Operator: Your next question comes from the line of Jeff Sprague from Vertical Research Partners. Please go ahead.
Jeff Sprague: Thank you. Good morning everyone.
Vicente Reynal: Morning.
Jeff Sprague: Hey Vicente, maybe elaborate a little bit on kind of this visibility on long-cycle orders that you mentioned in Q4. And kind of the spirit of my question is, we’ve heard from a few companies this earnings season, electrical companies, HVAC companies that kind of the mega project pipeline is building and becoming more visible. But there haven’t been a lot of orders booked yet, and they’re just starting to kind of come into kind of the booking cycle. Are you seeing any of that sort of dynamic? Or maybe, if not, maybe share a little bit more color on kind of the nature of the long-cycle orders you are starting to see come into view?
Vicente Reynal: Yes, I think Jeff, that’s exactly what I was trying to refer to there is that we’re seeing definitely before if you remember a few quarters or even last year, we spoke a lot about a lot of these kind of large projects that were being in conversations. And now we’re seeing definitely the release of some of those funds. And so yes, so that’s what’s giving us a bit of a higher level of confidence in terms of how the long cycle funnel continues to build in a company that gives us a good level of visibility, I’ll say, not only Q4 but also as we go into 2024.
Jeff Sprague: And then I think it was Vik, maybe it was you talking about deals saying there’s a couple of billion dollar things in the pipeline. It sounds like you expect bolt-ons most likely, which would be, I guess, natural. But maybe kind of a little bit of color on what’s going on in the bigger deals and the likelihood of getting something done in that size range?
Vicente Reynal: Yes. So, that’s right. I mean we said on the call that we — and the funnel continues to be really strong and mostly bolt-on in nature, but there’s a couple that are above $1 billion purchase price. And I’ll say that those are very well in line with our M&A strategy. We should not think about it as being a third leg of the company. For competitive reasons, we don’t want to kind of get into a lot of details, but we feel very comfortable with kind of even where we are from a balance sheet perspective and being less than one time on our net debt to adjusted EBITDA ratio. It actually puts us in a very strong position to move forward with this transaction. But yes, we’re very excited with how the M&A funnel continues to build and what we see in terms of getting things executed here over the next couple of quarters.
Jeff Sprague: Great. Thanks for the color.
Vicente Reynal: Thank you.
Operator: Your next question comes from the line of Andy Kaplowitz from Citigroup. Please go ahead.
Andy Kaplowitz: Hey, good morning everyone.
Vicente Reynal: Morning.
Andy Kaplowitz: Vicente, can you give us more color on what you’re seeing by geography? I think you’ve been very active in really generating market share gains in your own demand in regions such as China and Europe. Are you confident for instance, that Chinese compressor growth will remain positive? And obviously, I think EMEIA compressor orders turned down, but I don’t think you have big exposure to Germany, but how are you thinking about EMEIA as well?
Vicente Reynal: Sure, Andy. So first of all, on the Chinese compressor, I mean, clearly, not surprisingly, the overall China market has continued to be, I’ll say, choppy and soft; however, you saw how we deliver. The team in Asia-Pacific, and particularly in China, again, demonstrated one more time, another quarter of kind of growth organically in the compressor side from an orders and revenue perspective, which speaks to the continued self-help that the team is driving and leading relative to the overall performance in the market, and we’ll clearly share more examples of that as we head into the Investor Day. I’ll say in Europe, no significant changes in demand. I mean MQL activities remain solid. We continue to focus on our own demand generation for high-growth sustainable end markets, our economic engine is working.
And as I made in the remarks, I mean, we saw even orders sequentially in Mainland Europe come for the compressor side actually grew sequentially Q2 to Q3. So that gives us continued encouragement that, again, these self-help initiatives are working. And this kind of year-over-year tough comps is one that we’re just not worried about, as we see the underlying demand continue based on the self-help.
Andy Kaplowitz: And Vicente, maybe just following up on that. As the environment has been normalizing and interest rates are up here a little bit at least in the US, your focus on energy efficiency and sustainability through your products, how do customers — when you have conversations with customers, how do they balance sort of maybe higher cost of financing versus your ability to provide them energy efficiency and sustainability, that’s still trumping the higher cost?
Vicente Reynal: Yes, I’ll say Andy, it’s all about that ROI and the payback. And as customers prioritize CapEx as they go into 2024 and beyond, it’s all going to be all about ROI. No different to how we do it ourselves internally. And these energy savings, energy efficiency is definitely driving the conversation at the top even at the C-suite level now where customers are looking for what could do — what can they do to drive this great payback. So again, this is how our sales guys sell. They sell based on total cost of ownership and ROI.
Andy Kaplowitz: Appreciate it.
Operator: Your next question comes from the line of Rob Wertheimer from Melius Research. Please go ahead.
Rob Wertheimer: Thank you. Just to kind of follow up on a couple of those comments because I think what you’ve done in China has been impressive and maybe increasingly so. Is the market in China weakening? Do you have any sense of the outperformance gap that you’ve been able to deliver, as it’s not widening the continued growth in the market that’s kind of blown up a few results this quarter is great? And have you seen a competitive response? And if I may, Vicente, your comments on New York are relatively constructive. Are they meant to reflect IRX and how you’re generating better orders in a softening market? Or are you really just not seen softening?
Vicente Reynal: Yes. Great. I think the two that are pretty well tied. I mean I think IRX is definitely what is helping us drive this outperformance that we’re seeing against as the backdrop in the market. And even when you think about it, that ISM and PMIs have been below 50, and we still have been able to deliver over the past few quarters, really great strength in orders and revenue momentum. I think that is what gives us that uniqueness in terms of leveraging IRX as a differentiator. And clearly, we’re not immune to the market, but it’s all about controlling what we can control, and this is what our teams have done exceptionally well, guided and driven by how we leverage IRX as the execution engine to overdrive. And to the China slowdown question there, Rob, I’ll say that China continues to be very soft and choppy.
I was in China — I’ve been in China now twice over the past five months, and — just to see it myself firsthand. And I think what the teams continue to do there is just incredible. But as we always said, we’re in China for China, and that is really also helping from a strategy perspective because we’re being viewed in the China market as a local — almost like a local player, obviously, with a great reputation of a multinational and the great quality and innovation that we’re launching. But again, it’s a lot of self-help that we’re getting executed through the use of IRX.
