Scott Wine: Yes, as we’ve said, throughout the year, we’ve seen a moderating cost. And if you look at our EBIT margins as we’re getting carryover pricing but not significant pricing going forward, we’re seeing that cost curve bend down to a level. I mean, moderating inflation is still inflation, and we’re seeing that, but we’re also seeing really good work by our team specifically on logistics lanes and other costs. Our strategic sourcing, actually, we have our first review tomorrow and we’ll continue to get through that. And we still see the double digit savings that we talked about in that – in those categories. We still see that come into fruition. But that’s a longer term benefit. But it really is the lean activities that we’re driving through CBS, the focus on logistics improvement we’re able to push back on cost.
And I said earlier in the year that it was going to be the year of cost, not price like last year. And the team is really delivering on that. And I think you’re going to see that cost benefit show up for us for the next several quarters to come. We’re not giving guidance on ’24, but I did say in the prepared remarks that we have started to take orders in some markets for some products into 2024. And it seems very reasonable now. There is a bifurcation, I mean, the cash crop market in North America still seems to have nice legs to it. South America is – it’s weak, and it’s going to be weak, I think, until farmers decide to sell, I mean, sell the crops that they’ve harvested. And we’re prepared for that. But overall, there’s nothing that’s significantly positive or significantly negative as we read out what we’re seeing in the order books.
Operator: Our next question comes from the line of Tami Zakaria from JPMorgan. Please go ahead.
Tami Zakaria: Hi, good morning. Thank you so much. So given your goal to bring Factory Fit and aftermarket Precision Ag Solutions in-house to over 90%, it seems by 2026, which seems quite impressive. So from an R&D perspective, should we expect R&D spend to remain at 2023 level even if there’s a downturn for the next couple of years?
Scott Wine: We have been at an elevated R&D level for several years now, and I think what you’re seeing is the fruition of those investments. We’re obviously looking – we’re not going to stay at that level forever. And we’re looking at every single project about where we can, I think we’ll probably be flattish in that area, but we’ve also got some product gaps that we’re leaning into fill, and we’ve got some upgrades that we’re looking to make. And we’re not going to slow those down because it’s so important to our future. But I don’t think it’s going to go. Over the last several years, you’ve seen it go higher from here, and I think it won’t go higher from here. It’ll go lower from here, but moderately.
Tami Zakaria: Got it, that’s very helpful. And one quick modeling question. It seems like corporate expenses ticked up in the third quarter sequentially a bit despite revenues coming in, a lot lower. Anything particular driving that?
Oddone Incisa: I think there are two things here. One, sequentially as slightly lower than in the second quarter, and we expect sequentially them to be down in the third quarter – in the fourth quarter, sorry. What you probably notice is that there’s a big gap to the number of last year. But last year we had some non-recurrent positive items that we didn’t have, we didn’t repeat this year. So that’s the big gap that you may have noticed in comparison with last year. In terms of running cost. We are in the range between $60 million to $70 million per quarter. And of course, those will be also costs that would be subject to the review that we’re looking at partially immediately – next year.
Tami Zakaria: Got it, very helpful. Thank you.
Operator: [Operator Instructions] Our next question comes from the line of Daniela Costa from Goldman Sachs. Please go ahead.
Daniela Costa: Hi, good afternoon. Thank you for taking my question. I have two things left. First, I wanted to ask you, you mentioned in the release in the disclosures that you had a material issue with internal controls over financial reporting. It sounds like it is sorted, but I was wondering if you could give us some clarity of what it is and if it’s really all part of past now. And then the second thing, just obviously we’ve seen sort of throughout the quarter, the announcement between Trimble and one of your competitors. And you used to have some sort of relationship with Trimble. Can you tell us about sort of which impacts should we see if any or if you’re now, in terms of Raven product, completely independent and all sorted? That would be great. Thank you.
Oddone Incisa: So let me take the first one. Daniela. You may have noticed, we had an auditor rotation at the beginning of this year, and auditor rotations are mandatory under European framework. And so we started working with the new auditor and in conjunction with them, we had a different way of looking at the, I would say, the service access that we gave to some of our employees, mainly in ICT to the system of record in particular the different SAP instances that we have. We realized, that there’s different way of looking at things. The number and the scope of some of this access is out of what is typical nowadays, even considering the fact that we are a large multinational corporation. So what we’re doing is we are acting very swiftly and looking at ways, first of all, of making sure that we have all the controls, but also of bringing or normalizing this situation, let’s say, and we’re working on that and we should have a solution in a timely manner.
Daniela Costa: So you don’t expect any impacts or – anything?
Oddone Incisa: No. Absolutely no. There’s no impact. And it’s stated on the documents and on the reps that you will see when we issue our quarterly report that this has no impact on the financial statements. Of course, the risk that we see is that having this extended access to the system, a fraud, could be perpetrated and could not be immediately seen. But again, it requires a lot of skills and it’s not something that has happened or it’s not something that has been identified.
Scott Wine: Yes. And the second question as it relates to the acquisition during the quarter about Trimble and Iveco, it doesn’t really affect us at all in the short term or the long term. We’ve got – we still today buy a lot of stuff from Trimble. They’ve been a great supplier and partner for a long time. They announced that they were going to go direct in the aftermarket earlier. So we’ve known since we acquired Raven that we would have a lot of the ability to do this stuff in-house. And as we showed on the chart, we believe that is going to continue. But we still serve our customers well with a lot of products from precision planting and we’ll continue to do that. Raven continues to be a supplier to Ag Co and that will likely continue.
