Ryan Zimmerman: Good stuff. Thank you.
Operator: Our next question is from Daniel Buchta with ZKB. Please proceed.
Daniel Buchta: Yes. Thank you very much, gentlemen. Maybe the first question on margin phasing. Tim, typically you would like to give a bit of an update what to expect if we say for the second half now, I mean if I understood you correctly, FX at the topline level then for the rest of the year should be relatively neutral finally after 1.5 painful years. Is this fair to assume also then for margins that FX is not a headwind anymore. And how is it with other cost items like R&D, like marketing spend and other topics like that? And then maybe the second question on the outlook for price increases, I mean, the 3% now in the second quarter also meaningful contribution still, have there been any new price hike announcements or can we expect this to fade off for the rest of the year and then 2024 only a minimal spillover effect on the pricing side? Thank you very much.
Tim Stonesifer: Yeah. I’ll handle the margin one and then pass over the pricing to David. As far as margins go in the second half, they will be a little bit depressed and that’s primarily driven by gross margin. So as we said in the prepared remarks, our second half gross margin will be a little bit lower than first half, and that’s primarily driven by the fact that we are going to be having higher cost inventory flow through the P&L. So, when you think about the cycle from when we buy the inventory versus when it runs through the P&L, it takes about six months. So we had inflationary pressures obviously towards the end of last year, beginning of this year, that inventory will start flowing through in the second half. We’re going to continue to get SG&A leverage.
We’re going to continue to invest in R&D, you’re going to see that heavier spend related to the Aerie acquisition that you saw in the first half. So, but overall, we would expect gross margins to be higher year-over-year and we feel very comfortable with the 19.5% to 20.5% margin rate that we guided at the beginning of the year.
David Endicott: And Daniel just on price increases. Yeah, we had announced a price increase I think in May, June and that’s where we are right now. I think going forward, we’ll evaluate what price looks like and what inflation looks like and see what the consumers are doing to try and figure out what we can and can’t do. We’ll have to make that call as we get later in the year and into next year.
Daniel Buchta: Okay, understood. Thanks, gentlemen.
Operator: Our next question is from Anthony Petrone with Mizuho Group. Please proceed.
Anthony Petrone: Thanks for taking the question and good morning. Maybe to start off with Dave just on the Surgical backlog, you mentioned in the prepared remarks. Just wondering how deep or how extensive that is as we sit here today and can it be a driver well into 2024? And a quick follow-up there would be just on, not necessarily competition, but the patient choice between monofocal and premium, are there any kind of changing characteristics just from a spend level from those patients? And I’ll have one quick margin follow-up for Tim.
David Endicott: Yeah, I think directionally, it is interesting to watch the Surgical backlog. We’ve talked about it for a number of years now just because of the COVID miss and there was millions of procedures ex-US, there’s probably a million plus in the US that were either delayed or avoided. I think it’s been our view and it continues to be our view that we’ll see that come back kind of in a slightly warmer than historical growth rates. And I think that’s what we saw to a certain degree in the second quarter and partly why we have changed our outlook a little bit going forward, which is — we do think that the surgical patients are out there, there’s plenty of them and they are looking to get into surgery what was important was, we saw on a — we measure procedures on an active unit basis and we saw a significant uplift in number of procedures per active unit that we have, that’s a productivity increase which we’re kind of pleased about.
