Sameer Ralhan: Yeah, and Andy, just one quick point I would add to that is, as you’re going to think about Water Quality, in the Q1 it’s a very tough comp, as Jennifer just mentioned. And also, most of our broad portfolio does not have any seasonality, but Water Quality is one where we do see a little bit. Q4 tends to be strong as the budgets are finishing up the municipalities and similar institutions kind of making decisions. Q1 at the beginning of the year, people are a little predescent to how they kind of think about spending on the budget. So there’s a little bit of seasonal element into Water Quality, not a whole lot, but that’s something to keep in mind as well, and that’s kind of baked into the Q1 guide.
Andy Kaplowitz: Appreciate the detail.
Operator: And we’ll take our next question from Mike Halloran with Baird. Your line is open.
Mike Halloran: Hey. Good morning, everyone.
Jennifer Honeycutt: Good morning, Mike.
Mike Halloran: Maybe we could have a similar conversation. How you are thinking about the margins, given the separation and moving pieces around everything. How do you think about the jump-off point into ‘24 from a margin level? Is the fourth quarter, if you adjust for the deval, the right way to think about the two segments? And then how do you think about cadencing through the year in 2024? Should you just kind of follow that revenue pattern you were talking to or is there a different pattern to think about?
Sameer Ralhan: Yeah Mike, I’ll take that one. As you’re going to look at the margin profile, we had a pretty strong finish to Q4. But as you kind of move from Q4 into 2024, for the full year we expect to deliver 50 to 75 basis points. There’s going to be sort of a sequential improvement through the year. In Q1, as you can imagine, we’re going to probably see the biggest impact, the run rate of the stand-up and the corporate costs. So that’s going to have a tough compare in Q1 on a year-over-year basis. You’re also making some select investments in both Water Quality side and PQI side, more oriented towards growth in the sales and marketing kind of initiatives, which are going to impact Q1. But overall, as you’re going to think about for the full year, we expect to deliver 50 to 75 basis points of margin expansion.
And that includes roughly $40 million of headwinds that’s going to come from run rate corporate expenses and the stand-up company costs. So 50 to 75 with a margin, or with a fall-through of roughly 40 basis points is how we’re going to think about it.
Mike Halloran: Okay. And I might have missed this, and I appreciate that. What’s the interest expense expected to be this year?
Sameer Ralhan: Yeah, interest expense, you should think of Mike, roughly $140 million on a run rate basis for us. That includes a little bit of a benefit from the interest income, but overall $140 is a good assumption for modeling purposes.
Mike Halloran: Great. I appreciate it. Thank you, everyone.
Sameer Ralhan: Thanks Mike.
Operator: And we’ll take our next question from Nathan Jones with Stifel. Your line is open.
Nathan Jones : Good morning, everyone.
Jennifer Honeycutt: Good morning.
Nathan Jones : Question first on PQI. I think it makes sense that you would say the recovery in consumables first. Can you talk a little bit about what would be a typical lag time before you start to see improvement on the equipment side from that improvement in consumables?
Jennifer Honeycutt: Yeah, I think it’s typically a couple of quarters. It certainly depends upon the individual company and customer, but generally I would say that it’s around two quarters.
Nathan Jones : Okay. And then I wanted to follow-up on Deane’s question about Aria Filtration. A couple of the comments that you made there, sort of lead me to questions about the strategy there. Are we looking at some kind of outsourced water model, water as a service model, where you are kind of able to leverage the footprint you have in testing to build that kind of a business up? Is that the kind of thing that we’re talking about with the changing strategy of that business?
Jennifer Honeycutt: Yeah, I mean certainly every business will take a look at its portfolio and position it to be – to fully meet the needs of the customers and certainly align with where the opportunities are. That is not currently in our purview, but remains to be something that could conceivably be considered in the course of sort of moving the strategy along.
Sameer Ralhan: Yeah, the strategy point Nathan is more around really focusing around geography product combination, so this is not a complete wholesale change in strategy. Just want to highlight that.
Nathan Jones : And just the last one on price-cost, you said 100 to 200 basis points in 2024. Are you assuming that that’s neutral to margins or slightly accretive to margins?
Sameer Ralhan: No, I think overall maybe slightly positive, Nathan. I think when you look at the overall contribution to the margin, I think it’s helpful to just have a look at holistic basis. On a holistic basis it’ll be 50 to 75 basis improvement of the margin. It’s going to come through a combination of price and volume, and frankly, some of the cost optimization initiatives just as far as continuous improvement are going to bake into that as well. So that will result in a pretty healthy fall through of 40%.
