Nigel Coe: Thanks. Good morning, everyone. So I think I came on bit late, but I think you mentioned backlog moving down from $7 billion to $6 billion, still a very healthy level. I’m guessing most of that would be in commercial HVAC. But I’m just wondering how much TK would come into that backlog conversion as well. But my real question here is what is the key gating factor to an even stronger backlog conversion? I am thinking your supply chain, construction, labor, skilled labor in the field. Versus maybe customers don’t want the equivalent today? I’m guessing they do. But what is the gating factor to getting even more backlog converted?
David Regnery: I think you got the answer, Nigel, there’s a couple of things, right? First of all, the backlog of $6 billion, I was kind of using that as an example. I think we’re going to end 2023 with a backlog of $6 billion or more. Okay, so there’s, for us to burn $1 billion in backlog will be a lot. As far as why can’t you burn it faster? A couple of reasons you hit on, right. One is supply chain, it’s improving, it will continue to improve in the future, our teams are doing just a fantastic job working with our suppliers, giving them visibility and everything we can to make sure that we improve their performance. And that’s happening. The second is that lead times, especially in our commercial HVAC businesses, and the applied side of it, for sure, have extended.
And that’s not unique to Trane Technologies that’s really across the industry, in fact, we’re very competitive with our lead times. But so that means that customers don’t want an order early, right, you’re not going to ship an order, especially on the applied side to a customer before their job site is ready. And so that’s elongating the backlog as well.
Nigel Coe: Okay. I was kind of hoping you might delineate between, okay, labor is a real problem, supply chain getting better, but it’s okay. And then on the 25%, or better incremental margins for this year. I mean, that’s pretty impressive when you think about commercial HVAC are growing residential and TK. And we’ve all been trained to believe that resi, TK better margin commercial talks about businesses low margin, is that the wrong thesis? Or are you absorbing mixed headwinds within that 25% plus?
Christopher Kuehn: Nigel, it’s Chris. So we’re aware of that thesis. And I think, with our focus on our business operating system, we’re ensuring all of our businesses are growing margins. I would say in the commercial HVAC businesses really been impacted the last couple of years of the supply chain challenges, lots of inefficiencies, the inability to drive productivity, lots of increased costs to serve customers and expediting freight, buying components on the spot markets, we’ve incurred a lot of costs in the business just to get the revenue out. And that’s presenting a nice opportunity, as the supply chain normalizes as we can drive productivity in the plants, and ultimately, get our team members focused on both productivity and solving the supply chain issues, which they’re doing outstanding jobs, solving the supply chain issues throughout the last two years.
But I see all of our segments next year having very strong leverage. And I think that some really nice opportunities there for us to go drive. And when we eliminate some of those inefficiencies. We’re also baking in incremental investments. So I think we can do both next year. We can drive 25% or better organic leverage with also incrementally under 20 to 30 basis points of investments, allows us to do both and really drive for market outgrowth.
