Richard Tobin : No, right? Because you’ve got Belvac rolling down year-over-year, which we’ve expected for 3 years. If Heat Exchangers stays with our forecast, which is very conservative, the CO2 revenue growth will not offset that, but I think that we’re being cautious until we see what happens and when we see what all our customers say about Heat Pump demand for 2024.
Andrew Kaplowitz: Very helpful. Thank you.
Richard Tobin : You’re welcome.
Operator: The next question comes from Scott Davis with Melius Research. Please go ahead.
Scott Davis: Hey, guys. Good morning.
Richard Tobin : Hey, Scott.
Scott Davis: Hi. Thanks for being brief with your prepared remarks. I really wish everybody would get that memo. It’s – it’s helpful to get to the [indiscernible] point as I say and get to Q&A and let’s all move on. But guys, a couple of things caught my eye. One, kind of the volatility geographically, China up 14%, Europe down 16%. And maybe if you could walk around the world a little bit for us for ’24 and expecting a little bit more of a normalization there? Or maybe some puts and takes on some of the geographic moves. I’ll just stop there and open it up…
Richard Tobin : Sure. Yes. Look, look, I think that the China number is kind of – first of all, China as a percent of our revenue now is, I don’t know, 7% or 8%, 6% now, okay, 6%. So that number on the law of small numbers, when we make a big shipment into China out of polymer processing, it swings the numbers. Now the base business that – the remaining base business that we have in China is a reflection of the Chinese economy. It’s not great. But it flexed up because of that. Europe is really a couple of things. Well, first of all, the European economy is not great, but it’s been exasperated in the quarter by the sudden shift down in demand in heat exchanges or heat pumps where we went from an operating posture of selling absolutely everything we could make to selling hardly anything in about mid-September.
So I think there was a market-wide recognition that inventory got over their skis a little bit, so that needs to clear. So what was baked into our forecast next year is I don’t think that we’re overly optimistic on Chinese demand. I think the European demand in aggregate should improve year-over-year only because of the fact of that idiosyncratic headwind that we had. But the vast majority of the growth that we’ve got baked into our forecast is North America driven.
Scott Davis: Okay. That makes a lot of sense. So Rich, I think you started off – the last couple of quarters, you’ve made increasingly more kind of tonality, positive remarks on M&A. What – this may be hard to answer, but what does good look like? If ’24 is a good year for M&A? Is it to some sort of a range of dollars that you’d like to put to work or some sort of a – something where you guys just have a goal line in mind or that we can start to think about? And that’s…
Richard Tobin : Well, I mean, look, yes, sure. No, I understand the question. Look, at the end of the day, the reason that we put the one slide together in terms of firepower, it was an odd dynamic coming out of COVID where earnings accretion was great, but there wasn’t a lot of cash flow because it was all getting hung up in supply chain and inventory and everything else. So what we expected going into this year was this is the year we’ve got to generate a bunch of cash. Now we’ve had ample balance sheet capacity during that time period. So it’s not like we haven’t been doing M&A because we were waiting to build this cash position. But on the other hand, I think our ability for M&A and capital return is significantly better just on pure cash than it was 12 months ago.
So you would expect us to be more active in the deployment. Now we’ve closed three acquisitions in the last, what, 5 months. We’ve got a decent pipeline of acquisitions that kind of look like that. Would we like to do something bigger? Sure. But we’ve got some return hurdles that – if we can’t find something with those return hurdles, then we’ll return the cash to shareholders. So that’s the posture we always adopt. So it’s not like we got to go find X amount of M&A every year. We need to find things that are attractive from a return point of view. And if we can’t, it’s coming back to our shareholder base.
Scott Davis: Fair enough. Best of luck this year, guys. Thank you.
Richard Tobin : Thanks.
Brad Cerepak: Thanks.
Operator: The next question comes from Mike Halloran with Baird.
Mike Halloran: Good morning, everyone.
Richard Tobin : Hey, Mike.
Mike Halloran: Just tying everything up, when you think about the year and the idea that things get better through the year for you, how much of that is tied to comps in destocking being behind you versus a fundamental thought process that the underlying demand patterns improve across the numerous businesses you have?
