program, with approximately 25% of these expenses being non-cash footprint rationalization costs. Our adjusted tax rate is expected to step up in 2024 to 10%, with the first three quarters generally in the mid-20%s. Discrete tax planning items are expected to reduce the full year rate, and we currently expect these to occur in the fourth quarter. Other 2024 guidance assumptions at the midpoint are noted on the slide to assist with modeling. We expect the first quarter adjusted earnings per share to be approximately 13% of the full year at the midpoint. The EPS for the first quarter is impacted by the tax profile I discussed earlier, and a heavier contribution from interest expense associated with the expected first quarter commercial paper debt balance. Adjusted first quarter EBITDA, as a percentage of the full year, is expected to be over 20%, consistent with pre-pandemic history. First quarter total company organic sales growth is expected to be down low single- digits, primarily due to the same factors driving fourth quarter 2023 softness. Adjusted EBITDA margins are planned to be up strongly versus prior year, leveraging the carryover benefits of the program and comping the destocking period. In summary, 2024 represents another step along our transformation journey, with a continued focus on gross margin and cash, while targeting share gains in a stable but tough macro environment. We believe our actions continue to position the company for long-term growth and shareholder return. With that, I'll now pass the call back to Don. Thank you, Pat. We embarked on a bold transformation in the middle of 2022 to set Stanley Black & Decker on a path to drive strong, long-term shareholder returns through sustainable growth, profitability, and cash flow improvements. As we report another quarter of progress, our consistent execution against our plan gives us the confidence to increase investments, supporting the acceleration of organic growth behind our most powerful brands, particularly DEWALT, CRAFTSMAN, and STANLEY. In the face of dynamic markets, we're focused on delivering best-in-class product innovation, implementing cost efficiency measures within our control, and driving share gain in our core markets. I am confident that we are creating a stronger and more focused company, capable of gaining market share consistently over the long term, with the best people, the most iconic brands, and the highest quality innovation engine in the industry. With that, we are now ready for Q&A, Dennis. Great. Thanks, Don. Shannon, we can now start the Q&A, please. Thank you. Thank you. To ask a question, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. We ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Julian Mitchell with Barclays. Your line is now open. Hi, good morning. Good morning. Good morning. Maybe just a question for me around that rate of improvement as we're going through the year. Just trying to understand, I guess, particularly the gross margin delta, and also on the free cash flow progression. Y ou know, what's the confidence that that gross margin can sort of move up sequentially as you go through the year to get to that low 30s exit rate? And on free cash, kind of how weighted should that $700 million midpoint be to the second half? Thank you. Hey, Julian, it's Pat. Thanks for the questions. You know, our focus next year is on both of these, these topics, gross, gross margin and cash delivery. And as we moved through 2023 and made very strong progress on gross margin, we certainly had the benefit in 2023 of that progression being the consumption of high-cost inventory off the balance sheet. So throughout 2023, you saw a very, very significant degree of progression throughout the year. Throughout 2024, you know, we're confident in our plan, and we're targeting the 300 basis points, roughly, of progression throughout the year. It will be back-half weighted, and part of that is the low volumes that we saw the back half of 2023 and expect to see the front half of 2024. But we have every confidence we're gonna deliver it. And as we started talking to investors the back half of last year, you know, we guided people to measure our gross margin progress in half year increments. And if you look at the back half of 2023, we were about 28.7 for our back half of 2023 progression. And, you know, we expect to be in an expansion mode the front half of 2024. It'll be modest in the 50-ish basis point range, and we'll be stepping up more significantly in the back half of 2024, as we accelerate some of the savings efforts we have on the docket for the year, quickly to offset some of the volume softness we've been experiencing in the last six to 12 months. But we have every confidence we're gonna get there. In terms of cash, you know, the main difference in cash year-over-year is really the difference in the transformation initiatives that are planned for 2024, where we're doing a bigger proportion of the footprint moves, which are gonna drive more CapEx during 2024 than during 2023, about $100 million, and more cash-oriented restructuring charges, around $50 million. So the big difference year-over-year in cash drivers are the restructuring agenda. If you look at the rest of the cash drivers, you know, we're still targeting pretty meaningful inventory reduction, but less than the $1 billion that we drove off the balance sheet in 2023. We're gonna be in the $400 million-$500 million range, but that difference in inventory reduction is made up by a higher operating profit. So those two things roughly offset each other, and the drivers are really the difference in year-over-year CapEx and the difference in year-over-year cash restructuring charges. Thank you. Our next question comes from the line of Tim Wojs with Baird. Your line is now open. Hey, guys. Good morning. Nice job on the margins. Maybe just, y ou know, I had two cost questions. So first, just on investments, Pat, what are you kind of explicitly investing, or at least what's planned to be invested in 2024? And, you know, how variable are you kind of planning to manage those investments as you go through the year? And then secondly, just on cost inflation, could you give us just an idea of kind of what you're seeing in kind of key cost inputs and then also what's kind of explicitly baked in for price cost? Yep. So on investments, you know, we're continuing to invest predominantly in innovation and then in the field and marketing resources to activate it. So of the $100 million we're targeting for 2024, I'd say three quarters or more are around that. Obviously, a lot of that in our biggest business, our Tools & O utdoor business, but some in industrial as well. It's mostly about innovation and market activation and field resources to support it. You know, maybe 20%-25% is another capability building to make us a more productive organization. And then as we go through the year, I mean, obviously, we're going into a year with a pretty muted macro and the uncertainty we've been experiencing the last 12 or 18 months. We're certainly gonna be paying close attention to the macro, and managing our cost structure as we go throughout the year, to be in step with that macro. But we are really focused on the long-term growth of this business, and we're gonna be working hard as a leadership team and as an organization to preserve those investments, you know, even if the macro creates a bit more headwinds than we're expecting. 'Cause, we're not going to just completely collapse, 2024 investment, you know, at the risk of longer term brand health and brand share gaining power. In terms of inflation and deflation for the year, you know, our plan expects roughly flat across kind of materials and freight. You know, you've obviously had some of the battery metals go down in significant percentage terms, but in dollar terms, those don't drive our basket as much as some others. You know, there's been some recent upticks in steel, resins, and we'll probably face some marginal pressure from Red Sea freight. But overall, you put metals and freight together, roughly flat. Still kind of a high labor rate environment, but that's embedded in our gross margin and SG&A assumptions. And then finally, price cost, again, roughly neutral. It will have some carry-in price in industrial that's to the good, offset by just the normalization of promotional cadence in tools and outdoor. Again, recall the back half of 2023. We're getting back to a normal promotional cadence as our supply chain healed, and that will be playing through the front half of 2024 as well. But I'd say those two forces together, enterprise-wide, get us to roughly flat price dynamics for the year, and again, a roughly flat inflation backdrop in total. Thank you. Our next question comes from the line of Chris Snyder with UBS. Your line is now open. Thank you. I just wanted to follow up about the flatlining of gross margin that's expected into the first half, relative to the Q4 exit rate. It seems like there's a lot of savings on the balance sheet that is yet to flow through the P&L. And I think the expectations that those come through on a couple quarter lag. So just, maybe why is that not coming through in the first half? And I understand the outdoor mix will pick up, but I would also think that tools gross margin gets better, from Q4 into the first half as you move past the holiday promo. So any color on the gross margin delta between those product lines, to help understand that mix would be helpful. Thank you. Yeah, yeah. No, like I said, we do expect some modest expansion front half to front half. You know, we had, as we went through 2023, and we saw volumes being really soft, I think, commend the team for still delivering over $500 million of savings across the volume backdrop. That was for the year, about 300 or 400 basis points below what we expected, and we got beyond the high side of our guidance for 2023 gross margin. So we came out at quite a strong rate. As you point out, the trajectory in the first half is positive, even if a bit muted. And I'd say the couple forces of that are one that you pointed to, you have a heavier outdoor mix in the first half of the year, and you have some of the under absorption that was associated with low volumes from the back half of 2023. And those are really the two forces, and they play out in the front half by muting some of the rate of that progress, but they don't take us off track for the full year savings. Thank you. Our next question comes from the line of Rob Wertheimer with Melius Research. Your line is now open. Thank you. Good morning, everybody. Good morning. My question is on dynamics at the retail channel. Thank you. And if I understood it right, you had volumes a little soft, you had promotional activity down, which is good. And I'm just curious about, you know, how that works out in market share, whether the competition is stepping up promotional activity, whether, you know, channel inventory is now normalized, there's less promotion. Maybe just give us a comment on market share, on promotions, on, you know, dynamics of retail. Thank you. Sure. Thanks, Rob. And, you know, I think the competitive landscape has not really shifted or changed, as we went through the end of 2023 into the early stages of 2024. You know, there's modest movements in certain brands moving across retailers. But aside from that, you know, we're not seeing unusual pricing or discounting happening, and, for the most part, it's really all of us navigating, you know, a somewhat muted market right now and beginning and continuing to position ourselves for share gain. But I'll ask Chris Nelson to give a little more color on what he's seeing. Yeah, I'd say that, you know, as you think about the, just referencing POS, I would say that the POS played out roughly as we would have planned it in Q4, where we saw it, it was down year-over-year, but above 2019 levels. If you think about the kind of buckets therein, you know, we saw strength out of the pro and the expected level of, you know, kind of difficulties that we were going to see in the consumer and DIY segment. That's on plan, and, you know, it's what we're contemplating, as we said, moving into this year, for that being a fairly stable macro that we're playing the backdrop against. You know, as Don referenced, you know, we're not seeing, you know, major changes in the competitive dynamics. What we are seeing, and we're excited about, is getting back to our normal promotional rhythms as we have been able to take care of our customers and fill our, our fill rates have been improved, and that's made a big difference in our opportunity to compete well in retail. And then I think the final part of your question that you referenced was, regarding inventory levels. And certainly, on a global basis, as people take a look at, you know, what is somewhat of a dynamic or a tepid macro, people are thinking about, you know, right-sizing their inventories for that environment. And, you know, we see that in, you know, somewhat anecdotally in places like Europe and in some of our professional channels. But where you take a look at the biggest chunks of the inventory, where we have really clean data in our major retailers, we're at historical levels. We feel good where we are there positioned, and we think that that's gonna be, you know, kind of a neutral dynamic heading into 2024. Thank you. Our next question comes from the line of Nigel Coe with Wolfe Research. Your line is now open. Thanks. Good morning, guys. Believe it or not, I was actually at World of Concrete. I saw the new products. Pretty, pretty impressive, I'd say. So, congrats on that launch. Just on the pricing, came in, you know, obviously better than last quarter in Tools & Outdoor. So just wondering if, you know, you talked about normalization of the promotional activity, and I'm just wondering if maybe you pull back in the fourth quarter and perhaps that accounted for some of the, maybe the weakness in Tools & Outdoor. But, just, I'd really be curious on the footprint changes you're making with the CapEx. Yeah, obviously, we got Trump talking about China tariffs. I'm just wondering if there's gonna be a material change in your sourcing and footprint during 2024. Yeah. So Nigel, I'll have Chris answer the, your first question, and then I'll take the second question after he's done. So from a pricing perspective, Nigel, good to hear from you. I'm glad you were able to see the new products. Sorry, I missed you there. But no, we did not see a significant pullback in the promotional volume. What we saw was an overall, as we said, more challenge in the overall macro environment that I think contributed to that more than anything. And as we transition into next year, we're expecting that pricing dynamic to stay fairly stable, and we feel good about our plans there. And overall, I think it's fair to say that, as Pat pointed out, you know, we're kind of at a neutral price cost. We're not banking on a bunch of inflation, and as we take a look at in the rearview mirror, you know, we, we have recouped a significant, but not all of the costs that we took on, as we saw inflation. And so keeping that neutral, price cost is important for our, our gross margin, trajectory moving forward as well. Yeah, and the comment on the footprint, I mean, yeah, the geopolitical dynamics continue to be intriguing and interesting for sure, what may play out in the future. You know, as it comes to our footprint transformation, we started with an overarching strategy of finding ways to get closer to our customer with our supply base and our manufacturing operations. With certain types of products that are high volume, in particular. Other products, you have to focus more on the low-cost location, and so you end up with a mixed geography of where you're manufacturing and how you're serving your customers. That hasn't really changed. What we continue to do as part of the transformation, though, is develop centers of excellence for power tools, certain types of hand tools, certain types of outdoor products, that leverage the expertise we have in these geographies in Asia, in Mexico, and in the United States and Eastern Europe. And we will continue to build upon that, which gives it, eventually will give us the ability to flex supply from different geographies if the geopolitical landscape changes radically. That will take time to do. That's not something that will necessarily occur in the next six to 12 months. But as we continue on this journey and finish this transformation in the next two to three years, that's an outcome that we're looking to achieve. So, we believe that's the appropriate way to address what's happening in the dynamic geopolitical space, and we'll continue to evaluate that going forward as things shift in countries like the United States, if they shift, and make pivots as necessary. Thank you. Our next question comes from the line of Adam Baumgarten with Zelman & Associates. Your line is now open. Hey, guys. Good morning. Just, just on SKU rationalization, do you think that had any impact on the volumes in the fourth quarter or even the second half of 2023? Go ahead, Pat. Yeah. Adam, no. I mean, you know, that program has been, you know, very thoughtful in you know, weeding out a complexity that's not creating value for end users or for our shareholders. And, you know, there's no major disruption by that, by any stretch of the imagination. I mean. Thank you. Our next question comes from the line of Michael Rehaut with JP Morgan. Your line is now open. Thanks, good morning, everyone. Morning. Had a question on the growth investments and just how to think about the cadence of that longer term. I think you talked about it a little bit earlier in the call, but when you talk about, you know, in totality, I think you know, alongside the 35%+ gross margin and enabling $300 million-$500 million of growth investment, I was hoping just to get a sense of what those investments were in 2023, what you expect them to be in 2024 and 2025, and how much of that is going to be kind of an ongoing level of investment? And you know, if that would all be on the income statement in the tools and storage, or if there would be some in corporate. Thanks. Yeah, Mike, I'll give you a few points. I'd say, you know, 2023 was a bit over $100, will be around $100 for 2024. A nd, and as I referenced on an earlier question, you know, it's about three quarters around innovation and then the marketing and field resources to activate that effectively, and the rest of it is around capability building, some of it in our business segments, a relatively small amount of it in corporate. And, you know, I think if you're getting to the broader question of you're sitting there with a model, and you're trying to figure out is, is SG&A permanently at 21% of sales or something else? If that's kind of behind the essence of your question, I'd say, as we get back to share gains, and as we, you know, jolt our brands and our innovation up for a few years, you know, I expect in the medium term to be more in the back to the 20-ish percent range, if that's kind of what you're trying to unpack. But I would expect us to be elevated in 2024 and potentially, in 2025 and 2026, depending on, the macro, and some of the things we're prioritizing, in the medium term around that 20-ish percent level. And then I think, you know, beyond the medium term, to the extent we can be exceptional at driving gross margin improvement, you know, the SG&A will move with the rate at which we can drive gross margin improvement. Thank you. Our next question comes from the line of Eric Bosshard with Cleveland Research. Your line is now open. Good morning. You talked about normalizing promotions, and you talked about, I think, volumes relative to 2019. Just curious if you could give us a little bit of insight into promotional activity relative to 2019, where we are now, and what is embedded in the guidance and what you're seeing in the market in regards to an appetite for promotions, either from consumers, professionals, or retailers. Yeah. Good morning, Eric. So I would say that the level of promotional activities we're at now and we would expect in 2024 is probably pretty consistent with what we experienced in 2019. And so, we're kind of back to where we were, which I think was a healthy balance of normal core operating, selling activities and promotional activities. As we think about the year, you know, our customers are not really talking to us about what I would call unusual levels of promotional activities. They're looking for the normal set of activities, and I think that's gonna likely be the case throughout the year. And we tend to, i n demand markets like this, that are somewhat stable in the sense where you don't have a lot of growth and you don't have a lot of retraction, you know, it tends to be a more normal promotional environment in that setting. If, you know, demand retracts in a more significant way, then promotional activity does pull back a fair amount, because the impact of promotions is not as significant. If we see a back half of the year that gets better, which, you know, we talked about in that, in our presentation, that, you know, our guidance doesn't necessarily include that, but if a back half demand environment is an improved environment, then you could potentially see a little bit of tick up in promotional activity related to that. But at this stage, based on our guidance, I think it's probably balanced to say that our view is that promotional activity will be consistent with what we saw pre-pandemic. Thank you. This concludes the question- and- answer session. I would now like to hand the conference back over to Dennis Lange for closing remarks. Shannon, thanks. We'd like to thank everyone again for their time and participation on the call. Obviously, please contact me if you have any further questions. Thanks. This concludes today's conference call. Thank you for your participation. You may now disconnect.