And when you look at some of the proxies that we use for overall market trends, general industrial, ISM is below 50, China PMI is up now. And so we are starting to see in second quarter, some strength there. Like I said, on industrial distribution, continued growth, but certainly caution, resi HVAC bottoming out in second quarter. Non-res commercial, which is about 6% of our portfolio now still strike. So we feel good there. Food and beverage strength more so on food. Beverage a bit weaker. Alternative energy strength. We like the space. Actually, one of our customers came out stating that with IRA, their demand might be up more than 25% this year. And then we like our aerospace position. 5% of our business is in aerospace and aerospace is definitely growing and medical is growing.
So, again, Mike, we do think Q2 will be the bottom of our orders and then we will grow from there. I hope that helped.
Mike Halloran: No. That was great. Really appreciate the time. Congrats again on the quarter.
Louis Pinkham: Thanks. Yeah. Thanks, Mike.
Operator: The next question comes from Christopher Glynn with Oppenheimer. Please go ahead.
Christopher Glynn: Hi. Thanks. Good morning and nice work on the re-segmented information that recast. Nice and clean. I did want to…
Louis Pinkham: Thanks.
Christopher Glynn: … also comment on the free cash flow very strong, obviously. Louis, you mentioned a little change in incentive compensation structure to channel efforts on debt reduction. I am wondering if there’s kind of an interim accelerated aspect to that, obviously, there’s long-term emphasis on it too, but there’s always trade-offs. So I am wondering how you are staging that and if we would expect similar quarters of magnitude to your first quarter free cash flow, maybe not every quarter this year, but, yeah?
Louis Pinkham: Yeah, Chris. So thanks for your comments and thanks for your question. Specific to compensation, we do believe what gets measured gets done. Trade working capital is a measurement that we have had historically in all of our compensation measures. We have increased that from about 20% of the variable pay — annual variable pay bonus to 35% for this year. Will reassess at the end of this year if we want to make a different change. But we felt it was important to make it very clear to our organization that we need to reduce our inventory and free up cash, because we are on a laser focus of reducing our net debt-to-EBITDA to below 2.5 by 20 — by the end of 2024. So that was the whole rationale and we feel good about first quarter performance.
Rob Rehard: And I will just add on, Chris, just on the inventory side. So we talked about that we are estimating somewhere between $150 million to $200 million of cash generated from lowering our inventories the year. We saw about $47 million of that come from inventory and contributed in the first quarter, which certainly puts us on a nice track for the rest of the year. As far as the cadence of cash as we go through the year, normally, in the first quarter and second quarter, it is a little lower and it starts to ramp up in the back half. I think from a modeling perspective you can assume that, we will see the remaining cash that kind of goes to that above $600 million in the year. maybe it trends up slightly more in the back half than the first half or at least from Q2 to Q3 in particular. But fairly flat line as we go through the year.
Christopher Glynn: Thanks, Rob. Could you clarify what the $600 million reference was, I didn’t catch it?
Rob Rehard: Yeah. During my prepared remarks, I mentioned that we expect to see free cash flows of at least $600 million in the year.
Christopher Glynn: Oh! Got it. Thanks.
Operator: The next question comes from Jeff Hammond with KeyBanc Capital Markets. Please go ahead.
Jeff Hammond: Hey. Good morning, guys.
Louis Pinkham: Good morning, Jeff.
