David Raso: Can you help with the organic cadence a little bit though maybe for the whole company just to get a sense of the 1.5, if you can take us through that a little bit detail? And again, maybe a little color on Europe, in particular, what’s in the guide. I thought the first quarter was a little stronger than expected. So just trying to get a sense.
Todd Leombruno: Yes, David, I agree with you. Europe did outperform in the first quarter. I think we called that derivative plus 2. The total company did plus 2. Obviously, aerospace was fantastic at 16. If you look at the cadence, it’s really not that much different than what we guided to initially, is not second half-weighted. We expect comps to kind of moderate a little bit. But if you look at Europe specifically, they did 2 in Q1. We’re expecting about 1 in Q2, and then it goes — turns a little bit negative just again based on comps in the second half. I would say for the second half, it’s probably about minus 3.
Operator: Our next question comes from Scott Davis with Melius Research.
Scott Davis: Also, congrats, Lee. Great run. It’s been nothing but a pleasure indeed, but good luck in the future. I have a tough time picturing you retired, but…
Todd Leombruno: Scott. You’ve got a plan. He’s got a plan.
Scott Davis: Yes. I’m guessing we’ll see you around on Boards and such even more so. But anyways, a lot of the questions about inventories and stuff have been asked. So I just wanted to go back to a big picture one on Slide 4. Jenny, you kind of showed the — where you want to be in ’27. Can you get there with — I mean, is the plan kind of further tweaking around with the portfolio and a longer cycle M&A? Or do you get there just on the growth rates, the outsized growth rates and aero and some of your longer-cycle businesses?
Jennifer Parmentier: Yes, it’s the latter. We — these illustrations are with the portfolio that we have today and the tailwind that we see not just from aerospace but from the macro CapEx investment and the secular trends.
Scott Davis: Okay. Fair enough. And then the — just looking through my notes here, the distribution levels and like Parker stores, you guys have great visibility. But are they — is there a new normal above COVID levels? I know this has been asked in a different way, and I’m trying to really narrow down whether in this new world, everybody holds a little bit more inventory or whether supply chains are so healed up and people are so comfortable that they’re back down to kind of what was more of the long-term averages pre-COVID. And obviously, the cost of carrying inventory has risen, too, with higher rates. We haven’t had that in quite some time. So any comments there and how that plays into it would be interesting, too.
Lee Banks: Yes, Scott, it’s Lee. I would think it’s the latter. The cost of carrying inventory is way up from what it’s been. I think the insanity of supply chains has started to quiet down. So I don’t expect there to be a huge difference as we go forward about how some of those core industrial products are inventory versus what they were before pre-COVID.
Operator: Our next question comes from Jeffrey Sprague with Vertical Research.
Jeffrey Sprague: Lee, congrats, and thanks for all the help over the years. Could we just maybe kind of come back to the margins, which really stood out here. I think it’s probably pretty clear from just other companies we follow that price/cost spreads were pretty favorable this quarter. I know you don’t want to talk about price in isolation, but can you give us some sense of kind of where you’re tracking on a price/cost basis, how that might differ from what you saw in fiscal ’23 and how it’s progressing through the year embedded in your guide?
Jennifer Parmentier: So if you recall, we went out early and often with price. And we are now back to more of a what we would call a normal pricing environment where we are going out in July and January. So we don’t disclose the specifics, obviously, but price/cost management is a core element of The Win Strategy. And what we did do is we expanded from just material inflation to total cost of inflation. So we feel good about what we have covered, and we’re back to more of a normal environment.
Jeffrey Sprague: But you are getting some cost relief. Is that fair or not so much? You’ve got some metals relief, but other inflation, maybe just a little perspective on the cost side of the equation.
Jennifer Parmentier: Where we have some of those commodities index, which is very few, there’s adjustments. And where we have agreements with customers, there’s adjustments, but that’s already built in.
Jeffrey Sprague: And then just back to Meggitt and aero. When I saw the margins this morning, I thought okay, you’re going to be talking up the synergies or you’ve accelerated them into 2024. Really no comment about that. So I’m sure you’re capturing synergies, but it sounds like the margins are little one-offs that Todd mentioned but mostly aftermarket mix. But maybe just a little bit of color on the synergy pace, and is there scope for that to go up? And is any of that actually embedded in these results here in the quarter?
Jennifer Parmentier: So if you recall, in fiscal year ’23, we increased the synergies from $60 million to $75 million. And then we committed to another $75 million in fiscal year ’24. So as Todd mentioned, the synergies are in there. The team is doing a great job. We’re committed to the $300 million, and we’re just confident we’re going to get there. A lot of — as Todd mentioned, too, strong aftermarket, right? That is just a very favorable mix, really helped boost the margin in the quarter.
Jeffrey Sprague: Great. Yes. Felt like you’re getting after that additional 75 faster, but I’ll leave it there.
Todd Leombruno: No, Jeff, it really is a combination of — obviously, the volumes have helped on the efficiency side, but Jenny has mentioned supply chain has eased. I think that has taken a lot of noise out of a lot of our operations. It’s not totally gone yet, but if you look back to a year or 1.5 years ago, it is a lot more efficiencies that we’re seeing across all businesses.
Jennifer Parmentier: Yes.
