Guy Hardwick: All right.
Robert Mehrabian: … we were negatively by 60 basis points. This year I hope to be positive.
Guy Hardwick: And just to follow-up on the broker purchase, I believe that you said that it was $70 million incremental last year. What does your guidance imply in terms of lowering that $70 million in 2023?
Robert Mehrabian: It’s hard to tell at this point, but if I were to take the first quarter and project it out, I’d say half.
Guy Hardwick: So potentially $35 million…
Robert Mehrabian: So it will…
Guy Hardwick: … $30 million to $40 million lower.
Robert Mehrabian: Yeah. $35 million.
Guy Hardwick: $35 million lower broker purchases.
Robert Mehrabian: Yeah. Yeah.
Guy Hardwick: Broker, okay.
Robert Mehrabian: Approximately.
Guy Hardwick: Okay.
Robert Mehrabian: Again, that’s a moving target. So, so far, we have been successful. As the semiconductor industry has gone down, as you can expect, the parts that were in shortage, some of them have become available. Some of them are at the harder parts to get. The FPGAs, et cetera are still harder to get. So it’s a mixture. But things are improving, which makes me feel positive.
Guy Hardwick: And just one final one for me, is there any sort of mix effect either positive or negative in Digital Imaging in terms of the margin?
Robert Mehrabian: No. I don’t believe so.
Guy Hardwick: Okay. Thank you.
Robert Mehrabian: For sure.
Operator: We will go now to Kristine Liwag with Morgan Stanley.
Kristine Liwag: Hey. Good morning, everyone.
Robert Mehrabian: Good morning, Kristine.
Kristine Liwag: Robert, on the supply chain, just want to follow-up on the premiums paid to brokers for component sourcing. So you have talked about how that’s declined. And is that because traditional sources have reopened and therefore you are now sourcing less parts from these brokers or are you seeing more availability of parts and there’s not as much of a scarcity and therefore their premiums have declined? Can you provide more color on what’s driving the dynamic there?
Robert Mehrabian: Yeah. The big picture is that we are able to buy more from the OEMs than from brokers. We obviously prefer to buy from OEMs, because the prices are stable or it might be price increases versus last year. But brokers, you — there you end up paying premiums of 70% to them. So that’s the big picture. And the availability is improving, it’s very interesting just anecdotally, there have been a few brokers that have called us asking us if we want some of their parts. Last year, we were out there begging for parts, and obviously, if that were to happen, I look at that as they have some obsolete or some excess supply and we are buying, but we buy them at a discount to what we paid to the OEMs. So the market is improving. I like that.
Kristine Liwag: Great. And then, Rob, you mentioned that you anticipate that you can pass on whatever inflation costs that you have into pricing. So that should be a net positive for you. But can you talk about the demand environment? What’s been the customer sensitivity to pricing and right now, if you look at the financial markets, we have had two regional bank failures last month and there is more uncertainty today. Is that macro environment affecting your customer’s decision for capital purchases or to have some sort of pricing sensitivity?
Robert Mehrabian: Yes. The answer to it is, yes. On the other hand, because we are in such a diverse market, if you look at some of our longer-cycle businesses, as I mentioned, like marine with energy dependent. Some of our defense businesses or others, they are not as price sensitive to what’s happening in the financial market. Some of our shorter-cycle businesses, yes, we have to be careful that we don’t increase prices and lose to the competition, lose market share to the competition. But in some areas, like healthcare, where we make X-ray panels that are very high resolution, very low dosage, there we have pricing power and so it’s a mixture. Overall, when I say uncertainty, about economic uncertainty, I am speaking exactly to what you pointed out, some of the uncertainty in the financial market that’s shipping out into other markets as well.
Kristine Liwag: Great. Thank you for the color. And if I could sneak a last one in, when you look at your overall portfolio, what percent of it would you say, you have more pricing power versus what percent would have more pricing sensitivity?
