John Stauch: Yeah, so I’m a couple dynamics there. I mean, just as a reminder, price in Q4 does also reflect on some of our early buy. So it’s not the largest contribution to price in the quarter. Absent that, we were pretty much signaling that we would get closer to price offsetting cost versus having benefited substantially from price being much higher than cost in the first half of the year. So it came in line with expectations. And I think as you head forward, it’s probably going to be a little bit better. As Bob said, we now expect it to be offsetting throughout 2024.
Operator: The next question comes from Jeff Hammond with KeyBank Capital Markets, Inc. Please go ahead.
Jeff Hammond : Hey, good morning, everyone.
John Stauch: Good morning.
Bob Fishman: Morning.
Jeff Hammond : So just on the early buy, I think there was some question on, kind of how you’re going to spread it for 1Q and just wondering, if you have more to go in 1Q? And then just I’m kind of the, maybe just speak to break fix kind of how you’re thinking about that market within the guide?
Bob Fishman: Yeah, early buy came back to more normal levels in the fourth quarter. But again, as we typically do that, that gets spread between Q4 and Q1. So in line with historically how it’s done, in fact, the early buy component in terms of shipment in Q4 was probably a little bit less than historically what we’ve done.
John Stauch: Yeah, and on the break fix, Jeff, I will concede that we probably have what I’d call a more cautious outlook, I would not call it conservatism, I call it more realistic. And we just don’t know how the interest rate environment is going to affect the consumer being more thoughtful on what’s discretionary, not discretionary on the pad. Clearly, we expect products like pumps and filters to be replaced as needed to keep the pool running. But some of your heaters, especially on the high end and/or some of your lighting could see some consumer discretion push those off a quarter or two. That’s just our outlook. I don’t say that that’s right. I think it’s better to take that slant and maybe err to the fact that if that doesn’t happen, we’re going to see, a higher level of growth versus taking a more optimistic view and then having to reset the guide again to the lower end in Pool.
So I would be very clear, I don’t know. It’s just what we have in our particular view.
Operator: The next question comes from Brett Linzey with Mizuho. Please go ahead.
Brett Linzey: Hey, good morning all.
John Stauch: Good morning.
Bob Fishman: Morning.
Brett Linzey: I wanted to come back to the capital allocation priorities. You noted the continued deleveraging path, but also the potential for share repurchase. I guess what would be the gating factor there to drive that decision and what would be the optimal leverage you’d be willing to flex for repurchases?
Bob Fishman: Yeah, based into the assumptions that we gave, the $100 million of interest expense and the share count, we have assumed share buyback resumes to offset dilution. So typically, Q1 is a negative free cash flow quarter, but we would also start a share buyback later in the year, is what’s based into our assumptions currently.
John Stauch: And again, that’s just to offset dilution at the moment. I think where we’re at from a debt to EBITDA is prudent. I think at these particular interest rate levels, I think the focus still is on debt reduction. And the way we’re going to look at incremental buyback or M&A is what long-term value does it create for the share owner and therefore which one’s the best course of action.
Brett Linzey: Got it. And then just want to circle back on the $75 million of Transformation that’s planned this year. Curious how that feathers across the individual segments as we model ’24? And is this primarily from the Wave 1 measures and actions taken last year, or are you doing more on the operational side in 2024?
Bob Fishman: It’s primarily the Wave 1 on the sourcing side. Again, just as a reminder, Wave 1 last year looked at electronics, motors, maintenance, repair and operations, packaging, logistics. So we’re at the point where that’ll start making its way into the P&L and very early stages of Wave 2. Wave 2 looked at metals, moldings, resins, ocean raid and purchase finished goods. So I think we’ve got a nice cadence there of the Wave 1 reading out in 2024 and Wave 2 will straddle ’24 and ’25. We’ll also start to see some benefits from both the pricing excellence and the operations. On the pricing excellence, we’ve now rolled the strategic playbook out to almost all of the different categories and [TMs]. So again, good cadence there from a Transformation perspective.
John Stauch: You know, Brett, we’ve got to leave some information for Analyst Day to make sure everybody attends, comes and listens to us. And we’ll go in a lot more detail as to how we see all of those Waves working and connected to what the segment expectations will be as well.
Operator: The next question comes from Andrew Krill with Deutsche Bank. Please go ahead.
Andrew Krill: Hey, thanks. Good morning, everyone. I just want to go back to pricing. I know you said about two points net for the company, but just wondering, do any of the three segments benefit more or less relative to that 2%? And are these pricing increases basically already put through or does it require more pricing on kind of mid-year or at some point in the year? Thanks.
John Stauch: It doesn’t vary greatly across the segments as far as the expectation. And yes, they are all announced and implemented at this stage.
Operator: The next question comes from Joe Giordano with TD Cowen. Please go ahead.
Joe Giordano: Hey, guys. Good morning.
John Stauch: Good morning.
Joe Giordano: Hey, so on the Manitowoc Ice, you know, obviously the growth there on an organic basis looks a lot different than the water solutions business as a whole. Can you can you kind of go through, especially kind of like buckets of what drove that? Like how much was just backlog? How much was like was price in Manitowoc different versus like the underlying water solutions of three points for the year? Like how much were there like revenue synergies with the filtration reading out already into ’23? Just if you can kind of just break those into large buckets for growth.
John Stauch: Yeah, let me simplify it. I mean, right now we’re seeing great traction, especially with Manitowoc and also then the filtrations of Everpure, through distributors into key accounts and also working our way through synergies there. I just want to mention that our services business had a very large project that it worked in 2022, which was for a large customer, the install of frozen carbonated beverages. And we ran up against the year-over-year headwind in that business in Q4. But if you actually look at the filtration and the Manitowoc, contributing nicely and it’s just offset slightly by the headwind of the services business.
Operator: The next question comes from Andy Kaplowitz with Citigroup. Please go ahead.
Andy Kaplowitz : Hey, good morning, everyone.
John Stauch: Morning, Andy.
Andy Kaplowitz: John, could you give us a little more color into your industrial CapEx, I suppose businesses within Flow? I think you have the segment up single digits for ’24, industrial businesses look good in Q4. So what are you seeing in Flow and then how are you thinking about your commercial businesses there as well?
