Matt Farrell: Yes, so MEGALAC has faced low-priced imports for years, even pre-COVID. We were a little protected from that because of how difficult it was to get shipping containers. And so the US market was a little bit more protected, and so MEGALAC did really well during those few years. So once shipping constraints were lifted, competitors came back in, low-priced competitors were there, and we’ve lost share. This is a very low-profit business, this one product line. And so we are looking hard at how to restructure that business. And so not a lot to talk about today, but I would just tell you, yes, revenue is down, it was volatile, but the impact on profits is minimal.
Operator: The next question comes from Jon Anderson from William Blair.
Jon Anderson: Hey, good morning, everyone, thanks for the question. Just one, if it’s a shot, it may be too early for you to comment in detail, but you mentioned a couple of times that you have one of the better or best [inaudible]
Matt Farrell: Hey John, if you can hear us, you broke up. We’ll give another second.
Jon Anderson: Given kind of the current macro, is the innovation for ‘24 likely to be tilted more towards value than premium? And if you can just kind of characterize it a little bit, given Matt’s comments that it’s one of the best or better new product lineups that you’ve had. Thanks.
Matt Farrell: Yes, well, look, I’m, it’s a logical question, but it is our first week in November and we’re going to unveil all those new products in the January, first week of February when we give our outlook for next year. So it’s best to just stay tuned on that one, Jon.
Jon Anderson: Great. Thanks. Can I squeeze one more in?
Matt Farrell: Yes, sure. So we didn’t really you whiffed on the first one, so yes. Go with the second one.
Jon Anderson: Yes, we’ll try again. Just WATERPIK. Could you give us a little bit more detail around where that business is versus your plan year-to-date and really more importantly, what your expectations are going forward as you look to 2024? Thanks.
Matt Farrell: Well, look, this was a reset year for WATERPIK. The whole idea was to get close to plan, try to have a level year when it comes to sales. The business has been struggling because during COVID people pretty flush, people staying home, a lot of water flossers got sold in 2021 and even some in ‘22. So that’s where the struggle is in ‘23. And then there’s always knockoffs that we have to deal with that we see more and more of those as well as some private label, which is — which we, is not a new thing, but it’s been more significant in 2023. But that business has been around for decades. It’s it is the Cadillac when it comes to flossers. And we have innovation coming as well for WATERPIK, which we’ll talk about at the end of January, first week of February, but innovation and the maintaining the brand equity that the WATERPIK is the premier water flosser is our strategy going forward.
Operator: The next question comes from Javier Escalante from Evercore ISI.
Javier Escalante: Good morning, everyone. My question has to do with volumes. If you can comment what was in the comp versus your growth of around 3%, is there something that is going on anniversary in Q4? And also, if you can give us a sense of underlying category growth in terms of volumes and an old channel basis. And how do you stand this [inaudible]? Thank you.
Rick Dierker : Yes, the first one is similar to what I said with Lauren, there’s two things that are kind of impacting the comp in Q4. One is even for HERO is we did have some big. So that was a higher comp. The second thing was the laundry promotions. We had some discreet laundry promotions and revenue growth management activities that kind of Matt alluded to is what got pared down in Q4 this year. So those are the two things.
Matt Farrell: Yes. And as far as, I can’t really help you with the volumes for our 17 categories. But what I can tell you is that if you look at October and that we had consumption growth in 12 of our 17 categories, so that continues to sustain what we saw in Q3. And remember Q3 was half of our growth was driven by volume. We see that to be 1% or better in Q4. But the good news is that the 12 of our 17 categories, we’re seeing growth in October. So it’s the beat goes on.
Javier Escalante: But you don’t have a sense of whether given the amount of pricing there has been a pullback in actual usage or purchase frequency.
Matt Farrell: No, when you have volume growth, that would suggest that you are seeing consumers migrate to your product year-over-year. We have higher, it should be more cases and more units. And like I said, we expect that to continue in Q4.
Operator: The last question comes from Filippo Falorni from Citi.
Filippo Falorni: Hey, good morning, everyone. I’ll keep it quick. Thanks. So just a quick question on the marketing expense as percent of sales. You clearly returned to 11%. Should we consider as a new normal for you guys or in the past you’ve also done closer to 12%. So just wondering if it’s a new normal level of investment. Thank you.
Matt Farrell: We’ve said that 11% is where we wanted to get back to and we thought it was going to be a stair step that would go from 10% in ‘22 to 10.5% in ‘23 and then 11% in ‘24 and we’re already now at 11% and we think that’s a good level of spend to sustain and grow our brands.
Operator: Thank you, there are no further questions. I will turn the call back over to Mr. Farrell for closing comments.
Matt Farrell: Okay, hurray. Hey, thanks for joining us today. We had a great Q3, a lot of momentum going into Q4 and in 2024. And really looking forward to talking to you guys at the end of January or early February with our outlook for ‘24. So thanks for joining us today.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating. And we ask that you please disconnect your lines.
