Joseph Spack: Thanks, everyone. Good morning. Maybe to sort of follow up on a couple of themes already here, and I guess Jim I’ll just follow on with your most recent comments. So understand we’ll have to wait to hear about the backlog, and that you can sort of push investment to better time what your customers are doing. You did note that in the quarter, you did some of that, and I think that sort of helped some of that EV profitability. So how should we think about this in relation to your existing target to hit a break even in 2025? Because if the volume’s lower, but you’re also sort of pulling back, does that still net out to be able to hit that target, or does that change the trajectory of it at all?
Timothy Kraus: Hey, Joe, it’s Tim. Yes, obviously, it’s pretty dynamic. So we continue to, as Jim mentioned, a lot of the investment’s fungible. So we’re making it, and where we can push it around or defer it or become more efficient with it, we’re doing so. In terms of 2025, I think based on where we’re at today and the current run rate of programs, that’s probably still where we see the EV business in 2025. Obviously, it is pretty dynamic. So we’ll give an update on that in February as we continue to see the market develop and what new business is able to be secured between now and then.
Joseph Spack: Okay. And then just going back to the performance in the quarter and some of the early thinking for 2024, obviously, sort of you noted, there does appear to be good sort of underlying execution in this quarter. And I think that could, once we get past the strike issues, could give some confidence for people into next year. But candidly, the business is really hard to forecast. Even if we look at slide 14, the second box, if you look at segments like LVD and commercial vehicle, you see the flow through on traditional organics greater than the sales chain. So can you just give a little bit more texture as to sort of what’s going on beneath the surface in those segments? Like maybe what are true volume incremental, decremental margins? And then what is the hard work that you’ve done that’s been causing that conversion to be greater and what’s sustainable into 2024?
Timothy Kraus: Yes. Obviously, they’re all pretty different. But if you look at Light Vehicle and you adjust for the strike in the quarter, the improvement is still pretty dramatic even still. That’s really being driven by, first of all, 2022 was obviously a pretty difficult comparison. Even in the third quarter, we continue to see pretty volatile demand. That improvement is really allowing a lot of the important implements on the plant floor to be able to show through. That’s going to continue. Obviously, as you get into 2024, the comparison to 2023 isn’t the same. It isn’t going to be as dramatic. Certainly, we’ll continue to see those improvements. So I don’t think you can assume that the improvement operationally is going to be sequentially greater or continue.
But the fact is that when the customer starts to run better, all the things we’ve done across the business to really drive commoditization and efficiency and really a lot of the waste is really starting to show through. So do I think there’s some more of that in 2024? Sure. I think we’ll continue to be able to do that. I’m sure we’ll meet a lot of other challenges in 2024 as well. So we’ll have to see how it all nets out. But that’s a big driver really across all the segments. If you think about commercial, I’ll use that one. Sales are down, but that’s a tale of sort of two markets. Brazil’s down quite considerably. And what you’re seeing is sort of the sales offset that you have in North America and a lot of really strong efforts from a commercial perspective to really improve margins in that business.
So it’s a mixed bag when you look at the different segments. And I agree, it’s sometimes hard to sort of parse out. Each has its own story. And I think the teams are doing a great job to really drive the improvements that need to be, whether it’s plant floor or commercial or managed spend in all of them.
Joseph Spack: Well, I appreciate that. Tim, maybe just to sort of like zero in on LVD then. Like if we, if a traditional organic was up 15 million sales, if we just, broad strokes assume a 20% incremental margin flow through on that, that would suggest what, some like almost 20 million plus, like not from volume. So how much of that is recoveries versus some of the work you’ve done on your own to sort of help get you there?
Timothy Kraus: A big, the biggest single chunk of that is really operational, to be very honest, right? It is, right? I mean, the strike was the last two weeks in the quarter. So there’s a lot of very strong operational improvements. And the customer, prior to the strike ran extremely well in some of our largest programs and we were able to see the flow through of all the work that’s been done to get the plants to run where they need to run.
Joseph Spack: Okay. Thank you.
Operator: The next question is from James Picariello with BNP Paribas. Your line is open.
James Picariello: Hi, good morning everyone. Just on off-highway, the third quarter took a step down, but I think you could point to a handful of years and say that seasonally, that’s what events consistent for the third quarter. Just curious what you’re seeing there in terms of a –construction mining, and should we expect — I mean, is there going to be a seasonal pickup in the fourth quarter? Just kind of an overview on the key puts and takes on off-highway. Thanks.
Timothy Kraus: Yes. So I don’t think you can — we’re not seeing a real uptick from a fourth quarter perspective in there, right? We’ve been — we’ve done a really nice job. We did a really nice job of going and getting a lot of recoveries from the customers. And we’ve done a really nice job of trying to keep as much of that margin as we can. We know that we’re going to have to give some of this back. We started to see a little bit of that in the third quarter. That probably continues a bit more into the fourth. I mean the end markets all remain good and strong, and we’ll continue to deliver in them. But I think some of that’s being — some of the pricing we had gotten and now that we don’t — we’re seeing some of the pullback in inflation, we’re going to have to give a little bit of that back, and that’s going to pressure both the top line and a bit of the margin as we run into the fourth quarter.
James Picariello: Got it. And then just on the commodity front, as we think about next year, looking at current spot pricing, what would be kind of the set up the positioning on commodities? Would that be an additional or could that be an additional tailwind for you into next year?
Timothy Kraus: Yes. I mean, I’m not going to comment on next year. We’re obviously working through that now, and we’ll have to make — we’ll make some decisions about where we think commodities will be and how that will flow through. I don’t expect it to be material one way or the other, but I don’t think we’re ready to give an indication of what we think the commodity impact is going to be yet for next year.
James Picariello: Okay, thanks guys.
Operator: The last question is from Winnie Dong with Deutsche Bank. Your line is open.
