Michael Halloran: So two questions here. First, on the margins for Motion. Certainly, you heard Emmanuel’s comments about sequentially up as you move into 3Q. Maybe just talk about the timing of the recovery curve given all the moving pieces on the costs, volume, et cetera, side of things.
Emmanuel Caprais: Yes. Yes, Mike. So we’re very excited with the Motion Technologies performance. At 16%, as we mentioned, this is 150 basis points over prior year and then 120 sequentially. And there’s still more to go after. The growth engine in terms of margin expansion for Motion Tech is productivity and it will continue to be productivity and we see many more opportunities, especially as we grow rapidly our top line and expand into new types of products, new types of technology for our brake pad. So Friction, still a lot of runway in terms of productivity. And then if you look at our rail platform, KONI and Axtone, we see many opportunities, both from a pricing standpoint and also a productivity standpoint. So here in pricing, we have just scratched the surface, but there’s still much more to go after.
And because this is the longer cycle business, we’re not seeing all the impacts of pricing yet in our P&L. So we’re going to continue to drive this. And with further margin expansion from KONI, Axtone as well as from Friction, we expect really Motion Technologies to be in a position in 2024 sometime in 2024 to be at least 18% mark.
Michael Halloran: That’s helpful. Appreciate it. And then following up on earlier question on the IP side, underlying trends, you talked about a pretty robust funnel, just a little help on the composition of that funnel. And in anyway you can delineate between underlying — health of the underlying markets versus what’s clearly some share gain going on in your efforts there?
Luca Savi: So Mike, when you look at the funnel which is up just couple of stats. 38% year-over-year and is up 11% since January 1, is across most of the region, is very strong in North America, is up in also Europe, the Middle East as well as in Asia Pacific. And also when you look at the market, we’re talking about both up in the oil and gas and the funnel is also up on the chemicals. I think that we have a good, green project. I think if you look at our booking in terms of in green project as — it’s very good. And today, they represent roughly 33% of all the orders that we booked in projects. And we have a good sight of opportunities in the funnel there as well.
Operator: Our next question comes from Nathan Jones from Stifel.
Nathan Jones: I just have a couple of follow ups, few questions that have been asked. First one on the capacity addition per MK, could you just give us a number for what capacity this is adding and over what time period you expect that to be filled up?
Luca Savi: Okay. And that’s — you’re talking about that these are high-performing vehicles. So these tend to be low volume, high mix and tend to be high value in terms of products. So you’re talking about anything that could go from 5 to maybe 10 million maximum 15 million pads probably in the next, let’s say, 7 to 10 years.
Emmanuel Caprais: And so in terms of capacity, you know how we operate. We only book incremental capacity when we have our orders. So we don’t have the expending the Termoli sites from an infrastructure standpoint by more than — by more than 70% and so that’s the infrastructure. And then we’re going to fill it up with new prices as we receive orders. But we already started receiving some orders, especially from Porsche and also from Daimler with the AMG segment. Okay. So the revenue may not be that good bit, but it may not be that much further capacity expansions, you’re quoting in the — we would be expecting this to be some pretty high margin revenue that you’re booking.
Luca Savi: Yes. So I think it’s fair to say that there will be lower unitary volumes per platform. The price is going to be much higher than what we are selling today. And I would say our expectations from a profitability standpoint is that it will be higher than our business with conventional brake pads.
Nathan Jones: And while we’re at it, I was going to ask for an update on the Smart Pad. I haven’t heard an update on that for a while. Just any update you’ve got on the progress being made there.
