James Lico: Yes. I think you tried to take us up last quarter from $330 million to $350 million. But I think, Steve, it’s come down. I think that’s a fair statement. We sort of said we might end the year in the $200 million range-ish we thought, and that’s what I said in the second quarter. We think that’s maybe more between $100 million, $150 million-ish, depends on how the order rate. Some of that is just blanket orders that pushed into 2024 so it doesn’t necessarily mean as dramatic as that number. But we’ll still lock into with the excess backlog of over $100 million. So not as much as we anticipated, and that’s principally in Sensing, a little bit of Tek really in China — related to China, the conversation I just had around the answers to Julian’s questions.
But I think where we stand today is still with $100 million-plus of backlog, that doesn’t include EMC, which obviously has a very, very high backlog. So I think we still have an insurance policy going into 2024.
Stephen Tusa: And then what happened at Invetech? Can you just maybe discuss a little more of the drivers of that business for the quarter?
James Lico: Yes, that business is really mostly high centered on design, engineering and manufacturing for the diagnostic and bioprocessing market. Certainly, you’ve heard over certainly the last couple of days how that’s taken a step down to some extent. We thought our guide — I would own this one. We thought the second half guide was sort of bottom for us. And I think as it turned out, it was not bottom and a little bit more. We think now we’ve taken that down to where we think that is. But certainly, we’re certainly a little bit overzealous. It’s not a core health care market. As you know, the core health care market really centered around hospitals. But I think where it stands today, the engineering resources, we’ve certainly seen some customers sort of push projects into 2024. That’s what the guide reflects.
Stephen Tusa: One last one for you. Does this feel recessionary to you? And are you guys — do you have a playbook for costs, if so?
James Lico: Yes. I mean, I think, Steve, thanks for the question because I think at the end of the day, it really — I don’t know yet if this is recessionary in full. I think four quarters of PMI being where it’s been and a number of other indexes around industrial production and some of those things having been slow, I think we’ve seen pockets of that. And that’s been reflected in some of the order rates that we’ve described over the last couple of quarters. But I think if we come back to the original guide of the year, we’re on that number. We prepared for slowing in some places. That’s why margin expansion was so good in the second and the third quarter, following on a little bit less revenue. As we said in the prepared remarks, we’ve opted our productivity view of a little bit.
And again, maybe a little bit of abundance of caution but to be prepared for any environment. And we still think next year could be good. I think as we said, a number of the things that have played out in the strategy. Software was really good in the quarter. It continues to be strong. Our services businesses continue to be good. You saw Fluke in better shape, I think, than maybe if we were in a recession and their point of sale is pretty good. So I wouldn’t call it necessarily yet but I think there’s pockets of things, and we’ll be prepared for it.
Stephen Tusa: Great. Thanks a lot.
James Lico: Thank you Steve.
Operator: Your next question comes from the line of Jeff Sprague from Vertical Research Partners. Please go ahead.
Jeffrey Sprague: Can we just kind of maybe come back to Tek first? So orders are down in the quarter, but you’re expecting them to inflect positively in Q4. Can you just maybe elaborate on what’s driving that or is that just the comps now moving the other way? Like what kind of visibility do you have on improving orders at Tek?
James Lico: Yes, it’s a couple of things. I think number one is we’ve seen slowing in Tek orders for a few quarters now. And so some of it is comp. You’re right. We started to see some slowing. The two and three year stacks are still really strong, so we’re working off a level of order — just raw order dollar numbers that are still very, very good, quite frankly, unprecedented in the history of the company over the last few years. So in that sense, it really — there is much of a comp issue. We started to slow in the fourth quarter of last year. So yes, that’s it. And then there’s a little bit of — we think China maybe get a slightly better, it was pretty dramatic in the quarter, but even in — we’ve seen some early signs that maybe that gets a little bit better.
I wouldn’t call it good. I’d just call it a little bit better. So we had some order push from Q3 to Q4. We think we’ll see those things as well. So the majority of it is comp. We’re not counting on a big step-up improvement. But we are seeing some things that might suggest things might be a little bit better, and that’s reflected in how we’re talking about it.
Jeffrey Sprague: And on this inventory realignment in ASP. So you misjudged it a bit in Q3. Like what is your kind of visibility that you totally understand what’s in the channel and we don’t have some additional hangover into Q4 or maybe there’s some hangover baked into your Q4 numbers still?
Charles McLaughlin: Hey Jeff, this is Chuck. No, we don’t have anything baked into Q4. We’re done shipping to the distributors. And if there’s some — we’re confident that we work through everything. It was bigger than we had visibility to, which as Jim mentioned a few minutes ago, is why we wanted to make this — one of the reasons we want to make this change. We wish we’d been able to size it properly out of the gate. But as I said, that’s why we make the change. But nothing in Q4. And so we — what we are going to see is ASP to be in mid-single digit in Q4.
Jeffrey Sprague: And maybe just a quick one. This cyber issue, is this totally wrestled to the ground or do we have some kind of open-ended issue we’re dealing with there?
