William Stein: Great. I’m hoping you can elaborate on the low-margin onetime revenue that you had. And I’d also ask if you could comment on booking trends in the quarter?
Brian Roberts: So the low-margin onetime revenue is effectively within the Industrials business, we wound up leveraging our supply chain to effectively buy some onetime product on behalf of a customer, which was associated with an installation that we were doing. So it’s really almost — think of it as almost like pass-through revenue that was kind of onetime in nature. So that was the revenue back in Q2 of ’23, and again, it was around $25 million in total.
Operator: The next question comes from Samik Chatterjee with JP Morgan.
Manmohanpreet Singh: This is MP on Samik Chatterjee. Can you please highlight the key audit matters, which you touched upon the recent 10-K filing.
Brian Roberts: Sorry, Samik, could you repeat that on the 10-K filing?
Manmohanpreet Singh: Certain key audit matters that were highlighted by the auditors in the 10K filing.
Brian Roberts: So yes, so with the different acquisitions that were completed, we effectively have to go through goodwill and impairment analysis for each of those different acquisitions, basically looking at purchase price versus the fair value of the assets as described by us and then audited through the firm. And ultimately, that test is done on a routine basis, and they look at each of the different reporting units, that’s effectively that led to last year, the change that we made with the Insights business. I’m not sure if you’re speaking specifically to that or if there was another piece that you’re referring to. The other one may be around our internal controls, and I’ll just head on. Certainly, within our regions, as we went through our internal control kind of testing and environment here in 2023, we found some different issues, specifically in the Americas and our Mexico make sites.
A lot of it around inventory and some of our account reconciliation work that was done by our shared services team that we felt needed to be upgraded. And so we’re working through the process alongside Deloitte as well as leveraging third-party advisers such as Pricewaterhouse for us to be able to go through and make sure that internal control environment, the testing, the actual documentation of all those controls and the actions are up to the standards that we certainly set for ourselves, and we’re working hard to make sure that we can attempt to remediate that by the end of this calendar year.
Operator: The next question comes from Luke Junk with Baird.
Luke Junk: Jeff, hoping you could maybe expand on what you’re seeing in industrial and HVAC right now just in terms of current dynamics working through the channel and whether you’re seeing any light at the end of the tunnel sitting here in late April, just given that’s such an important piece to the bottom-line outlook.
Jeff Cote: Yes. So when you think of things that have changed since February, the outlook for Industrial is an area that’s a little bit more negative than historically was in February. That foreign exchange are both going in the wrong way, mix is going to positive way, offsetting the impact associated with both of those. You follow some of the others that have shared their results prior to us you know that the industrial business is now expected to go through a down cycle for the balance of 2024, and so we’ll monitor that closely. It’s a complex supply chain in terms of all the distributors and others that are there. But we are working very closely with our customers because as Brian had mentioned, when that business snaps back not only do you have to deliver what the market is, then you start to replenish the supply chain as well.
So it snaps back pretty strong when it does. So we’ll keep a close eye on it. On the positive side of the industrial business, as Brian also mentioned, I think everyone knows that there is new regulation associated with refrigerants and HVAC systems. We have, for the last 2 or 3 years, developed A2L leak sensor, and we’re engaged very closely with our customers as they’re launching that and 2024 has a meaningful portion of revenue associated with that. Just to be clear, that has — when it’s fully panned out, it has a $80 million to $100 million revenue opportunity for Sensata. So we feel really good about that piece of the industrial business. Hopefully, that helps, Luke.
Operator: The next question comes from Joe Giordano with TD Cowen.
Joe Giordano : I’ll just echo everyone’s comments, Jeff. Thanks for everything along the way, and I wish you the best for whatever is next for you. I just had a question on the corporate expense. It was decently lower than when we were modeling. I’m just curious, is this like a sustainable lower run rate now that some of this megatrend spend is either being 1 like moved into the segments and has true revenue associated with it or just kind of minimized and kind of rationalized out of the organization from now?
Brian Roberts: Yes. No, it’s — we think this is probably a relatively consistent run rate. We do have an uptick that happens in the second quarter as merits go in as of April 1. So that’s a little bit of a negative headwind when you think about corporate expenses for Q2. But overall, we’ve really tried to rationalize, I would say the megatrend spend as electrification became the opportunity for us to focus. And more and more of those resources are ultimately being serving new business opportunities now within typically the Performance Sensing units. So I think it’s probably a relatively consistent run rate going forward, maybe a slight uptick, like I said, in Q2, just given some normal kind of timing of expense.
Operator: [Operator Instructions] The next question comes from Amit Daryanani with Evercore ISI.
Irvin Liu: This is Irvin Liu on for Amit. Jeff, we wish you all the best. Not to be nitpicky, but Brian, if I heard correctly, you mentioned that 2024 revenue growth is expected to be 2% versus 2% to 3% last quarter. Just can you give us any color on why you expect 2024 growth could be at the lower end of your prior range. Is this mostly a function of FX or what you’re seeing in the industrial end markets?
