Kristine Liwag: Great. Thanks, Aaron. I kind of regret not going to Malta, when I had a chance a few years ago, wish I did that.
Aaron Saak: Oh, it’s wonderful. It’s very impressive. You would come away as excited as I am, when you see that.
Max Mitchell: facility, absolutely limitations there.
Kristine Liwag: Great. And maybe as a switching gears, Max and Rich, following up on Process Flow Technologies, core FX-neutral orders were down 3% on the quarter. Can you provide more color on what you’re seeing by end markets and how we should think about the outlook for the business, if, in fact, we do see a recession?
Rich Maue: Yes. Well, look, for the quarter, I would say just generally speaking, we had a good quarter from an orders point of view across PFT, right? When you look at project. We had some good project activity, a couple in Europe, a couple here in North America, China, actually as well. So, there were some just nice projects that did flow through in the quarter. But one I would tell you that we were expecting now whether that was expected to hit in December or January, some of them just happened to hit a little bit earlier, but overall, positive. On the MRO side, I would say that since probably around that October time frame and some of this is seasonally expected where you see that MRO demand tend to decline. We did see that.
I would say so far as expected, both in North America and Europe. So absolutely, as we expected. Now the funnel of activities, I would say, is something that we’re watching closely and to be cautious and careful about, and that’s, frankly, I would say nothing new and all aligned with the way we set up our plans for 2023. So however, we have this backdrop of this wonderful backlog as we enter into 2023. We are seeing this underlying softness just a little bit. And we feel like with the supply chain that’s in front of us and being a little bit cautious and careful, while improving slowly, I think the way I would think about our 2023 guidance is prudent as well in terms of how we framed up during our prepared remarks.
Max Mitchell: You mentioned the 3% down that was actually sequential, so year-over-year, it’s up 11. FX core neutral FX neutral. Well, it was down sequentially, still very, still very stronger than I anticipated.
Rich Maue: Yes. The sequential is typical at this point of the year, Kristine, so from Q3 to Q4, we generally do see that slight downtick. But on a year-over-year basis, up double digits.
Kristine Liwag: Great. Thank you for that clarification. Appreciate it.
Max Mitchell: Sure, sure. Thanks, Kristine.
Operator: Thank you. Our next questions come from the line of Nathan Jones with Stifel. Please proceed with your questions.
Nathan Jones: Good morning, everyone.
Rich Maue: Good morning, Nathan.
Nathan Jones: I’m going to re-ask Kristine’s question, because it was such a good one. If the market assigns the NXT business relatively low multiple, but it looks like it probably will when these businesses split up. How would it be possible for you to make a better return on capital by making inorganic investments rather than buying your own stock, given that this business is likely to throw off a ton of cash and an analysis of the present value of discounted cash flows should get at a much higher multiple. I don’t understand why you wouldn’t embark on an aggressive share repurchase campaign under those circumstances?
Max Mitchell: Well, I’ll let Aaron take a stab out in a second, too. But I’ll place Wager, friendly gentlemen’s bet on the post trading range, getting closer to small, mid-industrial technology companies. I think that’s what we’re going to see, because that really — when you really look at the underlying technology and margin profile of this business, as we’ve talked about, it’s really quite unique and shouldn’t be at that multiple. I think separating it, we hope investors are going to see that. Look, when you go to a stock buyback only, you’re really saying that you have no other opportunities to provide value to shareholders other than core growth and just plough all that stock, all that cash back into stock. And I think there are a number of exciting opportunities that will far exceed return than simply stock buyback, if I just look at the economics.
But there could be a debate on this and an argument. But that’s clearly not the intent as we separate. I don’t know, Aaron, if you have any other thoughts on value-creating options between full share buyback versus reinvesting inorganically.
