Larry De Maria: And then if I could just sneak in 1 last one. Can you just talk about the pipeline of inorganic options out there, things are real actionable in this year and competition multiples, et cetera?
Nish Vartanian: Sure, Lee, go ahead.
Lee McChesney: Sure. I love this question because you know I can only answer it in a certain way. So I’ll start off this way. We have shown again in ’23 our inherent ability to generate cash and it puts us with really a lot of options, which is good. So obviously, first place we focus, Larry, is on the organic side. So whether it’s the innovation, activation in the market, investing in our abilities, analytics, accelerating MBS, that’s where it goes first. Certainly, we have a great trajectory on dividends, a wonderful track record there. You’ll probably see at some point some action on share buyback like we typically do, which we did do last year because of the divestiture. And then that leads us to this optionality with M&A.
The entire team is certainly engaged in the market. We’ve never stepped back from that. But I’ll say what I would always do here and it shows up in our track record. We’ve done four deals in six years. And all in, we beat the odds. We’ve done better than most companies do there because we’re very disciplined in what we are willing to take on. It’s got to be a strategic fit. It’s got to hit the financial thresholds. If it does that, we’ll certainly participate in the process, and we’ll see how it works out. But again, we’re not going to go overpay. So we’re certainly engaged. I do think over the next couple of years, something will come to life. And if it happens this year, great, but it doesn’t have to happen for us to be successful this year.
Operator: The next question comes from Rob Mason with Baird.
Rob Mason: I just wanted to circle back to the commentary around the cadence through the year. If we think — if you think mid-single-digit growth for the full year at this point, I mean fair to assume just where your confidence level is that the first half would be some level above that. And right now, the planning would have second half below that?
Nish Vartanian: Lee, why don’t you take that?
Lee McChesney: Yes. So no, I appreciate that. Yes, I think that’s — we’re going to approach ’24 a little bit like we did ’23. We certainly have a better view into the first half of the year. So your math is right, Rob, that we would be on the higher end of the mid-single-digit growth for the first half. We mentioned earlier, we certainly think backlog will normalize, the pricing environment continues to normalize. So it’s more about just executing in the market. There’s things out there like we mentioned earlier, we’ll see what the timing is of some of these larger win opportunities. We’re certainly confident in some of them, but not all of them. And then we just know it’s an election year, so I’m even a little bit more cautious in the back half, just how the timing of things could play out.
But that’s our baseline as we talked about, that’s also supported by a pretty good view with margins that enable us to be in a 30% to 40% incremental range if we’re on the lower side, sales wise, it will be on the lower side of the incremental. If we’re not, we’d be on the higher side, just like what played out in the fourth quarter. We certainly ended a little bit higher in growth, and you see us — saw us in the higher end of the incrementals. But that’s — we’re going to take that approach right now because just the macro environment is challenging. So it’s just proven to be a smart way to navigate each year and be agile.
Rob Mason: I want to drill into the detection business a little bit further. Steve, I know you commented that the pipeline looks good there. But could you kind of walk through the various portions of that business, thinking about how replacement activity may be positioned in that pipeline versus more of a CapEx portion versus even some of these newer markets, let’s say, newer. But like hydrogen, LNG, I guess, is more in an expansionary mode. But just if you could put a little more color around what’s driving detection.
Steve Blanco: Yes, I’d be glad to, Rob. I mean I think we talked a little bit about the portal space, we continue to see opportunities there. That goes to market similar to the industrial PPE, but the energy comments you made and what we talked about and how strong those markets are, and they’re very solid, really plays well for the portable business. And we think we’re going to continue to see appreciation with our connected work platforms that I referenced earlier. If you go to the fixed monitoring solutions, our fixed detection space, you’re right, we’ve seen — certainly, we have that base business that’s very strong. The project business has been good. I wouldn’t see it — it has not tailed off necessarily. I mean, going forward, what we’ve seen is a little bit of a pivot to some of those clean energy opportunities, the hydrogen LNG and some — there’s some real work going on around decarbonization.
So the carbon capture utilization and storage that CCUS, which it’s been around a while, but it’s gaining traction now. We’re seeing a lot of activity and interest there internationally. So we expect that to be a really nice opportunity as well. So the detection, to Lee’s point earlier, as we look forward and we think of the pipeline there, fixed monitoring is an area that we think is a really strong growth platform and we think portables is right behind it.
Rob Mason: And just maybe a follow-up with the last question. Steve, your commentary around international opportunities on the fire safety side certainly makes sense given the runway. But I’m just curious, if you circle back to the G1, it’s — that — I guess we’re coming up on 10 years of when that was launched in the market. And first year seeded a lot of that product into the market. Are you starting to see replacement those units — initial units start to come up for replacement yet? Or is it still too early for that to happen?
Steve Blanco: Yes. It’s a really good question. So we watch that very closely. And the life cycle typically is around 13-ish years on average. Some certainly go sooner than that, some leak out a little bit longer than that, and you may see them past 15. But typically, our team averages at around 13-ish years, so you wouldn’t see that play out for a couple more years likely. And we don’t have a lot in our pipeline that shows those initial customers coming back up quite yet.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Chris Hepler for any closing remarks.
Chris Hepler: Thanks, Betsy. We appreciate you joining the call this morning and for your continued interest in MSA Safety. If you miss the portion of today’s call, an audio replay will be made available later today on our Investor Relations website and will be available for the next 90 days. We look forward to updating you on our continued progress again next quarter. Thanks.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
