Steve Schwartz: Yes. So we got – Jacob, we have roughly half of the year’s forecasted backlog. So we continue to make good progress on the stores. The pipeline is robust as it’s ever been. And so we’re working to make sure that we continue to bring in enough business to keep it full. But we’ve always talked about the opportunity here beyond the rare disease and population studies. We’re putting large automated stores now into companies that manufacture biological materials. And that’s helped us to drive another vector. So we feel good about the pipeline. We feel confident about the growth rate that we forecasted going into 2024. But a healthy backlog right now, we continue to add to it. That’s one part of the business we feel really strongly about continuing to be healthy in 2024.
Jacob Johnson: Got it. I’ll leave it there. Thanks for taking the questions.
Steve Schwartz: Thanks, Jacob.
Herman Cueto: Thanks, Jacob.
Operator: And your next question comes from the line of Andrew Cooper with Raymond James. Your line is open.
Steve Schwartz: Hi, Andrew.
Andrew Cooper: Hi, everybody. Thanks for the questions. And Herman good to chat with you here for the first time.
Herman Cueto: Thanks, Andrew. Nice to meet you.
Andrew Cooper: Just on C&I if I go back to last quarter, there was some commentary around the instrument dynamics actually giving you a little bit of comfort that there was going to be consumable pull-through, things would hopefully start to get better. I don’t think you put an exact timing on it. But just – maybe an update on to that thinking and how you think about potential for recovery in that business? Because obviously, the product business is doing well other than that. So I just would love to know kind of how you think about when that could normalize?
Herman Cueto: Yes. Andrew, it’s an interesting question. So I think where I would start – it’s Herman, by the way. Sequential growth in C&I was 8.6% from Q3 to Q4. So we feel really good about that. As we speak with the teams, we do continue to hear that C&I budgets are constrained. But right now, we have the largest active funnel in this period than we’ve had at any point in the last calendar year. And when we dig a little bit deeper and we ask about what’s going on with U.S. distributor inventory levels right now, they tell us that they’re basically at par where they need to be. We do hear that the levels in EMEA are a little bit lagging behind right now, but they do expect to cycle through that inventory by mid-2024.
Andrew Cooper: Okay. Great. That’s helpful. And then maybe just another one on the large stores business. Asking a little bit different way. Any changes there in terms of the sales cycles you’re hearing about and the duration to close that backlog just in terms of, obviously, a pressured funding environment for some of these customers?
Steve Schwartz: Yes. There just aren’t enough to give you a detailed trend here, Andrew, but for sure the projects that have been out there are active often takes us, 18 to 24 months from identification in order to closing it. So we’re not seeing anything different from normal behaviors. But once a customer needs a store, we usually get moving pretty fast. And the indications we have usually start with the design work that we do upfront to get the specification close enough and we think that activity is in normal course right now. So there’s some reluctance for sure at some places, but then we focus on other stores where it’s more active. So I can’t tell you that it’s different, but it’s not overly robust, but it’s certainly adequate for us to have a good look into 2024.
Andrew Cooper: Okay, great. I will stop there. Appreciate it,
Herman Cueto: Thanks.
Steve Schwartz: Thanks, Andrew.
Operator: Your next question comes from the line of Paul Knight with KeyBanc. Your line is open.
Paul Knight: Yes, Herman, thanks for your time today. The – Steve, I guess I’ll start with you first, though, and that is this SRS, the storage business, is this the ramp-up of some of these cell therapies and/or the three PDUFA dates we’re expecting here in December?
Steve Schwartz: Yes, Paul. So some of it – it’s difficult to say. I’ll give you a number, Paul, that will make sense. For us, this – the growth in the Cell and Gene Therapy business for us has slowed this year compared to what we’ve seen in the past, but we’re up 7% year-over-year for the full year. But it’s been slower – without question, it’s been slower here in the third and fourth quarter. I will tell you, one of the things that we observed is for the first time in a few quarters, we had a multisystem order for the BioStorage III cryo systems. It’s been a little while since we had those. We used to – they used to come rather frequently. This is the first we’ve had probably in four quarters. So it’s a good green shoot for us as people are starting to stabilize and make sense of which projects are going to go forward or not.
So I won’t say it’s off to the races yet. But it’s a healthier environment for us. And the pipeline that we have continues to build in a way that we haven’t seen now in a few quarters.
Paul Knight: And Herman, the 7 or so percent EBITDA margin you’re targeting on FY ’24 is a long way from peers. What has to happen there to get – I don’t know —
Herman Cueto: Yes. I mean, listen, there is still work to be done. As I said in the prepared remarks and listen, I’m going to come in here and I’m an operator. I see the same things that everybody sees and we need to work through that, and I look forward to talking more about that in the future. What I would say on the EBITDA margin that we put into the guide. We are seeing nice operating leverage on sales growth. So I’m happy to talk about that. We do expect gross margin to expand despite price pressure and genomics and some of the investments that we’re making in places like the Boston repository. You see the cost initiatives that we’ve been talking about. They are showing up in the P&L. We have great line of sight to the Phase 2 initiatives that we’ve been talking about.
