Shawn Vadala: I mean, I think if you like look at our full year guide for China, we’re still expecting to be down high-single digit. I think if you try to break it out between the businesses, maybe on a full-year basis, industrial might be a little bit better than that than lab, but I think that’s largely because of what we saw in Q1. I think as we kind of like look at Q2, they’re probably down similarly, maybe a little bit more on the industrial side because of some of these longer-term comp issues that we talked about. I think we have a good setup in terms of comparisons certainly going into the second half of the year. And if you look at — if you think about last year, the lab business was down disproportionately versus the industrial business.
So I think the lab will benefit from that more than the industrial in the second half of the year. In terms of the market, we always say things in China can change very quickly either way. So I think this is a good example of just wanting to get another quarter under our belt before we talk too much about the second half of the year. We — and I think right now, we don’t have any particular new insights. I mean, I think everyone is seeing the same headlines, hearing about potentials for stimulus and these types of things, but nothing like that’s necessarily influencing how we’re thinking about guiding for the second half of the year. I think we’re — I think probably the bigger theme is the more that can happen from a governmental perspective to instill confidence in the economy and in terms of people starting to reinvest, I think there’s been a lot of outreach in the country to companies, including to multinationals to really re-instill that confidence level.
And I think as that confidence builds, we’ll start to see probably more investment happening in the country. But mid to long term, we’re still really, really optimistic here. There’s still a lot of growth opportunity in China for China. And I think we’re just very well positioned for that growth when you look at how well we align with the government’s priorities and then even getting into some of the trends that we talk a lot about with automation and digitalization.
Patrick Kaltenbach: Yes. And we see very good engagement with customers in China as well as overall. The sales team is really good engagement. Maybe if we monitor very closely, so there’s a lot of customer interest out there that I think it will help us also to get back to that growth in the second half.
Shawn Vadala: Yeah. And then to kind of feed off that, our team there has just always been such an agile team to pivot to where the growth opportunities are and certainly that was a topic we were talking about throughout this week with our — at the executive level is just some of the programs that they’re doing locally to identify those pockets of growth and go after them. So we feel like we’re well positioned as things improve.
Patrick Donnelly: Okay. That’s helpful. And then, Shawn, maybe just on the margin build, can you just talk about the pricing piece in the quarter and as you work your way through the year and then similarly, just how you’re thinking about the cost base given again still a little bit of a softer macro, how nimble you are being on the cost side would be helpful. Thank you, guys.
Shawn Vadala: Yeah. So I kind of mentioned earlier in one of the other questions, pricing came in pretty much as expected in the quarter at 2%. We’re still kind of holding our guide for the full year on pricing at 2%. Of course, we’re going to try to do better than that. I think all the things we’re doing on innovation certainly continues to enhance our value proposition. And so that’s — that always helps. I see good execution on this topic as well too. So we’ll see how it plays out for the rest of the year. In terms of margins, on a quarterly basis, it can be kind of lumpy as we saw with the second quarter with volumes. But I think the team continues to do a good job in terms of material costs. I think there’s some modest benefits we can — we saw in Q1 there that will kind of continue to see through the rest of the year.
And then in terms of like just our overall cost structure, we have — it’s like a balancing act, right. We’ve done a lot of, I think very good things in terms of driving productivity in the organization and cost savings that were kind of necessary to adjust to our current volumes. But of course, that also creates the — and it creates the ability for us to continue to reinvest in the business to ensure long-term success, which is something that we’ve always been very focused on. And so I think we — I think we have a very good balance and mix in the business. Of course, Patrick and I are going to spend a lot of time with our teams here. Starting next month, we start to go into our normal planning cycles and that kind of continues until the fall where we really kind of look at the different growth opportunities, investment opportunities and then at the same time driving productivity throughout the organization.
Operator: Your next question comes from the line of Joshua Waldman with Cleveland Research. Your line is open.
Joshua Waldman: Hey, good morning. Thanks for taking my questions. First, Patrick or Shawn, just a follow-up on our previous theme. Any more color you can provide on what types of accounts started to open up in the latter part of Q1, or any customers that you point to that were sitting on the sidelines in ’23 and maybe January that then started to improve?
Patrick Kaltenbach: Yeah, look, I mean, I think we saw very good interest in our products and performances as we say, better-than-expected throughout the end markets and product portfolio. If I was — if I would point to maybe one segment, it could be food, actually down at the food market we saw really good interest for all our product inspection business that also drove a little bit of the better performance there. That market definitely, while there is still same topic about elongated sales cycles, we see that as well. There is strong engagement and a lot of that is driven by our new product portfolio. I mentioned the new X-ray products, new metal detector product. So that drives a lot of customer interest. To be honest, and also us getting more into what we call the mid-range market.
We had historically been more focused on the high end of that market. We have a broader portfolio now for mid-range customers, meaning more cost-conscious customers that don’t need — the highest amount of performance there, but and that probably is one of the market segments where I would say — I would say that opened up maybe a bit more than expected. But overall, we saw really good engagement across all end markets and geographies.
