Good day, ladies and gentlemen. Welcome to the Genuine Parts Company First Quarter 2022 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. At this time, I’d now like to turn the conference over to Sid Jones, Senior Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today for the Genuine Parts Company first quarter 2022 earnings conference call. With me today are Paul Donahue, our Chairman and Chief Executive Officer; Will Stengel, our President; Carol Yancey, our Executive Vice President and Chief Financial Officer; and Bert Nappier, our EVP and CFO-Elect. As a reminder, today’s conference call and webcast includes a slide presentation that can be found on the Genuine Parts Company Investor Relations’ website. Please be advised this call may include certain non-GAAP financial measures, which may be referred to during today’s discussion of our results as reported under Generally Accepted Accounting Principles. A reconciliation of these measures is provided in the earnings press release issued this morning, which is also posted in the Investors section of our website. Today’s call may also involve forward-looking statements regarding the company and its’ businesses. The company’s actual results could differ materially from any forward-looking statements due to several important factors described in the company’s latest SEC filings, including this morning’s press release. The company assumes no obligation to update any forward-looking statements made during this call. Now I’ll turn the call over to Paul for his remarks.

Thank you, Sid, and good morning. Welcome to our first quarter 2022 earnings conference call. As Sid mentioned, we’re happy to have Bert Nappier on the call with us today. Bert joined us on February 28 as CFO-Elect and has been working side by side with Carol to ensure a smooth transition in this key role. Turning to the first quarter, we were pleased with the continued strength and our results to start the year and we’re proud of the great work by all of our 52,000 GPC teammates who are at the core of our success. A few highlights in the quarter include new quarterly sales records for GPC and our automotive and industrial segment, segment margin expansion of 50 basis points, strong double-digit EPS growth and a strengthened balance sheet and strong cash flow. The GPC team is focused on key strategic priorities to sustain accelerated sales growth, improved gross margins and enhanced operational efficiencies in the face of ongoing supply chain challenges and inflationary pressures at levels we haven’t seen in 40 plus years. We also executed on our acquisition strategy and our industrial team made excellent progress on the integration of Kaman Distribution Group. And with the addition of Lausan, which we announced last week, we’ve expanded our automotive footprint in Europe, with the entry into key markets in Spain and Portugal, Europe’s fifth largest market. For the first quarter, total sales were 5.3 billion, a 19% increase from last year. We delivered our 18th consecutive quarter of gross margin expansion and our teams drove cost initiatives to enhance productivity and offset inflationary pressures. All in adjusted earnings per share were up 24%, representing our seventh straight quarter of double digit EPS growth. Total sales for global automotive were 3.3 billion for the quarter, and 11%…

Thank you, Paul. Good morning, everyone. I’d like to echo Paul’s comments and thank the global GPC teams for the impressive start to 2022. The teams did a great job during the quarter and built on the strong finish to 2021. As we traveled and visited the global operations during the quarter, the team energy is positive. There’s a strong sense of focus and alignment and it’s encouraging to see the broad base strength across the business. Our discussion centered around performance trends, initiative progress, talent, and finding better ways to serve our customers. Global supply chain and inflation challenges are common topics and all are doing an excellent job to respond. The in-flight strategic initiatives continued to deliver impact. Our foundational priorities are talent and culture, sales effectiveness, technology, including data and digital, supply chain and emerging technologies. Strategic M&A complements our initiatives. We added to our talent momentum during the quarter. In addition to Bert joining the team, we welcome Jeff England as EVP, Chief Supply Chain Officer of the US Automotive business. Jeff joins us following an impressive career over nearly two decades at Walmart. He will lead end-to-end supply chain execution for us automotive and brings discipline strategic leadership and relevant expertise. We’re excited to have him on the team. During our travels, we had the chance to meet with the Canadian automotive leadership team in person for the first time in two years. As Paul mentioned, the Canadian economy is showing encouraging signs of strength, as it reopens from prolonged lockdowns and our Canadian team is well-positioned with detailed market-level plans to capture the growth. We also traveled to Australia where we visited locations and performed deep dive initiative reviews. Like Canada, this was the first time in over two years, the extended GPC and…

Thank you, Will. And thanks to everyone for joining us today. We’re very pleased with our strong financial performance in the first quarter. As a reminder, our comments this morning primarily focused on our quarterly adjusted results which exclude the transaction and other costs related to the acquisition of Kaman Distribution Group, as outlined in our press release. Total GPC sales were 5.3 billion in the first quarter, up 830 million or 19% from last year. Our gross margin for the quarter was 34.6%, a 10 basis point improvement compared to the first quarter last year, primarily driven by the positive impact of strategic category management initiatives in areas such as pricing and global sourcing. These gains were partially offset by slight headwinds from supplier incentives, shifts in business mix, foreign currency and the timing of inflation in certain product categories. Our total operating and non-operating expenses were 1.4 8 billion, up 18% from 2021 and at 27.9% of sales compared to 28.1% of sales last year. Double digit comp sales growth in the first quarter drove SG&A expense leverage, despite the ongoing inflationary pressures in areas such as wages and freight. Our teams are focused on executing our strategic initiatives to further reduce expenses and drive operational efficiencies. With our strong sales and improvement in gross margin and SG&A, segment profit was 453 million, up 25%, and our segment profit margin was 8.6%, a 50 basis point increase from last year. Our tax rate was 24.5% compared to 23.8% in the first quarter of 2021. With the increase in rate due to several factors, including the impact of prior year gains on the sale of real estate and geographic shifts in income. First quarter adjusted net income was 266 million with adjusted diluted earnings per share of $1.86. This…

Thank you, Carol, another excellent review of our financial performance and fitting that our results were so strong for your last call as CFO. As a reminder to everyone on the call, Carol has had an incredible 30 year career in GPC, serving in nearly every key financial role before being named CFO in 2013. In her nine years of CFO, her leadership and her positive influence on the company’s success has been immeasurable. She has served on our executive leadership team, our investment committee, our cybersecurity committee, and in addition, she has held leadership positions in everything from supply chain and logistics, to real estate and IT, in addition to her financial responsibilities. She has been a valued partner to me and the entire GPC leadership team as well as to our board, and she’ll be greatly missed by all of us. So thank you, Carol, and best wishes to you, to Mike, and your entire family. So in closing, we’re proud of our progress in the first quarter, and the strong results to start the year, delivering a new sales record, continued margin expansion, double-digit earnings growth, a strengthened balance sheet, and strong cash flow highlight our first quarter performance. At the same time, our teams have done a terrific job is integrating KDG into the Motion business. Looking ahead, the increase in our sales and earnings outlook reflects the confidence in our plans for accelerated growth and profitability, as we build on the positive momentum in our automotive and industrial businesses. While cognizant of the many uncertainties in the global economy, we believe GPC is well positioned with the financial strength and flexibility to support our growth plans and provide for disciplined value creating capital allocation while enhancing shareholder value. We thank you for your interest in GPC and we thank each of our GPC teammates for taking great care of our customers and delivering strong results. So with that, I’ll turn the call back to the operator for your questions.

[Operator Instructions] The first question comes from Kate McShane with Goldman Sachs, please go ahead.

Hi, thank you. Good morning. And Carol, thank you, again, and congratulations. Our questions are around the guidance that you raised for the year. We’ve wondered how much of the guidance increase is due to your strong Q1 performance versus maybe what has changed in the outlook for the rest of the year, versus what you were thinking when you first gave guidance? And just has the contribution from inflation changed meaningfully to influence the comp guide?

Yeah, thank you for your comments Kate and I’ll talk a little bit about the guidance. So certainly what went into our thinking, the stronger quarter that we had, I mean, really couldn’t be more pleased with both our automotive and industrial teams and the stronger comp sales that they delivered. And so that momentum was continuing on was certainly contemplated in our guidance outlook. And then the inflation number was a bit higher than what we anticipated coming out of Q4, and that was contemplated as well. But really based on what we know now, there’s not a ton of clarity around inflation and you know how volatile that is. But we certainly contemplate it a little bit more on the top line growth and a little bit more on inflation. And, on the earning side, certainly the ability to leverage on that growth and a strong Q1 that we have, we just felt like it was appropriate now to use that range that we have. We certainly hope to do better than that but we thought it was an appropriate range to get right now.

And just as a follow up question, I think, you know, we’ve seen a bit of a fall off in miles driven given the higher gas prices, but it seems that we still are seeing, as you mentioned, a good degree of momentum in automotive. Can you help reconcile for us why you don’t think miles driven is necessarily having as much of an impact on demand and again, how you see that playing out with the higher gas prices?

Yeah, I’ll take a shot at that Kate and good morning, welcome to the call. Look, I think, as you look at our tailwinds in the automotive aftermarket, certainly miles driven is a factor we’ve not and unfortunately we don’t get a whole lot of transparency as to where miles driven is trending currently, it usually trails by a couple of months. But given the high gas prices one would assume it is trailing a bit from last year. But when you look at that tailwinds, you’ve got an incredible pent up demand. People want to travel, airfares are incredibly high, so I think you’re going to see folks traveling more both for vacation but I also think that you’re going to see miles driven pickup with folks returning to the workplace. Even though you’ll see a hybrid workforce, I do believe we’ll see a lift there. Used car prices are at all time highs, lack of new car inventory. All of that I believe is going to continue to bode well for the automotive aftermarket.

Thank you.

Thank you.

The next question is from Greg Melich of Evercore ISI. Please go ahead.

Hi, thanks. And Carol, I’ll add my voice to the thanks for everything over the years.

Thanks, Greg.

I guess I have two questions. One for you, Carolyn, I’d start is what comp now do you think you need the lever? Given the broader cost inflation like you talked about mid-single digits in the top line, what do you need to lever now getting comp?

Yeah, look, and again, as we have contemplated, when you look at what we’re contemplating for the full year, moving comps of 6% to 8% for automotive and 5% to 7% for industrial, we were pleased to take those comps, up 100 BPs. We also are going into the year with greater operating margin improvement, again contemplated in our guidance and in part based on the stronger results in Q1. So we are certainly comping just fine at those levels but at the same time, this is an inflationary environment that we’ve never seen before and so we’re being very mindful on what we’re seeing in terms of inflation and our product inflation and our costs. But we do know when we look at our numbers and our cost structure that we still have permanently lowered our cost structure going back to 2019. So the in the range of the 3% to 4%, we certainly can see operating margin improvement there with all the actions that we’ve taken.

Got it. And then maybe, I don’t know Paul or Will, if you want to take this, you’ve mentioned some pretty interesting initiatives in terms of expanding and accelerating growth. I guess I’d love to follow up particularly on the AfterPay. Could you take us as to how big that is and what that program actually entails for both pros or DIY customers? And then Will you talked about adding the SKUs, which I thought was the 2 million SKUs. I thought that was interesting, just some more color on that.

Yeah. So on the AfterPay, it is certainly early days, Greg. It’s not a material part of the business but the trends that we’re seeing in our pilots are very encouraging. It is predominantly DIY today with applications for do it for me in the future. One of the things that we’ve done recently is rolled that out online, and we’re seeing an encouraging trend there. So it’s early days, but something that we’re excited about as it relates to acquiring new customers and driving average order value, which is typically higher than what we’ve seen in our core business. On the supplier side, you know, I think this was a fundamental thesis that we had, when we acquired KDG, the relationship that’s been the supplier and customer base for that matter in the community that Motion has, with that type of transaction, it created a lot of great productive commercial discussions with all of our vendors. And so we called out the fluid power example as one of them but I would say that the discussions that the Motion team is having with its vendor base now with Kaman as part of the family is incredibly encouraging, including the access to new products, new growth segments, etc. So consistent with what we’ve taught before we bought the business, I am really encouraged to see that initiative taking hold. Just as a reminder, it’s only 100 days in on KDG, so again, early days but encouraging trends in the business.

Got it. And in my last one, flow got little stronger in the quarter in North America but DIY is still positive. How does that look as you go into the second quarter, especially given the bizarre comps that you’re seeing, particularly in DIY now?

Yeah, I’ll take a shot at that, Greg. You mentioned the DIFM comps so up strong-double digits and we’re seeing it across the entire commercial segment from major accounts to auto care to fleet. We’re seeing it across our entire business. DIY is holding up okay. I mean we’re seeing high single digit. Our strength, Greg, is always going to be on the DIFM side and that’s a good 80% of our overall business. For us to generate high single digit numbers in DIY, add to reflect and I think on all the good work our teams are doing in the stores. And look, with inflation that could very well drive people back into the stores attempting to do more DIY type projects. I don’t think the general population is going to get real proficient at changing out their own brakes, but certainly more basic type projects, car care products, I think, will continue to see a good lift in the back half of the year. So yeah, we’re very, very pleased at the mix and anticipate it continuing through the back half of the year.

That’s great. Good luck.

Thank you.

Next question is from Chris Horvers of JPMorgan, please go ahead.

Thanks. Good morning, everybody. And congratulations, again, Carol, on your retirements. By the time that you depart, we might have spring in the United States, so good news ahead. Maybe starting on the industrial side of the business, you talked about the acceleration in March in the US -- and sorry, and in the quarter. Can you talk about what industries are you seeing the most acceleration? And, obviously, energy and ag, there’s a lot of optimism around those sub sectors, given all the inflation that’s going on in those industries. Can you remind us how significant that is for you and to what extent are you seeing improvements in those sub sectors?

So as I mentioned in my comments, upfront, Chris, the increases we’re seeing are across the board, and in all the segments that we track, we’re seeing really strong double digit with the exception of two and those two are up mid to high single digit. So you called out oil and gas, we’re seeing huge increases in that segment. Not a huge segment for us but I can tell you, the increase is significant. We’re also seeing good increases, solid increases in segments like aggregate, cement, conveyance logistics products, which really points to the strength and expansion we’re seeing in distribution centers around the country; equipment and machinery, which is our single largest segment, again, really, really strong growth in the quarter. So really, it’s broad based and across almost every segment that that we track.

Got it. And then on the US NAPA business in March, an acceleration is pretty impressive considering we are lapping stimulus from a year ago, and to the point on maybe some late spring impact on DIY. So, can you diagnose maybe what helped that acceleration to the extent that it was pro versus DIY? Was it an acceleration on the inflation front? And then was there much difference in terms of the trend in the quarter between company-operated stores and independence?

Yeah, I’ll take the last part first, Chris. Not much difference at all, as we’ve seen in recent quarters between our good solid independent owners and our company stores both performed very, very well in the quarter. And as mentioned, we finished strong we had a record sales month in the month of March, but we were up double digit, January, February and March. And you called weather, Chris; the weather has not really been our friend in Q1, certainly not in April with, as you mentioned, snow storms across the upper Midwest and Northeast. I mean, we’re ready to get into spring and get into the ag business, depends on getting out in the field. So weather has not been a positive for us. DIFM versus DIY, I mentioned in an earlier call, strong, strong double digit growth in our core, which is DIFM and that’s across the entire segment. That’s major accounts, fleet, auto care, really pleased to see the surge in our auto care segment; that’s a great call out for us. But DIY continues to be up high single digit and, again, I think that’s evident of the good work that our folks are doing in our stores with a number of initiatives from improved assortments, enhanced store hours, better training, and better in stock availability, so really broad base across the entire NAPA team are all doing well.

And Chris, I would just comment, everything that Paul just said it really was very insignificant in terms of inflationary impact for March, you’re talking about a point or two, Paul said, mid-single digit inflation, we were certainly a bit higher than that in US automotive, but the bulk of it is just all the market initiatives and the growth and really the inflation impact for March specific is really just a point or so, so not significant.

Got it. Thank you very much.

Thanks, Chris.

The next question is from Liz Suzuki with Bank of America. Please go ahead.

Great. Thanks for taking my question. So given the pervasiveness of concern in the investment community about a potential recession in the next 12 to 24 months, and then comparing that to the strength you’ve experienced in your business, is there anything that you’re seeing in the leading indicators that you track that give you any pause in your outlook for the remainder of the year, maybe a degree of conservatism baked into that raise outlook, just given the uncertainty around potential recession or economic slowdown?

Look, Liz, great question. And certainly, as excited as we are, about our Q1 performance, and how our teams performed really all of 2021 and throughout Q1. We’ve fully realize the environment we’re operating in could get more challenging in the latter part of the year; not as concerned in the US, I think we’ll be fine, industrial remains strong. And I would tell you that our outlook for the balance of the year, we worked really, really hard, and looked at all the factors and we think our guidance for the balance of the year is very prudent.

Great. And just one follow-up about international expansion, I mean, you guys have been adding new markets to your addressable market for the last -- for several decades and adding a couple of new markets even every couple of years. So are there still -- is there still some low hanging fruit that you see out there, markets where you haven’t entered that seemed like they would make sense as adjacencies to your current business or new regions to enter that you think have the same types of either vehicle dynamics or on the industrial side have similar economic backgrounds as regions where you’re already operating?

So, Liz, I would mention our latest acquisition of Lausan who’s a market leader in Spain and Portugal. That’ll be our eighth and ninth country that we’ve expanded into in Europe and Lausan is just as you -- or Spain is just as you described, it’s a great adjacency to our current markets, fifth largest market in Europe, 35 million vehicles, average age 11 plus years, it’s very under penetrated. We think we’ve got a real opportunity with a great team on the ground in Spain and Portugal to be a first mover in that part of the world. So that’s an exciting move for us. As we look at, you mentioned industrial, Liz, look, we are incredibly bullish, as we’ve said in these calls before about our industrial business and I think that was borne out in our big acquisition of Kaman in early January. Still plenty of opportunities for our industrial business and continuing to expand. We’ve got arguably less than 5% market share in the MRO space. We’d love the robotics, the automation business. I could certainly see us continuing to expand in those categories. But I can say the same about all of our businesses, Liz. We have less than 10% market share in every business, in every part of the world that we operate in, including our North American automotive business. So yeah, lots of opportunities going forward and we’re cautiously optimistic about the balance of the year.

Great, thanks very much.

Thank you.

The next question is from Bret Jordan of Jefferies. Please go ahead.

Hey, good morning, guys.

Hey, Bret.

And congratulations, Carol, again.

Thank you, Bret.

On the 12% comp in the US, did you talk about what’s your feelings around share gain were in that number? How do you see the underlying market in the first quarter? And then did you see anything, I guess, relative to pure price dynamics? Is anything other more or less competitive in the US auto market?

Yeah. Bret, being the first one out of the big four to report, it’s hard to say how the others will line up. We’re very, very pleased with our performance in Q1. And if there is any market share gains, my guess is that it perhaps is coming from some of the smaller regional players. But again, until we see the balance of the big four report out, it’d be hard to pinpoint that exactly. In terms of pricing dynamics, Brat, I’m really pleased to tell you that it remains very rational as the automotive aftermarket has for many, many years. Certainly, we’re seeing price increases across all the major categories. But it has remained very, very rational across the industry.

Okay. And then a question on Europe, could you talk about the cadence of Europe? And obviously a lot of change in Eastern Europe since late February, but is that showing any impacts in Western European demand dynamic? And then just a housekeeping, you talked about the NAPA brand expansion ongoing there, could you talk about what percentage of European sales are in NAPA branded mix?

Yeah, let me take the first part of your question, Bret, in terms of the cadence, again, we had a very good quarter. Well, we had a very good quarter following up on a very good year in 2021 in Europe. So our total sales up 14%, our comps were up 7% in Q1, so very pleased with the performance. As I mentioned earlier, as good as we feel about Q1, we also fully realize that given all of the factors that are occurring in Europe, it could get more challenging in the final three quarters, but I would tell you that our teams are planning accordingly. And, if there’s one thing that we learned, Bret, during the downturn and the pandemic, our teams are very agile, they can turn very quickly and if we do see a downturn in the business, we’ll be ready to pull all the levers to ensure we deliver on the bottom line. And then the second part of your question, Brat, regarding the NAPA brand, it’s hard to say exactly, but I would tell you, we’re at a point now it’s less than 10% of our overall European business. We launched initially in the UK, it’s more widespread there. And it’s more expansive across a variety of product categories. We have since launched in the Benelux, Germany, France and we’re kind of taking a product category by product category. So we’ve got tremendous upside and many more opportunities to come in. And ultimately now we will launch the NAPA brand as we expand across Spain and Portugal as well.

Great. Thank you.

You’re welcome. Thank you, Bret.

The next question is from Scot Ciccarelli with Truist Securities. Please go ahead.

Hey, guys. Scot Ciccarelli. I’m sure Carol is ready to enjoy her long delayed vacation. Two questions, one on each segment of the business. First, given continuing supply chain challenges, have you seen any signs that companies are trying to increase their domestic production activity? Obviously, that’d be bullish for Motion, if so, and then on the auto business, just given the amount of inflation that’s flowing through both the economy and your own product costs, Paul, have you seen any resistance at all to the higher price points meaning, any kind of demand destruction even if it’s in a small minor category?

Go ahead, Will. Will will take the first question.

I’ll take your first question. Absolutely, we’re seeing that. I would say that discussions with the vendor community are more active than they ever have been on the re-shoring concept. So as you alluded to, that’s incredibly bullish for the Motion business over the medium term. I think the global supply chain and the complexities and some of the challenges that everybody’s been working through over the last couple years make it very logical for that manufacturing activity to come back to North America. So we’re bullish about it and we’ll seize that opportunity as it develops.

And then related to your second question, Scott, on automotive, and the higher price points are we seeing consumers trade down; we didn’t see much of it in Q1, I think as evidenced by our strong 12% comp increase, it was strong across just about every product category. But I would tell you with our good better breath -- best strategy we’re well prepared, if we do see consumers begin to trade down to the value lines and we’ve seen that in the past when times get tough, they will trade down. But I would tell you, we did not see much of that in Q1.

Excellent. Thanks, guys.

Yeah, thank you.

The next question is from Daniel Imbro of Stephens. Please go ahead.

Yep. Thanks so much, Carol. I have my congratulations and congrats on the first quarter, guys, on the results.

Thank you.

I wanted to start on the on the industrial piece. Growth was robust, Paul, and with it came some margin leverage. Are you able to disaggregate out of the 1Q margin leverage how much was from any vendor volume rebates versus how much was core sustainable cost removal, just as we model headline growth slowing over time, trying to see how much of that maybe the vendor rebates go away to the back half of this year into next year. Thanks.

Yeah, so on the industrial side, again, the Motion comps were 16% in the quarter, and that is just tremendous operating results. And when you get that kind of comp growth, the leverage on SG&A was extremely impressive. And then on the gross margin side, they’ve done a tremendous job. I mean, they’ve got a long track record of initiatives on the gross margin side, both pricing and category management. And with looking at their improvement in their operating margin, and again, the strong 100 BPs, that’s coming about equally from gross margin and SG&A. The vendor incentives, it certainly is moving in line with what the comps are but it’s incremental dollars, but it’s not necessarily giving us the bump on the rate. So really just strong operating, both on gross margin initiatives on the leverage on the SG&A, and, again, just a tremendous job by the industrial teams. And we certainly are pleased, we don’t have any reason to suspect that that doesn’t continue as we look ahead, because we’ve got full year operating margin implied for them as we look ahead.

Got it. And then maybe one for Will, as I think in your prepared remarks, you talked about bringing in some external talent to lead the supply chain, kind of optimize that. I’m curious as to what drove that decision? Are there particular inefficiencies that you guys were really struggling to address on the supply chain or what made you or why is now the right time to accelerate that investment with external talent you brought in? Thanks.

Well, yeah, listen, we’re always looking to add great talent and expertise to the organization. And I would say, we’ve been pretty clear that supply chain technology, our foundational priorities around those elements are clear and talent helps us get there, so nothing to read into it other than we’re adding great folks to the team, and we’re looking forward to build on our momentum.

Got it. Thanks so much. Best of luck.

Thank you, Daniel.

We have time for one more question from Seth Basham of Wedbush Securities. Please go ahead.

Thanks a lot. Good morning. Let me add my congratulations to Carol. I just have a follow up question for you. You talked about the rational pricing environments in the US auto segment. But have you seen any indication of relative price investments from any of your peers who have talked about doing that in the commercial side?

We have not, Seth, and look we’re all attuned to that, given the discussions of a couple of months ago, the team here, Will and I and Carol, and Bert, we spent half a day with our US automotive team, the entire leadership team. And trust me, that was a focal point for us. And I can assure you that we’re not seeing it out there. Might have come here in the second half of the year, perhaps, but we certainly didn’t see it in Q1.

Got it. Okay, helpful. And one last follow up, regarding KDG integration, did you see any margin accretion in the industrial segment for addition of that business this quarter or was the margin improvement driven by the other factors that you mentioned?

Yeah, look, we’re going to stay pretty consistent what we talked about at our February call, and also in December with KDG. We certainly -- it’s not -- the contribution of the operating margin improvement was really coming from the core Motion business. Having said that, really pleased with the early execution of the integration and what we’re seeing there is we get to the fully synergize model, it is definitely accretive to the industrial margins but we’re still a bit early on that. So again, the strong comp growth is really what drove the 100 basis point proven and operating margin. But again, KDG performed well in the quarter, they had a similar grid quarter. The teams are really integrated. We spent some time with them. So as we look ahead, we know that we’re going to be at our targets that we talked about, and hopefully be a bit early on the synergies.

Wonderful, thank you.

Thank you, Seth.

This concludes our question and answer session. I would like to turn the conference back over to management for closing remarks.

We’d like to thank all of you for participating in our Q1 conference call. We appreciate your support. And personally, I appreciate all of your support and your kind remarks today. And the company looks forward to discussing the Q2 results with you in July. Thanks again.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.