Andrew Obin: Just a question, can you talk a little bit more about the solar, business because it’s a fairly large chunk of the company. And I just want to understand better, what does the company does there? And I guess, how does it fit strategically with your HVAC vision? Thank you.
David Gitlin: Well, the beauty of their solar PV that they’ve gotten into recently is, it’s really part of a broader solution. There’s a lot of players globally that do some level of solar PV. The issue with Viessmann is they’re the only player kind of directly in our space that has it as a core offering. And the reason that’s important is it’s part of a broader ecosystem of offering. So it’s not that people should think of them as a pure-play solar PV, someone should think about them as an energy management solution provider. So as more and more regulations are passed throughout Europe, they’re saying here’s how much heating you can use – you as a homeowner, here’s how much carbon emissions that you’re allowed to have. A typical homeowner has no idea how to navigate achieving certain targets that are being given.
So what you really want is a one-stop shop. You want someone who can come in and say “I can help you achieve these objectives that you have instead of reducing your thermostat to 64 degrees in the middle of a cold winter, here’s how you can achieve the objectives that the government has set up for you and it’s that interconnectivity of a solar PV that seamlessly interacts with a wall-hung battery plus the heat pump plus a grid management, energy management, digital solution, it’s that interconnectivity that makes it such an important part of their portfolio.
Andrew Obin: Got you. And just a question on synergies. And I completely appreciate that the deal is a lot more about heat pump market tripling in Europe and channel synergies, et cetera, et cetera and revenue synergies totally get it. But 5% recent deals were more like 8% to 10% in the industry. So I’m thinking about 5% and we’ve also been getting questions on the headline and the FT that Germany will review sale of Viessmann, how does that just basically buying a storied middles the German company, how does that figure into your approach to costs in this deal? And what can you do going forward? Thank you.
David Gitlin: Well, what I’d say, Andrew is first your observation that 5% seems conservative, I would agree with. I do think your typical synergies are in the high single-digits and that’s been I think our experience. I think that – so is it conservative that we would get to $200 million, the vast majority of which is by year three? Perhaps. I do think we were pragmatic and very focused on what we’re trying to do with this integration. We are not coming in guns blazing. This is a very well-run business. This has as I mentioned one ERP system, this is a phenomenal business. So this is not about headcount reductions. They have 11,000 people. We are not coming in to reduce G&A heads. We’re not coming in to close factories it’s the opposite.
We’re coming in to invest in Germany, invest in the workforce, invest in growth because the worst thing you can do in the middle at the very outset of a huge growth opportunity is start to squeeze costs and not build for the capacity to keep up with the demand that is so clearly in front of them. So we got low-hanging fruit on the synergies with the in-sourcing procurement. That’s an easy go do. We know how to do that, Viessmann knows how to do that together. We’re just going to go make that happen. Well the number end up being higher we’ll see. But our focus will be on those two pieces of the synergies. And then equally important will be driving the revenue synergies.
Andrew Obin: David and Sam Congratulations. I know how impossible these companies together. Congratulations on getting this deal done.
David Gitlin: Thank you, Andrew.
Operator: Please standby for the next question. The next question comes from Nicole DeBlase with Deutsche Bank. Your line is now open.
Nicole DeBlase: Yes Good morning. Thanks for taking the questions, guys. Just a couple of more financial questions. So going back to I think Jeff Sprague asked this question towards the beginning of the call. Would you – do we need to make any adjustments to the EBITDA figure that you guys included in the slides as presumably Viessmann would need to transition from IFRS to GAAP?
Patrick Goris: Nicole, Patrick here. We believe that there is a good approximation of US GAAP. So from all the due diligence certainly good work, yes.
Nicole DeBlase: Okay. Thank you for confirming that. And then with respect to the synergies the $200 million, how should we think about the phasing of that? I think typically sourcing can take a little bit longer like tends to be towards the end of a synergy process in a deal. So is that more back-end loaded across the three years or will you start to get some of those synergies upfront? Thank you.
Patrick Goris: Yes Nicole, we expect that by year three, the vast majority of those synergies will be achieved. So think about 75%.
David Gitlin: And what I’d say is the phasing is – the in-sourcing is a go do. There might be some minor tweaking to the product. But Toshiba is already in Europe. So in terms of qualification I don’t see that as a major issue. So I think that in-sourcing will be I think relatively quick sourcing frankly could be relatively quick as well. So I think it’s — what typically takes longer is if you start closing factories and things like that that is not part of any part of our calculation. So I think achieving these relatively within the next couple of years is quite doable.
Nicole DeBlase: Thank you. I’ll pass it on.
Patrick Goris: Thank you.
Operator: Please standby for the next question. The next question comes from Steve Tusa with JPMorgan. Your line is now open.
Steve Tusa : Hi. Good morning. Congrats.
David Gitlin : Thanks, Steve.
Patrick Goris: Good morning, Steve.
Steve Tusa : Any margin differences between these various businesses within Viessmann the pie chart there?
Patrick Goris: No, I’d say that the margins for things like boilers heat pump services are all similar. Batteries might be slightly lower or solar a bit lower than that. But I think the nice thing is that the margins on boilers and heat pumps because we are going through that transition are very similar.
Steve Tusa : Got it. And then just Patrick on the guidance any moving parts on bridge items? And then just any color on kind of the cadence first quarter to second quarter the seasonality that you guys expect this year?
