All the things that we’re doing from an innovation perspective also will really help fuel that going forward, too. So, that’s something that we feel good about and then in terms of 2024, we’re consistent with how we were thinking about pricing with our earlier guidance for the year, and we’re expecting price realization to be around 2%.
Dan Leonard: Appreciate that. And my follow-up, I’m curious on your outlook for pipette tips and really any other part of your business that suffered from destocking. Does growth normalize back to trend, or is there an above-trend growth period since your comping and inventory burned down?
Shawn Vadala: No, I’ll start and let Patrick jump in if he wants to. I think the challenge with pipettes right now is that there is just weak market demand in general. We don’t have at Mettler-Toledo a significant exposure to early research or to biotech R&D, but we certainly do in Pipette Tips, and so we’re not immune to those trends right now at the moment. So, there are softer market conditions there, but I think we’re more optimistic as we get into the second half of the year. As Patrick mentioned, ordering patterns are looking a little bit better as well and just similar to my comments on innovation, we have a couple things there as well, too, that we were actually out at our facility recently, last month, and it was really fun to spend some time with the team there and look at some of the things they’re working on. Some of them are more medium-term, but some of them are things that we have in the market this year.
Operator: We’ll move next to Matt Sykes at Goldman Sachs.
Matt Sykes: Hi, good morning. Thanks for taking my questions. Maybe just the first one, just going back to the logistics issue, you outlined the revenue impact, and that seems isolated to Q1. Could you maybe talk about any cost implications that could bleed into Q2? My understanding is there had to be some temporary changes in how things were being shipped out of Europe, and I’m just wondering if there’s any lingering costs that could impact margins in Q2 or beyond.
Shawn Vadala: Yeah, of course, there’s some incremental costs associated with it. A lot of the costs are really opportunity costs because we’re reallocating resources to support the transition. The incremental travel costs, those things are less of an issue. Yes, there’s some higher transportation costs, but when you step back from it, I’d say it’s not overall significant to our overall financial statements and certainly something we kind of considered as we provided guidance here for the first quarter.
Matt Sykes: Got it. Thanks for that. And then just on Europe, you’ve talked pretty cautiously about it, but I still think, unless I misheard, that you’re expecting positive growth this year. Could you maybe just talk about sort of your cautious comments versus sort of the growth you’re expecting this year in Europe and what’s driving that?
Shawn Vadala: Yeah, hey, that’s a good question. Europe, of course, is going to benefit the most from the shipping delays. So I think if you exclude that, you get to a different answer, and it’s probably — if you take the fact of the Q1 and if you also look at maybe the easier comp in Q4, Europe’s probably more flattish on the year if you exclude those two things. So it’s marginally a bit softer than what we were originally expecting. But we’ll caution again. It’s early in the year. It was softer in the fourth quarter than we expected. A lot of it had to do with product inspection, as Patrick mentioned, but we did see just generally weaker market conditions. We’ve been very pleased with how resilient Europe was in 2023. If you would have asked us a year ago out of the major regions of the world, we would have probably expected things to be a little bit softer there just given all the concerns with the energy crisis and what that impact might be to our customers.
So we’re very pleased with how the business performed in 2023, but just sitting here today, we’re just a little bit more cautious on it.
Operator: We’ll go next to Catherine Schulte at Baird.
Catherine Schulte: Hey, guys. Thanks for the questions. Maybe first just on the revenue guide, I get that you want to leave a little bit of a cushion given where we are in the year, but if we looked at your outlook by segment excluding the shipping delays, I guess, which segments are you baking in some extra conservatism into?
Shawn Vadala: Yeah, good question. I’d say PI, and I guess you can see that one because it doesn’t have as much of an impact, if any, from the shipping delays. So I think we were saying that was up slightly the last time we guided for the full year, and this time we’re saying it’s about flattish. And then this comment on Europe, Europe is a little bit lighter than what we would have guided before, and then when you kind of break it into divisions, it kind of trinkles into Lab a little bit and so Lab might be excluding the shipping delays more. Instead of saying up slightly, it’s probably more flattish.
Catherine Schulte: Okay, got it. And then maybe on the margin guide, what should we be expecting for gross margins for the first quarter and the full year?
Shawn Vadala: Yeah, for the first quarter, we should be down about 40 basis points, and there’s a lot of currency in the margin in Q1. So if you excluded the currency, it would probably be up about 20 bps and then if you look at the full year for gross margin, we’ll be up, our estimate is we’ll be up around 50 basis points and again, currency has an impact on that. So if you excluded that, it would be up probably more like 90 bps.
Operator: We’ll go next to Rachel Vatnsdal at JPMorgan.
Rachel Vatnsdal: Perfect. Thanks for taking the questions, and good morning. So you mentioned that you’re expecting customers to be more cautious with investments starting off the year. We’ve heard that from some of your peers as well. So can you just dig into what you’ve specifically been hearing from customers in January and now into the first week of February here, and then which markets, geographies, have you been seeing more of that cautious spending to kick off the year as well?
Patrick Kaltenbach: Yeah, thanks, Rachel. And I’ll start, and then Shawn, if you have some additional comments, feel free to chime in. So I think the majority of cautiousness we have for it was in Europe, and also down in what we told you in the PI business, in the food segments, where we see customers not releasing purchases as fast as we had expected. Again, there’s good engagement for sales teams. We have launched a great fleet of new products, also mid-range products that help us to get to access to new market segments. But the whole conversion from opportunity to final sale still takes longer than we expected and that’s part of what we’re hearing in the European market. Otherwise, I think that, as we said, it’s not a big change. Do you want to do anything else? No? Okay.
Rachel Vatnsdal: Great. And then just my follow-up, given that you’re expecting most of this logistics issue to really benefit 1Q, can you just walk us through the sequentials on how should we be thinking about 2Q and the step up there, and then kind of leading into the back half on top line as well?
Shawn Vadala: Yeah. Hey, I think it’s a little early for us to provide too much color on Q2, but we kind of stick to what we said before, is that we expect the first half of the year to be down. I expect Q2 to still be down. A big part of that is going to be China. We still have to lap I think a full cycle in China for Q2. So that’s something that’s very much on our minds, but I think when we get to the second half, we do have, with a company that only typically sits on 1.5 months of backlog, it’s hard to have too much confidence when you’re starting to go out several months. But I do think we feel encouraged by lapping these comps as we get into the second half of the year, as we just field maybe the organization, looking at the initiatives, looking at how we’re trying to position things.
A lot of our focus has always been on coming out of this stronger and I think we try to focus on the things we can control and when we talk about all these product launches, all these launching of corporate programs, Spinnaker 6 [ph], things we’re doing with the customer experience, there’s a lot of good things that I think should help us out for the second half of the year. And we’ll get through the first quarter, and then we’ll provide a little bit more color as to how we’re seeing things at that point in time.
Operator: We’ll go next to Brandon Couillard at Jefferies.
