Giordano Albertazzi: Maybe I can start with a little bit of the three points we were talking and we’re asking about Jeff, price, cost and execution. I mean this is something we’ve been absolutely vocal about in the last three calls, as a matter of fact, this included. Certainly, a lot of price efforts and successful execution, as David explained also our outlook. But what is most important is our price cost. When we were talking about price, I was vocal about the fact that we have now a muscle that we did not have before, and that has helped a lot to rebalance back to position, let’s say, pretty big inflation position. When it comes to the cost side of the equation, we have a lot of focus on efficiency, be that in manufacturing execution, be that in procurement.
And there is still potential – there’s still potential in general. Execution in particular, is true across the organization, across the organization. But I can point particularly to the execution that we have started to drive in the procurement and manufacturing and ability to ship, that has certainly characterized and accelerated our ability to deliver on a strong backlog, we enter 2023 with. So we will have time in November to go to more details of exactly what are the access of this acceleration. But I was vocal about our eternal promotion of Paul and Anders as a further step in the direction that is testament to the fact that we are not done yet. And that’s very good news. I don’t know if you got.
Jeff Sprague: Yes. No, it is. I wonder if you could maybe give us some perspective on incremental margins. So trying to kind of pull all that together. So we kind of say we’re not done in 2023, but we’ve kind of pulled out of the big hole and or something maybe approaching normal, not quite there. But as we look into 2024 and beyond, what would be kind of a reasonable kind of incremental margin construct for us to have in our head?
Dave Cote: Yes. I think the easy answer is higher. But if you look at where we were last year – and we’ve disclosed this in the past. We were probably in the low 30s from a variable contribution margin perspective. We’re in the upper 30s at this point in time, let’s call it, the mid- to upper 30s. So if you look at the projected 600-plus basis point increase in operating margin this year versus last year, about $400 million of that is related to the variable contribution margin; and $200 million is related to fixed cost leverage. And I definitely don’t want to discount the power of the fixed cost constant methodology and culture, that should continue to provide upward momentum on the operating profit. So as we’ve consistently said, 16% has been our intermediate term goal.
We have high confidence of getting there for sure, but we’re not celebrating. Our long-term goal is 20% and higher. But to get to that level, Jeff, to your question, we’re going to have to continue to improve with the contribution margin while also incorporating that fixed cost leverage philosophy.
Jeff Sprague: Great. Thanks for the insight. Appreciated.
Operator: Thank you. Our next question comes from Nicole DeBlase from Deutsche Bank. Nicole, please go ahead.
Nicole DeBlase: Yes, thanks. Good morning guys.
Giordano Albertazzi: Good morning.
Nicole DeBlase: Can we just start with enterprise demand? I know you didn’t change the bubbles in the market outlook, but what are you seeing on that front? I know this has been kind of like a watch item year-to-date.
Giordano Albertazzi: Nicole, not much really to add to what we were saying. We continue to see that demand fairly, fairly stable. The technology continues to be evolving for everyone in the industry, and that’s not just a colo, hyperscale. But again, not a lot to elaborate upon here. We see – we’ve seen some stability in that space.
Nicole DeBlase: Okay. Thank you. And then the EMEA margins, obviously, pretty big step-up this quarter. How are you guys thinking about the sustainability of that level of margins into the second half of the year? Thank you.
