So we view that we have ample capital to not only pursue every project that meets our criteria, but obviously a significant amount of excess capital that we can deploy towards this program.
Operator: We will take our next question from Jeff Zekauskas with JPMorgan. Your line is open.
Jeff Zekauskas: Thanks very much. When you look at your cost of goods sold line, you went from 50 to 85 to 43.14, you went down 19% and your revenues fell 7. I was hoping you could analyze the decrease in cost of goods sold? Now I know that there’s cost to pass through which is there, and I know that your engineering business was much more profitable on a revenue basis. But can you talk about the real underlying cost inflation and why the gross profit increase was whatever it was, $330 million in the quarter?
Matt White: Okay, Jeff, it’s Matt. I’ll provide some response to that, but I don’t think we have enough time to do a full walk on our COGS. But to your exact point, so you have to start with pass-through, okay? So that 6% translates dollar-for-dollar, as you know. And obviously, the cost of goods is a smaller number than sales, but the dollar amount is the same. So that will create a larger percent variance on that. On top of that, to your exact point, Engineering will have some swings based on that and so that will create some of it. You saw the Engineering sales were down 4% due to some project timing. Another factor you have to remember is GIST. So we divested GIST, as you know, and this is the last quarter on [indiscernible] that.
But GIST was a high variable cost kind of low-margin business that would also result in a disproportionate amount of COGS. Those all aside, there has been a tremendous amount of effort on our productivity. When energy escalates like it did, while we passed through the energy itself, we pass it through at a very fixed sort of contractual consumption factor ratio. So if we are inefficient, we have to pay for that. But if we are efficient, we’re able to pocket that. And so in a lot of cases, we’ve had the ability to make more investments on efficiency. This also just so much happens our Scope 1 and Scope 2 emission reductions which we’ve also been focusing on. And so a combination between the work we’ve done on distribution, the work we’ve done on power management, natural gas management has given us an opportunity with this inflation to be more efficient on our variable costs.
And so that is another component that is also helping on this. So there is nothing in there that I view as any anomaly or not on a sustainable basis. Obviously, the pass-through will be what the pass-through will be, but that has no impact to profit. But we’re going to continue pursuing these variable cost efforts on efficiency, especially in a world where there’s more inflation because the payback opportunity is greater.
Operator: And we will take our next question from David Begleiter with Deutsche Bank. Your line is open.
David Begleiter: Thank you. Good morning. Sanjiv, can you discuss pricing sequentially? Where are you still getting it? I recognize that on a price mix basis, pricing was flat sequentially in the Americas and APAC. But where are you still getting pricing? And we’ll leave it at that. Thank you.
Sanjiv Lamba: Thanks, David. So let’s just talk about pricing. I’ll start off with the Americas because you heard in the introductory remarks that we made that in the Americas, we did see a spike in power costs, which we expect to see recovered over the next couple of quarters. That’s a typical lag that we’ve talked about in the past, and we’ll see that come through. So that’s just to make sure that that’s put aside. Now as you look at pricing across the board, again, very often, we reminded you and our investors broadly of when you think about pricing for us, you should be thinking about its correlation to globally weighted CPI on a long-term basis. And I’m taking the long-term view over here because that is what plays into the sequential movement as well.
