Steph Disher: Yes. Thank you. So as I talk about our strategy, I go right back to the four pillars of our strategy and how I’m driving that focus throughout our entire company. And so I’ll talk to each of those in turn, perhaps and reinforce the innovation component of your question. Firstly, we see ourselves in our first-fit market in our core business as leaders in fuel filtration technology and crankcase ventilation. We want to further enhance and grow our market share leadership in those sectors and we are investing specifically in programs and product development and innovating with our customers to secure a greater share of those markets is the first piece I would talk about as a priority investment for us. That’s driving, I would say, continued sort of R&D investment in the range of the 2% to 3%, and we’ve got targeted capital expenditure that underpins and supports those programs for growth.
So that would be the first in the core first-fit markets. If I talk more broadly, the other components of our strategy, accelerating profitable growth in the aftermarket, transforming in our supply chain and expanding into industrial filtration markets, I think your comments on innovation relate more to the fourth element or the fourth pillar of the strategy around expanding into industrial filtration market. We already have a very strong position in terms of our media technology capability and we want to leverage that technology capability across multiple horizontal end markets, and we are investing both capital and research and development investment to expand that innovative technology capability. So this is the largest one that I would point to there as a point of focus for us.
I might build just one step further on the industrial expansion strategy. We are very, very focused on how we’re going to create value by aligning or acquiring companies that we can stitch together with our core capabilities. And our technology and innovation is going to be fundamental to that creation of value.
Operator: Your next question comes from the line of Rob Mason from Baird.
Rob Mason: I wanted to ask about your gross margin. It actually again outperformed my expectations. So it’s — and you noted some of the factors there. And I’m just curious now that if you think that is a more sustainable level around 26% versus obviously, last year, around 24% had some challenges, but I’m just curious how sustainability looks from here.
Jack Kienzler: It’s a great question. It’s one we’ve been talking about a lot internally here. Obviously, there’s some big moving factors year-on-year as I think about gross margin price, of course, being the biggest mover year-on-year for us, which was offset by volumes. We also had some positive tailwinds from a commodities and freight perspective. We are, I would say, quite focused on improving our efficiencies and taking costs out from a gross margin perspective, and we will continue to focus on that moving forward. I think the biggest swing factor is we do expect the price to moderate certainly going forward off of what’s been a quite volatile, call it, 18-month span here. But I think a big factor will be what would input costs do moving forward. We’ve seen those costs moderate, which has been quite helpful and we’ll keep a close eye on those, all while continuing to drive efficiencies into next year in our manufacturing base.
Rob Mason: There was one mentioned in the discussion around your gross margin, Jack, around unfavorable manufacturing. Is that — was that different than volume in the quarter?
Jack Kienzler: Yes. So if I think about call it, our normal targeted decrementals, there was a bit more inefficiency than that. As we think about the cyclical aspects that Steph was highlighting, we’re trying to make sure that we don’t take out too much fixed costs and not position ourselves to serve our customers in the aftermarket. And so there was some inefficiencies. Obviously, there’s a lot of work going on in our supply chain as we decouple that from Cummins that highlighted a few of the warehouses that have been decoupled inside of Q3, and we’re continuing down that journey. As you can imagine, that causes a lot of challenges just operationally for our team that we’re continuing to progress through and again, try to focus on improvement moving forward. But that was a bit of a factor, I would say, in our gross margin performance.