Mike Baughman: All right. Nigel, it’s Mike. No, there’s really on plan. And remember, that’s five years out that we were talking about, 31%. We are on track. I think the important thing for the near term is that our expectation around that adjusted EBITDA margin will be that it’s a little bit up year-over-year on down sales, reflecting the synergy actions. And moving forward, no, there’s really no change to our longer-term expectation around the profitability of test and measurement.
Nigel Coe: No, no. But the $20 million gives you an extra point of margin. So just wondering if there’s anything to offset that. It doesn’t sound like there is, but just that’s the spirit of the question.
Mike Baughman: There isn’t. I mean at the…
Nigel Coe: Yes, go ahead.
Ram Krishnan: No, there isn’t. There isn’t necessarily anything we’ve identified to offset the $20 million. I mean the 31% margin targets 5 years out. I mean, obviously, what we are finding is good investment opportunities. And right now, we’re focused on executing the synergies by year 3. If we find good investment opportunities, we’ll make that because I think 31% is the target we’ve set, and we feel pretty comfortable getting there. But if the $185 million comes through with no additional investment opportunities, maybe the number goes up, but that applies your outnumber.
Nigel Coe: Okay. No, that’s fair. I know I’m being counting, but just this worth question. And then you had some extraordinarily strong growth numbers within ID. I mean the 28% within measurement analytics. It looks like it’s just an easy comp. So just — maybe just talk about that a little bit. But more importantly, there’s a theory out there that the process and hybrid markets are on a lag of discrete. And therefore, the spot part we’ve seen in discrete automation right now is sort of like a precursor for what you might see six months down the road. So can you just maybe address that point? And just anything unusual or concerning that you’re seeing? It doesn’t sound like it, but certainly, just maybe address that concern out there.
Lal Karsanbhai: Yes, happy to, Nigel. I’ve been speaking and been asked about this for the last three quarters or so. And again, what we experienced in the quarter continues to be very consistent with our initial commentary. The drivers around process and hybrid are being supported by the secular macros that we’ve been discussing, whether it’s energy security, affordability, nearshoring, sustainability to digital transformation. And I think those macro secular drivers are robust enough and secular in nature that they will go through a different type of cycle than we’ve seen historically. Secondly, we did not experience a boom and bust environment in the process space in over the last cycle. This is a much more moderated capital cycle that we experienced.
So we don’t have the overcapacity situations and the overbuild situations that we have typically experienced. There was much more discipline in the capital layouts by our customers. And that’s a benefit as well. So our business continues to be very robust, obviously. We continue to have confidence in the order runs and in the execution through the year.
Ram Krishnan: Yes. Just to answer the first part of your question, measurement solutions up 28%. That’s a function of that the supply chains coming back in that business. If you remember, it was an easier comparison. Q1 of last year, we had significant challenges on the electronics front, which have alleviated. So our orders are up high single digits, sales up 28% driven by improving supply chain. So it’s clearly a data point driven by weaker — easier comparisons, I would say, with Q1 of last year.
Nigel Coe: Right. That’s perfect. Thanks.
Operator: The next question comes from Scott Davis of Melius Research. Please go ahead.
Scott Davis: Hey, good morning, everybody. Congrats on a good start. I wanted to back up a little bit when you talk about R&D transformation at test and measurement. What do you mean? Is it like an 80-20 type thing that you’re going to refocusing? Or just — I know they’re — those good folks at NATI always spend a lot of money. But was it generally unfocused, do you think? Or how do you guys think about it?
Ram Krishnan: Yes. I think it’s purely on prioritization of the projects. I think we’ve gone in with our management system on how do we focus on the critical few priorities that can move the needle from a growth perspective. I mean there’s lots of opportunity. The beauty of what we’re finding at NATI is a culture of innovation, plenty of opportunities across 4 very important market segments where we can move the needle, macros around those markets like EVs, ADAS and semiconductors that are supportive of strong innovation. But I think we’re bringing some discipline into how do we prioritize, how do we look at where do these resources need to be in order to balance cost capabilities, particularly in software versus Austin, for example. And I think these are prudent moves that will allow us to drive more innovation at a better cost from an R&D as a percent of sales.
Lal Karsanbhai: And I will just add, Scott, to that. I think a company like NI with the market position it has in the space and the legitimacy of its technology will always have a role in the research element of innovation. That’s always going to be a responsibility that we have in the space to continue to move that needle forward. And we will, by all means, as we do in all our businesses, continue that. But having viable commercial programs is important. And that’s where parking some cars and investing heavily in the ones that we believe and management believes will ultimately result in customer success is really important. So really good work and thoughtful work being done by the team here led by Ram, of course, and Ritu.
