Dave Heinzmann: Yes, I think on the inventory side of things, in general, in our channel partners in the industrial space, I would say inventories remain kind of at normal level. So, we don’t have any significant concerning areas in the industrial distribution space. There are some OEMs like residential HVAC, where we sell into that are a little heavy. And of course, in our transportation side of our business, the automotive piece, we don’t really use distribution. So, that’s more of a direct relationship. Commercial vehicle is a space where we’re seeing that over inventory and our channel partners, that’s been coming down, of course, as it has been in electronics. As I spoke about earlier, they were kind of or well into the burn of excess inventory.
And the challenge a little bit is watching POS with our distribution partners because the end customers are also burning inventory. So, that’s kind of put a dampening impact on the POS with our customer — with our distribution partners. So, watching that balance between their POS and where it’s at and our inventory position at what speed we’re burning inventory. That’s something we, of course, have always kept an eye on to continue to watch. But clearly, we’re well into the inventory destocking and it’s a little challenging to see when exactly the turn is, but it will be coming. And when it comes, then we’ll get that return to growth.
David Kelley: Thanks for your questions David.
Operator: [Operator Instructions] Our next question comes from Joshua Buchalter with TD Cowen. Your line is open.
Joshua Buchalter: Hey guys, good morning. Thank you for taking my question. It sounds like within electronics and some of the other segments as well, as we go through this extended destocking, your utilization rates and factory loadings are kind of — just — you’re keeping them flat right now as the inventory burns through. Is that a fair assumption? And I guess, any metrics you can give on how depressed utilization rates internally are right now as we think about what leverage could look like as demand POS kicks back in? thank you.
Dave Heinzmann: Sure. Utilization rates, of course, vary by product lines and factory locations. And certainly, utilization rates are lower than we’d like to operate at. So, when we do begin to see a return, there will be nice drop-through on the return to volume, as we see that and it varies by technology, right, how heavy the fixed cost is in the factory. So in some cases, we’re able to flex our costs pretty aggressively and balance to our flow-through of orders, and it’s not a major overhang for us. Other areas, it’s a little more challenging. And so that’s — it’s really a balance, and it’s by business unit, by technology, how we manage that. But clearly, as volumes begin to come back later this year, yes, the drop-through should be very healthy.
Joshua Buchalter : Thanks, Dave. And maybe for Meenal, thank you for the color on the revenue impact of the sensor product portfolio review. Anything you can give us on gross or operating margins and potential OpEx savings as you go through the realignment? Thank you.
Meenal Sethna: Yes. So I would say, in general, what I talked about in for overall for the transportation segment. We see progressive improvement through 2024. It will be improvement coming both out of gross profit. We’ll see improved gross margin and we’ll see an improved OpEx level as well, lower OpEx dollars improved OpEx levels, as we go through some of these restructurings. I’d say, it’s probably going to be a little more pronounced in gross profit, because with volume, Dave has been talking about as we continue to see volume come back in different areas that margin incremental tend to be pretty strong. Couple that with the footprint actions that we’re taking is still in couple of areas of remnant pricing that we’re working on as well. I think, you’ll see more of the pronounced benefit coming into gross profit.
Dave Heinzmann : Yes. And I think it’s important to recognize and in this automotive sensor pruning, we’re doing this kind of more of what we’ve done in the past. This is kind of normal for us, and it’s a bit of a headwind on growth in the automotive passenger car piece of it. However, from an expense standpoint, we’ve shifted resources to current sensing. And so current sensing and our investment in that space is kind of ahead of revenue, as you know, we’ve had really nice design win cadence in the current sensor side of things. Revenues will start to kick in late 2024 and through 2025. But of course, our shifting resources and investing further in credit setting kind of balances off where we’re going there. Also, I think important, the pruning is much heavier in the commercial vehicle space than it is in the passenger car space. And in that case, we clearly will be taking costs out on both the variable side and the fixed side to address that.
Joshua Buchalter : Thanks, Dave. Thanks, Meenal.
Dave Heinzmann : Thanks for your questions, Josh.
Operator: Your next question comes from the line of David Silver with CL King. Your line is open.
David Silver : Yes. Hi. Good morning. Thank you. I guess, I was just wondering, you’ve talked a lot about the pruning that’s going on the sensor side. I guess, I was just going to ask if maybe you could extend that thinking to maybe a couple of your recent acquisitions in general, and I’m thinking the C&K Switch acquisition. And maybe at this stage, Carling has been thoroughly kind of vetted and worked through. But what would you say looking back, I mean, what would you say the pruning or the maybe somewhat outdated element in the portfolios there have been? And how do you think those areas are set up for 2024?
