Operator: Our next question comes from Brett Linzey with Mizuho.
Brett Linzey: Congrats to Lee. Appreciate all the insight over the years. Wanted to come back to some of the market choppiness and the destock. I guess what is Parker doing from a cost-containment standpoint? In the quarter, international volumes down, margins up. Is this just simply throttling back on discretionary? Are you taking more structural simplification actions and how that positions you?
Jennifer Parmentier: Yes. So we always say that we’re planning for the next recession, right? So what is evident with our Q1 performance is that executing The Win Strategy in a slower-growth environment works, right? So every tool, and I say this because I’ve used The Win Strategy to run Parker divisions and Parker groups. Every tool in that Win Strategy helps to expand margins. So it can be anywhere from adjusting your discretionary spending, changing the way you staff the operation to how you order material for your production. So there’s a lot of levers that our general managers can pull. And they become very agile and flexible. And they have learned how to look around corners and see demand changes coming. So we’re very proud of what they do on the downside as well as the upside to make sure that we get the best return.
Brett Linzey: Yes. That’s great. And then just one more on orders. Just curious how the sequential evolution of orders played out through the quarter into October. Any discernible pattern that might give you confidence that we could be some [indiscernible] to the bottom here?
Jennifer Parmentier: We’ll give you an update on that in February.
Todd Leombruno: Brett, I wanted to just touch on that restructuring comment. There’s been no change to our restructuring plans for the fiscal year. We do this all the time. This is not something that we wait for. I think we have $70 million of restructuring costs in the guide for the year. And that’s the beauty of the decentralization of all the markets. Our businesses are doing what they need to do depending on what’s happening in their businesses all around the world. So we’re not waiting for any kind of high sign to do restructuring. We constantly do that. To Jenny’s point, it’s part of The Win Strategy, and it’s part of what we do every day.
Operator: Our next question comes from Nathan Jones with Stifel.
Nathan Jones: I add my congratulations on retirement to Lee and [indiscernible]. I’m going to ask David and Julian’s question a little bit of a different way. Parker has been through many order downturns over the years. And while every downturn is different, the math always tends to be the same. You see 3 to 5, maybe 6 quarters of negative order rates. The magnitude of those declines are either a mid-cycle pause or a recession. We’ve got to the point where we’re now 3 to 5 quarters of negative order rates. Is this starting to feel more like a mid-cycle pause in the recession we’ve been trying to talk ourselves into for the last 18 months? And maybe just any comments around the feelings you guys have about this downturn relative to the downturns that you’ve seen previously.
Jennifer Parmentier: Well, I’ll start off just by saying that I think as evidenced by past performance, we’re able to handle these downturns, and we just weather them better each time, right? So with the transformation of the portfolio, again, I think we’re going to continue to see a longer cycle view of the backlog, and we’re going to be less susceptible to the dips. So I think we’re just in a really good position going forward to be able to achieve our organic growth targets and really perform at a higher level. We’re going to keep expanding margins in a slower-growth environment and be very well positioned for when some of this returns on the industrial side.
Todd Leombruno: Nathan, too, we’ve said this a couple of times, but we’ve never had as high a percentage of aerospace exposure across the whole portfolio. So it’s over 30% of the portfolio, and that part of the business is extremely strong right now. So we’re benefiting from that as well.
Nathan Jones: Yes. I was just talking about the industrial businesses that understand that there [indiscernible] dynamic. And then just one on Meggitt. You guys have talked about that outperforming. I think it’s clearly seeing better growth, the market seeing better growth likely leading to some [indiscernible] margins here. You had targeted year 5 high single-digit ROI. Is the double-digit ROI on this business with the outperformance now within reach in year 5?
Todd Leombruno: Nathan, we couldn’t be more happy with the way that business is performing. It still is early days. We just had the 1-year anniversary. Growth is robust. The margin performance has been good. And if you remember, we had a 3-year plan here on synergies and our focus is executing that. It’s kind of performing better than our expectations. So we’re happy with it.
Nathan Jones: Okay. We’ll wait till the upgrade of that target.
Todd Leombruno: Yes. Thanks, Nathan. Diego, I think we got time for one more question.
Operator: Okay, and that question comes from Nigel Coe with Wolfe Research.
Nigel Coe: Lee, you’ve had a lot of callouts, but we will like dream of walking off on a high, and that’s certainly what you’re doing. So congrats and enjoy. Enjoy the rest of the year before you retire. So backlog, I’ve got to say I’m surprised you didn’t consume more backlog based on what we’re hearing elsewhere. Maybe you could confirm, Todd. I’m calculating maybe $100 million of sequential backlog consumption in industrial in that kind of range. I was wondering, are you seeing more like longer cycle, lumpier orders coming through the backlog here? I mean, just any color there would be helpful.
Todd Leombruno: Nigel, you’re saying specifically on aerospace?
Nigel Coe: Industrial, industrial.
