Jeffrey Sprague: Great, and then just on SG&A. So that did move up a couple of hundred bps on a full year basis last year and up again this quarter, probably some deleverage on the sales decline obviously. But — where are we at in terms of kind of getting to a normalization there or the ability to deliver some operating leverage on the SG&A line?
Karen J. Holcom: Sure, Jeff. As you recall in the fourth quarter, we did take some costs out of the ABL business. So we feel pretty good about those cost reductions as we evaluate how we do the work. And we think we’re really at the right level of investment for where we need to be, to leverage when the sales growth comes back. That being said, in the ISG business, we did have some isolated cost this year that don’t really affect the run rate of that business. So overall, just feel good about the current level of investment going forward that we can leverage.
Jeffrey Sprague: Right, thank you.
Operator: Thank you. Our next question comes from the line of Jeff Osborne with TD Cowen. Your line is now open.
Jeffrey Osborne: Yeah, thank you. Good morning. Karen, I just had a question on what was the surprise relative to the guidance that you had given or the commentary three months ago around margins declining sequentially. Was it the strength in controls or the strength in the retail channel, just trying to get a sense of the surprise because Neil had indicated that the four areas of vitality service, technology and productivity are essentially a culmination of years of investment. So what was the differential relative to three months ago outlook?
Karen J. Holcom: Yes. So what I would say is that I would not use the word surprise. We really weren’t surprised by the level of gross margin that you’re seeing this quarter. As Neil said, we’re taking the company to levels of performance that it hasn’t seen before. What — kind of the gross margin of the 45.8%, the — not typical level of performance that you would see. It’s just a higher mix of control that had some impact this quarter. But overall, it’s really the execution of the business, the continued growth of ISG, and really the strategy as we execute over product vitality, service, technology, and productivity improvements that are driving this level of gross profit margin.
Neil M. Ashe: Yes, Jeff, just a quick build on that. What Karen had said last quarter is that normally, on a sequential basis, the gross margin would go down from Q4 to Q1.
Jeffrey Osborne: Got it. And then what was abnormal then this time, I guess I’m still confused on that?
Neil M. Ashe: Performance. We continue to perform.
Jeffrey Osborne: Perfect. And then, Neil, your predecessor, Vern, I think the past two election cycles that highlighted weakness in the end markets and sort of a skittish buyer, if I recall, the terminology correct. I’m just curious, it sounds like your outlook on the macro is a bit more calm and pipeline looks good, etcetera. Do you anticipate the November election having any impact on either larger projects or smaller projects?
Neil M. Ashe: I mean I don’t know what Vern’s logic was there. I can tell you the one thing I do know about Vern’s feelings this morning is that he’s a proud Michigan Wolverine. So I am sure that he was celebrating late into the night last night. As we look forward on the macro, the — it is as we have described earlier in the call, we believe that we found a kind of new normal and we’re not expecting — we’re not expecting anything extraordinarily positive or extraordinarily negative between now and the end of the calendar year.
Jeffrey Osborne: Got it, that’s all I had. Thank you.
Neil M. Ashe: Thank you.
Operator: Thank you. Our next question comes from the line of Brian Lee with Goldman Sachs. Your line is now open.
Unidentified Analyst: Hey Neil, hey Karen. This is Grace on for Brian. Thanks for taking the question. I guess there’s a lot of questions on margins. So I have — I just have one question on the demand trend and the order rate. I think a year ago, you were the first one to call it interest rate impact and slower order rate. Now you talked about order rates up year-over-year and sequentially. So can you talk about what are the drivers of that, are you taking market share, is it because of lower interest rates? And also given how interest rates have been trending in the past few months, maybe this is too early to tell, but do you see any order rate acceleration based on your conversation with customers today? Thanks.
Neil M. Ashe: Yes, good morning Grace. I mean, I want to kind of make the same kind of point. So this will be mildly redundant. But the order rate is obviously year-over-year. The issue on a last year basis — not the issue, the results last year on a net sales basis were the results of order rates that had happened prior to that. We’ve pointed out that through — kind of through the course of the year that there was an impact on those order rates. You’re seeing the impact on those order rates. Now those order rates have normalized, and we have found a kind of a consistent level of operating performance. So as we annualize those, the comps and eliminate the excess backlog impact that happened at the beginning of FY 2023, then you’ll start to see a kind of more normal performance, specifically from the Lighting business.
