Scott Salmirs: Yes. This is solely pinned on commercial real estate. Because Faiza, you have to think about it, 50% of our revenue base was in B&I, right? And when you have all the compression that’s happening, I think the latest statistic is that tenants on average are taking 19% space, right? So that demand and that demand reduction is going to pull through to our EPS for next year. B&I is one of our highest margin segments. So there’s no getting around that. But I would say where we become so resilient is a third of our revenue in B&I is in engineering, which is more stable and doesn’t have the demand compression because you have the air condition space regardless of occupancy. But the other two-thirds is in that commercial real estate segment and we will see pressure on that.
And the reason that we wanted to get that sentiment out there for next year, even ahead of guidance is, we typically grow 2% to 3% in B&I. And you can see with the compression that’s going on, it becomes clear that, that could be in reverse. And it could be that negative 2% to 3%. And I think in context to everything that’s going on with this massive structural shift in commercial real estate, the fact that we could look ahead to B&I and feel like we’re only going to be down low single-digit. I mean, again, it speaks to the resilience of our business model. And you pair that with our flexible labor model and our ability to protect margin. I mean it’s — we think it becomes compelling, but there’s just no way around the fact that we’re not going to see the demand effect with the compression that’s going on.
Faiza Alwy: Got it. Thank you so much.
Scott Salmirs: Sure.
Operator: Thank you. The next question is coming from Andy Wittmann of Baird. Please go ahead.
Andrew Wittmann: Okay. Thanks for taking my question guys and good morning. Your response so far to the questions have been helpful for the context in ’24. I just wanted to touch on one other thing regarding that outlook that I think would be incremental. In your prepared remarks, Scott, you kind of talked about in the M&D segment, which has been a very good segment for you over the last several years, very good growth. Obviously, very good margins here. But here, you said that there’s a large client that’s got a rebid, and this is an area that you’re going to see some revenue pressure here. Do you still expect that the M&D segment margin can show some growth even with some potential revenue pressure that you might be looking at there?
I guess because as I go through the segments here, you made it very clear in the last response, B&I is the area where you’re seeing the most pressure. These other areas seems like pretty good with ATS maybe being very good on a year-over-year basis next year. So I guess the one area that I want to get a better sense on is this M&D segment. Please?
Scott Salmirs: Yes. That’s great. Great, Andy. And like I’m in a weird position, right, because we’re in advance of like providing guidance and finishing up our budgets, but I do want to give you color, and I want to be responsive to you. So let me start by saying like M&D is probably one of the best ideas from the management team in the last few years, and it’s paid dividends to your point. And we’re a little bit of a victim of our own success here because we have one very, very large client that we kind of grew up together with, right? And as part of their normal business process, they’re going through a rebid and we’re expecting to see revenue compression there. It just makes sense, right? We’ll still end up with a disproportionate share of their work.
