SHW
#Yes, I think what we've commented on is that the second quarter was going to be the highest SG&A increase due to advertising for Lowe's.
What we have said is, it was really two buckets of SG&A, incremental SG&A at Lowe's.
It was the organization that we put in place, and that was going to be flat lined throughout the four quarters.
Advertising is going to be a little stronger in the second quarter.
And you're going to start seeing it at a more normal run rate in the third and fourth quarter.
Yes, that margin in that group is impacted by gallon movement.
That's where we manufacture all the paints for the company, so those gallons have been positive and you can see that, in that segment's reporting numbers.
We have them slightly higher than in the second quarter.
That could happen.
I wouldn't call it so much a surprise.
I think your analysis is correct, that we would expect that you're going to get these finished.
We're going to move on to these projects.
And I think our expectation that will happen is embedded in the sales guidance we're giving.
No.
I think that the second half of the year will be much smaller, and when you look at the cash generation we're having, again, we're going to be slightly higher than 1 to 1.
That would tell you we're going to spend less on stock in the second half of the year.
Yes, Rosemary.
This is <UNK>.
We do believe that in fact the weather patterns we've seen in the first half of the year is probably going to draw the housing recovery, the path back to normal, out even a little more than we anticipated.
So certainly three more years to this recovery to reach a peak is certainly foreseeable.
On the repaint side, not just the homes that are being put in place, the existing homes that are trading hands, but also the overall appreciation in home values that we've seen in the markets should drive remodeling and repaint activity in the out years.
So we think that this is, that the story is still intact.
It's just a little bit postponed as a result of the weather.
No, that is not completely accurate, <UNK>.
For sure, we saw deceleration in that space, but residential, also particularly in the new area, is below our expectation.
We're not parsing those numbers like that, but directionally, you're in the ballpark.
Correct.
I think that the new guidance number, we've said all along, we felt we were going to have efficiencies in our SG&A, but that's when we were at the mid to high single digits.
I think that's going to depress a little bit.
We're very careful not to break out SG&A, even by a customer.
I think that for us, we're probably not going to break out the HGTV SG&A versus the non-SG&A.
I think we're just trying to give you, that you can see in the second quarter, that pop, but we're not going to give you a finite number.
Yes.
It starts with Brazil, which continues to be a tough story from an economic standpoint.
We're seeing the Petrobras scandal with really long legs throughout the entire country.
That's actually impacting some of our Asian operations as well, because of our position with Petrobras and their production opportunities over there, for things that they build.
Just a little bit of a softness, <UNK>, in those end markets as well, accelerated by poor economic conditions and bad currency.
Well, I would tell you this.
It's not by design and it's a discussion that we have with our teams on a regular basis.
We, typically, towards the end of the year, as our developers are pushing to get their projects done, have a run at the end of the year, and then we're reloading going in throughout the year.
And we're trying to spread those out a little more evenly throughout the year, but it's not by design.
We're pushing these through, and getting them in as quickly as we can, and we've got a lot of confidence in the models.
We're continuing to invest in those stores.
We always look at the way we run the Company as, we think these gross margins over time are going to continue to grow.
We think our operating margins are going to continue to grow.
So you're going to have years where raw materials are going to hit you or come back, or do what they are doing this year.
We feel very good about our model, and the way we're running the Company, that eventually we're going to have our higher gross margin.
I would prefer not to comment on the 2016 gross margin yet.
Yes, <UNK>.
Actually the 1.3 million to 1.4 million is what we consider to be a normalized, sustainable rate of build.
We think that, given the rate of household formation today, the fact that inventories of homes for sale, both new and existing, are very low, and that apartment occupancy rates are very high, that this cycle should peak above the 1.3 million to 1.4 million level.
And then that 1.3 million to 1.4 million normalized should trend upward as population grows.
So ---+
The last cycle peaked at 2.3 million.
We hope this cycle doesn't get to that level.
Thanks again, Jessie.
As always, this is <UNK>, I will be available for the balance of today, tomorrow and throughout next week to answer your follow-up questions.
We would like to thank you for joining us today, and thank you for your continued interest in Sherwin-Williams.
