Operator: [Operator Instructions]. Our next question comes from Jon Block with Stifel.
Jonathan Block: Is there a way to think about the headwinds that you experienced later in the quarter? It just seems like the exit rate was heavily impacted or maybe call it the velocity of what was experienced in September. So where was that most acute? I mean looking just at your breakout, it seems like CTS, but was that U.S., was it EMEA, was it both? And then maybe more importantly, Glenn, what’s the assumption that you’ve embedded sort of for the balance of the year as we think about rounding out calendar 2023 in terms of what you factored into the guide? And then I’ll just ask a quick follow-up.
Glenn Coleman: Yes. I think 2 things. One, we definitely saw a falloff in the U.S. and Europe. Those are the 2 major markets that we saw the drop. And it was really in CTS, imaging, for sure, had probably the largest impact, even treatment centers, some of the instrument categories. But those were the areas that we saw the falloff. On the positive side, CAD/CAM and our milling as well as our CEREC Primescan had a really strong quarter overall, including the month of September, relative to the U.S. business. So we were very encouraged by that. But most other categories, I’d say, were down more acutely than we were expecting. And also on the consumables side, we also did see a fall off. Now part of that was some of the dealers reduced their inventory levels.
So the retail demand doesn’t necessarily reflect the wholesale sales that we show in our results. But even with that, I think consumables were a bit lighter as well, especially in restorative. In terms of the assumptions moving forward, Jon, I would just say we’re assuming pretty much consistent trends from what we saw in September. And that’s why we reduced our forecast here in the fourth quarter.
Jonathan Block: Okay. That was very helpful. And I guess we’re going to obviously get more details next week on ’24. But let me just sort of noodle on something. You got a lot of great disclosures in your releases, your presentations and your Q. I think this year going into ’23, you implemented some price increases. I think you at least alluded to that as like a driver of growth, if you would, in the first half of ’23. And now we’ve got a more difficult environment, right, with macro. And so when we think about ’24, is there pricing power in the portfolio? Or was that lever really drawn down in ’23? And when we start to frame ’24 top line, we think that might have to be a little bit more dependent on volume relative to price?
Simon Campion: I would say we have benefited from price thus far in ’23, Jon. At this point, I would say we need to get after our volume more than get after our price, and that’s what — that’s what we’re driving with our commercial teams globally. Some segments for sure, as you well know, are being impacted by price, specifically scanners. And that’s why we introduced Primescan Connect about a year ago, which has done pretty well for us globally. And we also reduced on price in certain geographies on our scanners, and we — that resonated with customers and we saw volumes pick up. So we need to stop relying on price and get after volume for our sales growth, and because our plans need that as well.
Operator: Our next question comes from Jeff Johnson with Baird.
Jeffrey Johnson: Let me try a different line here. Can you hear me now?
Simon Campion: Yes.
Jeffrey Johnson: All right. Good. So Simon, I’m trying to respect the waiting until the Analyst Day next week for some of the comments around the LRP, but it sounds like you are reiterating your commitment to that $3 number in 2026. I just want to make sure I’m hearing that correctly. And more importantly, I guess, Glenn, as I think about that $3 number that you put out at the beginning of this year, obviously, the U.S. dollar has been much stronger this year, we’ve now got some end market concerns that have flared up for sure, we’ve got inflation that looks like it’s staying more persistent and probably higher than would have been contemplated at least a year ago. So I guess my point is or my question is, have you tried to quantify how much incremental headwind just from factors outside of your control that have happened since you put that $3 number out?
And Simon, I would assume you’re not going to then cut back R&D or go-to-market commercialization spending or anything. So how do you kind of bridge that incremental headwind that has come up here across all those issues in the past year?
Simon Campion: Firstly, we will be reaffirming our $3 in ’26 at our Investor Day next week, and Glen will walk through the bridge from where we are to the $3 during his session next week. For sure, we do not intend to reduce how we go to market or how we innovate. We simply need to be more judicious with where we innovate in and what we innovate in and how we spend our SG&A dollars, so that we can get after, in my response to Jon’s question a moment ago, we can get after volume with our sales force in all our geographies. So commercial and R&D are sacred to us. We just have to spend our money more wisely in those areas.
Jeffrey Johnson: Yes. Fair enough.
Glenn Coleman: Jeff. Sorry, I was just going to comment on your other part of your question. So relative to the headwinds and impact to our $3. Keep in mind, when we laid out the $3 target, our guidance for this year was $1.80 to $2. So we’re still within that guidance range, even though we’ve had a recent reduction. So we had just started off the year stronger, and obviously we’re dealing with some headwinds at the moment. But when we laid that out, we’re at $1.80 to $2 and we’re pretty much in that range. So that’s why we’re still confident that we can get to the $3. I will discuss more next week the path to get there. But probably the most important message and takeaway is most of the path to get to $3 is in our control and things that we’ve already completed or are in process.
And so probably 2/3 of the way there is all within our control and not dependent on the macro environment. So I’ll give more specifics next week, but I think that’s a key point on why we’re still confident we can get to the $3. Obviously, if the macro environment extends and is prolonged for a long period of time, it will be much more challenging to get there. But our view is that this is more of a short-term acute situation on the macro environment.
Jeffrey Johnson: All right. That’s helpful. And then I guess as my follow-up question, just on the dental implant business. I think, Simon, over the last month or 2, we’ve heard you kind of maybe soften your view on when a turnaround, especially in that U.S. implant business, you might expect to see. I know you’ve been putting more sales reps out there, you’ve been putting more clinical education and other commercialization efforts behind that business. But talking about maybe that getting back to market a couple of years from now instead of more in the near term. Does that just take more spending there? Is it a pricing issue? Do you need to increase maybe your reliance on a lower-priced product like MIS, notwithstanding, I guess, the Israel issues right now. But just how do you look at that Implant business, the strategy there over the next year or 2 and trying to get that back to market?
Simon Campion: Thanks, Jeff. So Implants, it’s a very interesting business, nice growth, good margins, and we have not performed historically in this space. We spoke before, I think, on our Q2 call, about the portfolio survey work that we were doing, and we completed that in Q3 with over 2,000 respondents. And I would say, overwhelmingly, and I don’t use that word lightly, but an overwhelming favorability with respect to our offering across all categories, including implants. I think the band is a lot tighter in implants than it is in other areas. But our customers, over 2,000 of them, have said that we have a robust portfolio in Implants. But where we have work to do is around the capabilities of our commercial teams and the investments that we’ve made in clinical education over the past number of years.
