I think the thing I’d leave you with too, is our margin guide reflects low 40s pro forma incrementals. And so, we feel really, really strong about the margin that we’re delivering as well in the growth.
Operator: The next question is from Nathan Jones with Stiefel. Please go ahead. The next question is from Nathan Jones with Stifel. Please go ahead. Mr. Jones, is your line open?
Nathan Jones: Good morning, everyone.
Matthew Pine: Hey, good morning, Nathan.
Nathan Jones: I’m going to follow-up on the margin question. I think the vocal cost synergies get you something like 80 basis points. And you’re obviously going to get some pretty good margin expansion out of the M&CS operating leverage, which when I do the math, it gets me well in excess of 100 basis points top end of your margin expansion target. So, can you talk about what could be the offset there or increased growth investments or anything that’s kind of muting some of that margin expansion that I might otherwise expect?
Bill Grogan: Yes, I think the biggest piece probably in your high level math is we continue to invest in the business. Obviously, we’ve got significant growth opportunities over the long-term that we want to make sure that we’re allocating resources around across all four segments. There’s exciting things relative to product launches and market expansions that put a little bit of pressure on some of the significant accretion relative to productivity and the synergies that you highlighted. And then also, Nate, there’s obviously a volatile macro environment that you want to make sure that we’re more prudent relative to the guide that we have the ability to account for things that come up. So, I think our guide relative to the margin expansion is fairly balanced.
I think and Matt you just highlighted at 40% incrementals on a pro forma basis, that’s really strong flow through, so excited about the basis. That’s really strong flow through. So, excited about the opportunities the team has laid out here as we look for a really strong year on our margin expansion journey. And I think longer term, obviously, we’re just starting with the 80-20 implementation. That’ll add some tailwind as we exit the year and into 2025 to try to get us at the higher end of that range longer term.
Nathan Jones: Great. And then, my follow-up, Bill, I think you just mentioned that the chip supply issue has basically worked itself out. Can you guys comment on where the past view backlog is in M&CS today and when you expect that to get to whatever a normal level of past view backlog is?
Matthew Pine: Hey, Nate, I’ll take it. It’s Matthew. Yes, we’re making good progress on the past view backlog. If you remember, we started 2023 around 30% past due. We exited at 20. And we feel that we’re going to get through the bulk of the past due backlog in 2024. Some of that may stray into ’25. But for the most part, we feel pretty confident that we’ll get through the past due backlog in 2024 with, again, with a little bit of carryover into ’25. And so, really from a bottleneck standpoint, it really just comes down to our customers’ ability to go out and execute the deployments. Chip supply is flowing. We’ve made investments over the past few years in our capacity. So, there’s no capacity limitations from our point of view internally here at Xylem in our four walls.
Operator: The next question is from Joe Giordano with TD Cowen. Please go ahead.
Joe Giordano: Hey, guys. Good morning.
Matthew Pine: Hey, good morning, Joe.
Bill Grogan: Hey, Joe.
Joe Giordano: I wanted to touch on Idrica. I guess one of the more like interesting kind of high level where can we go type stories within water, how to get a real connected utility. I’m just curious how you guys think about this. Like, how do we judge success? What how meaningful could something like this turn into, kind of over a near to medium term and just kind of maybe set expectations about where that can go?
Matthew Pine: Yes, I mean, I’ve been pretty bullish on this. You’ve heard me talk about being the aggregator of data in the utilities, much like, folks are in the building management world or in the residential home. We believe we have the capabilities through this partnership to be able to be the leader in aggregating utility data. We’re off to a really good start. We only had about six months under our belt last year once we got the combination closed. The teams have made great progress globally and we built a significant pipeline. And one of the things I’ve talked about is, it’s one thing is to get the platform in play at the utility, but it’s about building on the applications as well as pulling through our core products.
