Josef Matosevic: Yeah. So, Jeff, the improvements we are seeing in health and wellness, that improvement has now three quarters under the belt, and it’s clearly going in the right direction. So, we do have some confidence level that the market is starting to rebound, not just in North America, but also in APAC, and at a slower pace in Europe. We see a very stable, good U.S. ag market, at least in our product offerings. Europe, on the other hand, has contracted, as everyone knows, in the ag industry. On the industrial side, we see alternative energy, mining. The general industry has been pretty stable for us. On the mobile side, stable, the only one that’s contracted somewhat is the European one in the mobile industry, and then we have the China, obviously, that is still in the process of recovering and rebounding.
There’s certain markets that are coming back nicely, there’s others that will take longer. So, that’s kind of, hopefully, the summary that you were looking for.
Jeff Hammond : Yeah. Okay. And then, Josef, I know you spent time in commercial food service. It sounds like you got multiple wins there on single product lines. It does seem like that market, those players in that market want to go to common controls across product lines, and I’m wondering if your customers are of that view and what it takes to kind of broaden out the portfolio beyond a single product line to more of those common controls?
Josef Matosevic: Yeah, certainly, Jeff. That has been, obviously, a desire in that field for a long, long time. You know, the challenge was, there was really not one single belly button who can have the product offering. So it became very complicated in terms of supply chain, and that’s what we have invested in now for going on two years. It is a path we have that not only to switch over to a common control platform, but also have different variations within that offering coupled with wire harness and also AI applications and algorithm application and our sickness monitoring system that can connect the entire commercial food service kitchen. And so the equipment can talk to one another and independent, if you have one brand or numerous competitive brands in the kitchen, you still will be able to use that application. So then turn ratio is coming up here shortly, and I’m sure you will be there, Jeff, so we can demonstrate some of those applications you’re talking about.
Jeff Hammond : Okay, great. And then just last one. You know, Sean, it sounds like, working capital you think is a pretty big opportunity around shortening cash conversion. Just wondering if you have any initial views on how much working capital you think you can take out of the system over a couple years?
Sean Bagan : Yeah, Jeff, thanks for the question. So, definitely a huge area of focus for us given where it’s trended the last couple years, and as we got into this year, I think the first quarter, we showed a little bit of improvement. Historically, the company was able to operate in the 100-day, 110-day kind of cash conversion cycle. We didn’t take out quite 10 days in the first quarter, but we did take a reduction from the end of the year. We’re not going to get back to those levels this year, but over time, that’s the target to get back to those historical levels. So, we’ll enter here, the end of the first quarter, enter the second quarter around 135 days or so. So, continue to drive that down towards that 100 target longer term.
Jeff Hammond : Okay, thank you.
Tania Almond : Thanks, Jeff.
Operator: Our next question comes from the line of Nathan Jones with Stifel. Please proceed with your question.
Nathan Jones: Good morning, everyone.
Tania Almond : Good morning, Nathan.
Josef Matosevic: Morning, Nathan.
Nathan Jones: I wanted to follow up on Jeff’s question about the mobile market and the improvement that you’re seeing there. I think it’s fairly clear from some of the machinery OEMs reports that mobile equipment production is going to be down in 2024. Is the improvement here more of a — but de-stocking is running at a lower level rather than — any actual thoughts that the market itself is going to improve, there is going to be more units produced? And is there still de-stocking going on in the channel, at the OEMs, and when do you expect that to come to an end?
Sean Bagan : Hey, Nathan, it’s Sean. So, I think on our first slide on our net sales, within our earnings slide, we kind of showed the quarter-over-quarter trend. And I think a little bit of a dynamic for us is we’re coming off a pretty soft second half last year where we felt a lot of that impact. So, from a sequential perspective, it improved. And I think specific to where we’re seeing strength is over in the Asia-Pacific market, particularly China and South Korea strengthening significantly. And so, we’re feeling some of that coming back. Some of that was validated. Josef and I were just over there last month and clearly seen some green shoots as he highlighted and has prepared remarks there. So, I think that’s a little bit of what we’re feeling. We were probably on the earlier side of the cycle from supplying a manufacturer. And I think we’re kind of getting through that already.
Nathan Jones: Okay, thanks for that. And then my follow-up question, I want to ask about the gross margin rebound in Electronics. And I look to get a little bit more color there. Obviously, huge improvement, 900 basis points from the fourth quarter to kind of what were the drivers behind that sustainability of gross margins at those levels and any expectation for further improvement?
Sean Bagan : Yeah, so there’s two key drivers there. And as you know, last year we made some pretty significant investments in manufacturing Centers of Excellence down in our Tijuana plant. And we had some of that headwind in our margin last year. Some of that cost was coming on as we finished that plant. But what went on in the first quarter relative to the fourth quarter is two big dynamics. First was on the Balboa side, the health and wellness strength. The orders were really strong and outpaced our expectations. So, we were even able to overdrive our internal plans on that. And I would attribute kind of the upside to our beat from our guide to that specifically. And those incrementals on that because it was so contracted in the second half of last year, and frankly, most of all of last year, those increments The other piece was at our innovation controls business.
Although the revenue and top line wasn’t as strong and the growth wasn’t there, all those actions we took in the fourth quarter last year from a cost perspective and then some of the integration efforts that we had by moving some production from Tulsa to Tijuana and that lower cost certainly helps as well. So those were the main drivers to the sequential improvement.
Nathan Jones: Thanks very much for taking my questions.
Operator: [Operator Instructions] Our next question comes from a line of Mig Dobre with Baird. Please proceed with your question.
