George Oliver: Steve, just when you look at the overall event, it did create significant distraction internally. We — it wasn’t one or two days. It actually was about three weeks, which was the better part of October. So, while we’re able to quantify some of the impact, I think it’s harder to put a number to the overall impact in October. As you — as we — although we maintained operations, we weren’t necessarily operating at full efficiency. But I would tell you the way that our teams have responded and actually got back to operations has been remarkable. And so I do believe, just from an overall momentum standpoint, we lost a little bit of momentum in October. But I can tell you, in November and December, we gained that back.
Olivier Leonetti: Steve, a final sort of detail. We have a substantial insurance coverage and the large proportion of our cost, including business disruption will be covered by insurance.
Steve Tusa: Okay. And so I guess I’m just struggling to see how you get from like $0.50 in the first quarter, which seems like an operating base to I don’t know, $3.75 for the year. That just seems like a pretty steep hill. And I mean, are you — I know you’re probably assuming that the comps maybe get a little bit easier in some of the products businesses. But I mean, are you assuming like recovery, true kind of economic underlying recovery in some of those short-cycle businesses for the back half of the year?
Olivier Leonetti: So, what we see happening is earning growth to return during Q2. What we see today is momentum in our Building Solutions business. We talked about that at length, equipment, services, enabled by digital are resonating with our customers. We see GP stabilizing in Q2 and more normalized growth in the second half for our Global Product division. If you look at the theme for the year, commercial strength, service strength with service expected to grow high single digits plus in the year.
Operator: Thank you. And our next question today comes from Julian Mitchell with Barclays. Please go ahead.
Julian Mitchell: Hi, good morning. I just wanted to understand some of the free cash flow moving parts again, maybe as we talk, just dollars year-on-year is the easiest thing for 2024. So, I think you’re guiding about $100 million of net income growth, about $300 million of free cash flow growth in 2024. So, just trying to understand that extra kind of $200 million in the free cash, how much of that is sort of CapEx may be coming down or working capital coming down substantially? I’m just trying to understand as well what’s the full year impact of cyber in the free cash year-on-year? And if there’s anything to be aware of on factoring, I know you mentioned supply chain finance? Thank you.
Olivier Leonetti: So, if you look at the key driver of free cash flow, they are going to be around working capital, mainly in inventory. If you look at our level of inventory, we are at about — we are going to close the year at about 54 days of inventory. We used to be before those supply chain events at about 45. A day of inventory is worth about quite a lot in terms of free cash flow. So inventory is going to be a key variable. Receivables also would be unchecked to declining as we are improving the way we manage that particular balance sheet line. Some of that will include upfront payments as our cycle has been improving to satisfy demand. We’re able to demand for acceleration of products. We’re able to demand more upfront payment and the final one would be supply chain financing, which we are now deploying across the world. Factoring will be flat year-on-year.
Julian Mitchell: Thanks Olivier. And the cyber of $200 million free cash headwind in Q1. Is that like a headwind of $200 million for the year as a whole or are you assuming you recapture most of that in cash flow in the balance of the year?
Olivier Leonetti: It would be timing related. We’ll catch that up in the second quarter.
Julian Mitchell: Okay. And then my follow-up question would just be on the pace of the EPS recovery through the year. Historically, I think Q2 is about 19% or so of full year earnings. Is that roughly what we should expect for 2024 in terms of the seasonality?
Olivier Leonetti: We are going to go through a more normalized seasonality in terms of EPS performance as now the supply chain is going back to what we had pre-COVID. If you look at the themes for EPS earnings growth expected in Q2, momentum in Building Solutions have indicated, GP stabilizing in Q2 and then going to an increase in profit contribution in the second half. Those would be the theme for the flow of EPS across the year.
Operator: Thank you. And our next question today comes from Nigel Coe with Wolfe Research. Please go ahead.
Nigel Coe: Thanks. Good morning, everyone.
Olivier Leonetti: Good morning.
George Oliver: Good morning.
Nigel Coe: Good morning. I know we’ve gone around this a fair amount here. But on the 1Q guide, Olivier, I really struggle to get down to that range down in flat sales and the 13% segment EBITA margin. So is there anything below the line from corporate timing, the interest or anything below the line you think about there? Just any help there would be helpful. And then on the free cash flow, the restructuring, I’m not sure if you did quantify that to Julian’s question, but what sort of payback are we seeing on this restructuring action? Where should we dial in for social cost savings for 2024?
Olivier Leonetti: So if you look, let me start with the end. On free cash flow, we are going to have an impact of about 10 points of conversion to two elements. One is higher CapEx actually due to the demand we have, mainly in the data center. That’s about 3-points of conversion and restructuring, we expect to have 7-points of conversion due to restructuring, the impact, the payback of those restructuring actions is about the year or below that. And we have actually quite a few projects to improve the profitability of our enterprise. On Q1, I go back to what I indicated earlier in the Q&A session of momentum in Building Solutions, that’s what we see in Q1. Weakness in global product due to the resi demand, some more normalized comp as the supply chain is normalizing for our global product division and then of course, the impact of cyber.
