David Gitlin : Look, our priorities really center around our shift to Carrier 2.0, which is really around aftermarket enabling technologies, digital capabilities. So we have been very purposeful in our plan setting to make sure that we have plenty of investment set aside for a bound for Lynx for connecting our devices out in the field. That’s been our priority. And then all things technical differentiation when it comes to more energy-efficient chillers and more energy-efficient products, electrification in both heat pumps and in our truck trailer business. So as we do our waterline process, there are some investments that we consider sacred because it’s either part of our conscious strategic shift or because of differentiation for key product lines.
Brett Linzey: Its ok, great. I’ll pass it on, thanks.
Operator: And our next question coming from the line of Deane Dray with RBC. Your line is open.
Deane Dray: Thank you. Good morning everyone. Maybe we could start with Patrick. Strong finish to the year on free cash flow, hitting expectations on the provided guidance. kind of take us through the dynamics, especially on working capital. It sounded like you ended up with higher inventory. Where do you stand on like buffer inventory with supply chain issues? And how does that impact the outlook for ’23 on free cash flow?
Patrick Goris : Well, we expect $1.9 billion in 2023 for free cash flow, which actually does include a tailwind from reduced inventories. And so, we know we ended the year inventories than we intended in the beginning of the year. Frankly, it’s the main reason why we missed our $1.65 billion target for the year. So, we ended the year, I think it’s fair to say with a few hundred million dollars of more inventory than we expected. I would not call all of that buffer inventory. Some of that, frankly, is related to the length of the supply chain and the lead times that are still not coming back to what we are used to. And so we’re assuming that we’ll see some continued improvement there in 2023, which will lead to about $100 million or so tailwind from lower inventories in ’23 versus where we ended the year in ’22.
Deane Dray : That’s real helpful. And then, Dave, you had an interesting comment earlier on a question referencing elasticity curves, and it seems like during COVID there — everything was in elastic. You saw no demand destruction anywhere. But maybe it’s an impact of normalization. There could be some more competitive pressures. But just kind of take us through some of your insights here on the elasticity curves and setting pricing, what the reactions are because — I don’t know, maybe we’ve lost some muscle memory about how that is just part of the economics here.
David Gitlin : Yes. Look, we — in our residential business, we went through something like six significant price increases in the span of 18 months. So I think that what we’ve seen over the last couple of years is an unusual pace of price increases that we’ve not only announced that we’ve also realized. We do think that as you head into ’23 and to ’24, you get back to more traditional levels. But in the first half of the year, we’ve realized that inflation is not over. And we’ve had to announce further price increases in January that perhaps even a couple of months ago that we might not have anticipated because the inflationary pressures continue to be there. So it’s not equal in all segments. We think we’ll probably get less pricing in the container segment right now than we will in commercial, HVAC, light commercial, residential to some extent.
Parts of our Fire & Security business, we probably across our brands have implemented over the last couple of weeks, 20 different price increases depending on the segment within Fire & Security and the brand. So we’ll watch it, but we’ve — in the first half of the year, we believe that the inflationary pressures are still there, and we need to price accordingly.
