We’ve shown that when we can get parts, we’ve got the plant capacity in the labor to respond and productive – drive productivity and get the product out the door that becomes increasingly more challenging as fewer and fewer lines and fewer and fewer products that we’re trying to effect change. It doesn’t mean we can’t affect change, it just means it will take a longer time to work the remaining backlog down.
Fay West: And you’re right, Steve, first half revenue is higher than kind of what’s implied in guidance for the second half. Part of that is seasonality, which is normal, and especially in EMEA, which we anticipate Q3 will be down slightly versus Q2. The other piece is the rate at which we’re going to be able to reduce backlog as Dave was just talking about, we said we’ll probably be right around the 200 range. And so that implies roughly a $50 million reduction in backlog, which is a bit lower than what we saw in the first half.
Dave Huml: And Steve, adding to that, you also had a question on EPS and I think, worth mentioning mentioned – Fay mentioned already during the presentation of our H1 also benefited from some total restrictions on S&A. And while we remain cautious, we anticipate – we will anticipate that some of the S&A will be higher in the second half as a result of investments in employee strategic investments and also reverting back to some normal level operational spend around travel. So that’s part of kind of second half guidance.
Steve Ferazani: Okay, that makes sense. Asia-Pacific, nice bump this quarter, is that China opening up again or is it more widespread than that? And if you can you give us any kind of color on regional differentiation in order books?
Dave Huml: Yes, I’d be happy to, specifically on APAC. And I think as Fay mentioned is, we’re having a strong year in Australia and New Zealand in our marketplace there, we have a commanding position of the market there and we’re really capitalizing on a strong macroeconomy to launch new products including AMR and realized price as well. China had a strong start to the year. And so we’re pleased with the early returns. I will tell you that we are seeing some softening in China and kind of the post-COVID surge appears to be stalling on a macroeconomic basis. The government is putting stimulus in place to try to stimulate the broad economy, but we’re cautious whether that will, that will read through into our markets. And what we’re hearing from customers is they’re cautious as well.
So, much of the China economy is driven by exports – and exports are down, if you look at China exports, in June versus prior-year June, it’s down 12%. And so it’s not, we don’t think it’s a quick solve for China on a macroeconomic basis. Having said that, we’re still bullish on China. We like our position there, we will look at our go-to-market and our product portfolio and we’ve got a line of sights and confidence in our ability to deliver China results in line with our full-year year guidance. From an order perspective, we’ve seen softening in EMEA, we believe it’s driven by broad macroeconomics, and we’ve heard other competitors echoing the same sentiment. We’ve seen it in our product portfolio on the lower end, kind of, commercial product categories, including high-pressure washers.
We’ve seen some broad-based softness across the geographies across the countries within EMEA. But I would note, Germany, in particular, has seen a softening in demand and it’s driven by macroeconomic conditions, and hyperinflation within that particular country. So we are monitoring EMEA closely to make sure that we are positioned to capitalize any opportunities that present themselves, but also that we’ve rightsized our cost structure and calibrated our spending, given the opportunities we have in the short term. And Americas, both Latin America and North America are very robust. Orders are holding up. We’re able to operate productively when we have targets, and we’ve demonstrated the ability to book orders when our lead times are extended but reduced backlog when we can get parts.
And we’re getting strong price realization against a moderating inflation backdrop. So we’re kind of hitting on all cylinders in those geographies. And while we’re cautious about our outlook and we need demand to remain resilient heading through Q3 and Q4 we have line of sight to the order pipeline to feel confident in those geographies delivering to support our full-year guidance.
