Nathan Jones: Thanks very much for taking my questions.
Eric Ashleman: Thanks, Nathan.
Operator: Our next question comes from the line of Joe Giordano with TD Cowen. Please proceed with your question.
Joe Giordano: Hi guys, good morning.
Eric Ashleman: Hi, Joe.
Abhi Khandelwal: Good morning, Joe.
Joe Giordano: Just curious like on the tools and the life science piece of HST, is there like – medium term, is there any sort of like adjustments at the top end of like what this potential is? I mean I know we’re going to get to the end of the destock and all that over the next bit here, and long term there’s a clear call. But like do we need to like adjust what we think like the potential is over like a multiyear period here given what’s happening internationally and things like that?
Eric Ashleman: Well, I think there’s probably a couple of things out there to consider at the highest level when you’re projecting. I think you hit one of them. So the ultimate position of China in this market, I think is something everybody has to think about. It’s a big part of the issue currently because it was such a high catalyst of growth here more recently for most of the customers that we supply. And so kind of where that comes out there, as you know, there are some regulatory things that are out there in the mix. I haven’t seen a big move in this particular area from any stimulus programs that have been applied over there. So kind of where it ultimately settles in, I think, is an open question. On the other side, though, probably on the positive and the question of does it offset it, we continue to see just massive technology advancements here.
I know the things that we’re working on with customers in our building certainly have even potentially higher growth potential as you think of where that may land on a global populations and what work that could done. So kind of I put the nature of innovation is a positive and where it goes and keeping track of it and seeing what it can all do right next to a question on China is probably the two biggest calls.
Joe Giordano: Would you say like globally, it’s longer term fungible? Like there’s a baseline global demand that is going up and whether it’s China or elsewhere, where this needs to be put in, it needs to be put in and like it’s just friction over like a shorter-term basis? Is that how you kind of think about it?
Eric Ashleman: I think that’s exactly how we would think about it. I mean, it’s – the China piece, in particular, is pronounced from just the relative nature of what it had been and what it is now. And that’s not trivial. That’s couple of positive years on the one side and a few of adjustment on the other. But long term, this is ultimately about applying life-saving technology, transformational technology, of course, a global population. And I think certainly, one of the things that we always intended with our franchise is having global reach and scale. We have that. So if it begins to shift around and move from one region to another to do the work, that’s actually something we’re very well set up to align with.
So I think that’s well stated. It’s – in the near term, it’s – which way are the winds blowing. I think more medium term, it’s more regionally around some of these key questions. And long term, it seems very, very assured. And I think it’s ultimately about do you have the scale to go chase it, and we do.
Joe Giordano: Thanks guys.
Eric Ashleman: Thank you.
Operator: Our next question comes from the line of Matt Summerville with D.A. Davidson. Please proceed with your question.
Matt Summerville: Thanks. Morning. I wanted maybe just a little bit of commentary and maybe a little bit more granularity on what you’re seeing in the M&A pipeline at present, which businesses? Which end markets are you focused on? What have you seen as far as purchase price multiples? Just a little more detailed color there.
Eric Ashleman: Yes. Well, I think you saw in the remarks that I had. I mean, I made a special point to talk about the fact that we’re looking for complementary pieces. So things that attach well to other areas of IDEX and I mentioned I think at high level, how we had done that over the last three years in the optics space, the water space. And then I call it kind of material-intensive processing on small form factor, that’s where Muon fits and frankly STC. So these are businesses that when we purchase them, not only are we purchasing a great IDEX-like business, but we can see attachment points, more natural synergies. And frankly, it matches a vision of something that we’re trying to create there, much of which comes back to the question that we just talked about in the life sciences arena of can we have the relative and the absolute scale to do that job well as it globalizes.
And so I think the areas that I highlighted here would be – you can take those as areas of high interest, and you can see the evidence of things that we’ve applied there. The valuations, I think we’ve consistently said for the kind of quality that we look for at IDEX, it remains quite pricey. I will tell you, I think we’ve put in a lot of work here recently where the capital deployed number for us would be higher if we were willing to go a couple of more turns and meet some of the expectations, and we just have not. We still are very, very disciplined about what we can do with the business. Even in the case where it’s complementary like that, they’re just – we know what the limit is. And we’ve held that line and we’ll continue to do that.
