Michael Stubblefield: Michael, I’ll pick up the second part of your question there around M&A. Maybe just a couple of comments. Firstly, I would just reiterate that M&A has been and will continue to be an important part of our playbook, and we’ve been actively investing and enhancing our capabilities. You’ll recall, we announced a new Head of Strategy and Corporate Development, Kitty Sahin, who joined the team late last summer. And she’s been busy in building out her team to put us in a better position going forward. When I think about the environment for M&A in 2022 and where we’re at here in the first half of the year, certainly, we’re cognizant of our own leverage, as well as the status of the debt markets. And consequently, have been and will continue to prioritize deleveraging in this environment.
I think there’s still some disconnect between buyer and seller expectations and I think there’s a reasonable amount of just market uncertainty associated with transactions. So it makes sense for us to focus on delivering the commercial synergies of the deals that we closed in ’21 and continue to give ourselves more flexibility by deleveraging. But I think it’s prudent to continue to be active in building a pipeline, which we have been doing throughout ’22. And we’ll certainly remain focused on that as we move here into 2023. Just to ensure that we’re positioned as opportunities open up in market – markets start to normalize, perhaps later this year as we move into 2024. So I don’t think our position has really changed here in terms of our view of the priority of M&A or just – the status of the current market conditions, but we’ll continue to invest in this area and make sure that we are prepared if and when things open up again.
Operator: Our next question comes from Dan Brennan with Cowen. Please go ahead, Dan.
Dan Brennan: Great. Thank you. Thanks for the question, guys. Maybe just one on bioproduction, so 4Q, I think you said it grew high single digits. Just give us a little color kind of maybe unpack that number a bit. It was a bit slower than the trend, but obviously, there’s a lot going on within that. So I would love to get color on kind of how you executed the year on bioproduction. And then I know you talked about the ’23 strong growth. Maybe a little color on what you’re assuming for ’23 in terms of the growth rate and included in that, how does some of the new capacity that you’re bringing online impact your growth outlook across that business? Thanks.
Michael Stubblefield: Yes. Thanks for the question, Dan. I think at a high level, probably important to reflect on just the strength of the overall bioproduction space. 2022 was a great year for novel drug approvals. I think there are 18 large molecules that were approved, including some pretty big ones in the area of Alzheimer’s, for example. I’m sure you all saw the news earlier this week around biosimilar approval in the HUMIRA space. So there continues to be, I would say, a very favorable backdrop in the core monoclonal antibody space. There are 6 CAR-T therapies that are available in the U.S. and Europe, and there’s a big year ahead here in ’23 of candidates that are up for approval. So backdrop for the space, I would say, is incredibly strong, and we remain quite bullish about not only the space, but certainly our position and long-standing track record of outgrowing the broader market by 200 to 300 basis points.
We concluded 2022 with more than 20% bioproduction core organic revenue growth, so another really, really terrific year. Q4 was certainly the lightest quarter of the year for us in that space, really reflecting the impacts of destocking, particularly in the single-use consumables area. We obviously have a very broad portfolio that touches nearly every step of that process from upstream, downstream to fill and finish. And I think we had pretty good performance across the space with the exception of these liquid handling consumables. And we saw it both in Masterflex as well as in our legacy business. I think the quarter played out largely as we had anticipated. I think Tom referenced, we did have a pretty meaningful order in our RIM Bio business of nearly $10 that slipped from our plan in December into the early part of this year due to a supplier constraint.
So absent that, I think it was another double-digit quarter and a really strong finish to the year. As we think about 2023, again, we’ll deal with these destocking events through the first half of the year. And overall, we expect another year of double-digit organic revenue growth in bioproduction.
Operator: Our next question comes from Tejas Sevant with Morgan Stanley. Please go ahead. Tejas, your line is open. Please proceed with your question.
Tejas Sevant: Hey, guys. Sorry about that. I was on mute. Just a few follow-ups there, Michael. Starting with bioproduction, can you give us just what your open order growth was in terms of the order book at year-end ’22 versus year-end ’21? And second, in terms of the guide itself, would you be willing to break out what you’re assuming for Masterflex, Ritter and RIM versus the $393 million that you did in ’22? And then finally, Tom, on your comments on free cash flow. Could you elaborate a little bit on some of those working capital improvements that you referenced that you expect to provide an offset to the growth investments here in ’23? Thank you.
Michael Stubblefield: Thanks, Tejas, for the questions. Appreciate you joining us today. On bioproduction, I think the setup for that space, as I just mentioned, is quite strong heading into the year. We have a really terrific order book that reflects I think the strong underlying market fundamentals as well as, I think, the investments that we’ve made in capacity to improve service levels and bring down lead times. We were fortunate even in the fourth quarter to reduce the lead times on several hundred GMP materials, which will support our customers’ growth, as we move into the year. So a great backdrop from an order book standpoint to start the year. Relative to our acquisitions in terms of how we think about those shaping up in 2023, we expect Masterflex tubing headwinds side by midyear and would return to double-digit core organic growth in the back half of ’23.
Ritter business has certainly stabilized. I think if you look at the outperformance relative to plan in the second half of the year, finishing above the high end of our guide, certainly gives us a little bit of momentum heading into the year. And the way I would think about Ritter is a sequential improvement, as we move quarter-to-quarter here as the effects of all the work that we’re doing around end customer conversion through our channel, as well as, and importantly, the impacts of all of the NPIs that will be launched as part of our technology road map. We had some pretty meaningful launches in the fourth quarter and another four or so launches planned for the first half of the year that will put us in position to continue to improve the trajectory of that business.
And I would say, in aggregate, we do expect on a full year basis growth for our – for these acquisitions.
