Michael Feniger: Thank you. And just if I could add, I understand you’re saying volumes potentially are likely down next year. There’s, these cost savings numbers that we’re looking at, plus the restructuring just can Ag margins hold flat if volumes are down 5%, 10% is that kind of the range what we should be bracketing? Are we kind of looking at down 10% to 20%. And in that case, obviously, absorption becomes a bigger headwind. Just curious if we kind of talk about these moving pieces with volumes likely down next year, but these big cost saving numbers coming in next year. Thank you.
Scott Wine: I really like to give a shout out to Derek Nielson and the work that he and his team are doing on this very topic. I think just to respond to your question, if it’s down 10%, yes, we can hold margins flat. If it’s down 20%, that’s a heavier lift. But I wouldn’t want to bet against the team to find a way to get there. But no, the team’s really been focused on driving margin performance and we’re seeing the benefits of that now.
Operator: Your next question comes from the line of David Raso from Evercore ISI. Please go ahead.
David Raso: Hi. Thank you. A little more of a longer term and then more of a shorter term. Sort of to the point you just made when you were considering this incremental cost reduction program, right, the 10% to 15% of SG&A. What magnitude of revenue decline were you assuming just there had to be some relationship to how you saw your revenue next year, to the tough decision to take this kind of cost out on the SG&A? And in the same vein of some of those hard decisions, were you thinking of those cuts in relationship to a traditional kind of two year downturn that we see in AG? I know we’ve seen some longer ones, but maybe this one could be a little shorter. I’m just trying to get a sense of this incremental decision, how you thought about next year.
And really even more importantly, is this trying to enter a couple of year downturn and that was the magnitude of the cuts? And then the shorter term question. And I appreciate all that you’re doing to offset some of the weakness in the market, but in the fourth quarter, your revenue growth sequentially, it’s a normal 15% to 20%. In fact, it’s 21% implied. Why such the strong incremental revenue 3Q to 4Q if we’re trying to prepare a bit for a weaker ’24? Thank you.
Scott Wine: All right, I’ll take the first one and let Oddone take the second one. First of all, we don’t take any action or activity as it relates to our headcounter employees lightly. We really – it’s not something, we ever want to do because we invest a lot in our team and it’s a difficult action to take, but it’s not a reaction to the market. It really is. When we did the spin off from Iveco, we took a shot at getting organized and understanding how we be. We’ve just learned a lot about where we are as a company and how we can be more efficient. We do a lot of employee surveys and we get a lot of feedback that despite a focus on being agile and customer focused, it’s still difficult to do sometimes. So this is really about not a level of decrease in volume next year, but it’s just recognizing that the market is not going to grow like we’ve seen over the past several years.
And we need to think about what’s the proper structure to deal with that as effectively and as efficiently as we can to create a better working environment for our employees and better for our customers. That’s what we’re striving to do and we see a good opportunity to do that. And we think the timing is right.
Oddone Incisa: And David, on the question –
David Raso: Sorry Oddone, go ahead.
Scott Wine: If you think you’re going to bait me into a comment on the cycles, try again.
David Raso: Well, no, I’m just I’m just trying to be thoughtful around those are hard decisions to make and we knew the SG&A staying below 5%, it was getting hard, right. I mean, you’re implying the fourth quarter SG&A is going to be flat, despite revenues up 20%, right? So we needed to take some action and I appreciate those are not easy decisions. But when you were putting pen to paper. I was just trying to think about. It’s never easy to let people go, obviously not always easy to hire people, nowadays, find, good people. Just trying to think about. Yes, we’re just going to approach this as a typical downturns too. Yes, we’ve seen three and tougher – three years and tougher eras. But I was just trying to get a sense of how you were really approaching this from a real structural view of the cycle. So, not trying to bait you, just this is tough decisions made and that’s –
Scott Wine: No. It was – putting the through the cycle margin chart together was actually helpful for us, and especially if you look at it in the middle of the chart, which reflects 100% of the market, and we’re still talking about playing above that middle ground line. So it’s not like – the fundamentals in Ag are just too good for a major downturn. It’s just – we’ve seen a lot of demand, we’ve seen dealer inventories normalize, and we think it’s going to be a little bit slower next year. But we don’t – if you compare to past downturns in the market, we fully just don’t see that coming right now.
David Raso: That’s helpful. I appreciate the discussion. Thank you.
Oddone Incisa: And David, on your second question about the growth in the fourth quarter. Yes, you noticed, the growth that we have sequentially fourth quarter to third quarter is pretty typical in our return on sales and is predicated on higher retail sales in the fourth quarter, which are also typical for our business and for the way our dealers and our farmers, operate.
David Raso: But I guess that was the decision. Do we get the typical sequential revenue growth, which is what you’re exactly correct, that’s the normal third or fourth quarter. But the decision was to get that revenue. We’re willing to clear out a bit with pricing, which is fine. That was the decision, right. Without that incentive, we probably wouldn’t get the sequential revenue, but at least it clears out some inventory going into ’24, which I appreciate. Okay thank you.
Operator: Your next question comes from the line of Timothy Thein from Citi. Please go ahead.
Timothy Thein: Excuse me and apologies in advance on the voice issue here. But in context with the pricing for Ag, you’ve talked about, can you kind of just give us a sense in terms of your expectations and what you’re seeing on the cost side in Ag and just maybe a little bit longer preview into ’24 in terms of, again, just kind of the trend lines and what you can see through contract negotiations and the like as to that relationship and get more on the cost side? And then I guess the second question I’ll just ask them at once, Scott, is just on the – obviously, you don’t do presales for every product, but what you have seen in terms of presales and where you’re taking orders into ’24? Is that – can you just give us a sense in terms of how much that’s informing you about the volume outlook into ’24 i.e., Just some kind of sense in terms of what you have seen in terms of that order uptake? Thank you.
