Olivier Leonetti: Yes. If you look at today, so we believe we’re going to be able to maintain the margin in Global Products and keep improving the margin in the field. I know Nicole, just to go back to your prior question on mix, the backlog conversion is the big variable for mix improvement more than anything else. And we have a high confidence in that now happening with no improvement in lead time. Going back to your global margin question, you go back to what George has indicated, we are mainly exposed to the commercial market today in Global Products. Resi is a small proportion of our portfolio. And in Global Products, we are investing heavily in pump. If you look at the new product introductions today, 90% of them are very strong heat pump capabilities.
We bought a small asset also in the quarter with heat pump. So we believe that the channel, the strength of the portfolio is going to keep allowing us to maintain a strong margin in Global Products. And there was no €“ if you look at the macro, Nicole, today from a commercial standpoint, it’s still strong for commercial.
Nicole DeBlase: Thanks, Olivier.
Operator: Our next question comes from Josh Pokrzywinski from Morgan Stanley. Josh, your line is open.
Josh Pokrzywinski: Hi, good morning, guys.
George Oliver: Good morning, Josh.
Josh Pokrzywinski: Yes. Good morning. So just a follow-up on the IRA. Wondering if that is something that you guys expect to start booking this year and if we really don’t expect to see any sort of shipments until 2024. Is that sort of the way you guys are thinking about the timing booking start this year and maybe start to see the revenue benefit next year?
George Oliver: Yes. I mean we’re €“ obviously, we’re already working with customers and working through what this means and how they go about it and recognizing that we’re obviously part of that as this bill was formed. And so we’re definitely going to start to see some momentum here on the order side. And then depending on the timing, how that flows through the year and into next, we’ll continue to keep you updated. But that €“ this is ultimately helping to build the pipeline that we have and the confidence that we have in being able to turn €“ but not only book but then turn sustainable solutions in. It’s across all of our portfolio, right, from residential incentives right up through some of the more complex offerings that we have.
Olivier Leonetti: And Josh, this is where the field presence is very important. We have today a field presence, allowing us to advise our customers about how to best leverage the benefits of the IRA.
Josh Pokrzywinski: Got it. And then just on maybe a little deeper trip into the weeds on the IRA. I think there’s like $5 a square foot in commercial energy retrofit incentives. My understanding is some of the stuff like OpenBlue is significantly below that per square foot. Like I guess like it seems sort of like a layup for customers. What would hold them back, if anything? Or is it just the industry, yourselves included, can only install products so fast?
George Oliver: Yes. I mean it’s just purely €“ there’s an educational element that we’re working through and understanding what it is and then what we can do and how we can go about solving the problem and being able to capitalize on the incentives. And like to your point, the value proposition that we bring with the output that we can create, again, it becomes very attractive for the customer. So it isn’t a matter of €“ that I think that they’re going to ultimately proceed. It’s more just the timing of going through that initial upfront process in getting it defined and then ultimately being able to execute. But we’re confident, Josh, with the solution set that we’ve built that we’re going to be well-positioned to be able to capitalize on the dollars that come into the market as a result of that.
And some of it is, when you look at customers, it’s also changing how they’re thinking about whether it be capital or OpEx and how these business models are configured and then how they match that to the benefits that they see. So we’re working through that. We’ve got a team that’s working directly with our customer base in sorting that out, but we’re going to start to see momentum that on that both in the orders and then our ability to be able to convert.
Josh Pokrzywinski: All right. Thanks. I’ll leave it there.
