Judy Marks: Sure. Listen, Miguel, performance can vary in any given quarter based on compares, but I’d like to take a step back and overall, for ’23, we believe we gained share in China with the market down north of 10% and us coming in, again, down about 5% or actually even low-single-digits when you look for the year, but let me try and give you some additional color here. First, we did perform better in the first half of the year versus the second half but we always manage volume and share versus profitability. And we manage those dials appropriately while maintaining momentum on our share growth. Our order value declined mid-single-digits, and we’ve spoken all year about the deflation that’s impacted the market, but we’ve been able to offset the price decline with better productivity.
And when you look at our strategy in China, we’ve added the agents and distributors. It’s given us the geographic and vertical coverage and we’ve continued to innovate and invest in our products. We’ve brought multiple products to the market in China. We’ve upgraded our escalator offering, our OH8000, and we brought Gen360 to the market in China over the past year. And that will yield for us and give us an advantage this year because of the technology because of our — again, our reach in terms of our sales channel. Overall, we’ve increased our bookings in China by nearly 20% since pre-spin, while over the market over that same multiyear period is down 10% to 15%. So our strategy is working, our team is out there every day focused. We are — our backlog, while it’s down mid-single-digits, the quality of our backlog, the profitability of our backlog, we’re not sacrificing for volume.
Miguel Borrega: And then my second question, if you can talk a little bit about modernization. You mentioned backlog is up 15%. What is driving that growth exactly? And how should we think about it from here, 2024 and 2025? And then on the margin of modernization, you mentioned that par with new equipment, I think one of your peers stated that margins are even higher than maintenance. Where do you think the different slides? And would you see those margins in modernization growing ahead of the other segments for you in the next few years?
Judy Marks: Yes. So I’ll comment a little on — let me talk about the market and a little bit on the margins because the margins vary by region in terms of modernization margins. But the mod market is up nicely in all regions. And the majority of that is just driven by the refurbishment required due to the aging equipment that’s out based on construction cycles from 20-plus years ago. We’re just in a natural growth cycle now where you’re going to see year-over-year additional Mod. Really pleased with the backlog up. This was our sixth consecutive quarter of orders up over 10%. Asia Pacific really was the standout again with Korea. But we have a great mod product in China and our China orders, albeit on a small base because it’s a little bit of a younger installed base is growing significantly double-digit.
And Americas and EMEA, as I said in my prepared comments, really had a strong major project contribution in Mod orders in the fourth quarter, and we expect that to continue. Again, in terms of margins, as Anurag shared, we will surpass new equipment margins shortly. But when you look in different geographies, there are different Mod margins. The market is a combination, again, of aging and safety regulations and demand creation. And I’m really proud of our team because when a part goes obsolete our team is out there. Our sales teams out there, our mechanics are out there. They’re ensuring our customers know what they need to keep their elevators, not just current, but to prepare them for the future. I’m really encouraged by modernization. We’ve organized around it.
We’ve set up this as a fifth strategic imperative, we have Mod kits because we are going to industrialize how we do Mods. So it will look more like new equipment coming out of a factory, and that’s what’s going to drive the margin expansion.
Anurag Maheshwari: Yes. Just to add to that, Miguel, I mean I can’t speak about the others, but for us, we’re clearly seeing the trajectory on margins pick up. And there’s no reason why it should be much higher than equipment. And as we standardize our products, optimize the supply chain, do better on the go-to-market strategy, we see that inching up. And as I said, we’ll talk more about it in the next couple of weeks. But clearly, the margin should be outpaced new equipment margins.
Operator: We have no further questions in our queue at this time. I will now turn the call back over to Judy Marks for closing remarks.
Judy Marks: Thank you, Krista. 2023 proved to be another strong year for Otis as we focused on our strategic imperatives to drive value for all stakeholders. We head into 2024 supported by the strength of our service-driven customer-centric business model and remain excited to share our 2024 successes with all of you. We look forward to you joining us at our Investor Day at the New York Stock Exchange on February 15. Please stay safe and well. Thank you.
Operator: This concludes today’s conference call. Thank you for your participation, and you may now disconnect.
