John Stauch: Yeah, so thank you for the question. I mean, we’ve had pretty nice steady order rates and steady deliveries. And what we do is very, very important because we’re turning waste into value for a lot of our key customers. And we’re seeing continued investment in that because it drives productivity for them. It’s also a big sustainability play for them. So it’s an area where doing the right thing for the planet also means a really good value for the customer. And so we’ve seen a steady order view there and we feel like we’re well positioned heading into 2024. On the commercial side, our larger pump business has benefited from, expansion of what I call mainly infrastructure types of projects and the continued build out in North America related to data centers, warehouses, etc. And we continue to see that trend as we enter 2024 holding up nicely as well.
Operator: The next question comes from Deane Dray with RBC Capital Markets. Please go ahead.
Deane Dray: Thank you. Good morning, everyone.
John Stauch: Good morning Deane.
Deane Dray: Hey, just want to follow up there while we’re talking about the formerly known as Industrial & Flow Technologies. Is there anything, it might just be cosmetic, but is there anything to read into the renaming as Flow? And just in answering Andy’s question, the point of the business today for Pentair is more of the focus on residential, commercial and the opportunities in Pool and it seems less about industrial and data centers and so forth. And maybe I’m just reading too much into it. But my sense is, are you still the natural owner for this business? And is there any potential that you’d consider a separation?
John Stauch: Yeah, I know. I appreciate the question, Deane. And I will spend a little bit of time on this at the Analyst Day in March. But just to share with you how I’m thinking, the relabeling of Flow was actually more of a branding exercise. You know, we want to have a web presence where we can tell our story and flow represents 9.99% of everything we do and the former Industrial & Flow Technologies, well, we just didn’t think worked as a naming nomenclature. So that’s all it was. It’s also shorter, which makes producing reports easier. And that’s a big deal, right? But ultimately, Deane, the way I think of the company is we’re a $1.5 billion in separations and membrane technologies. We’re about a $1.5 billion of pumps across the enterprise.
And then even some of our specialty applications like heating and cooling of ice, a rise in $800 million, which leaves you a couple $100 million of lighting and $100 million of other. So when you think of the portfolio, we’re not geared to residential other than that’s where our dealer base is. And that’s where our strength and our presence has been generally accepted around our brands. But as a reminder, we do a couple of hundred million dollars industrial wastewater today. That’s in the Flow side and we’ll continue to build out that capability and technology to continually take advantage of water reuse projects around the world. So, it’s — we are — we believe this business naturally fits and we’re going to demonstrate that we use those membranes that are used for industrial wastewater applications.
We’re bringing those back into the residential applications and we think it’s going to give us a differentiated technology advantage as we do so. So really excited about the cross-pollination of technology and really excited about how the segments are working together, while also maximizing what we think is the revenue opportunities within their individual swim lanes.
Operator: The next question comes from Steve Tusa with JP Morgan. Please go ahead.
Steve Tusa : Hey, guys, good morning.
John Stauch: Hey, good morning, Steve.
Bob Fishman: Hi, Steve.
Steve Tusa: How’s it going?
John Stauch: Good. How about you?
Steve Tusa: Grinding it out. Just on this productivity number, can you just quantify how much investments you’re throwing in there, just roughly?
John Stauch: It’s not a lot. Just, you know if you thought about $10 million to $20 million of reinvestment into the areas of sales and marketing, innovation, digitization, capturing data upstream and bringing that data to help our dealers be successful. And then really just automating the experience between our dealers and our distributors and us, are the two biggest opportunities we have. And then we got some excitement around three or four of these innovation projects that we’ll talk about further, Steve, at the Analyst Day. And I want to continue to invest in them because I think they could be game changers in the long haul. So I’m really pleased with the level of transpiration we’re realizing and, you know, these are good businesses that we want to add a little bit of investment back into.
Steve Tusa: You should have thrown AI in there. You missed the opportunity. But on that number, so I guess —
John Stauch: But you [answered] it for me, Steve. Now it’s in the transcript, so thank you.
Steve Tusa: I guess, though, I thought that the messaging around productivity was more bullish than, I guess, a $90 million gross number if I just add back $20 million. Am I missing something there? Is there just like conservatism on the way some of that’s coming through? I thought the productivity number you were messaging was higher than that.
John Stauch: Yeah, you know, I hate ever using the word conservatism. I think we definitely have a funnel that would suggest we could realize more. And certainly, at the upper end of the range, we would be realizing more. So I think right now, as we sit here and we don’t see any definitive movement in interest rates for the rest of the year, we haven’t planned on any in this forecast. You know, we think we’re well balanced in the way we’re positioning this.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to John Stauch, President and Chief Executive Officer, for any closing remarks.
John Stauch: Well, thank you for joining the call today. In closing, I want to reiterate some key themes on Slide 27. First, our balanced water portfolio and Transformation initiatives continue to drive significant margin expansion in 2023. Second, we initiated 2024 guidance with expected growth in sales and profitability, reflecting confidence in our strategy and execution across the company. Third, our Transformation initiatives have gained momentum in 2023, with expectations to drive further margin expansion in 2024. And finally, we believe our focused growth strategy and solid execution are building a solid foundation for long-term growth, profitability, and shareholder value. Drew, that does conclude the call.
Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
