Phil Buller: Just as a follow-up to that quickly, if I may. What’s your current take on the EU policies these days? Obviously, everyone was quite bullish about the Green Deal and Net Zero Industry Act a year or so ago. Do you think that they will ever lay an egg in a meaningful way like the U.S. ones do, or is that optimistic?
Craig Arnold: No. I think – I mean I think in many ways even more than the U.S., I mean the European government has demonstrated their commitment to essentially moving towards a low-carbon society. And they are putting both dollars behind it and just as importantly, they are putting regulatory changes in place to drive the adoption of these green technologies, right. So – but as you can imagine, there is a lot going on in Europe today. There is a lot of challenges on a lot of different fronts in Europe that I think are today getting in the way and holding back some of the benefits that you would ultimately see in that space. And as we talk about the manufacturing segment, Europe is much more – has been much more of a manufacturing engine for the world in places like Germany.
And those markets have clearly slowed dramatically. So – but where we participate, think about data centers, for example, our data center business in Europe is also up dramatically. So, where we have kind of some of these megatrends, energy transition where we play in energy transition markets, those markets are up dramatically in Europe. But the business mix is quite different. And in that case, it’s being held back. Those benefits are not showing up because it’s being overwhelmed by some of these other structural issues in some of the legacy businesses.
Phil Buller: Got it. And finally, if I may just squeeze one very quick one in on Aerospace. There is no change to the 10% to 12% range for the year. But at the nine months, I think you are 13% and a bit and so that implies a bit of a moderation in Q4 from somewhere. So, can you talk about what’s happening there, please, I assume it’s defense or perhaps there is something else going on that, please? Thanks.
Craig Arnold: Yes. I don’t think – I wouldn’t over-read that in terms of – we don’t anticipate a slowdown in Aerospace. As we talked about in our prepared remarks that the orders continue to grow, backlog continues to grow, so I would not over-read an implied number for aerospace in Q4. We still are very much pleased with that market and expect to see longer term kind of growth being quite attractive there.
Phil Buller: Thanks very much.
Operator: Thank you. And our next question is from Joe O’Dea from Wells Fargo. Please go ahead.
Joe O’Dea: Hi. Thanks. I will keep it to one. I am interested in how you are kind of evaluating the opportunities on mega projects and the degree to which you maybe even thinking that it means win rates can’t be as high as they have historically just because of the magnitude of the opportunity that’s out there. And so I am sure it’s inspiring some competitors to invest more in some of these verticals as well. And where are you directing your investment dollars most to maybe position yourself best for at least as good, if not higher win rates moving forward when we think about the verticals that you outlined on Slide 19, where you want your sort of exposure to those to get that much bigger over time and outpace the market?
Craig Arnold: I would say that in many ways, it’s quite the opposite. If you think about today where we tend to do well as a company and where our win rate tends to be higher, the bigger the project, the more complicated and sophisticated the project, the more likely it is that Eaton will win and garner higher share. So, if you think about today, the big mega projects and our win rate on a mega project versus our historical underlying market share, our win rate would be higher. It would be higher because once again, if you think about our total ability to deliver a complete solution, medium voltage, low voltage and everything in between, today, we have a much better capability than most of the companies that we are competing against in the North America market where most of these mega projects have taken place.
And so yes, without a doubt, the competitive dynamic is such that it’s an attractive space. I will tell you that for the most part, most companies are struggling with the same capacity constraint that we are. So today, with respect to a disruptor coming in and doing something that would somehow change the dynamics around underlying market share, highly, highly unlikely because there is simply not enough capacity to do it. And then secondly, you need the capability. And if you think about the size and the scale of these mega projects, you need a company who has pedigree, a company who you can rely upon and trust to essentially bring these projects home for you. The stuff that we do is mission-critical. And it’s not the kind of place that you would tend to find companies or customers testing or trialing somebody new.
Joe O’Dea: Appreciate it. Thank you.
Operator: Thank you. Next question is from Brett Linzey from Mizuho. One moment please. Please go ahead with your question.
Brett Linzey: Yes. Good afternoon. Thanks. Just back to the billion investment, is there any way to think about the mix of what’s expense versus capitalized? And is this going to be a program you are going to provide some quarterly guidance on like you have done with some of the restructuring programs in the past?
Craig Arnold: No, I would say today, we would not intend to provide any particular quarterly guidance or clarity on that, other than we can certainly let you know when the new capacity comes online, I think that’s perfectly fair. But the other thing to [ph] think about is that, yes, it’s a big investment. There is going to be a mix of capital and expense. That’s all kind of embedded – going to be embedded in our guidance as we go forward. But as the company has gotten bigger and our denominator, revenue and everything else has gotten bigger, yes, we have historically spent about 3% of revenue in CapEx. That number may pop up to 3.5% order magnitude. But so it’s not going to be – it’s a big number. It’s going to give us the ability to solve a lot of bottlenecks.
But in the big scheme of things, you are talking about maybe 0.5 point movement in terms of our CapEx spend here. So yes, there is going to be some expense associated with it as well. But once again, all of that embedded in kind of the 30% kind of incremental numbers that we talked about for planning purposes.
Brett Linzey: Got it. I will leave it there. Thanks a lot.
Craig Arnold: Alright. Thank you.
Yan Jin: Okay. Thanks guys. We reached to the end of the call. I appreciate everybody’s questions. As always, our team will do a follow-up call with you guys if you need to have more questions. Thanks for joining us. Have a good day guys.
Craig Arnold: Thank you.
Tom Okray: Thank you.
Operator: Thank you. And ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Teleconference service. You may now disconnect.
