Good morning. My name is Chris and I will be your conference operator today. At this time, I’d like to welcome everyone to the Nordson Corporation Fourth Quarter Fiscal Year 2021 Conference Call. Thank you. Lara Mahoney, you may begin.

Thank you. Good morning. This is Lara Mahoney, Vice President of Investor Relations and Corporate Communications. I am here with Sundaram Nagarajan, our President and CEO and Joseph Kelley, Executive Vice President and CFO. We welcome you to our conference call today, Thursday, December 16, 2021, to report Nordson’s fiscal year 2021 fourth quarter and full year results. You can find both our press release as well as our webcast slide presentation that we will refer to during today’s call on our website at nordson.com/investors. This conference call is being broadcast live on our investor website and will be available there for 14 days. There will be a telephone replay of the conference call available until December 30, 2021. During this conference call, references to non-GAAP financial metrics will be made. A complete reconciliation of these metrics to the most comparable GAAP metric has been provided in the press release issued yesterday. Before we begin, please refer to Slide 2 of our presentation, where we note that certain statements regarding our future performance that are made during this call maybe forward-looking based upon Nordson’s current expectations. These statements may involve a number of risks, uncertainties and other factors as discussed in the company’s filings with the Securities and Exchange Commission that could cause actual results to differ. Moving to today’s agenda on Slide 3, Naga will discuss fourth quarter and full year highlights. He will then turn the call over to Joe to review sales and earnings performance for the total company and the two business segments. Joe also will talk about the year end balance sheets and cash flow. Naga will conclude with high level commentary about our enterprise performance, including an update on the Ascend strategy, as well as our fiscal 2022 first quarter and full year guidance. We will then be happy to take your questions. With that, I will turn to Slide 4 and hand the call over to Naga.

Good morning, everyone. Thank you for joining Nordson’s fiscal 2021 fourth quarter and full year conference call. On the heels of 2020, a year marked by the COVID pandemic, I don’t think anyone knew what to expect coming into 2021. We were well positioned having both remained invested in our customer-centric businesses and started deployment of NBS Next growth framework. Our focus remained sharply on protecting the health and safety of our employees, while also meeting the needs of our customers. The successful deployment of NBS Next ensured we were able to fully participate in the accelerated economic recovery experienced in 2021. Our division leaders use strategic discipline to identify and then focus on the best opportunities for profitable growth in their respective businesses. As a result, we surpassed our prior record annual performance in sales by $108 million and an operating profit by $111 million. This new record was achieved through broad-based growth across most end markets and geographies. Fourth quarter was a solid finish to this record year. Sales were in line with our expectations, particularly in light of the timing of the approximate $25 million customer order that had been pulled forward into fiscal third quarter. Looking at the back half of fiscal 2021, we delivered 15% organic sales growth and 36% adjusted profit growth compared to the prior year second half. I will speak more about the businesses in few moments. But first, I will turn the call over to Joe to provide more detailed perspective on our financial results for the quarter.

Thank you, Naga and good morning to everyone. On Slide #5, you will see fourth quarter 2021 sales were $599 million, an increase of 7% compared to the prior year fourth quarter sales of $559 million. The increase was primarily related to 10% organic volume growth and favorable currency offset by headwinds from the screws and barrels product line divestiture. When excluding the divested product line in the prior year, for comparability purposes, sales growth would have been 11% in the current year fourth quarter. This double-digit organic sales increase was driven by solid growth in all product lines, with particularly strong demand in electronics, industrial and medical end markets. Test and inspection and consumer non-durable product lines delivered single-digit growth in the quarter, highlighting the continued stable demand in these markets. Geographically, all regions, except Japan, grew steadily. Gross profit totaled $331 million or 55% of sales in the quarter compared to $297 million or 53% of sales in the prior year fourth quarter. This 200 basis point increase in gross margin was driven by improved sales mix from the divested screws and barrels product line, sales volume leverage and process enhancements from our NBS Next growth framework. On a sequential basis, we experienced some pressure on gross margin from the third quarter to the fourth quarter, primarily due to elevated freight costs stemming from this dynamic macroeconomic demand environment. Additionally, we incurred approximately $2 million in non-recurring cost as we aligned our medical fluid components business with its best growth opportunities. We believe these negative impacts on gross margins are largely temporary in nature and we are taking appropriate pricing actions in fiscal 2022 to offset inflationary pressures. Our differentiated product offering and market positions, organizational agility and disciplined approach to cost control, combined with consistent deployment of…

Thank you, Joe. Let’s turn to Slide 10. Again, I want to thank our team for managing safely through another year of COVID-19 as well as managing issues related to supply chain, labor and other macro concerns. With their dedication, passion and focus on making Nordson stronger, not only did we achieve record results for the full year, we also made great progress on our Ascend strategy. We first introduced Ascend at our Investor Day in March 2021, designed to deliver top tier revenue growth with leading margins and returns the Ascend strategy encompasses three interconnected pillars: NBS Next, Nordson’s growth framework; Owner Mindset, our entrepreneurial division-led organization, which empowers our divisions to make decisions as close to the customer as possible; and Winning Teams, Nordson’s talent strategy. All three pillars are built on the foundation of what makes Nordson special, our culture and values. As we shared at our Investor Day, the successful execution of the Ascend strategy will deliver our financial targets of $3 billion in sales and 30% EBITDA by 2025. Through the cycle, we expect to achieve sales growth of 7% plus through an equal mix of organic and acquisitive growth. 2021 was a record year with double-digit organic growth and EBITDA margins ahead of our targets. We are just beginning to make progress on our acquisitive growth targets. On November 1, we completed the acquisition of NDC Technologies. This test and measurement business has a differentiated product portfolio that is leveraged through a customer-centric business model. It is a great fit with our strategic and financial criteria for M&A. The integration is off to a solid start. In November, the NDC leadership team received their initial training on NBS Next. They are leaning in and asking good questions about how to incorporate our growth framework…

Thank you. Our first question is from Mike Halloran with Baird. Your line is open.

Hey, good morning, everyone.

Good morning.

Thanks. Naga, can we pick up left off there. So you look at the guidance and obviously, first quarter growth rate is a little stronger than what you’re assuming for the rest of the year. You certainly gave some context on why the seasonality would be different. But maybe talk about two things here. One, just how you’re thinking about what is assumed-in guidance for how you think the rest of the year plays out by segment? And then my second question, and related, would just be how put this backlog in context? I mean it’s significantly bigger than what we would have seen historically. How much of this should have shipped last year? How much of this is just pulled forward through the rest of the year and just try to give some context. So those are my two questions related. So I asked them at the same time?

Okay. Great. Thanks, Mike. And what we want to talk a little bit about as we go into the year, we feel really good about first quarter just given the kind of environment that our customers are in and the order patterns we are seeing. So our first quarter is going to be more reflective of the back half of ‘21. And in terms of – if you think about the various end markets, let me start with the electronics. Electronics customer order entry patterns and demand levels are pretty strong. Medical, particularly biopharma and our interventional businesses, the order entry patterns are really strong. If you think about our industrial and consumer non-durable businesses, early part of the year, we feel really good about it based on the backlog we have. But as we look into the back half of the year, we do see those two end markets returning or normalizing to historic levels that we shared at our Investor Day. So that’s – hopefully, that answers the first part of your question, which is – feel really good about the full year guidance, which is going to be at the midpoint, 8% growth on a record year, and that is really underpinning the strong demand patterns in medical electronics and back half, expecting some tapering off in industrial and consumer non-durable. In terms of the backlog, these are historical highs, as you indicated, we do believe these backlog is really forward-dated or extended lead times that we normally don’t have in our businesses. So our customers are asking us or giving us orders or shipments, almost into the second quarter of next year, right, which is normally not the case. Normally, our demand patterns are such that people will ask us if the quarter out, right? And now people are putting their orders to be in line. And there is some amount of back and forth where customers are asking for some things to be shipped out ahead. So that’s why some things get pushed – pulled forward or pushed back but most often, it’s getting pulled forward than anything else. So hopefully, that answers the question, Mike.

Yes. No, it does. I mean if I could put that last part in context, basically, it seems what you’re saying is, you feel really good about where the order patterns are in the backlog patterns are, but don’t overplay the magnitude of the backlog here because of the extended lead times. But you feel good about the visibility that you have going into the second quarter, which is more than you would normally have. Is that a fair interpretation?

Yes. That is very fair, and that’s exactly what we’re seeing. And I won’t add anything more unless Joe you have something else to add to what...

Yes. I guess I just – when you think about the backlog, Mike, it is largely on the system side with these longer lead times, and there is a direct correlation when you look at our customer advanced payments. So our customer advanced payments year-over-year are also up 84%. So it’s in line with the increase in the order backlog. So we think about the backlog as largely system orders, not necessarily past due items. And we’ve got prepayments on those at that 10% of last year’s backlog and 10% of this year’s backlog.

Good. Thank you. Really appreciate it.

Our next question is from Connor Lynagh with Morgan Stanley. Your line is open.

Yes. Thanks. I was wondering if you could give a little bit of context on the logistics costs that you called out. And just specifically, is there – is one of the segments more disproportionately impacted by this? And is this something that was sort of isolated to the quarter? Or are you sort of accounting for this persisting in next quarter’s guidance?

Yes. So let me address that. I guess, holistically, when we think about the 55.3% gross margin, first of all, that’s gross margins coming off of a 10% organic growth and delivering 52% incremental margins at the OP line. But when you look at the 55.3% compared to where we were run in Q2 and Q3, it is down about 170 basis points. And when you think about that sequential drop, I would tell you, we’re – it’s roughly threefold. There is three relatively evenly split things, one of them being the spike in freight costs. In freight cost, it’s inbound, it’s outbound, but it’s also internal within the Nordson facility. And so we saw this as did the rest of the environment spike in Q4. I can tell you, it spiked above where we had estimated, and it’s starting to subside in the marketplace, already from those elevated levels that we saw in Q4, but we are addressing this with pricing actions in the first half here, of 2022. The other impact I would tell you was the nonrecurring write-off associated with aligning the factory, and that was all in ATS, to answer your specific question around the segments. That factory alignment was in our medical business and so that approximately $2 million impact on gross margins impacted ATS. The freight is felt across both segments. But I would tell you, it’s heavier on the IPS side proportionately. And the remaining – the third factor I would tell you is mix. And so if you look at our gross margins over the history here, we view prior to the screw and barrel divestiture. We were running about 53% to 55% gross margin on any given quarter depending on mix. For the last now three quarters, we’ve been running 55% to 57% based on the new mix post the divestiture of the screw and barrel business. So we – when we give our guidance for 2022, I would tell you, you should think about operating between that 55% and 57% gross margin range depending on mix on any given quarter. But those were the main factors I would tell you in the Q4 gross margin.

Got it. That’s helpful context. I appreciate it. So sort of related question here, but at a higher level as you’re looking into fiscal ‘22, it certainly seems like you guys are feeling pretty good about margins holding up relative to where we were in 2021. So just curious if there is any sort of inflationary pressures you’re worried about and – on the cost side of things. Is there anything you’re watching as sort of a swing factor on whether those margins will trend to the higher or lower end of your range?

Yes. Connor, let me just give you a high level color, and certainly, Joe will add some more to what I say. In general, we feel good about where we’ve got margins forecasted, based on our current customer demand and segments, the various end market exposures we have. From an inflation perspective, there are two things you want to keep in mind, right? First and foremost, material cost is a fairly small part of our cost back, right, given our gross margins given about the value we create. That’s sort of one thing to remember. The second thing to remember is that our cost to our customers is a smaller part of their total cost back. And so what that means is that we have a differentiated position and are able to pass along price increases where that is necessary. And we’ve already done that in some businesses. Overall, we don’t see this being a major factor for us into coming years. Joe, do you want to add any color to that?

That covers it. I mean we are closely monitoring it. And from an inflation perspective, both on the raw material side as well as the labor side, and then it was the logistics side. I would tell you that spiked in Q4 that impacted the margin slightly. I will also add, we see NBS Next efficiencies, helping offset some of this pressure. Efficiencies in terms of labor and conversion costs at several of our pilot sites. And so that has also helped our performance, and we anticipate that to continue to contribute favorably as we go into ‘22.

Got it. Appreciate it. I will turn it back here.

Our next question is from Andrew Buscaglia with Berenberg. Your line is open.

Good morning, guys. One thing if you look into your sales guidance for next year, if you back out NDC, the implied organic sales is more like mid-single digits. So I was wondering – I know you gave a lot of color already, but I would think that in some areas like medical and even electronics, you see a reacceleration, I think mid to late year. And I just wonder how conservative you’re being on that with that as a dynamic in the forecast.

Yes. Andrew, let me make one then maybe I’ll let Naga say something else. But when you think about our sales guidance for the full year, at the midpoint 8%, there is roughly about a 2% FX headwind that we’re contemplating. And to your point, the acquisitions, net of – don’t forget we have one quarter of the screw a barrel business. So the way that we’re thinking about it is a negative 2% FX headwind. The net acquisition and divestiture is roughly favorable 3%, and then it’s 7% organic growth is what we have.

Okay. Is there a way – sorry, go ahead.

No, no, go ahead, Andrew.

Well, I was just going to say, with medical, I would think that, that’s being held up by recent variant activity again. So I would just think that, that would only be a nice tailwind as the year progresses.

Yes. I – just historically, think about the medical business as high single digits or electronics, mid-single digits. We are in the early cycle of maybe third wave there on electronics. So you are right. In electronics, we’re going to see some pretty nice growth. That’s what is reflected in our guidance. In medical, we are expecting to have some pretty good return to the high single digits. Biopharma doing well. So if you think about all of that, these are going to be the big growth contributors. But look at the record year on our industrial business and consumer non-durable business in 2021. Our expectation is we do – we carry that strength into the first quarter. The back half of the year, there is going to be some tapering on those businesses, which had double-digit organic growth in consumer non-durable and in industrial businesses. So our expectation is some normalization in the back half for those businesses. But you’re right. There is strength in medical. There is strength in electronics. That’s what we have reflected. And what we are excited about is as you go into the first quarter, we are carrying the momentum of our second half of 2021 into 2022.

Okay. Okay. That’s helpful. Is there a way in that backlog that you can identify what percent of sales is specific to electronics and medical?

Yes. I would tell you, pretty heavy on the system side. And on the electronics, there are a lot of systems businesses that we sell. But I can’t tell you the split between electronics and medical.

Well, we do have industrial systems that still need to get shipped out in the first quarter, too. That’s in the backlog, actually.

Okay, alright. Thank you, guys.

Our next question is from Matt Summerville with D.A. Davidson. Your line is open.

Thanks. A couple of questions. You commented sort of the fact that we should not expect normal seasonality as it pertains to the first fiscal quarter of the year. But maybe Naga and Joe, if you can comment on how we should be thinking about the quarterly earnings cadence beyond that. In that, should we expect kind of the typical kind of fiscal Q3 being the high watermark for the year? What’s the right way to be thinking about that, particularly as you see some tapering as you are describing, or at least expect to see some tapering as you are describing in nondurables and general industrial?

Yes. I think our comments around the normal seasonality, as you know, Q4 used to be the strongest. And here, we had Q4, which contributed $25 million of the revenue back into Q3. So, Q4 wasn’t the strongest this year. And therefore – with coming off of Q4 being the strongest, we used to see a big drop into Q1. So, now you are not seeing the big drop. And actually Q1 will be comparable to Q4. And the way we think about then the remaining three quarters, I would tell you, with the current order entry pattern and the customer behavior that we are seeing, I would think about those quarters relatively evenly split as you think about the remaining three quarters of 2022. So, Q1 will still be relatively light compared to the other quarters, but not as dramatically light as it was in the past coming off of a strong Q4.

Matt, one comment I would add to that is the ordering pattern of our customers are so different and expectation of shipments are so different. So, that’s why you see us sort of changing what was traditionally a normal ordering pattern and a seasonality to our revenues on a quarterly basis. That’s the big difference. The question really is when does – when do you return back to your normal seasonality, it’s a perfectly good question to ask us. I wish I knew the answer to that. I would say, as our customer ordering patterns stabilize or some of these supply constrained questions that customers have in mind when they ease up is when we get to that. We are right now, at best, in the middle of this transition. So, I think at least for this year, we don’t see our typical seasonality for that.

Got it. And then as a follow-up, relative to what you would normally do from a pricing standpoint, is what you are contemplating for fiscal ‘22 more than you would normally seek to get. And if so if you could maybe perhaps quantify that a little bit for us? And then also just maybe a little bit of commentary on M&A actionability going forward as it pertains both to T&I and medical, recognizing you just completed a built on Fluortek? Thank you.

Yes. Sure. On pricing, you are right. Our expectations for pricing is going to be higher than our normal price increases that we have got. And the timing of them is also reflective of what we see in our businesses, right. So, in ‘21, we didn’t talk a lot about the price increases that we have already sort of acted on in ‘21 because they were not material in our work to move the needle for the total company. But in general, our view around pricing is that we are in an inflationary period. We need to adjust pricing where we need to adjust pricing. We are cognizant of the fact that we are the price leader in the marketplace. We are adding value. We will get paid for it. So, that’s on pricing up. Now let me have Joe add a little bit more color on the sort of magnitude and such, and then I will come back and answer your acquisition question.

Yes. I guess, again, if you think historically, I would tell you, we would realize approximately probably 1% on price relatively correlated to inflation. And so when you see the elevated inflation numbers that are being reported, that’s how you should think about our response as it relates to pricing. But again, I will go back to Naga’s original comment. When you think about the composition of our cost of goods sold, material costs, the purchase component is not the largest factor. The largest factor is on the labor side. And that as we are generally a light assembly manufacturing operation. But you are correct, the price – the historical way that we view price increases and the historical magnitude is no longer applicable in an environment that we are in right now.

I think, Matt, it’s really important, right. The inflation is 4% or whatever, 4% or 5%. Our material cost tax is lower. So, the price increase we will realize would not be the same 4%, it would be different. Just want to make sure you got it. Yes. On the acquisition question, we feel really good about our pipeline. We continue to have very good conversations. But what comes to market and when a seller is going to act on an opportunity, really, we don’t control, but we are actively pursuing our pipeline as we always do, and – but we would remain financially as well as strategically disciplined. And the areas we really like our test and inspection, medical. And there may be some adjacent call adjacent markets to our core products that if we have an opportunity, we might act on them as well. So acquisition pipeline, healthy, good activity, but what we act on obviously depends on what comes to the market. But you can expect this to remain disciplined.

Got it. Thank you, guys.

Our next question is from Jeff Hammond with KeyBanc. Your line is open.

Hey, good morning everyone.

Good morning Jeff.

Apologize for any background noise here I am jumping on a flight. But just kind of back on the industrial comment around tapering into the back half. Is there anything that’s really informing that as you talk to your customers, or is that just your normal lack of visibility that would kind of want you to put some caution around that?

Well, it is a couple of things, right. One, if you look at industrial CapEx activity as well as GDP activity over the cycle, you can start to expect that ‘23 is going to be a little bit lower than where we have been at, right. So, there is going to be a natural stabilization that goes. And so we expect that to get reflected in our business. That is one. The second is, the comps are going to be really difficult to you. So, think about the IPS business, that grew 15% in the back half. And this is a business historically grew 2% to 3%. And so as you think about year-on-year comps, the back half is going to get tough, right. And you are right. We don’t have visibility to our industrial customers as we – as much as we have in other places. So, that’s kind of where we are at. Hopefully, that – so it’s three things that is going on that sort of informs our process.

Okay. And then just back on the non-recurring charges in medical. Can you just expand on where you – what you are doing there, and kind of where you are shifting your focus? Thanks.

Yes. It is just a single R&D project that we were working on with one customer. On a product category, that was – let’s just say a little bit away from where we were and where we see the best opportunities today. Our best opportunities are in biopharma. Without going into specific details of the particular customer and such, this is an R&D project we were working on with an inventor on the outside. And given the kind of robust demand that we have, and a very strategic discipline around where we want to grow this business. This is one that we needed to sort of stop doing and there was a write-off related to that asset.

Okay. Thanks so much, guys.

Thank you, Jeff.

Our next question is from Chris Glynn with Oppenheimer. Your line is open.

Thank you. Good morning. Thanks for the update on Ascend strategy. I am curious where you are seeing – as you have been enacting this for a little while now, where you are seeing share gain, market space creation or enablement, not necessarily in a broad stroke level, but maybe some finer points on that.

Yes. That would be great. Thanks, Chris. One of the areas and it’s a good example to share with you that actually sort of dovetails to the question that Jeff just asked us. If you think about our biopharma business, one of the things that – as we deploy Ascend, as our teams use strategic discipline with NBS Next, and really begin to say, what is my market position in biopharma and how big is it, what are my core competencies, how can I continue to grow this, really, this just opened up a whole new opportunity for this team. Certainly, the market environment helped them, but it allows them to really focus on this biopharma part of the business, and grow it. And so what we are doing is as we invest more in biopharma, we continue to get new opportunities with existing customers as well as picking up new customers. And with existing customers, where we were, let’s say, the number two or number three, we are moving up to number two or number one, right. So, that will be a concrete example of how this is happening. And another example I would give you would be in our coatings businesses. In the past, we would take almost every project at an equal weight. But now our teams are able to say, if I have 15 projects or 10 projects in front of me, what is the best growth-oriented project and what is the most profitable project, and have the courage to be able to invest more in the most profitable and most growth-oriented projects, and maybe deemphasize the ones that are not so profitable.

Great. Thanks for that. And it looks like the book-to-bill was maybe a little over 1.1x. Curious of a couple of dynamics, I understand the extended and lead time and behavioral aspect. But curious of the organic book-to-bill by segment, approximate the impact of the acquisition. And then does guidance assume a reciprocal of book-to-bill at some point of the year where you just naturally flow into a negative book-to-bill given how backlog is formed currently, but maybe you might advise us not to read so much into it if a negative book-to-bill reciprocates.

Joe?

Yes. I guess I would repeat some of Naga’s comments, if you think about the strength in the electronics and the medical end market, those are predominantly that we see going out into 2022. We – those are predominantly in the ATS segment. Whereas the industrial and consumer nondurable where we see the growth rate stabilizing in the back half of 2022, that’s predominantly in IPS. So, when you think about the book-to-bill ratio and the movements there as you are quoting, Chris. That’s how it’s going to correlate by segment.

Okay. Thanks. I will pick it up offline.

Our next question is from Saree Boroditsky with Jefferies. Your line is open.

Thanks for getting me in. So, the earnings guidance of 8% to 18%, it’s a pretty wide range. Could you just talk through the assumptions at the bottom and top end of the range, what do you need to see to hit the higher or lower end of your guidance?

Look, when we look out the range, to your point, Saree, is, plus or minus, I would say, 5%, 4% in terms of earnings guidance. And I think it was mentioned earlier on the call, the COVID is still out there. COVID and the variants, and what that does to the supply chain, what that does to the medical business, I think is a little bit uncertain. And so that contributed, I think to our guidance range the uncertainty around that. And the second is the inflation combined with some of the supply chain challenges that we saw spike in Q4, some of those supply chain challenges have started to mitigate here over the last, I would say, 30 days to 45 days to a degree. But how that handles – is handled going forward, I think will also impact our range. But really, we were pretty specific, I think, in terms of our guidance for Q1, where we do have good visibility where we are saying top line is 15% at the midpoint growth, consistent with what we have delivered over the last two quarters combined. And at the midpoint, the earnings growth in Q1 is at 40%, 50% incremental margins in Q1, consistent with what we just delivered here in Q4. So, we are trying to give, I would say, some clear guidance one quarter out, which is where we have better visibility, and then leaving a little bit broader range for the back half.

Understood. And just a follow-up on the pricing question, within your top line guidance, you talked about organic growth of around 7%, the midpoint, how much of this is related to price versus volume? And then just on pricing, given the large backlog, how should we think about pricing rolling through the P&L in 2022?

Yes. So, let me take those, I guess in reverse order. You are correct. In some of our businesses, we had to go out with pricing actions earlier than at what I will call our fiscal year-end traditional practice given some of the inflation pressures that we were seeing, other businesses stuck with their year-end price increase. And so there will be a little bit of the timing issue, although not material and still hopefully we will be within our 55% to 57% gross margin range. But it will take some time for some of our pricing to take effect here as we rolled into 2022. When you think about the organic growth on the full year of 7%, we don’t break that down specifically. But roughly, when I look at the business and the timing and the price increases, you can probably think that that’s roughly 2% to 3% pricing.

Great. That’s helpful. Thanks for taking my questions.

Thank you.

Our next question is from Walter Liptak with Seaport Research. Your line is open.

Good morning guys.

Good morning Walter.

Hi Walter.

I wanted to ask about – kind of a follow-on to the last one with regard to the range, the gross margin of 55% to 57%. To hit the high end of your EPS range, would that imply that you are at the higher end of your gross margin range as well?

I think the higher end of the EPS range, I think I would tell you is more reliant on being at the high end of the revenue range. The margins throughout the year will fluctuate between that 55% and 57%. As you know, we delivered the last two quarters Q2 and Q3 were averaged 57%, roughly speaking. So, it will depend on product mix. But I think it’s more contingent on the sales than where the margins drop out.

Okay. And the sales – it sounds like – if there is any kind of caution or whatever, and the big range for 2022, it’s around COVID and supply chain. So, you are talking about not demand risk, but you are talking about your shipment timing. Can you get the shipments out in 2022? Is that fair?

Well, I would also tell you that the COVID impacts demand, particularly in our medical space.

Okay. Great. And I wanted just to review the – I think you made a comment that the last 12-week orders were up 25%. And I wondered if you could help us just get some visibility into that. Was that – what was the comp like? It sounds like it was strong in electronics and medical. Maybe what around both of those ATS segments? Is it semiconductor that’s strong? Is it COVID-related medical, that’s strong?

Walter, I mean, we generally don’t break order entry by categories. But my opening comments around where we are seeing strength in order entry is still the same, which is our electronic business order entry is pretty robust, pretty strong. If you think about our medical businesses, they continue to be pretty strong. And going into the first quarter, I would say the order entry for our industrial and consumer nondurable are also pretty solid.

And so from a time – Walter, I guess, going back, I think it was Chris’ question of book-to-bill and what have you. It was really in Q2 that we started to see the ramp-up of last year. So, from a year-over-year comp standpoint, from an order entry rate standpoint, that’s when the year-over-year comps on growth rates start to become more challenging relating to order entry.

Okay. That makes sense. Okay, great. Alright. Thank you.

We have no further questions at this time. And I will turn the call back over to Naga for any closing remarks.

Thank you. Thank you for your time and attention on today’s call. We are well positioned going into fiscal 2022. We remain focused on our long-term objective of delivering top-tier revenue growth with leading margins and returns as we deploy our NBS Next growth framework to prioritize organic and acquisitive growth opportunities while also unleashing an owner mindset within our customer-focused divisions. We wish you a happy holiday season.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.