Lee Banks: Julian, it’s Lee. I’m going to just take a step back a little bit and talk to what you’re asking to, but a little bit commercial for the company. So sitting in front of me is a heat map from every country around the world and region of what the PMIs are doing, and it’s a sea of red, and it’s really turning a red since August or September. And the success we’re having today, I think, really has to do with the portfolio changes that we’ve made inside the company and then really focusing on these key secular trends. So that’s made a big difference as we navigate through what is forecasted around the world is a slowdown in different areas. On inventory, I would say, if I just break this down by region — I was out with some of our large distributors here in North America.
There’s definitely some inventory balancing taking place. We were at a frantic pace there for probably 18 months. This things came out of COVID, there’s people taking their breast balancing things out. But I would tell you their order book is still very strong, and they’re still very positive about what’s happening. And the other thing to test for me in some of the regions on distribution is what kind of CapEx projects they have going on with customers. And the CapEx dollars with end customers are still flowing. On the OEM side, I would say, broadly speaking, the order books are still good, especially on the mobile side and that inventory level, they try to get us true to adjusting time as they can. A little bit of disruption with microprocessors, et cetera, but really not a great deal.
So that’s still positive. I think I’ll stop there if — I don’t know if I hit your question or not.
Julian Mitchell: No, that’s good color, Lee. And maybe just a follow-up on aerospace, give us some insights as to how the Meggitt top line is trending at present? And I guess when you think of overall Parker Aerospace, a couple of large sort of aero peers, GE and Honeywell, for example, have talked about the headwinds, whether it’s cash or P&L margin from the OE ramp at the airframers. Maybe help us understand if that’s a big pressure point for Parker Aero on margins or cash in the next year or two?
Jennifer Parmentier: I’ll start with your last comment first. We don’t see that as a big pressure point for us. I mean we’re pleased with the performance. We expect their full year sales to be $1.9 billion at about approximately 17% adjusted segment operating margin. As I mentioned earlier, we’re on track to achieve the $60 million in synergies by the end of this fiscal year. We expect this to grow at or a bit faster than legacy aerospace. So we’re real positive on this.
Operator: Thank you. One moment please for our next question. Our next question will come from Jeffrey Sprague of Vertical Research.
Jeffrey Sprague: Thank you. Good day, everyone. Jenny, just back to where you left off on Meggitt and synergies, probably very early to talk about changing those forecasts or anything. I’m actually a little bit more curious about cost to achieve and opportunities to sort of outperform there? Given that it’s not a real heavy lift on factories and the like, there’s some people costs associated with getting this right. But — is that a potential lever here as you get into this and lean the company out to do this maybe even more cost effectively than you were originally thinking?
Jennifer Parmentier: So Jeff, you’re right, it is too early to say that there’s some upside to that number. We feel good about this year’s synergies at $60 million. We feel good about the path to $300 million. But obviously, as I spoke about with the synergies and the operational excellence driven by the Win Strategy implementation, we expect to get this to a higher level of performance, and we’ll update you along the way.
