Robert Mehrabian : That’s very good. We look at our pipeline, as necessarily say that we have better orders at this time. But we’re talking to our customers, we’re looking at that inventory level, but they’re sharing that with us. And we see that inventories are going down. As a consequence, we expect that we will start getting the orders. long cycle, of course, you understand that’s much easier because we already have the orders, and we feel good about that. So the other thing that we do on the short cycle is we look at the generator trends that people are talking about in terms of what happened in the semi industry in the past number of quarters. And what’s expected — what people are projecting. We’d be thinking that environmental and test and measurement will eventually pick up.
But we’re also seeing some pickup in MEMS already in flame infrared as well as our maritime businesses. So that’s what’s encouraging. We see some lowering of inventories for our customers as well as some pickup in certain unique businesses of ours.
Noah Poponak: Okay. That makes sense, and that’s helpful. If I go to the 4% organic for the year, and then I do what you said with the segment margins, I think most of the things between that and the EPS are pretty straightforward. I get something above your EPS guidance. Is it safe to assume that you’ve just embedded some degree of conservatism relative to the lack of visibility in short cycle in the EPS range?
Robert Mehrabian : Yes. You said it better than I could. We’re always a little conservative. The other — there’s one other thing that I should mention. When we look at our segment, per se. And we look at increases in segment margins. We have to be cognizant of the fact that the new management, which is Edwin and George are now going to be their costs or their pay is going to reflect in the corporate portion. And we’re also seeing a little higher medical and insurance premiums. So corporate, we expect would go up. That’s why while the margins in the segment look much higher, the corporate margins are — we’re assuming they’re going to be increasing about 50 to 60 basis points.
Noah Poponak: Last one, some of your commentary makes it sound like the M&A pipeline is pretty full and pretty active and you’re pretty optimistic about what you see. Other things you’ve said suggests there’s a bid-ask spread and maybe it’s a little tougher. So I guess, can you put a finer point on it in terms of how likely we are to see deals this year?
Robert Mehrabian : Yes. Let me just say that the confusion may have reason because I was answering 2 questions at the same time. The first part was larger acquisitions because we — our leverage ratio is obviously going down and it go down faster this year. The larger acquisitions right now that we look at are pretty expensive. People are paying prices that we are not going to. On the other hand, smaller acquisitions are available, and we expect to make some this year. So I think we’d be patient for the larger ones like we always have been and — but we will make some smaller acquisitions this year. So we have a reasonable product line.
Operator: Next is the question from Robert Jamieson with UBS.
Robert Jamieson: Very helpful. Just one kind of smaller one on A&D electronics. Strong growth, like expected for next year and another 80 to 90 basis points of margin expansion. Just curious how you’re thinking about the growth split within commercial aerospace between new builds and then MRO? And then how should we think about the puts and takes on margin there, maybe if like MRO is a little bit pressured next year?
Robert Mehrabian : Let’s stay with aerospace first. A significant amount of our revenue in aerospace is in the aftermarket. Because we have a very large embedded base in aircraft of various kinds. So we think that is going to be very helpful for us. We also are — obviously, in 737, we have a product line that’s going into that. And we think that’s going to help us regardless of the current issues with builds and so on. On the defense side, we are seeing some good programs in modernization, stockpile, replacement. And we think those would be helpful to us. And obviously, we believe it will be a balance of improvement, both in aerospace and in defense perhaps 5% to 6%. 5% to 6% in each domain.
Robert Jamieson: That’s great. And then this is kind of more of a random question, but just — we talked a little bit about capital allocation. You got a full funnel, probably going to look to do some smaller acquisitions. Absent anything large, and I know this would be a deviation for what we’ve seen over the last several years. But would you have any interest in buying back stock? And then I guess one other kind of thought or questions that random would be given like the float, would you ever consider a stock split to maybe make it a little bit easier to trade like tighten the bid-ask spread? And could that ever maybe make it easier for you to buy back stock?
Robert Mehrabian : Split, no. And the reason — let me start there. And the reason I say that that’s a pain for our investors. And 90-plus percent of our investors are institutional investors. We don’t want to cause that kind of a problem for them. We have very small fraction of our investors that are retail investors. Going back to buyback. Right now, we think our investment returns are much better reflected in acquisitions than stock buyback. You don’t want to say never because stock goes down a lot, then it becomes attractive. I’m hoping that doesn’t happen. We do have open authorization if we wanted to do that. But right now, I don’t see that as long as we have attractive acquisitions, even small ones, we’ll do those. And there’s nothing wrong also having some cash on the side in these days.
