But we are — price in China is challenging.
Steve Tusa: When you say challenging, I mean can you give us a little bit of magnitude around that? I mean, is that down 5, down 10, like just any kind of magnitude on a year-over-year basis?
Judy Marks: No. I mean it’s been challenging. This is year three of challenging pricing there. Again, Sally and the team are just focused on productivity, on commodities, on everything we can in terms of getting cost out of our products even from an engineering perspective and installation. So I think we’ve done a really good job there staying as neutral as we can in terms of price cost.
Anurag Maheshwari: And Steve just to add to that, right. So because it’s a deflationary economy, so the input costs are coming down. But if you look at the overall New Equipment backlog for us, even after having about $20 million of pricing tailwind in the quarter, flushing through the P&L, our backlog margin for New Equipment is still higher relative to last year. I mean Americas, EMEA at mid-single-digit price increases, Asia Pacific low. So really, really good progress in terms of backlog margin, building it up and flushing it through the P&L as well.
Steve Tusa: Okay. That makes a lot of sense. All right, thanks guys.
Operator: Your next question comes from the line of Joe O’Dea with Wells Fargo. Your line is open.
Joseph O’Dea: Hi, good morning. Wanted to just start on your observations of ABI and Dodge Momentum, most recent prints, how that aligns with what you’re seeing in the market, clearly some softening in those lead indexes. While at the same time, your Americas New Equipment outlook actually improving a little bit since prior. And so whether this is the result of just kind of long lead times on projects or if there is any kind of incremental softening that you’re seeing on the ground out there in North America?
Judy Marks: Yes. So in North America, I’d tell you that the New Equipment market segment that we saw in Q1, it remained weak but it was at a lesser pace than the weakness we saw in the second half of 2023. And you saw we delivered — we increased price and we delivered on the backlog significantly because our revenue was up 15%. Our orders challenge in the first quarter was a really tough compare. North America [to us] (ph) as Canada and the US, we had several major infrastructure orders in Canada first quarter last year. So I would tell you it’s more of a compare. We are expecting more New Equipment stability in ’24 than in ’23. But the latest ABI data at 43.6%, I mean this is the lowest since December of 2020 and now another quarter of less than — less below 50%, which means things are contracting similar Dow Jones.
So we’re watching it carefully, Joe. What I would tell you is all verticals this quarter in North America were down. Commercial was down more than Resi. Resi is becoming more stable. And for the part of infrastructure where we compete and where we are successful, that has been more stable as well.
Joseph O’Dea: That’s helpful. And then just on capital deployment and increasing the share repurchase for the year, it sounds like some opportunities there related to repatriation. My question is just related to the M&A side of things, what you are seeing on opportunities there, the pipeline just expectations for being able to execute on any bolt-on opportunities this year?
Judy Marks: Yes. Well as Anurag shared on the cash repatriation, Kudos to our team, this is the first time I think, we’ve made a significant decrease in our cash balance bringing it down from $1 billion to $900 million and continuing to focus on how we can do that since spin. So that’s allowed us to repatriate $300 million and gave us the confidence between the cash and the repatriation to increase. This is the first time we are doing — we’ve announced a share repurchase that starts with $1 billion since spin. So it’s our fourth year repatriate — of cash buybacks — of stock buybacks. But we’re feeling confident there. In terms of M&A, the bolt-on business is still healthy. We’ve got a good book of business. It’s just kind of timing when those get closed.
We outlook every year about $50 million to $100 million of bolt-ons. For us they have to — eventually, they have to be accretive. They have to as well be — give us the density and be in the right locations and have one of our teams that knows how to integrate them well. And I think, we’ve proven that year after year and decade after decade. In terms of anything else, generational, obviously we’ve got a strong balance sheet. These opportunities don’t come up frequently in the elevator and escalator market. And we will continue to evaluate anything that comes to market. But I – again being the leading provider, our service strategy is working, our capital strategy is working, our operational strategy is working. So we don’t feel the need to have to do [intergenerational] (ph) M&A, but of course, we’ll take a look at it.
Joseph O’Dea: Thank you.
Operator: Your next question comes from the line of Nick Housden with RBC Capital Markets. Your line is open.
Nick Housden: Yes, hi Judy and Anurag, Mike. Just on the outlook for modernization. The sales growth guidance was tweaked up to 8% to 9% growth but that’s against a backlog that’s up 15%. So I mean, I’m just trying to understand what the relationship is between backlog growth and maybe the next 12 months of sales growth that we can expect to see there? Is it just to do with conversion times, why it wouldn’t be a little bit higher than that?
Anurag Maheshwari: Yes, you got it. It’s more around the conversion time, right? So if you look at our modernization sales growth, it’s actually been picking up every quarter. There is no reason why it should not be going up double-digit in the next three quarters to four quarters, and as the sales conversion catches up with our backlog. And part of it is the same thing which is driving a margin increase. I think it’s more around standardization of products, reaching the lead time from the factory, reducing the lead time to install it. I think those are drivers which will help us get there. So it’s ticking up in the right direction, but where it should kind of mirror is where the backlog grows at, and we should be there in the next few quarters.
