Alok Maskara: I think that’s a fair question and we are wondering the same questions in that. I mean, 30 days in, we haven’t noticed a huge difference between the two. So like time will tell. Some of it also comes down to how distributors are thinking of the year and what kind of signals and tea leaves they are reading about demand this year. But sometimes when these air pockets come in, in the two step model, they last a few weeks. We haven’t started experiencing that yet. We’re just prepared to experience that. Unfortunately, we don’t have any numbers. And your guess is going to be as good as mine, Steve.
Steve Tusa: And then one last one. What was the actual, like — just what were the inefficiencies from this year changeover, what exactly was that?
Alok Maskara: Quite a bit, I mean when we — so I guess get three different areas, right? First is in our factories, we had to turn over different lines, which means there was work stoppage at different lines at different times. We did that on a rotating basis. But clearly, there was labor inefficiency and underutilization as we went through that. Second, we had to air freight and look at some prebuy of components at elevated prices just to make sure we met all the deadlines and pull that together. And I think finally, within our own distribution network, we have to spend extra because we had to manage old SEER, new SEER, different freights, move it around. So I mean those would be the three different things that we looked at, right, is just air freight and component costs, factory and efficiency and then additional distribution cost.
Operator: And we’ll take our next question from Julian Mitchell with Barclays.
Julian Mitchell: I wanted to check on the Commercial business, not so much the sort of internal self help initiatives. We can see that clear green light on Slide 11 for that, but more just on the sort of the market as you see it. Classically, there was a lag, but a relationship from Residential trends to light Commercial unitary, just wondered how you see that dynamic playing out this time, if you have seen any more kind of choppiness in project activity or so forth amidst higher interest rates and weaker housing starts activity.
Alok Maskara: So Julian, you’re right. Historically, there has been a lag with the correlation. If there is one this time, I think it’s going to be extended because the industry has such long lead times, and there’s still a pent-up demand because of number of replacements that were converted into repair over the past few years. So if a unit broke, historically, they could have replaced it, but they chose to repair it. So when we talk to our larger customers, we don’t notice any change in their replacement plans, their spend plan, their capital. Now that could change. But so far, we haven’t noticed that. We see a lot of customers still talking about 2025 and how they plan to significantly upgrade their facilities and HVAC system with the low GWP refrigerants to meet their carbon footprint goals and get better ESG values out of it.
So we have not noticed anything in the short term. The lead times are still anything from 24 to 52 weeks. And then we start hitting 2025, which we do expect a lot of the key accounts to start ordering more and planning for 2025 replacement. But we’re watching it closely, the same data that you would look at, Julian, from — everything from ABI to other indexes. But so far, it’s more lead time and supply constrained, not demand constrained.
