Julie Beck: Yes, thank you. I mean what we would say, David, is that we would have Q2, as Simon mentioned, would be — and we mentioned in our remarks would be impacted by more inefficiencies in Monterrey. But really, the first quarter would be a stronger quarter than the fourth quarter, I guess and that would be the only reason. There is nothing else other than some further startup inefficiencies, and that’s about it. But overall again — for the AWP, they’re going to have incremental margins approaching at 35% for the year.
David Raso: Okay, just want to make sure. I really appreciate it. Thank you.
Operator: Our next question comes from Steve Volkmann from Jefferies. Please go ahead. Your line is open.
Steve Volkmann: Thanks guys. Just a couple of cleanups for me. Julie, have you changed at all your view of the sort of total start-up cost impact on 2024?
Julie Beck: We would say that we guided to that $15 million to $20 million number. It came in a bit favorable in the first quarter. I’d say, it was probably about a $5 million impact. We would expect that to increase and be higher in the second quarter, as we mentioned. And then we would expect that to go down through the rest of the year, more first half weighted than second half.
Steve Volkmann: But for the full year, kind of that same range that you have been talking about –.
Julie Beck: Yes, exactly.
Steve Volkmann: Okay. And then I had a question on the utility business as well because if I remember correctly, that had some very kind of specific and I think significant margin headwinds through the COVID interruptions in supply chain and so forth. So I’m just curious if you can sort of bring us up-to-date. How are margins in that utility business now? Is there still sort of meaningful upside as we go forward? Just how to think about that?
Julie Beck: Yes.
Steve Volkmann: Yes, we had a tough Q3 last year. And since when we kind of graduated team has continued to improve. So we’re actually very pleased with how the team executed in the first quarter.
Julie Beck: Yes. The third quarter, as Simon mentioned, they had a supplier quality issue, which impacted us significantly. And we recovered from that. And so we are expecting some improvement in that business as well. That business still does have some more supply chain disruption due to bodies and chassis, but we are expecting improvement in that business as we go as well. And we’re — as Simon mentioned earlier, we think there is a business that has a tremendous amount of potential and we like that business going forward.
Simon Meester: It’s still functional supply, though, that’s the challenge, is that — and there are some big swings like custom bodies and truck chassis. We thought we were out of the woods truck chassis and that kind of came back. So it’s really — there’s some uncontrollables there as well.
Steve Volkmann: Okay, thank you.
Operator: Our next question comes from Nicole DeBlase from Deutsche Bank. Please go ahead. Your line is open.
Nicole DeBlase: Yeah, thanks good morning. Maybe just first, you raised the EPS guidance for the full year, but less free cash flow as is. Is it just early in the year to be raising the free cash commitment? Is it more working capital investment? Can we just discuss that?
Julie Beck: Yes. I mean we kept the range it is early in the year, Nicole I agree with that. We are carrying — we do expect inventory levels to come down through the year and improve working capital management is incorporated in that. As we mentioned, that we do carry some more inventory in the first quarter, we build inventory to support those second and third quarter of higher sales volumes, and we have higher inventory right now for the production moves. And so — but we are expecting that to come down in net working capital to be a source of cash this year, and we — cash flow to gradually improve throughout the year and be more traditional with our seasonality with the use of free cash flow in the first quarter and improving subsequently throughout the year.
Nicole DeBlase: Got it. Thanks, Julie. And then I guess, can we just hear a little bit more about what you guys are seeing in Europe. This has been definitely a trend that we’ve heard from multiple company. So it’s not particularly surprising. But just would you say things are like getting worse, just kind of bouncing along the bottom, it would be really helpful if you could characterize what you’re seeing there. Thank you.
Simon Meester: Yes. For us — so the bright spot in that region, if you include the broader region is for us in the Middle East. But the parts where it’s really affecting us, it’s Germany, U.K. and it’s France. And I guess, technically, both the UK, and Germany are hinting towards, I think, a technical recession. I haven’t seen their late GDP numbers. But if Germany and the U.K. would recover, and we think U.K. might recover a little before Germany does because Germany is overly dependent on exports but our outlook currently confirms that it doesn’t get worse in the UK, and in Germany. But those are the two markets that are really [hurting us] (ph) the most.
Nicole DeBlase: Thank you. I’ll pass it on.
Simon Meester: Thank you.
Operator: Our next question comes from Tami Zakaria from JPMorgan. Please go ahead. Your line is open.
Tami Zakaria: Hi, good morning. Thank you so much. So could you comment on the inventory in the channel for MP. I think I remember you expected some destocking in the first quarter. Is that largely done?
Simon Meester: Destocking — sorry. Thank you, Tami. So yes, we — that is largely done. Our dealer inventories are where they need to be. So it’s an interesting dynamic because obviously, when backlogs come down and in the case of Fuchs where demand came down because of scrap prices, we had to do some adjustments in supply. That’s largely done. That’s behind us now. And so from a dealer inventory and pipeline standpoint, we think we are where we need to be going forward.
Tami Zakaria: Okay. That’s all from me. Thank you.
Simon Meester: Thanks, Tami.
Operator: Our next question comes from Jerry Revich from Goldman Sachs. Please go ahead, your line is open.
Jerry Revich: Yes, hi. Good morning everyone.
Simon Meester: Good morning.
Jerry Revich: Simon, in your prepared remarks, you spoke about the company’s opportunity in leveraging digital and technology advancement. Can you just expand on that? What are the opportunities with your telematics offerings and elsewhere, what exactly if you wouldn’t mind flushing out first, what exactly you have in mind in terms of the most significant opportunities for you folks, given existing installed base telematics and any other developments you’re focused on?
Simon Meester: Yes. Thank you. So I see external opportunities for us and I see internal opportunities for us. External besides just what makes its way into our products today. I talked about hybrid. I talked about our first all-electric pocket truck, ePTO and so on and so forth. But we also made some longer-term technology investments in Acculon and Apptronik which we both announced last year, and I believe late 2022, we believe we’re very excited about our Acculon investment because that will give us control of an important EV supply chain for us. And in Apptronik, we’re excited because that’s kind of the next-generation of robotics and we can start applying that in some of the applications in not just aerials, but in other areas of tariffs as well.
So the long-term technology investments is just as exciting as what we’re currently implying. But then internally, we see AI as just that – the next opportunity to just drive efficiency, drive productivity, drive real-time decision-making, the way we balance supply-demand with AI, we can make that a real-time process. So we’re excited on how we can leverage that both externally and internally. We mostly see it as opportunities for us.
Jerry Revich: Okay. Thank you. And then lastly, can I ask you to please comment on what you’re seeing in terms of the telematics data for booms in North America in terms of where year-over-year utilization stands. It looks like used equipment inventories are rising off of a really low base, but I’m wondering what the utilization data shows if you’d be willing to share it, please?
