Operator: Your next question comes from the line of Laurence Alexander with Jefferies. Please go ahead.
Unidentified Analyst: Hi, good morning. This is Kevin on for Laurence. So my questions have largely already been asked. But I guess just — do you guys see any risk of a recession impacting any of your end markets in 24? And I guess, if so, which areas have denoted risk? And when you said that you expect your top line and APAC to be troubled next year, is that most related to China? Or are there issues elsewhere in the region that you’re seeing?
Tod Carpenter: Yeah. So when you talk about the recession, it’s really China for us all the time. We’re really happy with where we are with China based upon — we know that that’s a very troubled economy over there. Everybody knows that in the world. But we’re happy with where we sit, position to when it comes out. That should give us tailwind. We have a number of different market share gains over there that should be able to give us some positive outcomes. However, we have not baked any of that type of lift into F ’24 guidance. We believe that will just be a little bit more protracted than it’s currently or then was, let’s say, seen six months ago. So we’re very careful about projecting China. But for the rest of the world, we have not really seen any early indicators of recessionary type of behavior in any of the other geographies. And so we have not contemplated that at this time.
Unidentified Analyst: Okay, thank you.
Operator: Your next question comes from the line of Rob Mason with Baird. Please go ahead.
Rob Mason: Yes, good morning. Maybe, Tod, I just wanted to follow up on that last comment. I mean, to the extent that you’ve not baked in any recessionary impact, I guess how do you reconcile some of the PMIs that we see out of Europe versus your results, which seem to be very good? It just seems like there’s some disconnect there given the results. Is that more share gain-oriented on your side? Or just kind of help us versus what we historically would have expected given those macro indices.
Tod Carpenter: Sure. So we’ve long said that we’re a diverse portfolio of businesses across our company. You’re starting to see the strength of that, particularly, as you read about particular sectors having some headwinds. Donaldson Company is more broad than that. Some of the execution within the strategies that we talked about at Investor Day is actually going extremely well. We clearly have share gains in some of our replacement part based businesses. And so we have good momentum at this point in time, and we’ll continue to press, continue to invest and look for a continuation of the solid execution that we’re seeing across our company.
Rob Mason: Yep. To the extent — and speaking to the Mobile business, I think, particularly to the extent destocking was heavy in the fourth quarter. It’s been going on for several quarters. I thought your commentary around the Aftermarket — Mobile Aftermarket business implied that it may continue. And I was just curious if that’s the case, you said it could weigh on the low single digit or influence that low single-digit growth rate. How much longer do you think are you anticipating that destocking headwinds impact that business?
Tod Carpenter: Yeah. Thanks, Rob. Let me just give a little bit more specific color on that. If you recall in our Mobile Solutions aftermarket business, our OE portion of that business is 40% of the revenue. Our independent channel is 60% of the revenue. If you look at just the fourth quarter, we would tell you that our independent channel was roughly flat year-over-year and the OE channel was down mid-teens. So that suggests to you that the destocking across the OE channel, and it’s not specific to one end market, but now has more broadened to multiple customers. It has really created a headwind across our Aftermarket. It is not the independent distributor channels. In fact, looking forward, we would expect that destocking from all the behaviors we’ve seen from the OE to pick up just a little bit, looking forward here in the first two quarters but not appreciably.
So therefore, our estimation is that the destocking at the OE side would go in the first Q and likely the second quarter because there’s a lot of balance sheet management across the OE sector in our second quarter as we end the calendar year and then pick up in the second half of the year.
Rob Mason: Yeah. And maybe just to take the other side of that, the First Fit side in Mobile. Now the supply chains have largely normalized, lead times have come down. Are your OE customers still giving you the same level of visibility on their production schedules? Or has that shortened up as well? How do you feel about the level of visibility?
Tod Carpenter: So nothing’s changed. Yeah, nothing’s changed about the models between the way we operate with our OEs and Donaldson Company. We do things where our computers are linked. And so we get a longer look at their production build rates. They may firm the build rates a little tighter. So say, at more like 90 days rather than 150 days, but we’re still very comfortable with what we’re seeing across all of the end markets in the Mobile Solutions. So that’s agriculture, construction, mining and On-Road, with On-Road likely showing a bit more resiliency than the others.
Rob Mason: Very good. I’ll hop back in the queue. Thank you.
Operator: [Operator Instructions] And we have no further questions at this time. I’ll turn the call back over to Tod Carpenter for any closing remarks.
Tod Carpenter: That concludes the call today. Thanks to everyone who participated, and I look forward to reporting our first quarter fiscal 2024 results in November. Have a great day. Goodbye.
Operator: That will conclude today’s call. We thank you all for joining. You may now disconnect.
