Robert Mehrabian : For industrial automation, really is it’s a combination of things. We’re seeing, for example, some improvement in the semi market now, projections for improved semi market recovery. We’ll also seeing some pickup in smartphones now, which is our consumer-related businesses, which affects our Micro Electro Mechanical Systems MEMS programs, in the other markets, especially laboratory instrumentation, we don’t have as much visibility, frankly, we haven’t seen these kind of declines before. So we think those should come back. But we’re not counting on them a lot. We think there’s a flip side of our environmental businesses, which is — that’s a part of which is the air quality, water quality monitoring, which have been very healthy. We have a nice backlog and — we think the combination of those 2 will help us in that part of our instrumentation business.
Kristine Liwag: And last question for me. I mean, your current leverage position gives you flexibility to pursue more sizable deals? I mean, you’ve recently closed the Zeno acquisition. But in terms of larger deals, are valuations starting to look more attractive? And how is the 2024 pipeline shaping up?
Robert Mehrabian : Yes. I have to tell you, valuations on the larger deals have not come down yet as much as we would like. We’ve looked at some of the prices that our competitors have paid for large ones, those are kind of out of our range of what we would consider. On the flip side, we see some opportunities in smaller bolt-on acquisitions, what we call single pearls, which are available, and we will be pursuing those. If you looked at our ’68, ’69 acquisitions over our history, the string of pearls are of ’68, ’69. And they are the easiest to integrate. We can fit them in and we can improve their margins as we go. The larger deals, we have to be a little more patient because right now, prices are still pretty high.
Operator: Here’s a question from Andrew Buscaglia with BNP.
Andrew Buscaglia: Digital Imaging margin. So I wanted to ask on — so you’re going to start Q1 sounds like in a whole. First off is digital imaging margins, do you expect those down year-over-year and that effectively marks sort of a bottom for that segment as sales start to improve from there?
Robert Mehrabian : No. The answer is no. I don’t expect Digital Imaging margins to go down. I think that should go up a little bit in Q1 and then pick up the rest of the year. As I mentioned before, Andrew, this — we think Digital Imaging as a whole should have margin improvement in ’24, somewhere between 50 basis points and 100 basis points. We’d probably more prejudice towards the higher number. But nevertheless, no, I don’t think we’re expecting to suffer there because as we’ve done before, when some of our markets soften up, we take cost out. And then that helps maintain our margins. And the markets come back — we really enjoy the margin improvement. So no, I don’t think digital imaging is going to go down.
Andrew Buscaglia: And you mean up year-over-year or up sequentially?
Robert Mehrabian : Well, I think year-over-year first, it’s going to between 50 to 100 basis points. I think — and I think what would happen is if there’s sequentially — it will be sequential improvement. I don’t expect things to go down.
Andrew Buscaglia: Yes. Okay. And then in past quarters, you sort of broke out [indiscernible] book-to-bill versus legacy Teledyne book-to-bill. Do you have that? And then wondering your view on potential incremental defense awards as the year progresses?
Robert Mehrabian : Sure. If you look at instrumentation, which is all legacy Teledyne in some ways. Which is marine, environmental and test and measurement. The book-to-bill in Q4 was 1.12 which is very healthy, driven primarily by Marine, which was really good. Digital Imaging, we — or excluding FLIR, I’m just answering your question precisely, it was just over 1. Aerospace and Defense, it was closer to 1.2. That’s historical paradigm. And Engineered Systems was just over 1. And then if you look at FLIR, which is our big acquisition, obviously, it was just over 1. So all in all, whether it’s our historical Teledyne or Teledyne Plus FLIR, if you look at Q4, our book-to-bill was over more closer to 1.07%.
Andrew Buscaglia: Okay. And then a question on you’re feeling on incremental defense awards throughout the year. Is there still a lot you’re tracking?
Robert Mehrabian : Yes. The answer is yes. We have a pretty good read on what’s coming. We have some new products. I mentioned the Black Hornet 4. I mentioned the space Tranche 2. The primes that have gotten their awards in last week or we are up to all of them. And we feel good about that.
Operator: [Operator Instructions] And let’s go to the line of Noah Poponak with Goldman Sachs.
Noah Poponak: Robert, your full year 2024 framework is assuming 4% full year organic revenue growth. Is that correct?
Robert Mehrabian : Yes, about 4%.
Noah Poponak: And can you just repeat what you said about the first quarter top line revenue dollars or organic revenue growth?
Robert Mehrabian : Yes. I think it’d be above 1.4 or a little under, if that’s going to be our lowest quarter. And I’m saying that because of the short-cycle businesses that we’re seeing. We have orders on long-cycle businesses. But we — our short-cycle businesses — we’re assuming that will not recover much in Q1 and so it should be flat year-over-year in terms of revenue and then pick up.
Noah Poponak: Got it. Okay. Just — yes, I wasn’t clear, but now I am. And I guess in those short-cycle businesses, I mean this has sort of been asked and discussed, but just have you actually seen concrete evidence of when that will pick up? Or I know a short cycle, but orders for it to pick up? Or are you just kind of making an assumption based on everything you know about the business? And then I guess you’ll also have easier compares.
