Timothy Daley: All right. No, I appreciate that that detail. And just — just thinking about those two customers, is there something that we could take out of the [indiscernible] model here in terms of 2023 revenues? Any color around percent of revenues maybe those two customers that accounted for or would have accounted for going forward?
David Naemura: Hi, Tim, it’s Dave. I think it’s in the guide. I would say the new news for us a little bit in the quarter wasn’t these — wasn’t these folks. I would say, things came in generally a little bit lighter. I think some — because of some of the end market pressures. But I think this more describes the kind of the absolute growth rate. I’d say it’s contemplated in the guidance.
Timothy Daley: All right. Got it. Perfect. And then thinking about the destocking, just I know new commentary around, I think the channel is that low — pretty low levels here, just when should we think this rebound or how long should these low levels sustain of inventory before going back to normal or are we at new normal at low levels. Just additionally thought here on timing?
John Adent: Yeah, Tim, I don’t think we’re at a new normal. I think this is abnormally. Low and based on what we’re seeing end user demand, so we see what goes in and what goes out on end-user demand, like I told, we have always been bad at calling the bottoms, but to me, this is not a sustainable model. So I feel pretty comfortable, like we talked about the second half of the year where we think that you can’t drive inventories down that low and it still provides the type of service levels that distributors want to provide to their customers. So I think this is a — it’s something that we contemplated and we think probably in the back half of the year is going to — going to improve.
Timothy Daley: All right. Got it. Then Dave, final one for me, and I’ll pass along. So could you just walk us through the transition agreement here in terms of the pathogen and sample handling lines as a percent of like, you called it out, 30% of revenues? How much of the, I guess, transition manufacturing agreement costs are those product lines? And how should we think of like the day-one margin impact as those total costs roll off, if you will?
David Naemura: Yeah. Tim, look, we’re obviously standing up a reasonable amount. There’s costs from kind of move and kind of one-time in nature, but we’re standing up recurring costs to accept those product lines in. And when those happen, to your point, we won’t be paying the manufacturing transition fee. I think net-net, that’s accretive to us; tough to quantify too sharply and some of the costs are overlapping, but we — you had seen us put forward a schedule in the spring about where we expected to be from an integration standpoint at the end of our third quarter. Hopefully, it took away from the call that we feel at least here after the first, we continue to track to that. I think the other thing I’d add is that on the OpEx line, you know we have some duplicate costs as well that we’ll see come out for the fourth when we — when we’re able to get to that point of integration that we previously noted.
So just under 23% adjusted EBITDA margin for the first, I talked about 100 basis points of some kind of unanticipated headwinds, but there’s probably another 100 basis points of duplicate cost in there. So we got to manage it well, but I think the fourth quarter and really the exit rate for the year is how I think about it, is where we should see us down to just manufacturing, transition fees related to manufacturing of Petrifilm, and then of course, that becomes an issue in the coming years. So maybe not as precise an answer as you’re looking for, but hopefully that contextualizes it.
Timothy Daley: No, that was great. Appreciate the time. Thanks, everybody.
David Naemura: Thanks, Tim.
John Adent: Thanks, Tim.
Operator: Thank you. And the next question comes from Dave Westenberg with Piper Sandler.
Unidentified Participant: Hi. This is John on for Dave. Thanks for taking the questions. So can you give any additional details on the ERP implementation? So, there was some revenue that was shifting from — between the different quarters from the second quarter. So can you just walk us through what the implementation issues were, what the degree of the shift was, and what the areas were that shift was mostly around?
John Adent: Yeah. Thanks, John. Like we talked about in the prepared remarks, when you build a new ERP system, you will not be as efficient day one as you were on the old system, because you had spent 20 years on the old system and you knew it backwards and forwards. So, like I said, the good news was the business was up and running, we were able to do all the functions, nothing stopped. It’s just we’re not as fast and — really around warehousing than we are in everything else that we were before. So, we’re finding a way to continue to train the teams. We’re seeing sequentially daily that that is improving day-by-day. But we had a period of time where that wasn’t at our average and so we’ve to overperform to get to the average. And I don’t know Dave has got a couple of comments on this. Dave?
David Naemura: Yeah, just to make sure we’re clear, so this didn’t affect the end of the first quarter. So we went live for the first day of the second quarter. So what we’re looking at is in the first — the first month of our second quarter here and our shipments were out the door and we carried over open orders from September into October and that was low double-digit millions, whereas it usually be much, much lower than that as we ship at a slow rate, you got to make that up, right? So the question is, do we carry over some of that out of the second? So our goal here was to share, you know, I think first and foremost that the implementation went well. I think that’s the headline. And as anticipated, maybe we’re shipping a little bit slower than we otherwise may have and that we got our — we’re kind of calling it out as potentially a shipment timing risk for the second.
Some of that might push to the third. But what we really got our eye on is the demand backdrop. I would say through the first month. Hopefully, you heard from us that feel supportive.
Unidentified Participant: Got it. Thank you. So, also we heard that Walmart had suggested that consumers are reducing their buying because of GLP-1. Are you actually hearing food producers saying anything similar?
David Naemura: We’re hearing the same things that you’re hearing. Most of them are watching. They’re understanding that it may have an impact. And we’re looking at the same thing, John. I think, if you look at it on a relative scale and size of our business, GLP-1 will be a headwind, but it is going to be a relatively small headwind compared to the big tailwinds we have around this business, around increased regulatory environment, increased customer usage, expanding into new geographies, developing new products. So while it may be a headwind going forward, it is going to be a, I think, de-minimis headwind.
