Judy Marks: Yes. Nick, what we’ve done is we’ve taken everything we’ve learned in new equipment service over four years, whether that’s go-to-market strategy, whether that’s sales specialization, driving common installation beyond industrializing the packages, supply chain and everything else. So we are really encouraged by the continued Mod trajectory. And as we said, we are going to continue to expand margins there and focus on backlog conversion.
Nick Housden: That’s great. And then just on the Service pricing, I think you said a couple of times that it was 3 points in the quarter net, maybe I’m misremembering, but I think previously you commented saying that you were expecting 100 basis points of net pricing for 2024. So I’m just wondering where the extra 2 points has come from?
Anurag Maheshwari: Just to clarify, the 300 basis points that we spoke excludes mix and churn. So it’s a gross pricing. The net for the quarter was a little bit higher than being flattish over there, but it is consistent to what we are seeing in pricing in the Service business. So EMEA is seeing mid-single-digit price increases, Americas close to that. Asia Pacific has always been on the lower side. So from a pricing perspective, it’s sticking well in the market, and we’re seeing good traction over there. What’s really helping our Service margins to grow besides that is clearly more on the productivity side. And with the productivity because of that, we kind of increase the profit on the Service business for the year.
Nick Housden: Great. Thanks very much.
Operator: Your next question comes from the line of Miguel Borrega with BNP Paribas. Your line is open.
Miguel Borrega: Hi, good morning everyone. I’ve got two questions. The first one, just on China. For several quarters now, you mentioned three years in a row that you’re seeing price pressure. I know you’re offsetting with lower product costs, but where do you think the price — that the floor of pricing is? When you look at your competitors that are putting pressure on pricing, how long do you think this will keep going? And then long-term, where do you think margins in China New Equipment will ultimately converge to if you think it will end up at Western levels? That’s my first question.
Judy Marks: Yes. Let me start and Anurag will add on the margin side. But Miguel, we – listen I’m not here to declare a trough, as soon as we see that in terms of the competitive pricing and the segment, we will share that but we are not predicting it this year as you can tell with our outlook. Again though, I can say, having been in China in March and meeting with multiple government officials as part of the China Development Forum, there are efforts underway. The government is taking action. It has not changed sentiment or the liquidity easing yet. But as that happens, obviously our team will respond. They’ll respond quickly and where we have the ability to see price inflect. I believe you will see us do that as we have led in pricing in China many times. Margins?
Anurag Maheshwari: Yes. Just exactly. It’s a balance between the pricing and the share of segment, and I think we look at both. In terms of margins for us, if pricing is coming down in China, as we earlier mentioned, it’s also commodity prices. We’ve seen tailwinds over there, and we’re taking cost out and seeing more supply chain efficiencies. So we are maintaining our margin rates in China. And as we go forward, between price, between share, between margin, we are going to find a balance between all three of that so we can continue to be — grow our profitability as we move along.
Judy Marks: Yes. And that’s really what you are seeing, Miguel with us really now. Service now being 25% of our revenue in China and growing, the Mod element of that grew double digit last quarter. That’s going to continue to grow and continue. So you’ll see this trade, we normally do between volume, price in every market, but in China explicitly, we see it moving to becoming more of a mature market and reflecting that especially in Service.
Miguel Borrega: That’s great. Thank you. And then just a follow-up on capital allocation. So after you upped the dividend in buyback, I know you’re buying the minorities in Japan. So does that mean there’s not much out there? I know you talked about bolt-ons, but how would you think about potential targets in Southeast Asia, Japan also – and what would be the rationale for buying more companies in Southeast Asia versus the rest of the world? Thank you very much.
Judy Marks: Well, our M&A approach for bolt-ons, no matter where it is, is a similar model. It’s got to again be accretive to us. It is got to be in a place where we know how to integrate it, and it’s got to happen in a location where it adds density to our routes. Now we are fortunate in most markets that — that works for people when they’re ready to sell. But we’re always interested in bolt-ons everywhere in the world. We ended up buying Schindler’s portfolio in Japan in 2016, and that integration has gone extremely well. And our team has continued to grow our Service business in Japan, where conversion rates are highest in the world, call back rates are lowest in the world. So it’s a high quality, good margin business for us, and we thank our partners in Nippon Otis, but it was time we felt to — like we’ve done with our disciplined capital everywhere else, for us to get our legal entities in order, as well as get our balance sheet in order.
So you’ll see that in the NCI line in the future. And it just like we did Zardoya made sense to us. Other — as I said, other larger properties will evaluate, but again only where they make sense for Otis and for us — for us serving our customers, as well as for our shareholders.
Operator: Your next question comes from the line of Gautam Khanna with TD Cowen. Your line is open.
Gautam Khanna: Hi, good morning guys.
Judy Marks : Hi, Gautam.
Gautam Khanna: I wanted to ask about India specifically, and just what — it sounds like that’s a source of strength still. If you could just talk about what the big drivers are there? And if you could dimensionalize how big that is relative to the rest of Asia-Pac?
