Now, if you look at the second quarter versus prior year, of course, there’s different moving parts. You have a 2% headwind when it comes to foreign currency. If we look at our gross margins, we expect the gross margin to be down probably about 20 basis points versus the prior year and a lot of that has to do with volume being down in the second quarter versus the prior year. There’s a little bit of noise as well with maybe a little bit of higher transportation costs with some of the Red Sea topics, some investments we’re making in our service business. And then our pricing, of course, offsets that a little bit. We — our pricing came in about 2%, which was in line with our expectation for the first quarter and we kind of expect that to continue here into the second quarter and for the full year.
And then maybe one other comment on the P&L kind of going below the gross margin. In addition to the volume and the things that I just said in terms of headwinds, we also will have higher variable comp Q2 this year relative to last year. But if you kind of then step back from all that and you maybe pivot to the full year, we’re actually pleased that our full year operating margin is now probably going to be up about 50 basis points. And if you exclude currency, it’s probably up about 70 basis points. So in a year where there’s pretty modest top line growth, we feel good about our ability to continue to drive operating margin improvement.
Operator: Your next question comes from the line of Rachel Vatnsdal with JPMorgan. Your line is open.
Rachel Vatnsdal: Hey. Good morning, guys, and thanks for taking the questions. So I wanted to dig into the industrial performance in the quarter. You mentioned some strength in Americas in 1Q on some project-level activity, but then you also said that you expect core industrial to be down high singles in 2Q. So can you just kind of walk us through the drivers of that core industrial business in the first half of the year? Were there any one-timers that we need to be aware of in 1Q, for example?
Patrick Kaltenbach: Yeah. Thank you, Rachel. And I’ll start and maybe let Shawn chime in as well. Look, we are very proud of the performance of our industrial business. I think it comes down to really outstanding portfolio enhancements we have made here over the last year. I mentioned the Industry 360 terminal and other things we launched, driving productivity for our customers and they really pick it up nicely. When you look at Q2, I mean, the major driver for that decline that we outlined is a very tough compare against very strong business we have seen in Q2 last year in industrial. So that’s we are not concerned about the — I would say, the attractiveness of our products or the engagements we see of our customers simply based a decline on a very tough compare versus last year.
In the quarter, we definitely look forward to keeping the momentum or gaining even momentum with the new products that I indicated like the Industry 400 and 700 and the new industry scales that we are launching. So overall, I would say not a concern the decline is purely because we had a very big fall last year in the industry.
Shawn Vadala: Yeah. Hey, maybe just to get to the other part of your question, Rachel, the first quarter in the US, certainly that project activity is lumpy. And so we certainly will not see that in the second quarter. So there’s an element of that. And then maybe the other point I make here is that in core industrial, it has a larger mix of business weighted towards China versus our other businesses. And then if you kind of look at maybe the multi-year comparisons of that China business, we do have a very difficult comparison, as Patrick mentioned. So it will be a little bit — and it will be a little bit bigger of a headwind there that we saw versus Q1.
Rachel Vatnsdal: Great. And then just for my follow-up, I wanted to dig into some of the biopharma commentary that you gave. So you mentioned some of the slower spending to start the year. We’ve been hearing that across the sector this earnings season. But could you just unpack for us what does guidance assume in terms of those biopharma customer budgets starting to open up? And then have you seen any activity level from biopharma customers pick up in April and then early May here in that group as well? Thanks.
Patrick Kaltenbach: Well, look, when we talk about biopharma, I think the business we really focus on here is our process analytics business. Biopharma definitely still has been soft in the first quarter and we also expected given what we are hearing from our customers to be soft in the second quarter as well. This — I mean, when we talk about growth in the second half for biopharma, same thing is true as for many other businesses. We just expect also easier compares. When we do — when you look at the underlying engagement and the momentum we are seeing right now, I would say, especially in China, we are still facing some inventory issues on with our Pro sensors. They’re still sitting on some inventory there that they’re working down. On the single-use sensors that you use in biopharma, we actually also encouraged by, let’s say, the recent — more recent interest again into single-use sensors that come from our PendoTECH business for biopharma customers.
Shawn Vadala: And the other part of biopharma, of course, is pipettes, and we certainly have seen improvement in pipettes relative to some of the de-stocking issues that we are dealing with last year.
Operator: Your next question comes from the line of Matt Sykes with Goldman Sachs. Your line is open.
Matt Sykes: Hi, good morning. Thanks for taking my questions. Patrick, maybe I’m sorry if I missed it, but maybe just some commentary around the services business. I think you mentioned it was strong in Q1, but just any expectations and progress that you’ve made on your services initiative over the course of this quarter and your expectations for the full year.
Patrick Kaltenbach: Yeah. Very good. Thanks. I mean, again, we are very proud about the performance of our service business. We had 6% growth in the first quarter against a very strong growth in the first quarter last year. And we see strong demand for our services. We continue to build out the service portfolio that we can deliver to our customers. We compete extremely well. We still have a lot of opportunity with the installed base that we have out there, connecting more for our services to the installed base and we have dedicated also marketing programs in place to connect more of the business. I think that will drive a lot of profitable growth for us moving forward. I’d like to remind you also that our operating profit on services is actually higher than the average of the — of our portfolio.
