Operator: Thank you. Our next question comes from the line of Joe Ritchie with Goldman Sachs. Your line is now open.
Joe Ritchie: Thanks. Good morning, guys.
Don Allan: Good morning.
Joe Ritchie: So, you talked about getting a normalized production in the fourth quarter. I am curious, maybe two-part question, do you expect to stay at normalized production throughout 2024 and then as you kind of think about maybe some of the one-time hit to your profitability in 2023. What — can you quantify whether it’s the inventory piece, the production piece, how much does that help the bridge for 2024?
Don Allan: Yeah. I will let Pat give it a little more color on that, but we are pleased that we have gotten to a more stable manufacturing level here in the fourth quarter. And at this point the view of next year is, if we assume the environment that Pat described around the $45 of EPS, that– for in that range, because of where the macro is we would expect it to continue to be stable. We will continue to focus on optimizing inventory next year. So Pat, maybe give it a little more color on that.
Pat Hallinan: Yeah. Yeah. I think, Joe, we certainly feel like we have opportunity to get inventory much leaner, right, probably to the tune of $1 billion to $1.5 billion over the next two years to three years at a pace of $400 million to $500 million a year. I think as it relates to the production normalization, you asked about and as it relates to kind of one-time items in the cost structure. I’d say for the most part 2024, we expect production to be normalized. Obviously, as we and the rest of the Outdoor industry find the new kind of post-COVID Outdoor base, we will be mindful of the production levels in our Outdoor space. But that’s kind of $2 billion-ish of $13 billion, $14 billion T&O business. So I think those production schedules will be in tied to the market realities we see in Outdoor.
But broadly speaking, in this fourth quarter and as we head into 2024, Tools production has normalized. I think as you talk about the one-time costs. Those you are kind of seeing in our gross profit as we exit the fourth quarter of this year. So, during this year, you have seen a cost of about 400 basis points in total, 300 basis points of which was roughly high cost inventory and one of which — 100 basis points of which was kind of under absorption of fixed cost. That has played out within 2023 and you are seeing that in the gross profit margin at almost did 28% in the third quarter and will probably be at or above in the fourth quarter. And so that’s kind of behind us and we are building off of that 28% plus gross margin next year as we head into 2024 and the program continues.
Operator: Thank you. I would now like to hand the call back over to Dennis Lange for closing remarks.
Dennis Lange: Shannon, thanks. We would like to thank everyone again for their time and participation on the call. Obviously, please contact me if you have further questions. Thank you.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
