Dave Regnery: Yes. Let me just start, and I’m going to let Chris talk about price. Nigel, I think it’s always important to look at the history on pricing. So if you remember, we were really early with pricing. Right. And that’s really because of our business operating system. We were able to see around that corner. So you really have to go back in history and kind of look at what we did early on versus maybe some of our competitors are catching up a little bit. So, Chris, I’ll let you answer the rest of the question.
Chris Kuehn: Hi, I think that’s where it starts, Dave. Right. 2021, 2022, even 2023, we really saw where we led on price there. So, we’re being strategic, Nigel, as we think about that again, the 1% guide for the year right now, it’s early in the year. We’ll see how we do as we move throughout the year. But services, what we would look at is, we look at wage inflation, look at the demand out there in the marketplace and make sure we’re pricing appropriately. We’re also not there, and we’ve said this for many years, we’re really not out there to try to gouge our customers. What we were trying to do is offset inflation a few years ago with price. We want customers for life. And so we’re going to think about that as we move through the process here. But we don’t see pricing moving backwards here in the businesses. But again, the 1% guide, it’s just early in the year, we’ll update you as we move throughout it.
Nigel Coe: Okay. And there sounds, obviously, you guide him for about $1.7 billion, $1.8 billion of capital deployment in 2024, consistent with what you did in 2023. Obviously tough to know how much of that’s going to be buybacks versus M&A. But as you do more M&A, the amort is going to be increasingly a burden to your GAAP EPS. I know I asked this question last year about a move to cash EPS, but is that something that’s under consideration?
Chris Kuehn: We’ll give it some thought as we move throughout. You’re right on amortization. It’s actually really the main driver with the Nuvolo acquisition that we wanted to call out with higher amortization, non-cash accounting rule based shorter lived assets in terms of how you amortize those with a high technology business, that’s a youngish company. But yes, we’ll watch it as we go forward. I really like our cash EPS in 2023. I calculated that after knowing your question was going to come up with 103% on cash and net income. I like our cash EPS. We have lots of opportunities still within our working capital, especially in inventory to make sure we have that level set, and that’ll be a nice opportunity for us on cash going forward.
But as we move out into the future years, right at some point we’re going to start comping against the Trane acquisition amortization. Right. So as we move out into the future years, we may see some of that starting to roll off as well. Not so much here in 2024, but as we look out in the future, we could start seeing that being a tailwind, let’s say, on operating income. But that’s why we like also showing the EBITDA margins for investors. Right. It takes out that noise on the amortization and just gives another metric to look at.
Nigel Coe: Right. Okay. Thanks for the details, Chris. Appreciate it.
Chris Kuehn: You’re welcome.
Dave Regnery: Thanks, Nigel.
Operator: Our next question comes from Andrew Obin from Bank of America. Please go ahead. Your line is open.
Andrew Obin: Hi guys, good morning.
Dave Regnery: Hey Andrew, how are you?
Andrew Obin: Hey, how are you? Just a question on CMS, I think you highlighted it to us back last year and my understanding that it sort of qualifies ITC, I think was clarified back in November, and I think there are potential more tax incentives. Does this change the game on TMS in North America? Or it’s know, just more arrows in your quiver and just to work with your customers and to provide a good solution for them? Is that a game changer? That’s a question I guess.
Dave Regnery: I certainly think it is a game changer, when you start thinking about thermal management systems and electrification of heating and being able to significantly reduce the carbon footprint of a building and have a very, very efficient system versus a conventional system. So, I think if you wrap all together I’d say sure, absolutely. It’s a game changer. It’s making its way around the world and as we launch it in different regions and continue to see more of that in the future.
Andrew Obin: Yes, I guess I was referring to is the tax credit a game changer? No. I know you’re excited about the technology.
Dave Regnery: So I think any policy or tax credit become tailwinds. I don’t think they’re the only driver. I think the main driver of these systems is very, very efficient, they’re very sustainable and they have great paybacks with or without any kind of policy or tax credit. Tax credit will be a benefit to it, but it’s not the only thing that’s driving.
Andrew Obin: That makes sense. And then as we think about inventory in the channel and the refrigerant change both on residential and light commercial, how do you see, I think you addressed inventory on residential, but how do you see it playing out on light commercial? And I know it’s sort of hard to pin down what qualifies as light commercial. And then the second question does it introduce different seasonality first half versus second half for the unitary business? Thank you.
