George R. Oliver: Yes, when you look at the business, whether it’d be at the product level or in the field, as far as the demand signals are coming through strong, we’ve gone through some adjustment relative to backlog as well as in the product business, the book-to-bill business. We see this really differentiating our overall commercial solutions and how we’re utilizing these businesses and differentiating our solutions. On a go-forward basis, we have — when you look at our pipeline of opportunities it is pretty robust, and we’re working to continue now to execute that into backlog and ultimately, then the conversion revenues going forward. So I think it’s more short term based on what we’ve seen here with some of the adjustments in the market, but we’re confident that with the pipeline we have, we’re going to be positioned to be able to continue to support the growth that we’re committing to.
Noah Kaye: Okay, thanks. And I think I’d like to return to the why now question that was asked earlier, and maybe frame it slightly differently. Obviously, the U.S. market went through a tough year last year with volume trends. But certainly, there’s some secular tailwinds as we look out in the next couple of years, refrigerant transition, ongoing price mix benefits, easier comps. And then you have the transition, both in North America and globally towards heat pumps. So there seem to be some positive prospects, both North America and globally for residential and at the same time, there’s, I think, overarching concern from many investors around non-res, right, commercial weakness. And so I guess in that context, why now is a particularly a cute question because I think from a cycle perspective, the market doesn’t necessarily see the same trends ahead that would seem to inform this decision. So maybe kind of talk to us about why this makes sense for you and why now?
George R. Oliver: Yes. So as I said earlier, we’ve come through a very disruptive period, and there’s been significant progress that has been made across these businesses, and these businesses are positioned to perform. And so as I said earlier, as you can appreciate, we’re constantly reviewing the portfolio and understanding how we manage the assets to be able to deliver value for our shareholders. We’ve taken a very thoughtful approach to the strategy, and this has been continuous and making sure that we’re assessing all avenues on how we ultimately deliver value to our shareholders. And so that’s what’s been playing out. I think tied to — as we think about our acceleration of becoming the leading comprehensive commercial solutions provider within commercial buildings, this is part of that path forward.
And in line with — consistent with how we continue to update our shareholders, we’ll continue to provide those updates as we continue to make progress with these potential divestitures.
Noah Kaye: Appreciate that thoughtful answer. Thanks George.
Operator: And our next question today comes from Joe Ritchie with Goldman Sachs. Please go ahead.
Joseph Ritchie: Thanks, good morning. Congratulations to Marc. And Olivier, we’ll see you on the other side. The — let me just start with Asia because you referenced China a few times on your prepared comments. I’m just trying to understand like how much of the weakness that you saw this quarter was this the market deteriorating versus your own selectivity? And then as you kind of think about the next few quarters, should we be expecting material order declines to continue?
George R. Oliver: I’ll take that, Joe. Last year, when you look at where we were last year, we were working to recover our backlog from the second wave of COVID shutdowns in China. As the economic environment in China has slowed, we continue to make sure that we’re streamlined with our organization and aligning our resources to the market to be able to maximize what we believe is our entitlement. And then make sure that we’re executing with discipline to achieve what we see to be very strong life cycle value creation with our services. This is what we played out in North America and which has been very successful for us. We do have a very healthy pipeline as we assess the market, which we are converting. We are anticipating a slower recovery of the backlog and ultimately, the projected revenue, which now has been pushed to the right.
And so those are the factors really updating our guidance here, Joe, but I’m confident that we have incredible product for the market, making sure we have the right go-to-market structure and then ultimately, being able to execute on what we see still to be a very attractive market.
Joseph Ritchie: Okay, thanks George. And I know that you don’t want to provide a ton of specificity on what noncommercial means. Just maybe from my own edification and remembering the old Tyco assets, I mean I think you still had some residential ATPs, international assets as well. Just correct me if I’m wrong, if you don’t? And then also just a point of clarification, the Light Commercial business is showing at roughly 6% of sales. I think the last several quarters, we’ve been seeing it closer to 9%. Did you guys shift a portion of the Light Commercial sales into Applied, just want to understand that a little bit, too?
George R. Oliver: No, when you look at the mix within our ducted business, which is mainly what drives our Light Commercial, is we’re up 40%. And like I said, in our ducted business, when you look at Resi being down slightly and then commercial being very strong, our whole duct business was up 10%. And so this has been the differentiated product that we’ve been bringing into the market, getting — we’ve increased share, Joe, by — it’s been roughly about 300 basis points over the last year with the recovery of the commercial market, and we’ve invested in the capacity to be able to do so. So as far as that is the core of our Light Commercial business, and we’ve been performing extremely well.
Joseph Ritchie: So was there a re-cost because it’s showing like that business is lower as a percentage as your total sales than it was in the last few quarters?
George R. Oliver: It takes into account the VRF.
Marc Vandiepenbeeck: Joe, the difference is that the 9% is our fiscal 2022 sales in the prior year versus when we move forward, it’s now our fiscal 2023, now that, that year is final. It’s just a — it’s a math exercise.
Joseph Ritchie: Yes. Actually, that math doesn’t really tie well, but I can follow up off-line. Thank you.
Operator: And our next question today comes from Andy Kaplowitz with Citigroup. Please go ahead.
Andrew Kaplowitz: Hey, good morning everyone.
George R. Oliver: Good morning.
