Steve Downing: Yes. So the order volatility is really supply issues across the entire industry that’s impacting OEMs and then, therefore, we are being impacted because of how much change is happening at the OEM level. On the margin on a year-over-year basis, if you look at Q4 of 2022 versus 2021, one of the things we like to point out is there is actually about 500 basis points of margin headwind that from cost side, we €“ obviously, with cost recoveries, we are able to recover about 200 basis points. So the net is 300 on a year-over-year basis is what you see the margin down. But the total headwind was actually 500, a little over 500 basis points. Of that, about 350 basis points were bill materials related, so cost increases there was about 100 basis points of labor and then another 50 to 60 basis points of various things, mix and overhead being the primary drivers of that headwind.
David Kelley: Okay. Got it. That’s helpful. And outside of the pricing and pass-through dynamic, how should we think about kind of raw material labor expectations baked into that second half margin ramp that you’re expecting in the guide? .
Steve Downing: Yes. I mean, if you look at on the bill materials side for 2023, we’re expecting stable environment, so basically flat on the material side, there will be some ups and downs inside of that. But the bottom line is we think we’ll get through 2023 with pretty much net neutral position in terms of billing materials. Obviously, labor is going to continue to move based on market conditions. What we see though is that we think we’ve addressed most of those over the last few years in terms of labor costs. . But you would expect to see normal kind of inflationary pressure going forward on the cost of labor. So we think the increase in those issues should be less than what we’ve experienced in the past, and the growth rate will obviously produce a higher rate of revenue, which should help us with our overhead side to get to a slightly improved overall cost position.
David Kelley: Okay. Perfect. Thank you. And then last one for me, the OpEx guide, and you mentioned the kind of key focus, our ongoing focus on growth products, how should we think about R&D levels going forward? Any meaningful step change in the spend there?
Steve Downing: No, it’s roughly in line with our revenue growth rates. Really, the R&D forecast is tracked pretty well. I mean there is a little bit of lumpiness as it relates to when the revenue actually comes to fruition. But the increases in R&D attractive over the last five years have tracked roughly in line with our sales growth level.
David Kelley: All right. Got it. Thanks. I’ll pass it along.
Kevin Nash: Thanks, Dave.
Steve Downing: Thank you.
Operator: Thank you. Again one moment please for our next question. Our next question will come from James Picariello of BNP Paribas. Your line is open.
James Picariello: Hey, good morning, guys.
Steve Downing: Hi, good morning, James.
