Patrick McCann : Hi, Colin it’s Pat. When I think of where we were last where we stand today, I think the biggest variances are a few. We talked — Swamy touched earlier on the margin question, if we just focus out to 2025. So we’re impacted by we’ve seen significant volume, geopolitical issues in Europe that are driving volumes down for those effectively throughout our whole period, which drive the inflation significantly. If you think about our outlook, we tried last year, we updated in the appropriate quote we reflect an additional $290 million primarily of energy cost. So we have — and then the third thing, as Swamy said earlier, we were forced our flushing operations. So you have on the P&L side, you have those factors driving our earnings.
And then we have significant growth above where we expected last year. And when you think about that growth that fits into what we see in our cash flow statement, which is driving higher capital, whether it’s accelerated, but it’s significant capital to our growth. So long answer, but I think it’s a combination of volumes, input costs offset and typically just the growth that’s driving the cash.
Colin Langan: Okay. Thanks for taking my questions.
Operator: Our next question is from the line of Rod Lache with Wolfe Research. Please go ahead.
Rod Lache : Hi, everybody. As we look out to 2025, you do have the succeeding get back to over $3 billion of EBIT is similar for you back in 2018, but on much higher revenue and more capital than we saw back then. And I was just hoping you can address whether the business is structurally less profitable going forward. And I’m not — I’m still not sure I understand what you’re assuming with regard to the, I guess, it $680 million of higher input costs, the $150 million this year and the $530 million last year. Are you assuming that, that essentially gets recovered by mid-decade?
Patrick McCann : So Rod, maybe I’ll answer the second part of that question. Swamy can jump in on the first. On the — so for 2022 versus 2021, we had net input cost headwinds of $530 million. And that’s what was reflected as an EBIT hit, I would say. As we move into 2023, the additional $150 million is a combination of headwinds. We have inflationary costs primarily in Europe for — well, labor is actually global, but we’re seeing labor headwinds where we’re operating the increases are in the mid-digits or above standard across the globe. And we also have continued energy headwinds in Europe. So those are the first two buckets driving headwinds into ’23. And the other part of it — that’s $100 million on a net basis, net of recoveries. The second part is scrap, and these are contractual scrap balances month to month per contract. So to answer your question, we have a $150 million incremental EBIT charge in ’23 versus ’22.
Rod Lache : Sorry, I was asking about whether you have that reversing by 2025. The combination of these headwinds. Are you anticipating that in this $3 billion north of EBIT that you’re projecting by then that, that has been fully recovered or resolved now?
Patrick McCann : No. So it’s — a portion would roll off, Rod, as contracts launch. So you have a combination of old economics, new economics. And as we continue our business and you think about our launch period, these inflationary headwinds started hitting roughly this time last year. So as we move forward and launch new business, that will reflect new economics. So — 2025 portion would reflect a combination of old and new. So the answer is somewhere in between.
