Brooks Mallard: Yes. So no, so Q2 was relatively muted. We have a pretty good outlook in terms of what our customers want on the personal mobility side and what they’ve got in inventory and things like that. And it’s really almost entirely the second half and it’s really managing with our customers, how much inventory they have, both from an end-user’s perspective and in their warehouse that’s our product. And kind of managing through the supply chain aspect of that as they work through that inventory. So it’s almost entirely prospective.
Jeff Hammond: Okay. And then Ivo, you made a couple Europe comments, but just wondering how you’re thinking about the second half for Europe. We’ve heard about a little choppiness there. Do you see some of this auto strength continuing?
Ivo Jurek: Yes. So first, Jeff, let me start with second half of 2022 for Gates, Europe was a real standout outperformer. We had a very strong performance there. So I would say that we have a very difficult comp in Europe in second half. So starting with that, auto continues to be quite strong. And again, we believe that the underlying trends with used vehicles that kind of as I’ve outlined and the other OEM business continues the trajectory of improved output from the OEMs. So auto, we feel is in a reasonably good shape. And then, most of kind of our caution if you would, is more associated with the industrial activities that continue to be choppy. And I am sorry for continuing to use the word choppy, but it really is, I mean, you can have a couple of months that are less than trend line, and then you can have one or two months that are nicely above trend line.
So there’s no real straight line consistency up or down. And so we remain pretty cautious about what we are seeing in Europe particularly on the industrial side.
Operator: Thank you. [Operator Instructions] Your next question comes from the line of David Raso of Evercore ISI. Please go ahead.
David Raso: Hi. Thank you. One quick modeling question before my real question. Currency for the year, what’s the updated view on currency impact for the full year?
Ivo Jurek: So in the back half, it’s going to be a favorable, very low single digits in the back half, mostly in Q4, because Q4 is when it starts to roll over but very modestly.
Brooks Mallard: David, think about flat for the year.
Ivo Jurek: Yes, flat for the year, very slightly favorable in the back half.
David Raso: What I’m trying to understand though, to get to the revenue for the full year, the fourth quarter needs probably even a little less currency health in the third quarter. So we can talk offline the exact math. But what I’m just trying to understand about the fourth quarter, with the organic implied down 4%, where do you see when it comes to the segments that impact the greatest? And given that’s where you’re seeing the weakest core, how does that influence our thought on pricing to start 2024? Thank you.
Ivo Jurek: So look, yes, so look, I think, like I said earlier, I think you’ve got to think less about Q4 as a comp year-over-year, and you got to think of it more in the back half, because remember, Q3 was seasonally weak in 2022 because of the supply chain headwinds and some of the issues we had getting product out the door, and then we started to catch up in Q4. And I believe that Q4 was a record revenue quarter for us in 2022. And so, it’s really not that much about the expectations for I think 2023 – I think 2023, we’re kind of seeing a return to normal seasonality. When you look at the sales split, you look at the EBITDA split, you look at all those things on the first half versus the second half, it’s a return to normality.
I think, Q2 was more of the outlier where you just saw all these disruptions. So I don’t think there’s anything to read into the kind of lower core growth number that you’re seeing in Q4. It’s more a function of Q4 of 2022 than Q4 of 2023.
Operator: Thank you. Your next question comes from the line of Deane Dray of RBC. Please go ahead.
Deane Dray: Thank you. Good morning, everyone.
Brooks Mallard: Good morning, Deane.
Ivo Jurek: Good morning, Deane.
Deane Dray: Hey, I joined a little bit late but I wanted to circle back on the comments about lead times. I know it’s hard to kind of homogenize across all your product lines, but if you could just highlight where you stand on lead times now versus 2019 because that’s an important part of the calculus on destocking because the more the lead times compress, the more your customers have confidence about burning off buffer inventory. That’s what we’re seeing across multiple industrial verticals. But just some perspective on lead times to start, please.
Brooks Mallard: Yes, I would say that the fluid power lead times have normalized for us, Deane. And in power transmission, we still have a reasonable amount of our portfolio where we have extended lead times. We’re still trying to work down reasonably a good amount of past due backlog that we hold and we don’t anticipate all of the lead times in power transmission will normalize by the time we exit 2023. We still remain nicely – I guess nicely constrained across number of our parts transmission lines as well, despite the fact that we have added capacity. So it’s kind of a – it’s a mixed picture, Deane, some of the lines are where they need to be, and some of the lines will remain reasonably constrained all the way through 2024.
