Thank you for standing by. My name is Kayla Baker, and I will be the conference operator today. At this time, I would like to welcome everyone to the Gates Industrial Corporation First Quarter 2023 earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by one on your telephone keypad. If you would like to withdraw your question, again, press star and one. I would now like to turn the call over to Vice President of Investor Relations, Rich Kwas. Good morning, thank you for joining us on our first quarter 2023 earnings call. I'll briefly cover our non-GAAP and forward-looking language before passing the call over to our CEO, Ivo Jurek, who will be followed by Brooks Mallard, our CFO. Before the market opened today, we published our first quarter 2023 results. A copy of the release is available on our website at investors.gates.com. Our call this morning is being webcast and is accompanied by a slide presentation. On this call, we will refer to certain non-GAAP financial measures that we believe are useful in evaluating our performance. Reconciliations of historical non-GAAP financial measures are included in our earnings release and the slide presentation, each of which is available in the Investor Relations sections of our website. Please refer now to slide two of the presentation, which provides a reminder that our remarks will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed in or implied by such forward-looking statements. These risks include, among others, matters that we have described in our most recent annual report on Form 10-K and in other filings we make with the SEC. We disclaim any obligation to update these forward-looking statements. We will be attending several investor conferences over the next month, including the Goldman Sachs Industrials and Materials Conference, the Wolfe Global Transportation and Industrials Conference, and the KeyBanc Industrials and Basic Materials Conference. We look forward to meeting with many of you. With that out of the way, I'll turn the call over to Ivo. Thank you, Rich. Good morning, everyone, and thank you for joining our call today. Let's start on slide three of the presentation. Our global teams delivered another solid quarter, and we posted Q1 revenues above the midpoint of our guidance in an operating environment that remains challenging and while managing through a cybersecurity attack on the enterprise. As previously disclosed in an eight-K filed in February, our company experienced a cybersecurity incident in early February, which led to a temporary shutdown of most of our operations globally. Our operating and corporate teams worked diligently and tirelessly to restart nearly all of our operations progressively over the course of 10 days. I am proud of the resiliency and successful response to such challenging circumstances. Our Q1 results have been adjusted for costs incurred during the period associated with the incident. Brooks Mallard will outline these in more detail later in the call. We estimate the cybersecurity event impacted our revenue growth rate by approximately 150 basis points in a quarter. The incident primarily disrupted our ability to support North American and European replacement demand, which is book and ship business. We estimate North America experienced approximately two-thirds of the sales dislocation. We do not contemplate recovery of this volume in the current quarter. Moving on to our results. Our core growth was relatively balanced across the first fit and replacement channels. Geographically, our EMEA region registered another strong quarter of core growth supported by healthy OEM demand. China regional performance continued to recover as the quarter progressed after the most recent impact from COVID and modestly outpaced our initial expectations. We saw solid automotive replacement demand despite the disruptions to our output and service levels caused by the cybersecurity event. Vehicles in operation and the car park age both continued to increase in our major geographies, which should support steady demand dynamics for our business in the midterm. Supply chain and logistics headwinds continue to slowly ease, and our global teams remain diligently focused on satisfying customer demand. Our profitability in the quarter expanded meaningfully compared to the prior year. Our business teams executed well, and our price-cost position was more favorable when compared to last year's first quarter. Overall, the supply chain is slowly improving and benefiting our operational performance. Our Adjusted EBITDA margin rate was slightly ahead of our Q1 guidance midpoint. Including the estimated $5 million expense impact from the cybersecurity incident during the quarter. Notably, we produced positive free cash flow this quarter. Our working capital use was well below last year's first quarter. We made progress normalizing our inventory position, which experienced a sizable decrease on a year-over-year basis. We have multiple initiatives underway to improve our inventory turns while also driving improvements to our service levels for our customers. When coupled with easing supply chain impediments, we believe that further progress will be made as the year evolves. We are encouraged by the strong seasonal start to our cash flow. Underscoring our commitment to driving shareholder value, we announce today that our board of directors has approved a $250 million share repurchase authorization that expires in October 2024. The authorization provides us with added flexibility to enhance shareholder returns, and we intend to use it opportunistically. Please turn to slide four. First quarter total revenue was $898 million and translated to core growth of 4% versus the prior year. Foreign currencies were a 350 basis points headwind year-over-year. As outlined, we estimate the cybersecurity incident represented approximately a 150 basis points headwind to our growth rate. We realized solid growth in most of our end markets, led by a double-digit growth in energy and Personal Mobility and high single-digit expansion in off-highway. diversified industrial growth moderated from recent quarterly trends. Adjusted EBITDA was $175 million, which yielded a 19.4% Adjusted EBITDA margin, an increase of 180 basis points year-over-year. Our price cost position was better relative to a year ago quarter when commodity and energy inflation accelerated due to the Russia-Ukraine conflict. Gross margins increased year-over-year, helped by a better supply chain dynamics. Adjusted earnings per share was $0.25. Our operating income was up materially year-over-year and contributed a $0.06 per share of earnings. The year-over-year comparison was affected by higher effective tax rate and increased interest expense. On slide five, I'll review our segment-level highlights. In the Power Transmission segment, we generated revenue of approximately $548 million in the first quarter, resulting in core growth slightly above 3%. FX was a 450 basis points year-over-year headwind. The segment experienced the strongest top-line performance in energy, construction, and Personal Mobility. All these end markets experienced double-digit core growth, which helped offset weaker demand in China. Diversified Industrial revenues decreased mid- to high single digits on a core basis in North America, where we saw the most impact from the cybersecurity incident. While China was our weakest region in the quarter, primarily as a result of the COVID pandemic disruptions, it came in ahead of our expectations and strengthened as we exited the quarter. Polymer supply availability continues to normalize, and we are obtaining sufficient supply to support customer demand. We had strong design wins in the quarter, particularly in Personal Mobility, which should support continued above-market growth on a go-forward basis. Our Adjusted EBITDA margin showed nice recovery year-over-year, helped by a balanced price-cost position and improving supply chain. Our Fluid Power segment recorded revenues of $350 million with core growth of approximately 5% year-over-year, partially offset by 170 basis points negative pressure from currency. The energy, construction, and auto replacement markets were the best growth areas in the quarter. We booked meaningful wins in agriculture and construction that will begin production in the second half of 2023. Fluid Power segment EBITDA margin improved 160 basis points year-over-year, benefiting from a more stable operating environment compared to the prior year. I will now turn the call over to Brooks for additional details on our results. Thank you, Ivo. Moving now to slide six and an overview of our core revenue performance by region. Similar to fourth quarter 2022, EMEA was the standout region, growing revenues 10% on a constant currency basis. Personal Mobility and energy were the strongest end markets, both growing well above 20%. Off-highway expanded at a mid-teens pace. Overall, our industrial end markets core growth versus prior year was in the high teens. First fit sales experienced moderately stronger growth than replacement in EMEA. North America revenues increased low single digits year-over-year on an organic basis. Off-highway and automotive generated solid growth in the quarter, while diversified industrial moderated compared to last year. China declined mid single digits, activity strengthened in the last half of the quarter and modestly exceeded our initial expectations. Auto replacement was a distinct bright spot in China, growing double digits. The relaxation of COVID restrictions in the country has fueled miles driven and an increase in garage visits, driving higher demand. East Asia and South America both generated high single-digit core growth year-over-year, with solid contributions across most end markets. It was a good start to the year and demonstrated the resiliency and dedication of the organization. On slide seven, we provide an adjusted earnings per share walk from last year's first quarter. Operating performance contributed approximately $0.06 per share and includes a little over $0.01 per share of expense add back related to the cybersecurity incident. The adjustment primarily reflects lost manufacturing production in addition to incremental SG&A costs. A higher effective tax rate drove a $0.06 earnings per share headwind, while higher interest expense was a $0.03 earnings per share drag compared to the prior year. The other bucket includes the benefit of a reduced share count and lower minority interest versus the prior year. Lastly, we recorded a $10.7 million pre-tax charge or $8.5 million after tax related to a customer bankruptcy filing. The charge was added back in our Adjusted EBITDA and adjusted earnings per share reconciliations. Slide eight has an update on our cash flow performance and balance sheet. Our free cash flow for the quarter was $38 million. Relative to the prior year period, working capital outflow was significantly lower, benefiting from a slowly stabilizing operating environment and improved inventory management. Our inventory turns increased modestly year-over-year. Our net leverage declined both year-over-year and sequentially. At the end of the first quarter, our net leverage ratio was 2.7 x compared to 3.2 x last year. We ended the quarter with the lowest net leverage ratio for a first quarter in our history as a publicly traded company. We remain highly focused on driving incremental improvements to our balance sheet and will be opportunistic with regards to taking actions to strengthen our position. As Ivo mentioned earlier, the board approved a new $250 million share repurchase authorization, which enables us to be efficient in optimizing our capital allocation options as we deploy excess cash. Shifting to 2023 guidance on Slide nine. We are reiterating our full year 2023 guidance, which includes 1%-5% core revenue growth, Adjusted EBITDA in the range of $700 million-$750 million, and adjusted earnings per share of $1.13-$1.23. We still anticipate capital expenditures of approximately $100 million and free cash flow conversion of 100%. Please note that our guidance ranges do not incorporate any potential share repurchases. For the second quarter, we expect revenues to be in the range of $915 million - $945 million. We expect low single-digit core growth year-over-year, inclusive of meaningful growth in China as the business comps against the COVID-related shutdown that occurred during last year's second quarter. We estimate our Adjusted EBITDA margin will expand approximately 50-100 basis points compared to the prior year. With that, I will turn it back over to Ivo. Thank you, Brooks. On slide 10, I'll summarize a couple of key messages before taking your questions. First, I am pleased with the start to our year. Our results came in above the midpoint of our guidance while navigating through a cybersecurity incident. The operating environment continues to heal and our operating initiatives are gaining traction, both of which contributed to attractive margin expansion year-over-year. Additionally, we are intensely focused on our customer service metrics as the operating environment normalizes. Second, we continue to make good progress improving our balance sheet and enhancing our ability to return capital to shareholders. We delivered positive free cash flow in the first quarter, a very strong performance when considering our normal seasonality usually results in an outflow. We are intently focused on converting 100% of our adjusted net income to free cash flow in 2023 and in the midterm. On trailing fourth-quarter basis through March, our free cash flow conversion has measured 105%, which highlights our cash flow generation capabilities. Our net leverage ratio decreased by half a turn year-over-year and fell slightly from the fourth quarter level. Based on the strong cash flow performance in our business and improving balance sheet, our board of directors recently approved a $250 million share repurchase authorization that will enable us to opportunistically return capital to shareholders. The authorization provides us another tool to deliver attractive returns to our shareholder base. I'll finish by extending my deep appreciation to the 15,000 Gates Industrial associates for their perseverance and dedication. With that, I'll now turn the call back over to the operator to begin the Q&A. At this time, I'd like to remind everyone in order to ask a question, please press star, then one on your telephone keypad. Our first question comes from the line of Deane Dray with RBC Capital Markets. Your line is open. Thank you. Good morning, everyone. Good morning. Good morning. Hey, just to put some closure on the malware incident. When you say you're not going to recoup the volume, was that just it was a share loss during that period? Just, you know, why is there that expectation that you don't get it back, or is it in future quarters? Yeah. Hey, Deane. You know, a lot of our business is book and ship. There was this period of time where we, you know, were where we couldn't take some orders, and that progressively got better as we went through the incident. Our view is, during that time we couldn't take orders, we probably aren't gonna get those orders back. That piece of it, we just don't think is gonna come back to us 'cause it's primarily that book and ship business where you take the order, and you book it within, you know, I mean, ship it within 48 - 72 hours. Got it. All right. That's helpful. Second question is: can you give us a sense of the inventory in the channel, how distributors are positioning, any de-stocking going on? Anything there would be helpful. Thanks. You know, it's, the business is fairly balanced. Based on the point of sale data that we continue to very carefully look at and the related indicators, we believe that, the inventories are consistent with the underlying demand still in a channel. As you can imagine, we are also being very, very cautious and very mindful of what the market, you know, may do in the near-term future. I'll say that we did see some choppiness in the industrial demand, as I stated in my prepared remarks. That, that I would say is more isolated to kind of logistics and distribution and markets that have weakened, somewhat. In general, the inventory positions, remain in a reasonably good shape. As we have also indicated, we started to take nice chunks of our finished goods inventory down. That's real helpful. Just lastly, it's not a question, just a comment. That's very impressive on free cash flow this quarter. Thanks. Thank you. Thank you. The next question comes from the line of Andy Kaplowitz with Citigroup. Your line is open. Good morning, everyone. Good morning. Good morning. Ivo, on your last earnings call, you mentioned the availability of highly engineered polymers is improving, and it seems like you said that again in today's presentation. It seems like it did help your margin performance in Power Transmission, you know, given the significantly higher margin and lower sales. With the understanding that maybe Q1 was your easiest comparison in terms of supply chain headwind, would you expect that more positive performance to continue, especially in PT, or are you just being conservative in terms of your supply chain expectations? Yeah. Thank Thank you, Andy. I mean, you know, I've been pretty consistent and maybe very open about our struggles with with the polymer supply and availability. Look, we're making really good, we're making really good progress. We have secured adequate amount of resins that was a big headache, particularly in Q3 of last year. While Q1 of last year was probably the easiest comp, but predominantly driven by inflation that was brought in by the conflict in, you know, in Russia in particular and obviously some of the other issues that we have all seen in end of 2020. We think that the the polymer-based comp will be easier in Q3 than it was in Q1. You know, I feel that, you know, we have what we need and, you know, we should progressively be able to continue to drive our margins up as we have guided in our prepared remarks. Then Ivo or Brooks, can you just give us a little more color into what happened with the customer bankruptcy? I think it would be a good time to ask you about, you know, how tighter credit conditions are impacting your customers and/or markets and, you know, that you would expect this to be a relatively isolated incident. Yeah. I mean, look, there's not a lot to say. The customer towards the end of January filed for bankruptcy proceedings. They've been going through the process. As we learned more information, at some point it became prudent for us to go ahead and book a credit reserve for that particular customer. We do think it's an isolated incident. We have a good methodology in terms of how we track the creditworthiness of our customers and how we look at bad debt and different things like that. This one was a particularly big automotive supplier. It happened very fairly quickly. We have a good process in place where we manage both our customers' creditworthiness and looking at our, you know, receivables and managing our bad debt. We feel pretty good about where we are. Appreciate the color, guys. The next question comes from the line of Julian Mitchell with Barclays. Your line is open. Hi. Good morning. Maybe, just to try and drill into the sales outlook a bit more, you know, just wondered in the, in the first quarter, the sort of price, versus volume spread within sales. When you think about volumes for the balance of the year, volume growth, you know, anything to call out sort of on a, on a quarterly basis or seasonal basis? Are we still thinking it's sort of, you know, three-ish points of, three-four points of price tailwind for the year? Julian, good morning. Yeah, I think you are thinking about it correctly. Look, I mean, in Q1, again, to, you know, to restate, right? I mean, we had a full quarter of Russia and, you know, then in a comp. Then obviously we had we had COVID impact in China in Q1 of this year. Based upon what we see the order intake, pricing, and the underlying performance of the markets, we believe that our outlook remains pretty prudent as we have, you know, as we have described in our guidance. Thanks very much. The sort of the price tailwind eases gradually or narrows gradually through the year. Is that the way to think about price in sales? Yeah. I think that's the exact way to think about it. It will, you know, as inflation, you know, the rate of inflation starts to decrease, I don't think we're seeing deflation certainly yet. The rate of increase in inflation starts to slow, that'll trickle through the price cost relationship, and then that will slowly, you know, go down over the course of the year, quarter by quarter. Thanks very much. Just on the balance sheet usage, you know, it's encouraging to see the free cash improving a lot in the first quarter. You do have much more optionality sort of looking ahead on cash usage. Maybe just talk us through sort of the aspiration here to try and get the free float, if you like, or, you know, change the structure of the shareholder base to a degree at Gates. You know, the appeal of that versus kind of M&A, 'cause I'm sure you're chomping at the bit to get some M&A done. You know, maybe just how are we thinking about that? A sort of even distribution between the two or just given the valuation of the stock, it has to be a sort of a buyback is a much higher return. Hey, look, you know, first of all, we're really pleased with our cash conversion in Q1. You know, as we continue to drive improved profitability as the supply chain optimizes, you know, we feel good about our cash conversion for the year, and that's gonna give us, you know, a significant amount of cash to deploy, right? From a cash optionality perspective or a capital deployment perspective. Look, we've got a midterm target of, you know, getting our leverage down to one and 1.5 terms. That's gonna come through a combination of both gross debt pay down and improved profitability. It's probably split pretty evenly. It's, you know, we'll continue to drive that leverage down both ways. You know, we wanna remain flexible, so that if an opportunity comes up for us to, you know, to do some stock repurchases, I mean, that's gonna be nicely accretive for the company. We wanna have that optionality. We also wanna make sure that we, you know, we have M&A in front of us 'cause all those are good options. We continue to, you know, look at our pipeline of M&A opportunities. We continue to, you know, make sure we keep those in front of us in case something becomes actionable. In terms of debt pay down or stock buyback, those are both great, you know, capital deployment opportunities. I'll say further, you know, we're not gonna let the cash sit on our balance sheet. You know, in the short run, if we have more opportunities to pay debt down, reduce cash interest, help improve earnings per share, then we'll do that. As we continue to generate cash, we'll look at other options. Great. Thank you. Your next question comes from the line of Joshua Pokrzywinski with Morgan Stanley. Your line is open. Hey, good morning, guys. Good morning, Josh. You know, just wondering, as you guys look out, across, you know, pretty big, I'll call it mega project funnel out there that some folks in the broader industrial orbit are seeing, are you seeing, you know, an uptick in either, you know, the OE business or, you know, folks in distribution who are trying to prep for those things or new design wins or anything, I guess, that would just, you know, give Gates access to, you know, the higher CapEx spending that we're seeing now and probably, you know, get further momentum into 2024? Yeah. I think that, you know, maybe I'll point out to the prepared remarks a little bit, Josh, too. I mean, we've talked about, you know, some nice wins in construction and off-highway equipment that, you know, we believe we will start production with the second half of this year. I would say that, you know, some of our participation, biggest participation is gonna be more in the infrastructure build-out, as a first stage. Then as a second stage, as you start looking more out to the industrial automation, you know, the equipment that actually is going into those facilities, you know, we have a ton of products that are components of the in-production equipment that our products get used to. We're actually reasonably confident that we're gonna have a good participation as these projects go from an early stage to more latent stage of development. You know, this could provide a nice benefit for our revenue generation kind of in the 2024 and beyond that timeframe. Definitely something that we look forward to participating on. I, you know, outside of that, I wouldn't say that, you know, we see. You know, we don't have, like, an electrical equipment, so we don't, you know, we don't participate in the early stage of that build-out of those mega projects. Got it. That's, that's helpful. I guess if I just, you know, think about the balance sheet, and you gave some helpful color already, but what's the level at which, you know, you feel like it's, you know, sort of inefficient to continue to pay down debt? Do we, you know, do we see a lot more sense of urgency on, you know, at 2x, you know, or where do you guys, you know, kind of want that to land before you really get more aggressive? Well, look, I think that depends on the environment. I mean, clearly, you know, we're in a higher interest rate environment right now, and you have to look at our complete debt picture in terms of how much of it is fixed versus how much of it is variable in terms of what the paybacks are. We've said before, you know, we wanna get down to below $2 billion of gross debt, so that still leaves us a ways to go in terms of paying that down. We wanna be balanced too. You know, we wanna look at what's best for the shareholders. you know, certainly as we pay down debt and improve profitability, get closer to our goal, pay down more of the high cost debt, you know, buying back stock may be a little bit more attractive for the shareholders. Then on the M&A side, you know, or, Ivo? Look, I mean, I will start with we really like our product portfolio and how we participate in the end markets where we participate. We believe that we have a very strong set of opportunities ahead of us to nicely continue to grow our enterprise and do it at, you know, very strong type of margins that we can deliver. That being said, you know, we don't feel any pressure to do an M&A. You know, we wanna continue to demonstrate that this business has a strong opportunity to have a, frankly, a bullet-proof balance sheet and, you know, that is our primary focus. When opportunities arise, you know, there are lots of companies out there that we believe, we would benefit or they would benefit from combination with Gates. When the opportunities arise at the right valuations, you know, we'll be on a standby to look at some of those potential transactions. Great. Best of luck in the meantime. Thank you. The next question comes from the line of Michael Halloran with Baird. Your line is open. Hey, morning, everyone. Morning. Morning. Maybe some thoughts on first the demand side again, just how you're thinking about backlog normalization through the year. You know, I certainly heard your response to Josh's first question, I think, about how some of these larger projects will cadence and project wins will cadence in through the year. Any nuance by end market from an underlying demand perspective, positive or negative, that you're thinking about as we look at the back half of the year from a trend perspective? I think that's a very, very good question, Mike. Look, I mean, our book-to-bill remained above one, let me start with that. You know, taking into account what we've gone through with the cyber incident, which frankly was, you know, a very challenging period of time for our teams here. Our age backlog and our backlog remains way too elevated. Frankly, we do not anticipate that we're gonna be able to start reducing it in a meaningful way until second half of the year. Maybe, you know, additional color is more available. I think I said it a couple of moments ago, we do see some choppiness, particularly in the industrial replacement business. It remains in line with our expectations, particularly as the supply chain normalizes and the lead times overall start normalizing already. We believe that you're gonna see a little bit of that choppiness. Again, book-to-bill above one, you know, the inventory levels in the channel remain very, very, you know, solid with the present level of demand. We, we do think that the business should continue to evolve around, you know, how we have viewed the year at the beginning of, at the start of this year, which is, you know, probably some slowdown in second half, particularly driven around, you know, some of the credit constraints and, you know, late in the cycle and so on and so forth. we, you know, we feel pretty good with what we see. I mean, I'll, you know, maybe give you a little more color in here. You know, our auto demand was very solid. global auto up kind of 4%. Energy up very strong, you know, high teens. Underlying market demand staying very strong. Off-highway, very solid at +8%. Obviously, we talked about Personal Mobility still in high teens. you know, the only, you know, kind of the only choppiness that we have seen was more in the diversified industrial, and it was down kind of mid-single digit level. all in, you know, pretty good, pretty solid and, you know, kind of what we anticipated. We're being very cautious, and we're being mindful of the underlying macroeconomics that we are all operating in. Well, very helpful. Follow-up, when you think about the optimization programs you announced a couple of quarters back, just an update on how things are progressing on that side. Yeah, look, I mean, you know, our gross margins up quite nicely, obviously flowing through operating margin, very good leverage on incremental revenues. You know, that's, you know, that was pretty solid. I would say that, you know, we were predominantly helped in the first quarter by, you know, a less negative supply chain situation. Our prime prime wheel or prime pump is getting pumped up. You know, we think that we have, we're in a good place to continue to drive improvements that we have described. You know, we certainly believe that over the next couple of years, the gross margins should go up very nicely and, you know, that, you know, the underlying improvement should filter through the profitability as we have highlighted on the last earnings call. Thanks, Ivo. Appreciate it. Thank you. The next question comes from the line of Jamie Cook with Credit Suisse. Your line is open. Hi. Good morning, and congrats on a nice quarter. I guess I mean, most of the questions have been asked. I guess I would just say, you know, assuming that the macro does deteriorate, can you talk to some of the changes, in your business model, either from a cost side or, you know, end market focus, how your business performs in a potential downturn, you know, this cycle versus previous ones, and any actions you're contemplating, right now in the event that things do deteriorate? Thank you. Good morning, Jamie. Thank you for the question. Look, I would start with that I think that we are a lot more cognizant of the macros. You know, we have been maybe I think somebody told me that I have maybe been too negative about the underlying market conditions. We're just trying to be pragmatic. As I said earlier, we started to, you know, take down our inventories levels quite nicely. We are positioning ourselves to be in a situation where while we wanna have a flexibility and we're absolutely laser-focused on servicing our customers more effectively, we also don't wanna be caught up with significant amount of inventory in a potential scenario where the macros, you know, filter through the underlying demand. I would say, you know, that's probably a, you know, change number one maybe from the previous cycle. Change number two, I think we have a lot more balanced portfolio, where we believe that, you know, some of our end markets should have a pretty strong dynamics even in slowdown of the macroeconomic environment. Our automotive replacement business is in a very good shape, and we believe that, you know, that should provide a nice cushion for us. You know, we have done lots of work with the change of our portfolio. I mean, obviously, we have taken our automotive OEM exposure down by nearly 50% since we become a public company. We believe that, you know, there should be a less exposure to a cyclical auto market. You know, we have fundamentally improved our footprint where we have a capability to flex our muscle a little more effectively maybe than we have been able to do in a past down cycle. Lastly, we still have a ton of restructuring projects on the docket that we haven't really spoken about a lot since we said sometimes late last year that we are in planning stages of executing those. We will be coming out, mid-year and providing an incremental update on our opportunities that we see with driving, putting ourselves to a position to lower our break-even point. Great. Thanks. I appreciate it. Again, if you would like to ask a question, press the star and the one on your telephone keypad. Our next question comes from the line of Jerry Revich with Goldman Sachs. You may begin. Hi, this is Clay on for Jerry. Just one quick one from me. Second quarter EBITDA or EBITDA margins are typically the high point for the year, looking at normal seasonality. Would you expect any deviation from this for in the second half or just or... Thank you. Yeah. No, I Look, I think overall, you know, you know, Q2 tends to be our peak. Our peak year. I do think when you look back at 22, there was some choppiness in terms of, you know, when we started to see the Russia-Ukraine impact come through. You know, if you remember, you know, Q3 and Q4, we had the supply chain disruptions, you know, last year. Then, you know, we expect the supply chain to get progressively better. You know, when you look at our, you know, we're kind of thinking of it more first half versus second half. We expect a pretty even split when you think about gross margin improvement, through the year, pretty even from the first half to the second half. We do expect to have more variable comp in the second half of 2023, so that's gonna... You know, when you look at a year-over-year perspective, that's gonna be a headwind from a comp perspective. I would think of it that way in terms of the first half versus the second half. Thanks. Yeah. The next question comes from the line of Jeffrey Hammond with KeyBanc. Your line is open. Hey, guys. Just on, I guess, any changes within how you're thinking about Fluid Power versus PT growth? Just confirm, I jumped on a little late, where all the cybersecurity, you know, revenue shortfall hit. . We believe that we still have a little more opportunity for recovering Power Transmission. Power Transmission was more impacted in second half of last year vis-a-vis the polymer shortages that we have discussed. So we think that, you know, the opportunity remains there to continue to perform nicely in the second half. And on your first question, most of our cybersecurity impact was realized in North America and Europe. And 2/3 of about $15 million that we have highlighted were impacted in the North America business, predominantly in the replacement side of our business. Okay. This kinda industrial replacement choppiness, can we chalk that all up to destock, or is there, you know, some certain end markets or pockets that, you know, feels like, you know, some real demand weakness? Yeah, you know, I think I said it earlier, Jeff. logistics and distribution equipment has been weaker. I mean, I think that that's, you know, that's pretty notable. I would also say that, you know, the cybersecurity impact, you know, touched North America and Europe in particular. We don't really see lots of destocking at this point in time. We feel pretty good about the inventories in our channel being, you know, nicely balanced. You know, outside of that, you know, maybe that warehousing equipment side of the business, I would say that the rest of it remains pretty robust. Okay. Thanks for that, Ivo. Thank you. There are no further questions at this time. Rich Kwas, I'll turn the call back over to you. Great. Thank you everyone for joining our first quarter conference call. If you have any follow-up questions, feel free to reach out to myself. Thanks again. Have a great day. This concludes today's conference call. You may now disconnect.