Josh Spector: Okay. Thank you.
Ed Breen: Yes, thanks.
Operator: Your next question comes from the line of Vincent Andrews of Morgan Stanley. Your line is open.
Vincent Andrews: Thank you. A couple of questions here. First on the distributor part of the supply chain, not just for you, but for pretty much everybody seems to have taken it more on the chain with the overstocking and then the destocking. Do you have a sense of whether that was just – they’re little too over jealous with principle risk loading up and then on the way back down is the issue just that they don’t have the same access to credit or just the higher rates. And I guess, what I’m getting at is, do you think, over time, your terms with distribution and maybe some of your other customers are going to need to change in a way that might require you to hold more working capital or to give them incentives to move it along? And I guess I’m just sort of asking what’s going to ultimately break the log jam of the game of hot potato of nobody wanting to hold inventory?
Ed Breen: Yes. I don’t think it’s – I really think it’s just – we all overbuild inventory. Direct vendors and distributors through the COVID period, I mean we all talked about it. And I go back to my example on the medical packaging side. The customers were just yelling for us to get more to them. And usually, when that happens, you see an overshoot happen, and some of them probably even double order. I’ve been through that before in my career, and then you get the snap back. So I think that’s what we’re going through is that they’re adjusting their inventory back to appropriate levels. They don’t have to worry about carrying excess inventory because supply chains are normalized again. And again, we’re doing the same thing. We’re feeling confident about being able to get supply of all our different components.
And so we’re working our inventory levels down from what were elevated levels because of the COVID stuff. So I don’t think that you’ll have to worry about different terms or anything with our distributors.
Vincent Andrews: Okay. Good to hear. Lori, can I just ask you what’s updated thoughts on minimum cash levels that you want to keep just as we think about next year and your free cash flow generation versus what you might do from a share repurchase perspective?
Lori Koch: Yes. So we’ll still target about $1.5 billion of minimum cash levels. As we had mentioned on the call, we’ll look to return a significant portion of our cash flow to shareholders next year through share repurchases. So will be done with the existing ASR at some point later in the first quarter, and then that will give us the ability to get back into the market underneath the new program. As I had mentioned, we have the Delrin proceeds coming in at some point today. So we’ll have that cash come in the door. And then when we’re in an open window, again, we’ll be able to do more share repurchase.
Vincent Andrews: Okay. Great. Thanks so much.
Operator: Your next question comes from the line of Frank Mitsch of Fermium Research. Your line is open.
Frank Mitsch: Good morning. I wanted to – wanted to follow up on…
Ed Breen: Good morning, Frank.
Frank Mitsch: Hi, Ed. How are you doing?
Ed Breen: Good, good.
Frank Mitsch: Wanted to follow-up on Spectrum. You indicated that financially, it was performing in line with your projections. So I was just curious, I think you indicated that you expected like something like $45 million of EBITDA for the balance of $23 million since you closed on August 1. And also I think you guys indicated you get about $20 million of synergies. So are those numbers still accurate? What’s your take on Spectrum so far?
Lori Koch: Yes. So Spectrum is performing according to plan. They’ve got nice growth on a year-over-year basis, especially within the medical device side. The majority of the business is medical device. There is a piece that goes into industrial. And it’s really based on some nice key wins that they’ve had with some of the large medical device producers. So we’re pleased with the performance that we’ve seen as the numbers that you had cited earlier are still on track. And then the synergy delivery is $60 million in total, it’s over a couple of year timeframe for us to realize the synergies, but that continues to remain on track as well. Obviously, the initial synergy delivery will come from some overhead consolidation that we get after the procurement-related synergies and maybe some of the site-related synergies over time.
Frank Mitsch: Very helpful. Thank you, Lori. And if I could follow up on semiconductor technologies. You indicated that AI growth is going to help this business in the future. Can you give us an idea of the size that you anticipate AI to grow to over 2024, 2025 in terms of your semiconductor business?
Ed Breen: Well, I will go, Frank, more high level. I think a lot of the growth we’ll get will allow the semiconductor business – again, once we get through the downturn here and all that, that this business can grow kind of mid- to high-single-digit, which, by the way, it was doing before all the destock hit. Again, if the market grows 5 to 6 to 7 points, we’ll grow 200 to 300 basis points above that. And that 200 to 300 basis points is mostly because of that high-end ship, because of AI enablement and all that and that plays to our sweet spot. So that’s how we get that outsized growth usually over the market and AI plays right into that.
Lori Koch: Maybe just to help to size it for you, too. So within our semi portfolio, we have about a $700 million business in data centers overall and about a little more than one-third of that is direct to AI. So that’s the nice portion of growth that we continue to see above the overall MFI projections.
Frank Mitsch: Very helpful. Thanks so much.
Ed Breen: Thanks, Frank.
Operator: Your next question comes from the line of Steve Byrne of Bank of America. Your line is open.
Unidentified Analyst: Hi. [Rob Hoffman] on for Steve Byrne. Just going back to the Spectrum business. Now that you’ve had the business for a couple of months, – do you see any opportunities for cross-selling to these medical device companies?
Lori Koch: Yes. That was one of the large theses for the revenue synergy upside was that they are very strong and have great relationships on the medical device side, and we’re very strong and have great relationships on the biopharma side, and how can we bring those two pieces together to generate revenue synergies? So it’s been a couple of months and that the theses as we’ve initially seen it continues to play out, and we’ll – and we don’t have the revenue synergies on the hand right now, but we see nice opportunities as we continue to integrate these two businesses together.
