Michael Harrison: All right, sounds good. Thanks very much.
Andrew Tometich: Thanks Mike.
Operator: Our next question is from Jon Tanwanteng with CJS Securities. Please proceed.
Jonathan Tanwanteng: Hi. Good morning. Thank you for taking my questions and congrats on the nice quarter and margin cash flow. I was wondering if you could first talk a little bit about IKVT. I know it’s fairly small, but maybe a little more details on what you paid for it, if there’s any tangible accretion and what capabilities or opportunities does it bring to Quaker?
Andrew Tometich: Hey, Jon, thanks for the question. Good morning, by the way. We’re excited. This is another opportunity to advance our position and our advanced and operating solutions, specifically with specialty greases. Now, the size of the business is less than 1% of our total sales, but it adds some excellent growth opportunities and consistent with our bolt-on strategy that we’ve been very successful as we take advantage of our customer intimate model. When we can add technology or customer access channel to market or shore up some geographic positions, it works out extremely well for us. IKV does all those things for us.
Jonathan Tanwanteng: Got it. That’s helpful. Thank you. And then it looks like you had some modest deflation in Q4. I was wondering if you could talk about what you’re seeing in input so far in Q1 and does that give you some tailwinds in driving incremental margin as you hold on to the price or should we be expecting something different there?
Andrew Tometich: Yes. So we’re anticipating. Was your question about raw materials or I just want to clarify, Jon.
Jonathan Tanwanteng: Yes. And how that relates to margin. Yes.
Andrew Tometich: Yes. Thanks. Thanks for that. Yes. So for sure, there were some modest declines in the second half of last year, but I would highlight raw materials are still very high on a historic basis. We’ve seen them stabilize at this point in time. We’re not anticipating any real changes as we go forward into 2024. Remember, we’ve got a very complicated basket of goods, but overall, at that high historic rate, I think we believe it will be relatively stable going forward.
Jonathan Tanwanteng: Okay, great. And then finally, could you talk a little bit more about your fluid monitoring products and kind of how much contribution you’re expecting from that family of technologies and solutions in the coming years?
Andrew Tometich: Yes. Thanks, Jon. I mean, we don’t provide the granularity on how much it’s contributing, but we’re continuing to make progress on our fluid intelligence. This is a multiyear approach with phases where we really want to continue to add customer value in the way we’re helping them to monitor their operations and control and ultimately optimize those things. So we’re making great progress with the activities we’re doing with customers now, which is helping to refine where we go next, and we’ll continue to characterize that as we go forward.
Jonathan Tanwanteng: Okay, great. Thank you.
Andrew Tometich: Thanks.
Operator: Our next question is from Laurence Alexander with Jefferies. Please proceed.
Laurence Alexander: Good morning. Can you, it’s been a while since we’ve had, like a fairly normal year. Can you characterize what you think seasonality should be going forward?
Andrew Tometich: Yes, Laurence, you’re right. I can’t recall what normal looks like anymore, so it’s a fair point. But I think we’ve seen kind of some stability over the last year or two that is at very low levels. But we tend to see improvements as we move through the middle part of the year. And I would anticipate that’s going to be a continuation, low to mid-single digits, lower in the first quarter, but things improve as we move to the middle of the year.
Laurence Alexander: And then as you talk to your customers about your digitalization efforts and kind of the types of processes and programs you’re working on, is there any change as you look farther out a cycle, two cycles, is there expectations in the industry of a change in the value capture? I mean, should we expect gross margins to sort of step up to a new level over seven, 10 years, or how does the industry think about this all in terms of how it changes the financial structure of you versus your customers longer term?
Andrew Tometich: Yes. So, Laurence, I think the way our customers and the way we think about it is there’s opportunities here to both add efficiency to the things that we’re doing today, to help them to monitor, control, and optimize their processes, and it allows us to do it more effectively as well. So I wouldn’t say it’s been quantified at this stage, but we fully anticipate that it’s going to add to the benefit of both the efficiency and the effectiveness in the way that we deliver that intimate service model to help them be the most successful.
Laurence Alexander: And what has been the feedback in terms of how different what you’re doing is compared to your smaller regional competitors?
Andrew Tometich: Yes, I mean, I think we have a more comprehensive ability to cover more parts of customer operations. Many of our customers have multiple operations, and so our ability to be able to help with tools and capabilities that go across those different units of operation is really a key thing that helps to differentiate us. And I think our know how in the way that our products interact and the breadth of our products also creates a differentiation for us.
Laurence Alexander: Thank you.
Andrew Tometich: Thanks.
Operator: Our next question is from Vincent Anderson with Stifel. Please proceed.
Vincent Anderson: Thanks. Good morning, everyone. So I just wanted to ask, hey, I want to ask real quickly, just how are supply chains looking for, let’s call it some of your more esoteric inputs in terms of your ability to really lean into capturing new business this year?
