Gabe Bruno: So, Nathan, but I would add that we’re just – we are confident, Nathan, that we’re doing all the right things from a product, from a commercialization, from an operating capacity standpoint. So it really is about, as Steve’s point to, to continuing to nurture the progression of the product offering. And then by second half, be able to give a little bit more insight as to how that’s progressing.
Nathan Jones: Thanks. And then maybe just one on capital allocation. Leverage is less than one, strong free cash flow ahead. The automation portfolio has been a priority for capital deployment over the last few years. Do you feel like that portfolio is mostly complete and capital allocation priorities turn to somewhere else? Or is automation still really the outlet for M&A dollars?
Gabe Bruno: Well, Nathan, as we’ve talked before, the market is very fragmented. We believe we have lots of opportunities to continue to drive inorganic growth through acquisitions, automation and outside of automation. So we’ll continue to prioritize capital allocation through internal investment and acquisitions and then the balance to return cash to shareholders. But we think we have a lot of opportunities, a very robust pipeline of acquisitions that we’re actively pursuing.
Steve Hedlund: Nathan, I would just add, just for clarification, it’s not necessarily been that automation has been the priority for M&A. It’s just been the most fertile hunting ground for us in the last couple of years. We continue to be very active in the rest of our business and looking for M&A investment opportunities. And as Gabe mentioned, as we sit today, the pipeline looks fairly robust for us. So we’re optimistic that we’ll be able to deploy the capital effectively and productively, consistent with our capital allocation strategy and our disciplined approach to investment.
Nathan Jones: Thanks for taking the questions.
Gabe Bruno: Thanks Nathan.
Operator: We’ll now take a question from Walt Liptak, Seaport Research Partners. Walt, your line is open. Please check your mute button.
Walt Liptak: Sorry about that. Thanks. Can you hear me now?
Steve Hedlund: Yes. Yes, Walt.
Walt Liptak: Great. So I wanted to ask you about the guidance, the low to mid single-digit. I wonder if you could run through the regions for us. We’re seeing some – hearing about weakness in Europe and some of the international markets. I wonder if you just help us understand what your assumptions are?
Gabe Bruno: Well, Walt, typically, we don’t give a lot of detail from the full year assumption, but I’ll give you a couple of points of color. So we do expect to lead in the Americas side and we have 75% of our automation business portfolio within Americas. So you can see that leading. We do expect continued pressure on residential construction in retail on the Harris side. So we’ve considered that. And in the international side, just a little bit of pockets of caution in Europe, a continued strength when you think about Middle East and parts of Asia.
Walt Liptak: Okay. Great. And then Harris, the revenue was down in 2023. But there might be some signs of things are going to start to turn, just so I understand, you’re expecting that the volume and price are going to be down in 2024.
Gabe Bruno: We put the volume while being down – coming into 2024. So that’s a bit of caution just on the retail and residential construction. But you’re right, as things potentially open up, particularly on HVAC type demand that should be a positive for the Harris segment.
Walt Liptak: Okay. Sounds great. And then I think you’ve talked a little bit about this or alluded to it, but how is the January and February looking in terms of the trends, the orders, et cetera?
Gabe Bruno: Walt, as I’ve mentioned in my prepared remarks, we expect coming into the year, first quarter to be flat to slightly down. It’s based on the mix of some of the points that we’ve highlighted.
Walt Liptak: Okay. And if I recall, last year in March, you guys had a strong March. Are we thinking that we’re going to see sort of that trend again? We’re maybe weaker January, February, then a pickup in March?
Gabe Bruno: Well, that is typical as we go into the spring season to see the strength of the end of the first quarter. But we’ve built that all in into our considerations of how we’re beginning the year.
Walt Liptak: Okay, sounds good. Thank you.
Operator: We’ll take the next question from Steve Barger, KeyBanc Capital Markets.
Steve Barger: Hey, thanks. My question is around longer term customer attitudes for automation investment. I think in the past, we’ve talked about how that’s a CapEx decision that slowed down in soft patches. But going forward, do you think that could be more resilient as some customers may be more proactive about investing for productivity through the cycle?
Steve Hedlund: Yes, Steve, I would agree with that assessment. And I would base that really just looking at our view of our own operations, right. We continue to be challenged with labor wage inflation. We continue to be challenged with the need to make the hard jobs easier in our factories so we can reduce the demands on our employees. And when you look at the interest rate environment, yes, it’s elevated from where it was two years ago, but it’s not an obscenely high interest rate environment. So a lot of the projects that we look at for our own factory and I’d say in parallel that our customers look for in their factories are still very high return investments. It’s really the ability to absorb those investments into your factory that becomes the rate limiting factor.
