Mike Baughman: Hey, Julian, yeah there is a little bit of mix and I would say the discrete automation softness that we are expecting in the first half of the year plays in on that. There’s — we’ve been ramping up our spend around growth platforms and innovation. And so as you come into the first quarter, there’s a little bit of a year-over-year comparable that plays into that first quarter leverage as well.
Julian Mitchell: I see. So it’s really discrete, sort of getting better, and that pushes up the op leverage balance of the year.
Mike Baughman: That’s correct. Again, obviously we’re driving restructuring in the discrete business given the trend in the orders and you will see that margin expansion come through in the second half which would drive up the leverage rates.
Julian Mitchell: That’s helpful, thank you. And then just a quick follow-up would be around, I suppose, historically process cycles in automation followed discrete by around 12 months, and we see discrete is soft now. Are there any sort of specific reasons why process should hold up differently this time versus history instead of following discrete lower later this year?
Lal Karsanbhai: It’s a good question, Julian. One that we’ve thought a lot about and been watching very carefully. The fact of the matter is that we have some very unusual secular trends going on in the world right now. I think a lot of our process activity is driven by two — three critical areas. The near-shoring activity, which impacts life sciences and the metals and mining value chain. The energy affordability and security, which is impacting significant continued investment in liquefied natural gas and nuclear. And thirdly, equally important, sustainability. I think we’re past the tipping point in terms of the — our customers’ commitment around sustainability, and we’re seeing continued investments there. So whether we believe those will transcend certain economic cycles and that will impact how we should think about the strength of process as we go through 2024. Ram, you have something to add?
Ram Krishnan: Yeah, and the other point I’d make, Julian, is the capital spend in the process hybrid industries has been pretty disciplined. There hasn’t been a boom in capital to cause a correction as we move forward as opposed to the prior cycles we saw. So I think that disciplined capital spend plus obviously the trends that Lal identified where the sustainability investments provide that tailwind, we expect process to continue to run for a lot longer.
Julian Mitchell: I see, so you…
Lal Karsanbhai: Process and hybrid — and hybrid, yeah.
Julian Mitchell: Got it. So the process and hybrid orders growth should stay fairly steady through 2024.
Lal Karsanbhai: That is our expectation, yes sir.
Julian Mitchell: Fantastic. Thanks for the help.
Lal Karsanbhai: Thanks, Julian.
Operator: The next question comes from Nigel Coe with Wolfe Research. Please go ahead. Nigel, your line is now live.
Nigel Coe: Okay. The line is live, but I’m not, so sorry for that. So National Instruments, I think that the 4Q fiscal sales were down, I think, high single-digit, organic. Is that the right number? Is my math correct? And it looks like the guide implies flattish to maybe slightly down organic. Just wondering what the profile is on that and anything on orders there would be helpful.
Ram Krishnan: Yeah. So, Ram here, Nigel. From an orders perspective, as Lal indicated, the last quarter, which is our fourth quarter, down 16% in orders, we expect orders to remain down for the first half and turn positive in the second half. And you are right, the $1.6 billion that we’re guiding will translate to down 5% to 6% for the year from a sales perspective. And sales should turn positive in the fourth quarter. So we’ll have down sales for the first three quarters and positive in the fourth quarter.
