Kristen Actis-Grande: Yes. So, second quarter on a dollar basis, probably down a little bit, but on a rate basis it’ll still be up a tad from Q1. And then going forward in Q3 and Q4, kind of given some of the dynamics you described, I think 280, low 280s is probably a pretty reasonable, probably a good range for Q3 and I’d say ticking down even a bit there from Q4. The OpEx rate following Q2 will sequentially decline.
Patrick Baumann: Okay. I appreciate the color. Thanks.
Operator: Our last question will come from Ken Newman of KeyBanc Capital Markets. Please go ahead.
Ken Newman: Hey, good morning, guys.
Kristen Actis-Grande: Good morning.
Erik Gershwind: Good morning, Ken.
Ken Newman: Good morning. Maybe I’ll just give a dig into the metal working demand. Obviously, you talked a little bit about activity being relatively stable within your industrial side of your business, but obviously, the has kind of been €“ the middle working index has kind of been a contraction now for seven months, I’m curious have you seen any weakness within that portion of your business and how do you view that part of the portfolio going forward?
Erik Gershwind: Yes, Ken. No question. Look, you look at the MBI, you look at the PMI, the sentiment indices are dropping considerably. I would say inside of the company, I would characterize metalworking as a microcosm of what I characterized for the for the overall customer base, which is moderating and certainly some pockets of softening, but not dropping like a rock and not dropping as the indices would suggest. I think part of the story, Ken, is, you know, were a lot of €“ if you take some of the end markets that drive metalworking consumption, many of them, several of them have been really beat up during COVID. And so, they still have room to grow. So, I mentioned aerospace being one. Another that drives metalworking consumption through the economy, oil and gas with oil prices being high activity levels are up, so that’s sort of buoying things.
So, I mean, nothing really to speak of out of the ordinary or out of what we’ve described for the total company as it relates to metal working.
Ken Newman: Okay. Are you concerned at all about a potential lag impact of that sentiment index or has there been enough structural changes you think that you can help to offset that? Because obviously you’ve outperformed in the last six months relative to that sentiment index?
Erik Gershwind : Yeah. Look, Ken, I mean, I wouldn’t say concerned. We’re watching it. And if you go back and you run historic patterns, typically there’s a pretty good correlation with the sentiment that is like the MBI and our revenues, but really that’s why you saw €“ when we gave the annual guidance of 5% to 9% that’s down considerably from where we’re running in Q1. And part of that was €“ there’s a little bit of comps in there from the pricing that we talked about. And then part of that is contemplating some further softening. So, we think it is going to happen. So, do we watch it? Absolutely. Are we modeling and planning? Yes. Do we worry about it? No. Because from our standpoint, we can make strides almost no matter what happens in terms of capturing share from local distributors. So, yes, that’s our assessment.
Ken Newman: Got it. And then my last question is probably more for Kristen, but Kristen, you mentioned some warehouse automation investments towards the end of your prepared remarks. I’m curious if you could just give a little bit more color of what exactly that entails and maybe the timing of the benefits that you expect to see out of those?
Kristen Actis-Grande: Yes, sure. So, we obviously have a lot of automation in the warehouses today. We’re looking at kind of extending that further, modernizing some things. Generally in response to a lot of the pressure that we’ve seen around labor inflation recently, but certainly always just looking for opportunities to be more efficient, provide better service levels to the customer. In terms of when the benefits come online for those, Ken, I’d say, it’s really not materially until 2024, some of those are definitely longer-term investments. But when we think about, kind of like the ongoing opportunities around mission critical and what that looks like post-2023, this would be kind of one of the big rock projects that start to kick up again that deliver savings in operating expenses going forward.
