Joseph Ritchie: So a couple of quick questions. First one, just on just on the organic growth that you guys saw this quarter in MT, can you just make that — break that down a little bit further for us? Like what did you see in Friction versus the rail business? And then like any other geographic color would be helpful, too.
Luca Savi: Okay. So first of all, when you look at Friction and Automotive, I think that there was a positive performance when you look at the OE. So we outperformed the market by 500 basis points, especially performing was China, where we were almost twice the growth of the market and we continue to win awards. I will give a little bit more color later. The aftermarket is still destocking. So overall, the OES was positive, but independent aftermarket negative growth year-over-year. Rail had a very good order intake. So when you look at KONI, for example, KONI orders in the quarter were up 25%, and we expect the orders to be up double digit for all of 2023. And also Axtone, you may remember, Axtone, 25% of the Axtone business was actually in Russia, and we got hit pretty hard last year.
Now the team has worked incredibly hard to offset those Russian orders with more passenger orders in Western Europe and other regions. So we expect the orders for 2023 to fully offset the business that we suspended in Russia. So overall, positive across the board.
Emmanuel Caprais: So Joe, to round it all up in terms of revenue Friction, so strong growth in Friction, mid-teens. This is really driven by Friction OE, plus 21%, which is a really strong number as Luca was mentioning, based on the outperformance. Rail also was up 25%. And this is both coming from KONI and Axtone. So not only we had strong revenue and we really — the team really increased the output of our factories. But on top of that, we had really strong orders, as Luca was mentioning.
Joseph Ritchie: Awesome. That’s great to hear guys. And then my quick follow-on. I saw the price/cost was a nice contributor to earnings on a year-over-year basis versus last quarter, I think you guys were flat. What’s the expectation into the back half of the year, Emmanuel, for price cost and how that’s expected to contribute on a year-over-year basis?
Emmanuel Caprais: Yes. So you’re right, Joe. We had a nice contribution from price cost clearly positive from a dollar basis and more than 100 basis points of margin expansion, thanks to that. And let me just precise that. When we talk about price cost here, we talk about price versus all our costs. So not only material, it includes also labor and overhead. And so in the second half of the year, I would say that we should still see a positive trend on price/cost, definitely positive from a dollar basis. And then from a margin basis, a little less than 100 basis points.
Operator: Our next question comes from Vlad Bystricky from Citigroup.
Emmanuel Caprais: We can’t hear you Vlad.
Vlad Bystricky: Sorry about that. guys. Can you hear me now?
Emmanuel Caprais: Yes.
Luca Savi: Yes.
Vlad Bystricky: Okay. Great. So I just wanted to ask you guys about the channel destock in CCT connectors and where you think that channel is in the destocking cycle and what you’re hearing in terms of actual end market dynamics there?
Emmanuel Caprais: So I think what we’re seeing is the destocking that we’re seeing is happening in Europe. We’re not seeing destocking for the moment in North America. What we hear from our distributors’ partners is that their customers are destocking, but we’re not seeing a clear destocking movement at our customers in North America. I would say from a demand standpoint, we feel pretty good. As Luca was mentioning, we have been able to expand our product lines with our distributors, especially in North America, and that has yielded a significant share gains. And we’ll continue to really insisted to develop new products, especially including the ones that we acquired with Micro-Mode to really boost our presence with distributors.
Vlad Bystricky: Okay. That’s helpful. And then I just wanted to shift on the Friction announcement that you — that you mentioned, quite interesting. So I guess just any color you can give on when you’re expecting that plant to come online and how you’re thinking about visibility to demand for product offerings out of that facility? And is this sort of displacing incumbents or more focused on winning new content on new vehicles as they’re introduced. Just how are you thinking about ramping that capacity you’re bringing online?
Luca Savi: Sure. Thank you, Vlad. So the first part of the question is that the plant will be up — the building will be up by September next year. The equipment will be installed in September next year. And the line will be running in October 2024. So you’re talking about 15 months from now, yes, 14, 15 months from now. That’s the timing. When it comes to awards, we have already won some of the awards that we will be producing in those plants. So we got a very good visibility. And also, this is something that we have been working in the last 12 months together with the customers. So that is going to be a good start-up with the line running from day 1.
