Saurabh Pant: Soma, maybe let’s touch on the productivity improvement pipeline you talked about, I think, several times in your prepared remarks and in response to Marc’s question. Can you give us a little more color on that, Soma? What kind of initiatives, what kind of pipeline you are looking at? What’s most exciting to you from an incremental contribution, margin contribution standpoint? And then just broad strokes, Soma, I know you said you expect margins to improve in ’24. Is there a way to say on a year-over-year basis, all else equal, productivity improvements can get you a certain way there in terms of margin improvement. So based on things just that are in your control?
Soma Somasundaram: Yes. So thanks for that question. So when you look at our productivity improvements, I would put them in 2 buckets. One is, as you know, we operate with the lean manufacturing principles. We call it a continuous improvement journey. So all of our operations are in a lean manufacturing continuous improvement journey. So that drives the continuous improvement of employees driving daily improvements. Then on top of that is what we call it, high impact productivity projects which are teams focused on driving significant productivity on certain projects. So let me give you a few examples of that. So the first one is, given our large spend in particularly in raw materials and bottle components. So we have teams working on how do we continue to drive productivity or reduce reducing cost of that through best cost country sourcing, strategic spend, leverage and so on and so forth.
So that’s a one particular project in 2024. The second project is we have internal digitization efforts that drives productivity. And that’s the second element. The third element, for example, is continued utilization improvement as well as yield improvement in our large chemical facilities as well as our drilling technologies facilities and so on and so forth. So those are high-impact large productivity type projects. So to answer your question around how should we think about the contribution of this, so the way I would think about it is, in an environment even if our revenues are flattish, you should expect us to deliver incrementally more earnings in 2024, even if the revenues are flattish. So that’s how to think about it.
Saurabh Pant: And then quickly, maybe a follow-up on shareholder returns. So obviously, very strong free cash flow. You returned 83% of that to shareholders in 2023. That’s a lot more than your minimum threshold of 60%. I know it’s at least 60%. So it’s got to be more than that but 83% is very strong. Maybe Soma or maybe, Ken, you want to go through that but maybe just refresh us on your capital allocation priorities and then maybe talk a little bit on M&A. Where do you see opportunities on the M&A side of things and maybe talk to your emissions monitoring business a little bit as well.
Soma Somasundaram: So when you look at our capital allocation framework which will be published in 2022, we have very much a disciplined way sticking to that. Just to refresh that, obviously, our first priority is to invest in high-impact organic opportunities, then we want to make sure that we are sustaining our dividend. As we have said before that we will consistently increase that in line with our free cash flow increases. And third, we said that any bolt-on tuck-in type opportunities for us, technology additions, geographic expansion additions, M&A type opportunities. And then lastly, any excess cash, we will opportunistically deploy to share repurchase programs. So that’s our capital allocation framework which we published in 2022.
And you are seeing us really in a disciplined way sticking to that. So 2023, is a good example of that. And even from the inception of our capital return program, you can see that. For example, in 2023, we returned 83% as you said, because we didn’t feel the M&A opportunity, it’s not like we are not looking at M&A opportunities but we have a high bar on our M&A opportunities. So we are very disciplined about it. So when we don’t have a need for that, we are returning those cash to our shareholders. And when you look at right from the inception, we have returned 71% of our free cash flow to our shareholders. So it’s just a demonstration of establishing a capital allocation framework and being disciplined about it and sticking to that. So you should expect that from us going forward.
Now with respect to your question on M&A, I think we continue to look at opportunities. And as we have said before, it has to be a clear strategic fit into our portfolio. They are bolt-on type opportunities. So we continue to look at them. But again, it’s a high bar for us and that’s why we say at least 60%. Can it be more? Sure, we have demonstrated it can be more. So, then your question on emissions. We are pretty excited about the developments that are happening in the emissions. As you know, the recent final ruling which is adopted on methane standards, the big change in this ruling is the inclusion of existing facilities which includes things like storage tanks includes, things like terminal, includes things like gas processing plants.
So which means the regulated facilities is significantly improving in some by some estimates, it goes from what is 60,000 regulated facilities to as much as 1 million regulated facilities now. So we are excited about our emissions technology offering. As you know, we offer everything from aerial surveys to leak detections to optical gas imaging to continuous monitoring. So we have a full portfolio of emissions technologies offering. So you should see our emissions business continue to grow in an accelerated way in the coming years.
Operator: Next question will be from Atidrip Modak at Goldman Sachs.
Ati Modak: Slide 8, you showed PCT North America has delivered steady growth so far. Can you talk about the expectations for the cadence for the full year with respect to the activity levels that you are expecting in North America?
