Dave Zapico: Great questions, Matt. We think the closure — it’s dependent on regulatory approval, but nothing atypical. But we think — we’ll get the approvals and close sometime in the first quarter. In terms of year one, yes, we’ll have a very modest cash EPS accretion. It’s going to be impacted by purchase accounting, integration costs, realignment cost to financing costs, we’ll pay with this with a mix of cash and debt. And — but we’ll have very strong accretion in year two. And we’re excited about getting the business under our wing, improving the business and delivering and we’re very excited.
Matt Summerville: Just real quick, Dave. So you’re not planning to non-GAAP those items out, you’re just going to run them through the P&L then?
Dave Zapico: We’ll make that decision at the time. Historically, we have not broken them out, but with the amount of acquisition activity that we have. It may make sense to do that. We haven’t made a decision yet.
Matt Summerville: Got it. Thank you guys.
Operator: Our next question comes from Allison Poliniak with Wells Fargo. Your line is open.
Allison Poliniak: Hi. Good morning.
Dave Zapico: Good morning, Allison.
Allison Poliniak: Just want to go back to your comments on automation. If I recall, that’s typically a canary in the coal mine. But it seems from your comments what I’m reading through, I just want to clarify that it just seems to be more industry destocking for you in that market? Or was it something that — I want to make sure I understand.
Dave Zapico: Yes. We think it’s destocking. We think it’s destocking. And the destocking last through the year-end. And — but post destocking, we remain constructive. We are — that business automation sells to a lot of markets and the health care part of that market is not doing well right now and some of the other exposures, but we think it’s clearly destocking.
Allison Poliniak: Got it. And then on growth investments, keeping to the $100 million, how should we be thinking about into 2024? Is it something that you think there could be a raise there? And then just even with Paragon, what that R&D? I think you talked about the design piece of it being very — a big part of that, how does design in R&D? Is it higher than the typical AMETEK? How should we be thinking about?
Dave Zapico: I think you should think about Paragon is matching the AMETEK profile.
Allison Poliniak: Got it. And then organic investments as we kind of look to 2024 is…
Dave Zapico: Yes. I mean we’re going to sit down with each of our teams, discuss 2024 over the next six weeks. We’re going to review each of the individual businesses. We do deep dives, as you know, into what they are seeing in their niches, their market dynamics, growth opportunities, cost reduction opportunities, and we want to go through that — these meetings before there’s any commentary in 2024. We’ll tell you in early February. But — so in terms of talking about next year, we’ll have the typical things like we expect price to offset inflation and CapEx will be about 2% of sales and things like that. But we’re going to defer from talking about the overall plan until we get to meet with our teams and understand at a detailed level.
Allison Poliniak: Perfect. Thank you.
Dave Zapico: Thank you, Allison.
Operator: Our next question comes from Jeffrey Sprague with Vertical Research Partners. Your line is open.
Jeffrey Sprague: Hey. Thank you. Good morning, everyone.
Dave Zapico: Good morning, Jeff.
Jeffrey Sprague: Good morning, Dave. Just to come back to Paragon, maybe one more time. Maybe somebody else will come at it again. I just kind of want to understand the — maybe the profit improvement plan going forward. Because it looks like rough math right, margins, EBITDA margin is 25% or so. You’re doing 800 to 1,000 bps better now than that in EIG. When you talk about kind of the aspirations for the business and the cost cutting and other opportunities, is that the sort of Zip code and margin improvement we should be thinking about here? And if so, over kind of how long a period of time?
Dave Zapico: Yes. That is the Zip code and it’s over time. And we’re going to build a plan with the management team and show them all the resources that AMETEK has and some of our business processes. But what you’re talking about is in the Zip code of what we have planned.
Jeffrey Sprague: And just to elaborate a little bit more on how this fits. Is there a kind of a commercial or operational synergy with other parts of the business? Or should we just think of this as an interesting, healthy kind of stand-alone business that drops into the portfolio?
Dave Zapico: We have an existing business in our EMG business. It’s about a $200 million business. It’s — or called our engineered medical components. So we’re familiar with these segments. There’s completely different end markets, but think about that as additive to that existing position, but in a greater scale.
Jeffrey Sprague: And then maybe just one last one from me. The med tech world has been a little rocky here the last couple of years, procedures post-COVID everything. You characterized it as a double-digit secular grower. But are they kind of sitting in a little bit of a trough here impacted by those sorts of forces? Or maybe just kind of the…
Dave Zapico: Not really. They’re growing nicely. I mean you have the market growth that they’re benefiting from, and they happen to be in the fastest areas. They’ve deployed their resources well and they’re benefiting from the faster fastest growth areas. The — there’s — they’re winning new business on new programs, it’s pretty substantial. And we did surveys on these businesses, and this is a really good business in terms of their capability and how they take care of their customers, and they’re definitely winning share. So, it’s going to be a low double-digit grower for the next few years, and a lot of that’s programmed in. Now that’s the way we’re looking at. There’s going to be ups and downs as we go throughout the years, but this is a solid business with really good growth prospects.
