If you look at our, if you look at the normal cyclical nature of Q3, move to Q4, by the end of the year, you would normally expect a little bit of trail off around the holidays, but normally October is a very strong month and there’s been no reason to believe that’s not consistent, we have actually been doing very well and staying very busy throughout October, despite some of these challenges. The question will become how long does this run, is it beyond October through November, and which OEMs are able to settle the disagreement.
Ryan Brinkman: Okay, great. Thanks. And then relative to the reference in the release and then in the prepared remarks too about the last several quarters having improved significantly from a supply chain perspective and I think this is benefiting gross margin in a couple of different ways. You’ve got the mix improvements because I think earlier some of your shortages were impacting your more advanced higher profit features. Then you have got the leverage of the fixed portion of cards from the higher sales that that allows and maybe you’ve got some lower premium freight or logistics in there too. How would you sort of bucket those areas of supply chain related margin tailwind and then how important is any one of these areas continued improvement there, to continuing to progress toward the targeted 35% to 36% by the end of next year or are other areas more important, like, I don’t know, manufacturing cost efficiencies I heard on the call today about, some sort of, you know, vendor cost reduction program, etc.
What’s the right way to think about that?
Neil Boehm: Well, yeah, I think I the single biggest impact given the improvement in the supply side has been really freight and duties and tariff related, especially expedited freight costs like you mentioned. So that was the single largest impact. Part of its pricing from the supply base, but really it’s more so focused on how much expediting freight we had to do in order to keep up with demand from our customer base when things were constrained. So that’s improved significantly. So that’s obviously, helped provide a tailwind to margin profile. As we talk about moving into next fourth quarter and really next year, if you look at the key focus areas, it’s going to be really the higher sales levels and then obviously improved bill of material costs and then lastly, the factors that we mentioned on the operational side.
So we are talking about total throughput, scrapping yield loss costs, and then limiting the amount of overtime and so if we can handle those areas, those would be the key areas beyond, obviously maintaining product mix and the higher sales level. Beyond that, though, operationally, and once we achieve those targets, that’s what’s going to equip us to be able to get back to that 35%, 36% range by the end of next year.
Ryan Brinkman: Very helpful. Thank you.
Operator: Our next question will come from the line of Ron Jewsikow of Guggenheim Partners. Your line is open.
Ron Jewsikow: Yes. Good morning and thanks for taking my questions. I guess just first, were there any retros or out of period pricing benefits this quarter just as we think about modeling?
Kevin Nash: There was a few million dollars probably about $4 million to $5 million in, kind of recoveries in the quarter, related to settlements of negotiations. Not all of it was one time in nature, but sure.
Ron Jewsikow: Okay. Are you using the strike to help build up some slack in the system or kind of buffer in your supply chain and maybe shifting back to some more favorable modes of freight for both inbound and outbound and or reduce over time?
Steve Downing: Yes, that was exactly the plan. Depending on the length and severity of the strike is to use this as an opportunity to replenish finished goods inventory back to more sustainable levels and also, obviously, hopefully find a way to get production scheduling back in line so that we can limit over time and some of the reactionary expenses that you face given customer order changes.
Ron Jewsikow: Okay. Yes, that’s helpful and then just high level like Europe and North American production was down something in the range of 10% to 12% sequentially, but your revenues, I kind of for the pricing commentary you gave are roughly flat quarter over quarter. I guess this, like, key takeaway is FDM take rates that are moving higher or overall product take rates or how would you bridge the gap because those are two core markets or two largest markets and you still have roughly flat revenue performance?
Steve Downing: Yes, you’re exactly right. If you look at continued growth in FDM, obviously, there’s been some tailwinds on Outside Mirrors as well. Overall product content, even though volumes have dropped some in that space, like if you look at what the overall dollar content has done very well during that time period, allowing that over outperformance versus the market.
Ron Jewsikow: Okay. That’s super helpful. I will hop back in the queue.
Steve Downing: Thanks Ron.
Operator: Thank you. [Operator Instructions]. Our next question comes from the line of Luke Junk of Baird. Your line is open. I see no further questions in the queue. I would like to turn the call back over to Josh O’Berski for closing remarks.
Josh O’Berski: Alright. Well, that concludes our call. Thank you everyone for the time and questions. Will look for the chairman in near future. Have a great weekend.
Operator: The conference is now concluded. [Operator Closing Remarks]
