Julian Mitchell: That’s very helpful. Thank you.
David Gitlin: Thank you.
Operator: Please stand by for the next question. The next question comes from Andrew Kaplowitz with Citigroup. Your line is open.
Andrew Kaplowitz: Good morning, everyone.
David Gitlin: Good morning, Andy.
Andrew Kaplowitz: Dave or Patrick, I think you mentioned the expectation of sales up high single digit in resi for the year. Can you break that out between price and volume? And then can you talk about the progress you’re seeing on rolling out 454-B and then where did inventory in the year in resi versus your target? I think you were talking about down mid-teens.
David Gitlin: Well, Andy, it’s Dave. Let me try to break it out. I think that, look, we’ll expect for resi a few points of price, the rest will be volume mix. Remember, we talked about price for the 454-B units being up 15% to 20% over two years. And the way you can think about that is, a few percent of just basic price this year, a few percent of price next year. Remember, we announced a 6% price increase effective for March for our resi business. And then on top of that, you’re probably looking at about a 10% or so price difference for the 454-B units versus the 410-A. And look, I’m proud of the team. I think that we’re going to start shipping units as early as March. We’ll start for the 454-B. We’re going to start on some of the new build side because our home builders don’t want a mixed subdivision, so to speak.
So they’re going to start taking 454-B units a little bit earlier. We’ll get some out for national heat pumps for training purposes. I think when all is set and done this year, probably be 80% will be the 410-A and about 20% will be the 454-B. And I’m sorry, Andy, did you have another piece in there that I failed to address?
Andrew Kaplowitz: It’s just where inventory is in the channel sort of ended the year?
David Gitlin: Yes, this was a big one for us. We wanted to end down mid-teens and we ended up down 16% year-over-year in inventory. So that was a fairly purposeful effort by us working very closely with our distributors. That was one of our biggest targets in 4Q. Now 4Q resi ended up being a little bit lighter than we had thought, partly for that reason, as we were making sure that we got as much of the de-stocking behind us in 2023 as possible. And I think we achieved that. Could there be a tiny bit more de-stocking here in 1Q? Yes, but I think that’s behind us over the next month or two, and then we’ll back to more typical levels.
Andrew Kaplowitz: Great. And then sort of the mid-single-digit growth guidance for HVAC. You answered Julian’s questions about the mix, but commercial HVAC orders actually reaccelerated a bit up 5%. Are you seeing sort of reacceleration or anything in certain key markets for you guys? And then alternatively on the light commercial side, you talked [indiscernible] down mid-single digits and visibility to that sort of kind of decline in 2024. When we look at orders, we’ve actually been — it’s been robust in the Americas for a while. You look at our sales for — and orders for the Americas, both last year were up double digits. When we look at sales in commercial HVAC in the Americas, close to 20%. We had very strong double-digit growth in commercial HVAC in Europe.
I would say, it’s been a little bit surprisingly strong. Orders still were fine in the fourth quarter there as well. And it’s partly driven by this continuous demand for data centers. We see positive growth on some of the industrial side in Europe. Asia is still pretty solid. China orders in the fourth quarter were lower than we would have liked, so China is kind of a watch item. But I will say in terms of commercial HVAC in China, we used to be 70% real estate and 30% industrial and infrastructure. It’s now 75-25, the reverse. So we’re seeing very strong demand for EV production. The data centers continue to be strong in China. So China’s clearly properties are weak spot, and I think that will continue, but the rest is strong. So we’re actually banking on strong growth in China this year, and we have some level of optimism, because we continue to go where the customers are.
Andrew Kaplowitz: Appreciate the color, guys.
David Gitlin: Thank you. One moment for our next question. Next question comes from Deane Dray with RBC Capital Markets. Your line is now open.
Deane Dray: Thank you. Good morning, everyone.
David Gitlin: Hey, Deane. Good morning.
Deane Dray: Hey, it’s kind of hard to see through the fog of all the moving pieces here, but we’re hearing more about resumption of seasonality. Just what’s baked into the guide regarding what we would typically see as seasonality?
Patrick Goris: I would say, Deane, in general, no different than prior years. So we expect, as always, Q2 and Q3 to be, by far, our biggest quarters, generally driven, of course, by what’s happening in residential HVAC. And then from a seasonality point of view, more on the cash flow side, as typical, very back-end loaded, so heavy in Q3 and in Q4. In terms of the EPS split, last year we did about 48% in the first half, 52% of our full-year EPS in the second half. This year our current guide assumes it’s very similar, maybe a point lower in the first half, offset by a point higher than the second half, so 47%, 53%. But I would say besides that, no big difference in seasonality than we typically see. As Dave mentioned, for Viessmann specifically, we expect it to be a second half — more weighted towards the second half, one, because of the expected volume pick up given the order activity we’re seeing, but also given the cost synergy that we expect to kick in, particularly in the second half of the year.
Deane Dray: Great. That’s real helpful. And then, Dave, lots of discussion this quarter across the industrials about all of these mega projects, $1 billion plus. It sounds like most of these are still in sort of the front log discussion stage. Where are you positioning and what do you expect to be with regards to win rates and so forth?
David Gitlin: Very strong, Deane. We feel very well positioned with the mega projects with some of our scale customers that we really — we’ve established a central group to go target some of our bigger scale customers, data centers is just unbelievably strong. It’s — when we look at it, we’ve talked about the property market being a little bit less than 10% of our commercial HVAC business in the Americas, data centers is bigger as a percentage for us than the real estate market. That’s in the low double-digit percentage for us as a company. And we’ve recently introduced new products. We have a new air-cooled chiller that’s helped us get significant wins, both in the United States and in Europe. Europe has seen 10 times growth in data center space over the last two years.
So when we look at CHIPS Act bringing some of the production back, we look at data centers. There’s other verticals that are strong to education, K-12 has been strong, higher ed, retail — in some parts of retail, even health care continues to be strong. So we feel very well positioned overall in commercial HVAC. I would tell you, we picked up share last year in the Americas. And in Europe, we were probably flattish in share in Asia. So we feel well positioned with these mega projects.
Deane Dray: That’s very helpful. Thank you.
David Gitlin: Thank you.
Operator: Please stand by for the next question. The next comes from Noah Kaye with Oppenheimer. Your line is now open.
Noah Kaye: Good morning. First question, the guidance for mid-single-digit organic growth in the Refrigeration segment for 2024. Can we talk a little bit about the assumptions to get there? And particularly what you’re assuming on a regional basis for transport refrigeration? Thanks.
David Gitlin: Yes. Yes. I’ll take that. This is Dave. Well, first of all, we’re looking at a strong rebound in the container business, both in terms of the market and in terms of share. So we think that for us, the container business will certainly be well north of double digits. For the global truck trailer business, that’s up in the low single-digit range. The North American truck trailer market, if you look at ACT, that market is down double digits. But remember, last year, it was down significantly, and we actually grew last year, and it’s partly because people look at ACT, and that’s just a small piece of it. That is the sheer volume for trailers. It excludes things like truck, APUs, pricing mix that we get from electrification.
