Barry Logan: Yes. I think affordability has always been a question, and yet the industry has grown 3.5% compounded for 30 years, and things are obviously always more expensive over time given all the regulatory things. So I would just point to that as a long-term reality of it. But Ryan, if I give you an interesting answer, I just recently took out a system in my home, $6,200 was the bill. Contractor did it in a day. They expect it to be paid that day. And I was curious, I went back and looked at our cost to him, meaning our revenues, what did Watsco sell that guy in my $6,200 installation. And the answer was around $2,900. So the layer – my point is there is a layer in this called the contractor that’s also a very important layer of both profit and cost and consumer price and so on.
if our cost of goods went up 10% because of regulatory matters, that’s $270. That’s something the contractor would have to decide how to pass that on or what to do about it. But there is this entrepreneurial thing, and it’s really doing a lot of the work called a contractor, not just Carrier or not just Watsco, but contractor, and that’s where all these tools we’re talking about, how do we help the contractor sell products? How do we help them grow their business? How do we help them digitize our business? How do we help them improve their business processes? How do we cater to that clientele that’s growing at a much faster rate and build on it? So this whole idea of how we’re approaching the contractor gets beyond just the economics of a price increase.
It really is a much bigger picture that we’re after.
Ryan Merkel: Yes, makes sense. Alright. Thank you for the color. I will pass it on.
Operator: The next question comes from Jeff Hammond with KeyBanc. Please go ahead.
Al Nahmad: Good morning, Jeff.
Jeff Hammond: Hey, guys. Good morning. Just want to come back to this regulatory issue. I know there is a lot of uncertainty. But like is your expectation that the split system kind of needing to be installed kind of sticks? And if that’s the case, just how do you think about transition timing? Are the OEMs going to be ready to kind of start getting a new product? This kind of brings in kind of inventory obsolescence. Just maybe talk a little bit more about that.
Paul Johnston: Yes. I think all of our OEMs are geared up to have the new product and hopefully, we can start introducing product in the second and third quarter of next year, the new product. So I really don’t have a lot of concern that they are not going to be ready. They will be ready. And then on the 410 transition, your guess is as good in mind. If they allow this to continue the way it’s unfolding right now or has been written up in the latest blurb we got from the EPA that means 410a units will be available indefinitely until we run out of the ability to supply them with 410a. But I think that’s not a good move for the consumer and the consumer would be much better off with the longer warranty period as well as having a new machine that actually is operating to specs, and improve their overall efficiency in their home.
So, it’s a guess as far as whether or not the EPA is going to continue on this path, where are they going to change their path or modify it in some way, we don’t know.
Jeff Hammond: It seems like the R22 drive ship over again, but…
Paul Johnston: It is. As I indicated, that was different at that time because you had all these drop-ins available and the consumer could rely that they were going to have a unit that would be serviced for the 10-year or 12-year or 14-year lifespan of the product. We don’t have that certainty this time.
