Tami Zakaria: Got it. If I may ask one more question. As you look at your gross margin, they’ve been pretty strong this year. So if we look to next year, let’s say, on-highway volumes are, let’s say, flattish. Do you expect to hold gross margins in a flattish environment or how should we think about gross margin, let’s say, in a flat volume here?
Fred Bohley: Tami, this is Fred again. I mean I’d start with, as you mentioned, I mean, gross margin certainly strong in the quarter, the incremental drop-throughs on the revenues is very strong, it’s just thinking of the quarter. I mean revenue up 18%, EBITDA margins up 260 basis points; net income up 43%; EPS up 52%, so definitely a very strong performing quarter. As we think what is 2024 going to look like, obviously, we’re not providing guide for 2024. But as we look out there – one – the cost of everything has been inflating. So if you think about the cost of vehicles going up, the cost of labor going up, the cost to get your vehicle repair going up, maintenance parts going up, what that really is generated is a situation where we deliver products that make the vehicle to run more efficiently.
Ultimately, you can get from point A to B quicker, you don’t have the maintenance downtime, you can size smaller fleets and fewer drivers. So, the cost increases has really driven for us a significant improvement in our value proposition, which is obviously already very strong. So as costs continue to go up, we definitely have to manage them from a price cost standpoint but it positions us with more — delivering a greater value proposition to both further increase market share as well as get price. So as we’re thinking about where we sit right now. We’re still – we’re not having conversations with our customers on 2024 pricing, we’re really trying to understand what the expectations are for cost. But we’re well positioned to continue to get price.
And then as the supply chain begins to normalize, we’re going to get after the operating inefficiencies that are out there, whether that be expedited freight or our plant productivity measures, we don’t always have every part you need to produce a product. And at times, you’re running on overtime, which really is unnecessary if you had all parts. So there’s definitely cost opportunities to get out, but we do expect that labor is going to continue to be challenged and that’s going to drive some cost pressures across the business and the industry.
Tami Zakaria: Got it. That’s very helpful color. Thank you.
Operator: Thank you. Our next question comes from the line of Jerry Revich with Goldman Sachs. Please proceed with your question.
Jerry Revich: Yes, hi. Good evening, everyone. I’m wondering if you could talk about your views on the opportunities for natural gas and landfill gas powered engines, in particular, in terms of what that would mean for an automatic attachment rates? And can you comment specifically whether you’re going to be specked on the new upcoming 15-liter natural gas engines that are set to come out over the next 18 to 24 months? Thanks.
David Graziosi: Hi, Jerry, it’s Dave. Good evening. Relative to natural gas, and Fred mentioned this earlier on the question about hydrogen. Nat gas has some interesting attributes in terms of power density. So one of the things that it requires is ways that you can actually increase the power at the lower end in terms of RPM performance. So, what that requires is analysis in transmission, a fully automatic overcomes that lag if you have this sense of hesitation when you would try to accelerate, that’s the advantage of a fully automatic, right? So to your point on natural gas, we certainly view ourselves in an advantaged position relative to transmission solutions to pair with natural gas. So, your question around engine releases, that situation continues to evolve for a number of reasons, will allow the OEMs and the engine providers to ultimately get there in terms of their maps and their product introduction timing.
