Michael Halloran: Good morning, everyone. So just kind of following up on this then, the order side and the end market commentary, I certainly understand the order strength that you’ve mentioned, Mark, through — picking up through March, April. Is that optimism reflected in customer conversations, channel feedback, et cetera? I suppose what I’m getting at here is, you’ve got a relatively choppy backdrop kind of holistically with a lot of moving pieces around a lot of different markets. There’s a chance you get more episodic demand trends month-to-month. Curious, therefore, if you think there’s a chance that that’s part of what’s going on and if there’s anything in the channel that would support that. Or is there just real synergy between what people are telling you, where the order rates are coming in and given where inventory levels are and everything?
Mark Sheahan: It’s hard for us to really know exactly what’s going on because we’re in so many different markets around the world and a lot of different niches. But if I were to characterize what we saw happening throughout the quarter, it’s really as simple as it started off very slow and we started to see a pickup. There are some areas within the segments that are stronger than others, and I think we tried to highlight, I would say, that the Contractor business, in particular, feels like it’s on much firmer footing than it was when we started off the year. Asia is still pretty weak, in particular. China, as there’s just not as much capital flowing into there. The construction markets have been tough. We are starting to see a little bit of a pickup there in the container industry where they’re starting to build containers again, but that’s not going to be enough to really change the game there.
And of course, China is like the big thing for our business. China catches the cold, everyone gets sick. So all in all, I’m probably more optimistic than pessimistic at this point, but we’ll see because we’re not the greatest at forecasting these short-cycle businesses.
Michael Halloran: No, that makes sense. And then two more here. One, just the timing of some of these product launches, are these gradual through the year or do a lot of them start hitting in the second quarter?
Mark Sheahan: Most of them will launch here in Q2. For sure, by the end of Q2, is what our target plans are at this point.
Michael Halloran: That makes sense. And so does that essentially mean that front half, a little slower growth, even accounting for the 2Q is probably lower growth than the rest of the year is the thought process?
Mark Sheahan: Well, Q2, I think, is — we will see the ramp up on the new product side. We have seen, at least for the first three weeks here, order rates that would indicate that we should see some decent business and perhaps even growth in Q2, who knows? But it does better than it did for sure a couple of months ago.
David Lowe: Yes. And I would add that the area that we are talking about primarily on the new products is the Contractor channel. And of course, you’ve heard us say before that that’s without a doubt, our most developed, most sophisticated channel. The products have been presented to their buying and marketing organizations. And when those products are, in fact, launched, we’ll be able to ship because they will want them in their product lineup for the spring and summer projects.
Michael Halloran: Great. We appreciate the help, everyone. Thanks.
Operator: Our next question comes from Saree Boroditsky with Jefferies. You may proceed.
Saree Boroditsky: Thanks. Good morning. So just sticking with Contractor, I believe one of your major customers noted that spare equipment was actually up mid-single digits in the quarter. So could you just help us understand the difference there versus the decline you saw?
Mark Sheahan: Yes. I think if — it’s always — we don’t really know what would be the quick answer. But I do believe that at the end of last year, there was some inventory build that they did with respect to our equipment. I think there’s a difference between their out-the-door sales and what we saw for orders. And again, as we kind of work through the end of the quarter, I think that dynamic started to shift in our favor.
Saree Boroditsky: And so I guess just following up on that, inventory levels there, I guess, are normal at this point?
Mark Sheahan: Yes.
Saree Boroditsky: And then I know the decrementals in your business can be high when volume is lower, but Industrial margins declined probably more than we would have expected. So just any thoughts on what drove this? And how do we think about this trend for the remainder of the year?
Mark Sheahan: Yes. Part of it was mix. I think we noted that our powder equipment business was actually up and our legacy Industrial businesses were down. And there is a difference in the margin rates of those 2 groups, those 2 categories. And then, obviously, in addition to that, we had different product mixes going on in different areas. And within our legacy businesses, there was a little bit of a ramp-up in product development spending here in the first quarter because they’re also going to be launching products here in Q2. And so from last year’s first quarter, there was a little bit of a spike on the spending side.
Saree Boroditsky: And I’ll just add one more. I appreciate all the color on some of the new products. You mentioned these new products adding to sales starting in the second quarter. But could you just help size that opportunity, maybe looking at historical performance when you put in a new product, especially in Contractor, like what does that lead to from an outperformance perspective?
Mark Sheahan: Yes. We really don’t get into details on how much incremental we get from our new products, but we’re happy with the investments generally and they do drive incremental business for us. Of course, we have internal estimates that we use to justify projects and what we think the revenues might be. But to be honest with you, until they actually hit the market, we just really don’t know. But I will just — getting back to my comments earlier, I would say that this particular slate of new products that we have coming out in CED, from somebody who’s been here for a long time, is pretty exciting and should move the needle if everything else stays consistent.
Saree Boroditsky: Great. Thanks for the questions.
Operator: Our next question comes from Joe Ritchie with Goldman Sachs. You may proceed.
