Rob Rehard: Yes. So let me, let me take those two pieces here. So first of all, from a — the copper coming through on a two-way material price formula. Hey, these are two way. We aren’t seeing a lot of that yet that there is still a lag there. On the non-contracted business, which I know is not part of your question, but we do hedge both copper and aluminum. So that’s on the non-contracted side. So no, we aren’t seeing a big impact from that as we move through the year but are continuing to evaluate. On the — your second question on stranded cost potentially, so the $0.15 that you see in the model that we provided in the presentation, it is simply dilution. There is a — certainly a bit of stranded cost that we would estimate to be a little less than $5 million, which are partly covered by TSAs and which we believe we can take out in the next 12 months through our normal productivity actions.
Nigel Coe: Great. Thank you.
Louis Pinkham: Thanks, Nigel.
Operator: The next question is from Walter Liptak with Seaport. Please go ahead.
Walter Liptak: Hi, thanks. I wanted to ask about the free cash flow for the year. And how — we’re going into a seasonally stronger period, how the cash flow might look for the second quarter? And then what are the puts and takes to getting to that the free cash flow number?
Rob Rehard: Sure. Yes, so $700 million for the year and you’re specifically asking about maybe puts and takes on, on maybe working capital, how that progresses, the seasonality associated with inventory builds. I would expect that the cadence of our cash flow is customarily going to be, hey, you’re going to start a little bit slower in the first quarter and build as you move through the year with most of your cash coming in the late third to fourth quarters. We do see that there is a headwind in working capital this year relative to last year. We saw almost $250 million of working capital benefit last year, and we might see about $50 million of that this year. That being said, the way that we bridge from last year to this year, if you will, if you think that we got almost about $660 million last year going to $700 million this year is — we’ll get a little bit out of EBITDA year-over-year.
Our cash interest expense will come down. Our cash taxes will also be lower than last year and then restructuring should come in a little bit lower. So when you kind of bridge last year to this year and there’s about $40 million or so between the two years, those are the kind of puts and takes on the bridge to get you to this year’s cash flow. (multiple speakers)
Walter Liptak: Oh, sorry about that. So Louis, I wanted to ask about the conveying products and thanks for pointing out the $400 million in sales. I wonder if you could talk about the margins for that business? And if there is a difference between margins for component parts and systems versus design engineering? And are you doing any installation or integrated systems within that $400 million.
Louis Pinkham: Yes. So I’ll go a little backwards. So are we doing installation and project management? We are. It’s not a big percentage of that business, but about 5% and we’re actually seeing that piece growing nicely. You know the margins of the overall business are actually above our average in that segment and it’s part of AMC, it’s a solid business. Now it really depends on project by project, but our equipment side and our system side are not that far off our component side for margin. So overall, a really solid business for us.
Walter Liptak: Okay, great. And why is it that you — do you think that this part of say, the conveyors are growing faster than say the automation part of your business?
Louis Pinkham: Well, you know, this — the conveying business is really linked to food and beverage and warehouse. And for sure, food and beverage and warehouse has been under pressure for the last couple of years, in particular, I should say beverage and warehouse. And so we’re seeing that rebounding as the year progresses and into next year. And then I’ll emphasize one other point, which is with the acquisition of Arrowhead as well as our industrial powertrain solutions synergy, strategy of selling the entire industrial powertrain, it really fits into these markets well. And so we’re winning more because of the total solution that Regal Rexnord is able to bring to bear.
Walter Liptak: Okay. Thank you.
Louis Pinkham: Thanks Wal.
Operator: The next question is from Joe Ritchie with Goldman Sachs. Please go ahead.
Joe Ritchie: Hey guys, good morning.
Louis Pinkham: Good morning, Joe.
Joe Ritchie: Hey, so just want to really focus my questions on AMC. So clearly, like there’s a big part of the business that is going from inorganic to organic this upcoming quarter. And so I just want to make sure I’m dialing this in right, like you guys are now looking at potentially like mid-teens down organic for the second quarter. And is that — so please correct me if I’m wrong there. And then also, is that kind of like where trend is on the business right now? And any color you can give us on the discrete automation side of the business would be helpful relative to that number.
Louis Pinkham: Yes. So Joe, I appreciate the question. I would say you’ve also got to remember there’s a little bit of a stub period compare that puts a bit of a pressure on AMC. It really though, the main pressure in AMC for us is discrete automation. And although we’re seeing the order book feel better, it’s really more second half and ’25 weighted. And so that’s putting pressure. But again, the segments or the markets that are accelerating are medical data center and aero, which gives us confidence in the second-half of next year — sorry, second-half of this year.
Joe Ritchie: Okay, got it. That’s helpful, Louis. And then I guess — and just maybe just sticking with that last comment. So to get at those end markets are doing better, like in the end markets that aren’t doing well, like is there anything from like a — whether it’s like you know, negotiations or marketing qualified leads or any type of like kind of leading indicators that are helping you feel better about like the parts that aren’t doing well bottoming?
Louis Pinkham: Yes. So you know, I would refer you back to some of the statements that Rob made earlier on. And so factory automation makes up about 35% of that segment and our funnel is up 50%, our win rate is up about 300 basis points and our — we’re seeing a book-to-bill in that segment coming out of the first quarter of 1.08. So all of this is giving us more confidence in the second half. And so yeah, that’s really why we’re guiding — what we’re guiding for second-half sales.
Joe Ritchie: Okay. Yeah, no, that’s helpful. Thanks for that clarification. I’ll get back in queue.
Louis Pinkham: Okay, great. Thank you.
Operator: This concludes the question-and-answer session. I’d like to turn the conference back over to Louis Pinkham for any closing remarks.
