But I mean, when you look at – as we say, when you look at the mix between the NRCs and the IRCs, maybe a little bit, but it’s pretty balanced. If you look back to 2023, pretty balanced between the NRCs and the IRCs, we expect that relative balance to continue going forward. If you look at our business regionally around the world in 2023 for access equipment, every region of the world had really nice growth. Every region of the world had really nice growth in 2023. We go into 2024, we expect continued long-term health in the North American market, which is our biggest market because of all the dynamics we talk about. As we look around the world, we do expect some weakness in Europe. I think probably whatever industry you’re in, in Europe people are expecting a bit of weakness in 2024.
But the other regions of the world, we’re continuing to see relatively healthy market conditions that we’re addressing, so.
Chad Dillard: Great. Thank you.
Operator: Our next question comes from the line of Tami Zakaria with JPMorgan. Please proceed with your question.
Tami Zakaria: Hi. Good morning. Thank you so much. So my first question is, I think you mentioned you booked Striker Volterra orders with the Ministry of Defense in Japan and also an airport in Paris. Are you able to size the two opportunities, how much in sales do you expect from these contracts at run rate? And could the order size or contract become bigger over time? I’m just trying to size the opportunity for this product line in overseas market?
John Pfeifer: So I think the meaning of the orders that we won, these are airport orders. There are airport rescue and firefighting vehicles, the electric vehicles that we put into the market, brand new platform for us. I think the meaning of it is, is that we’ve never had orders from these countries and these places before. We’ve never had orders from airports in France. Don’t know that we’ve ever had orders from airports in Japan. Australia is looking at orders from us as well. The new product innovations we’re putting into the market, in this case in electrification, are very desirable products and they’re very notable products, and they’re going to drive nice share gains for us. So this airport rescue and firefighting market is one of our smaller end markets that we serve.
So it’s not a gigantic market, but they’re very, very profitable products. And I think the bigger meaning is, is that we’re putting electrified products into the municipal fire market, into the environmental market with refuse and recycling vehicles. We’ve got the NGDV, which is an electric vehicle for the last mile delivery, and specifically the United States Postal Service. I think it’s just an indication of the power of some of the new products as we get them into the market. And one of the first ones that we took to market was this airport rescue and firefighting vehicle, and that’s why we highlighted this.
Tami Zakaria: Got it. That’s very helpful. And then my second question is just wanted to understand the first quarter guide for the Defense segment a bit better. You’re expecting defense earnings down sequentially. Does that include any cumulative cost adjustment, negative impact from that versus 4Q or is it apples to apples or without that adjustment you expect the core earnings to be down sequentially?
Mike Pack: Yes. Tami, what we benefited from was positive cumulative catch up adjustments in the fourth quarter. Essentially, you’re spreading – we received more JLTV orders for the domestic program. That’s really the last order for domestic. So you’re spreading more costs over more units, and that’s why you get a positive cumulative catch up adjustment. So that does not recur. So we would not expect any meaningful cumulative catch up adjustments foundationally in the first quarter. So that’s really the big difference from Q4 to Q1.
Tami Zakaria: Got it. So the core earnings should be somewhat similar to the fourth quarter and the first quarter.
Mike Pack: Yes. I would think that just generally our – because of we’re – in general, we would not expect because of these large orders creating cumulative catch-up adjustments. I would – I don’t know that defense earnings will move around quite as much from quarter-to-quarter this next year?
Tami Zakaria: Got it. Okay. Great. Thank you so much.
Mike Pack: No problem.
Operator: Our next question comes from the line of Tim Dean with Citigroup. Please proceed with your question.
Tim Dean: Thanks. Good morning. Question on going back to vocational and more specifically, just on AeroTech. Can you maybe speak to what you’re seeing there from just the integration as well as if you look at $730 million or so in revenues is quite a bit above what we would have thought. I don’t know if that was a wrong expectation or what, but maybe just speak to kind of just order activity and then ultimately, your thoughts around the synergy expectation for 2024. Thank you.
John Pfeifer: Yes. So it’s John. I’ll answer this question. We feel even better today about AeroTech than the day that we closed on the acquisition. We love the end market. We already understood a little bit about the end market because of some of the other products we have already been supplying into the airport marketplace. Now, we’re a much bigger player in the airport end market in terms of ground service equipment. But this is a growing market, what we believe it’s going to be in long-term secular growth. We see our position is really strong. We see the fit between the technology that AeroTech has already been working on with our technological capabilities. So, you’re going to see a lot of autonomous functionality continue to come into that market, which is what our customers, the big airlines and the airports want – you’re going to see electrified product on runways more in the future than you do today in terms of lithium ion electrification, but this business has really great people.
It’s got a great culture. It’s a good cultural fit with us. And we just feel really strong about it and strong about the growth opportunities that we can get. And I can – the – from a synergy perspective, the real power behind the synergies is behind the technological synergies. Of course, there’s other synergies we get in terms of operating capability and that sort of thing. But the real powerful synergy long term is the technological synergies that are so strong with us in AeroTech.
Tim Dean: Okay. I’ll leave it there. Thank you John.
John Pfeifer: Thank you, Tim.
Operator: Our next question comes from the line of Seth Weber with Wells Fargo. Please proceed with your question.
Seth Weber: Hey guys, good morning. A quick question. I think what I heard in the remarks was $35 million of profit headwinds in the Defense segment for 2024 related to the new NGDV ramp and stuff like that. I guess is that correct? And how should we think about that number as we go into 2025 as your production starts to ramp, does that $35 million headwind start to come down? Does it go away? I’m just trying to think through the defense margins for the next couple of years. Thanks.
