Joshua Buchalter: morning. Question for Dave. Thanks for taking my questions. I guess I wanted to ask a big picture on the destocking. Your inventory on books went down in the second quarter. But clearly, there’s a good bit more to go. If we sort of disaggregate that, can you help us understand where things are at on books? And where levels are now in the channel? And I guess, if any way you can quantify where they need to be in the back half of the year for us to be comfortable that sort of wrapped up by the end of the year? Thank you.
David Heinzmann: Sure. Yes. We have both opportunities for us. One certainly is on-book inventories, and you’ve seen that decline through the course of the first half of the year, and we have more work to go there. And clearly, as like a lot of companies are working through as supply chains have balanced out now and ability to kind of pull back on the inventory position there to support the business, so that’s ongoing. We’ll continue to do work on that. From a channel destocking and cleanup that’s ongoing, as I mentioned earlier, kind of typical is that four to five quarter peak to trough sort of cycle. And we’re kind of halfway through it. And our view now is we expect it to kind of go as we have seen in the past, and we’ll see that bleed through the back half of the year.
Joshua Buchalter: Thank you. And maybe one for Meenal. I wanted to ask about margins. They’re obviously running still above where they were in 2019, 2020, but coming down as volumes come down. Has there been any change in the pricing environment as you go through this extended period of destocking? And how are you feeling about your ability to continue to pass on inflationary costs on the input side? Thank you.
Meenal Sethna: Yes. Thanks, Josh. So, maybe just — I’ll step back as this is part of the overall question. We had back in January talked about our overall company margins and the target we have for this year. I talked about the high teens, 17% to 19% average for the year, and we continue to remain committed to that. As part of that as we’re going through the year, we’ve spent a lot of time laying the foundation around Dave talked a lot about the integration work that’s going on. On the price/cost side, we — so far, we’ve maintained price, and we’ve seen the cost balance out, some increases in some places, decreases in others. So we continue to remain neutral around the price/cost side. So, I think compared to the last cycle, which was our intent, last cycle 2019, 2020, we were running in the 14%, 14.5% margin range. So, we feel good with all the work we have done and continue to do to keep the margins in that higher target range.
Joshua Buchalter: Thank you. Appreciate all the color.
Trisha Tuntland: Thanks Josh. Appreciate your question.
Operator: [Operator Instructions] Next, we’ll go to William Kerwin with Morningstar. Your line is open.
Trisha Tuntland: Good morning Will.
William Kerwin: Good morning all and thank you for the question. A lot of my main questions have already been asked. So, I think I’ll switch a little longer term here. Haven’t talked too much about the Industrial segment, some nice growth in the quarter. Definitely a place where some peers have been seeing some weaker performance. So, just curious what you would call out as doing particularly well there this year if you’re seeing any incremental weakness? And then also, what’s exciting you most for the long term out of the industrial market?
David Heinzmann: Yes, from an industrial end market, we continue to see overall strength in that end market. There is some mixed bag between different pieces of it, if you will. We see particular strength out of renewable energy and energy storage types of applications that are quite strong. We see kind of industrial safety applications also continuing to be quite positive as well that we’re seeing kind of play through there. The area where maybe we see a bit of weakness that we’ve talked about in the last couple of quarters is HVAC, particularly residential HVAC tends to be down a bit and is a bit softer. And there may be a little bit of softness in industrial automation types of applications, but it really kind of bounces off.
We’re also beginning to see the kind of crosses over between industrial and electronics applications with communications and data centers as there is a push to invest in and drive AI types of installations to support the higher compute needs. We have both on the servers and the power supplies for those servers. There’s lots of content for us. But also in the infrastructure of the data centers themselves and the power systems there, we have a lot of industrial play there, which we’re beginning to see more activity, again, on as well there.
William Kerwin: Awesome. That’s great color. And then one more for me, if I may. I know it’s a small part of your business, but I think it’s been a while since we’ve heard about the silicon carbide business for your semiconductor. So, just wondering if there’s any update there?
David Heinzmann: Sure. No real change or update from what we’ve talked about in the past. And obviously, this is getting a significant amount of attention from the large semiconductor players, particularly for our traction drive applications and EV applications where there’s billions of dollars being invested to support that. That is not our core market. That is not where we’re focused. We do have a silicon carbide offering that’s part of our more industrial-focused power semiconductor business. And we do see design-in activities there and things like renewable energy, some off-board charging types of applications and things. But we just have that as an offering as a part of our broader portfolio. It’s not an outsized investment area for us.
William Kerwin: Thank you.
Trisha Tuntland: Thank you, Will. Yes, appreciate your questions. We’ll take our next caller please.
Operator: Next, we’ll go to Christopher Glynn with Oppenheimer. Your line is open
Trisha Tuntland: Good morning Chris.
