Sujal Shah: Okay. Thank you, Samik. Can we have the next question, please?
Operator: Thank you. Our next question comes from the line of Luke Junk from Baird. Please go ahead with your question.
Sujal Shah: Sorry, Luke, are you there? Why don’t we go to the next question and we’ll have Luke rejoin.
Operator: Thank you. Our next question comes from the line of Matt Sheerin from Stifel. Please go ahead with your question.
Matt Sheerin: Yes, thanks. Good morning. Terrence, I wanted to circle back on the Industrial sub segments. You really just called out the factory automation, industrial automation area, it’s being weak on the destocking, other markets growing. But we are hearing from other suppliers and EMS companies have some slowing demand and inventory issues across pockets of medical and even some of the renewable energy areas. Could you give us a read on what you’re seeing in terms of inventory and is that more of a direct to OEM sales so there’s not as much noise in the channel?
Terrence R. Curtin: Yes, Matt, thanks for the question. Couple of things, first off being in Medical, and that is a direct sale, it’s very similar to how we serve automotive. There’s not much it goes through the channel there, not much it goes to EMS either. So, where we served that’s market is very much the big interventional players of the world and you can see like our growth was double-digit very strong and in-line with where interventional procedures are growing double digits. So, we don’t see that. In the Energy where we play in service in utilities and on the renewables, I would tell you we saw wind can slow a little bit more due to financing and I would say then I would say destocking, but we continue to see acceleration in solar applications and any weakness that we’ve seen in the energy business has really been around utility spending primarily in Europe.
We did see a little bit of slowness of utility spending on their grids in Europe and that’s why you saw the growth rate being a little bit lower than what we expected to be middle and longer term in that middle high-single-digit.
Sujal Shah: Okay. Thank you, Matt. Can we have the next question, please?
Operator: Thank you. Our next question comes from the line of William Stein from Truist Securities. Please go ahead with your question.
William Stein: Great. Thanks for taking my question. I think you all have done a very good job on the margins this quarter, posting some pretty solid upside. You’ve explained it a little bit, but I’m hoping you can linger on this a little bit more. We know you had these aspirational goals. You had this significantly better than expected or better than guided quarter. And maybe that’s sort of the question that I have. Is this a matter of having achieved some goals earlier than you expected, some things you thought might take several quarters, wind up being realized earlier? Or are we just looking at a higher level of profitability and we’ll continue to see some improvement from this point? And what changed, you’ve been pursuing these, all the things you talked about, you’ve been pursuing them for a while, suddenly we get this upside. Did something change in this regard in the quarter? Thank you.
Heath Mitts: Sure. Well, listen, I think certainly we went into the quarter expecting auto production builds of about 21 million units and we stated that last quarter. We came in north of 22 million and it shows that when you get the cost structure and the fixed cost base and the number of rooftops in the right location to the right number that you can really leverage that incremental volume. And that’s really what we saw on the Transportation side within the, there’ll be auto business there. So, as we come back down to about 21 million units a quarter production, global production, we do expect to be able to hold to that target margins. But there’s a lot of different levers involved there. It’s getting the cost structure right and then obviously having a more stable environment to be able to plan towards and deliver towards.
And all of those things came together nicely in the quarter, but I feel good about these volume levels that we’ll be able to hold to our target margins. And I think that’s just part of this journey that we’ve been on. If you go back last several years even coming through the pandemic driven market, we’ve been running well below 85 million units globally in terms of auto production. And now that we’re starting to get back up to that we’re starting to see the benefit. We’ve said that getting to target margins for our Transportation business would require a couple of things one of which was a bit more volume market support there and we’re certainly starting to see that. So, we’re able to get there a little faster. Some of that was market support.
Some of it was getting the cost structure in place a little bit faster as we’ve taken some facilities off in within our auto world offline in Western Europe and seeing the benefit of that. When you get into communications, we’re running a little bit hotter there. But again it’s having that structure in the right place and being able to execute. So, I wouldn’t call out and give relevant to size of the segment that can swing out around a little bit. But we feel good about where we are margin wise. And most of this upside that you’re referring to is driven out of the Transportation business.
Sujal Shah: All right. Thank you, Will. Can we have the next question, please?
Operator: Thank you. We have a question from Luke Junk from Baird, once again. Please go ahead with your question.
Luke Junk: Great. Can you hear me now?
Sujal Shah: Yes.
Terrence R. Curtin: Yes, we can Luke. Thanks for coming back on.
Luke Junk: Okay. Yes, great. Sorry about the technical issues there. Terrence, just hoping you could comment on your ability to hold the line on neutral pricing in Transportation Solutions, especially in automotive this year. I guess if we look around the neighborhood, there are some companies talking about getting back to price downs. Just for TEL specifically, if you could talk about some of the factors that are helping me to keep that neutral pricing outlook that you had outlined earlier?
