Christopher Snyder: I appreciate that. And then maybe following up, Dave, you mentioned in the prepared remarks that orders need to go down at some point due to the law of large numbers. So the other question is wouldn’t you need like a step change negative in the macro to see that? Because it feels like the lead time compression headwinds are kind of largely in the rearview at this point. Commercial is healthy. Resi seems to be turning. And you mentioned before, the mega projects really haven’t ordered yet. It’s mostly still in the pipeline. So I mean, what do you need to see on a macro standpoint to have material order declines off these levels?
Christopher Kuehn: Yes, Chris. It’s Chris. I’ll start. This is why we want to make sure it’s important that investors look at growth rates as well as backlog position and just absolute bookings levels, right? I think the trends around decarbonization, and as you mentioned just before, customers putting out emissions targets, we see these as long-term tailwinds. Growth around data centers appears to be a multiyear tailwind as we think about the need for data and for saving data and to process data. So we see this as some longer-term tailwinds. When we think about the beginning of the year, we guided ending backlog down to around $6 billion, and that would have implied bookings down around 5%, 6%. But even on a down 5% or 6%, that would have been still very elevated levels in terms of absolute bookings, and we continue to see that strength here through the third quarter.
So I would say the trends, we don’t necessarily see, as abating. Could we find some quarters where the backlog will start to normalize or bookings growth will be negative? I guess we could. But I would just encourage people to look at absolute bookings levels because when you look at 2-year stacks, 3-year stacks around bookings growth, they’re significant. You think about commercial HVAC in the Americas, a 3-year booking stack of over…
David Regnery: 65%.
Christopher Kuehn: 65%. So the fact is if we went down 5 points in a given period, you still have to subtract that from 65% points of growth. So maybe a bit of a long answer to your question, but where we’re confident we’ve got a long-term tailwind here.
Operator: Your next question is from Joe Ritchie of Goldman Sachs.
Joseph Ritchie: Nice quarter. So yesterday, Eaton resized the mega project funnel up 25%, now tracking almost close to like $900 billion. And they suggested that about 20% of the projects have kind of broken ground and a lower percentage, they’ve actually bid. I’m curious, like I know that you guys have your own funnel and you guys are also tracking projects over $1 billion. But does that all kind of jive with what you’re seeing in your pipeline broadly? Or any other color around that would be helpful.
David Regnery: Yes. I haven’t read Eaton’s reports so I can’t comment specifically. I would just tell you that we have a lot of projects in the pipeline right now that we’re tracking. I think it’s always — you always have to be a little bit careful when you track 1 company versus another company is when orders are procured by different companies could vary. So Eaton maybe a bit before us. But I guess the good news is we still see a lot out there. It sounds like Eaton does as well, and we’re very, very confident with many of the solutions that we have that we’re talking with customers about and we feel that many of these projects, we’re in a unique position.
Joseph Ritchie: Yes. Maybe following up on that, Dave. [indiscernible] had any concerns? I know you’re not seeing it really in the order book today, but are there any concerns out there on project financing or things putting to the right, just given the rate environment that we’re in?
Christopher Kuehn: Joe, it’s Chris. No, we’re not. I think while certainly interest rates have gone in the negative direction on paybacks, I would tell you that the change in paybacks is minor when we think about the energy-efficient systems that we’re able to quote customers. A payback may have gone from 2, 2.5 years to 3-ish years now with interest rates. So the fact is there’s still very strong paybacks when you’re implementing some of these solutions. So we’re not seeing that right now.
Joseph Ritchie: Got it. That makes sense. And I guess maybe 1 last 1 quickly for you, Chris. I know that we’re kind of not ready to bless any 2024 numbers at this point. But as you kind of think through both pricing and mix for next year, just any thoughts — initial thoughts on how that should kind of play out across the Americas business?
Christopher Kuehn: Yes. We’ll dial it in a little bit further, Joe, as we get a couple of months from now. But we do target, from a price inflation measure, let’s say, a spread of 20 to 30 basis points in a normal year. We’ll dial that in as we get closer to next year. To Dave’s earlier point, we’re making sure we’re pricing for innovation and also long-term customer relationships. So I’m confident that we’ll have a good set of numbers there. We’re going to target positive on a dollar basis and a margin basis on price versus inflation. And we’ve been able to demonstrate that for the last 3 years, so I have a lot of confidence our teams will be able to do that going forward.
Operator: Your next question is from Steve Tusa of JPMorgan.
Charles Tusa: I’ll echo, those orders, pretty strong for sure. What were — there’s been a lot of strength in light commercial. How strong was your light commercial business, large and light?
David Regnery: Our revenue was up, in the Americas, was up over 20%. Equipment was up over 30%. Applied was stronger than unitary.
Charles Tusa: Applied was stronger than unitary?
David Regnery: Yes, yes, yes. Both were strong but applied was stronger than unitary. I mean, you could look at the verticals that really had the strength in it, Steve. You have data centers, high tech, education. Those tend to be more applied systems. And even the verticals that were solid like health care, life science, again, those tend to be the more intricate projects where you need really a design system, which is our applied systems. So we’re pretty happy with the performance that we saw in the third quarter. And again, not to iterate, but these implied, I know you know this, but this is where you get the long service tail. And so this is going to continue to fuel our service business in the future.
