Timothy Thein: Thanks. Good evening. The question, Dave is or Fred, just on pricing, I think the expectation for the year was maybe just under 500 basis points of price capture for this year. Is that still the expectation? And then just to continue on your — on that last thread in terms of what the OEMs seem to be signaling in terms of relative strength in the on-highway market is most important to you, especially the vocational segment and I think somewhat communicated at least the attempts — initial attempts for price increases in ’24. How do you think, Allison fares in that kind of backdrop should that hold? Thank you.
Fred Bohley: Tim, this is Fred. From a pricing standpoint, it was another strong quarter from a pricing standpoint. As you know, we passed on pricing throughout 2022. So the comps become difficult as you progress through the year. But over $30 million in price, close to 470 basis points in the quarter, revenue really up about 400 basis points. So you’re really looking at price driving the revenue performance. I’d say what’s encouraging about that is on fairly constant volume. Our gross margins are up 230 basis points. EBITDA margins up 180 basis points. So we’re in a situation where we clearly have price out running cost, and you’re seeing those really drop through from a margin standpoint. For the full-year, we’re still tracking to that total 500 basis points, roughly $150 million in price realization on a year-over-year basis.
And relative to 2024, as we’ve talked about on numerous calls, as the vehicles continue to increase in price, our value prop is that we make those vehicles run more efficiently, less repair time, more vehicle uptime. Ultimately, you can get from point A to point B quicker, you can size fewer vehicles than your fleet. So as the vehicles continue to advance, whether it’s inflation cost pressures driving that or outside North America, moving up the emissions curve and adding safety features, it just significantly increases our value proposition, and we’ve been in a position to both take advantage of that from a price and a share standpoint. So we’re certainly going to continue to monitor what the OEM price actions will look like going into 2024, but we do anticipate another, I think, historically pre-pandemic, 50 to 100 basis points of price.
We do anticipate in 2024 pricing significantly above those historical pre-pandemic levels.
Timothy Thein: Thank you, Fred.
Operator: Thank you. Our next question comes from the line of Ian Zaffino with Oppenheimer. Please proceed with your question.
Isaac Sellhausen: Hey, good afternoon. This is Isaac Sellhausen on for Ian. Just a follow-up on off-highway. Does the reaffirm guidance assume we see off-highway recover in the fourth quarter? Or will on-highway perhaps make up for some lower performance there given the dynamics you discussed in off-highway?
Fred Bohley: Yes. I think as Dave commented on off-highway, our expectation with outside North America is there’s been an element of timing. And we do have an elevated expectation for Q4 and outside North America off-highway versus what we saw in Q3. Relative to North America, that’s something we’re going to continue to closely monitor. North America on-highway, I mean, Dave hit on it, I mean there’s a significant amount of demand for medium duty and Class 8 straight and we feel very solid about where that order book is going into the fourth quarter.
Isaac Sellhausen: Great. Thanks very much.
Operator: Thank you. Our next question comes from the line of Tami Zakaria with JPMorgan. Please proceed with your question.
Tami Zakaria: Hi, thank you so much. So my question is on the impressive gross margin expansion to 30 basis points. I think this is the highest you’ve seen this year. How should we think about it for the fourth quarter? And also, how should we think about gross margin in general as you start lapping these expansions next year?
