And we are quite optimistic that we can continue to outperform the markets well into the future. And once the destocking plays itself out in Mobility, we have a tremendous backlog of new programs that we believe will continue to reaccelerate the growth in Personal Mobility, and still give us the opportunity to deliver on our mid-term targets.
Damian Karas : Okay. And then thinking about fourth quarter here and going forward, is there still a positive price uplift that you’re getting on the top line, or has that kind of faded and you basically have lapped most of the pricing initiatives that you’ve already taken?
Brooks Mallard: No, we’re still getting price. Part of it is carryover from last year. Part of it is 80-20. And look, we’re going to continue, look, there’s still inflation out there, right? So I would say that certainly, on the freight side, you’ve seen cost start to come down somewhat. Some of that for us is more, the supply chain headwinds and productivity that we saw, as opposed to just straight deflation. On the material side, we’re still seeing inflation, albeit at a much lower rate than we were seeing when it was really ramping. So you’re seeing a very moderating amount of inflation. And the other thing I would throw out there is, labor inflation has gotten, I think, significantly more pronounced here over the past couple of years, and you’re seeing it kind of play out across the broader environment.
And so if you kind of add all those things up, we’re going to continue to price — we’re going to continue to go out with price increases, offset inflation, and we’re going to continue to price for 80-20. So we think we’ve got good pricing dynamics as we head out into the future. And those are kind of all the pieces of it.
Operator: We will take our next question from David Raso with Evercore ISI.
David Raso : I was curious, the comment you made about the fourth quarter so far tracking toward the low end of the revenue. Can you give us a sense of what is tracking so far a little bit below what you — maybe have put in the guide? And even within the guide, I see the organic is implied or noted, is down $4 million, but total revenues are down less than that. So I’m just trying to get a sense, do you see the currency swinging back to a positive in the fourth quarter? Just trying to square that up.
Brooks Mallard: Yes. Yes. So look, what we’re really seeing is, and the reason we made that comment is, we’re just seeing a return to more normalized seasonality, right? And so if you think back over the past couple of years, there’s been significant puts and takes in terms of the seasonality and how it plays out by quarter. And so as we’ve moved through Q3 and Q4, what we’ve seen is just a more normalized return to seasonality. Now, what could uptick that? Does China start to recover a little bit more, is Industrial a little bit more robust. The normalized seasonality, we’ll have to see how that plays out. But what we’re implying there is just more normalized seasonality than anything. We have a 1.5% FX tailwind in Q4. I think that’s the other piece you’re probably looking at in terms of total sales.
David Raso : And within the segments, the down 4, just so we get a sense of trying to think about how we enter the first half of ’24. Are both segments with negative organic growth in the fourth quarter? And if you had to sort of handicap how you’re thinking about the destocks into the first half of next year, where would you expect the bottom to be in those year-over-year organic sales declines?
Ivo Jurek: So, I would say that in Q4, PT is more affected by weaker China in Q4, and Personal Mobility. SP, we are leveraging a little better capacity utilization and being able to keep up with the order flow reasonably well. So, I would say, I would think about maybe think about PT being more impacted in Q4. And we — that’s what we’ve embedded in guidance.
Operator: We will take our next question from Deane Dray with RBC Capital Markets.
Deane Dray : I’ll start with an observation in Brooks’ answer to Andy’s question. Brooks, I love how you phrase that we don’t give a lot of specific detail by product line, and then you proceeded to give fabulous color on strategic pricing, restructuring, supply chain normalization. So I really appreciate you’ve got those details. And so now I want to ask, maybe you have the same level of precision on releasing your own buffer inventory, your own destocking, where and how might that play out in the fourth quarter because that would boost an already strong free cash flow quarter. Just — and then just overall, how do you expect the release of your own buffer inventory?
Brooks Mallard: Yes. So what we’ve seen so far, Deane, is we’ve seen the raw materials start to come down as we released our inventory. But on the flip side, what we found is we’ve worked our way through some of the supply chain issues we had last year. And as Ivo talked about the supply chain initiatives we’re working on, we’re working on making sure we optimized our finished goods inventory which is what’s led to some of the improvement in past dues and the improvement in service levels that we’ve had. So, our cash flow has been strong this year, improved profitability, working capital management, capital relatively flat. And so we’re making sure that we use a balanced approach to be able to drive additional volume when the when the cycle gets to the upturn, and that we’re prepared for that.
At the same time, we try to shrink how much of that buffer inventory as you called it, that we had during the downturn. We think we can take inventory out on a net-net basis, but we’re going to manage it between raw material and finished goods to get the best outcome.
Deane Dray : That’s real helpful. And then for Ivo, I know you are limited on what you can say about future restructuring. And so my first reaction is why wouldn’t you get started earlier with that and doing some in the fourth quarter, and maybe there’s some timing limitations there. But if you could also just frame for us directionally, is this more restructuring that you’ve done recently previously? And what kind of payback are you looking for in these types of restructuring actions?
Ivo Jurek: Yes. Thank you for your question, Deane. So I think we have announced that we are closing one of our facilities in China earlier this year. The project is nearly complete, and we anticipate that at the end of this quarter, we will have completed the China restructuring activity, and that’s going to give us approximately $4 million annualized savings for next year. On some of the other restructuring, Deane, as you know, we firmly believe that we can nicely improve the efficiency of our franchise by further optimizing our footprint. We believe, and I’ve been pretty vocal about our desire to continue to improve the efficiency of our assets, position our business to sources of more available direct labor, better skill set mix, and that will require some incremental steps to drive some additional footprint reductions that we have in some less efficient areas where we operate.
So while we haven’t made any of these announcements, we are working feverishly to make these announcements in time, to be more able to discuss this publicly and after we have notified all of our employee infrastructure across the globe. So we do believe we have lots of opportunities, and that’s going to become certainly a set of projects that we can execute over the midterm. That’s incremental to simply running the business in an efficient and effective manner. So we are very committed to delivering our mid-term target of that mid-20s EBITDA margins. And we believe that we have put ourselves in a position to be able to deliver that over the midterm.
Operator: And we will take our next question from Julian Mitchell with Barclays.
