That’s how we quantified it. And ultimately that was our objective is to get enough price to cover some or all of that material and wage inflation. And that’s what we have done. It hasn’t been to expand margins in the spirit of strategic partnership and ensuring we maintain a strong new product development pipeline with customers. That’s how we approach pricing. We expect going forward we are a fresh neutralist business. We believe going forward based on the agreements we have in place that we can manage that on a looking forward basis, which is a meaningful change from where we have been historically. So, that’s how we think about price looking forward.
Phillip Dantoin: Thanks for the color. And I guess just one last quick one for me, given the investor interest in this category, how do you think of GLP-1 impacting some of your end markets and businesses in both the near-term and longer terms if at all?
Joe Dziedzic: Great question. Well, I will start with since the select trial was announced in early August, the medtech space looks like it’s down 15% to 20%. So, I think there has certainly been an investor impact and perception. When we studied the markets that we believe and that our customers say, will be more heavily impacted by GLPs, it points to Bariatric Surgery and diabetes, which are negligible. In fact, we didn’t really choose anything just support diabetes and indoor Bariatric Surgery. And when we look at the markets, we are focusing on to drive growth structural heart and neuro vascular, neuro neuromodulation, electrophysiology, they would appear to have meant at least based on what our customers say, and what the analysis thus far has been done, they would appear to be minimally impacted by GLPs. Our demand remains strong and in our targeted growth markets, we are not hearing or seeing customers say that they are either changing orders or demand on us or expect to because of GLPs, you are hearing that on their earnings calls.
And I can tell you in our order book and the demand we are seeing, we are not seeing that impact. And again, it’s we are focused on procedures that treat structural heart defects arrhythmias, cerebral aneurysms, pain management in neuromodulation. We are just not seeing an impact. Maybe it’s too early, but our customers are not telling us they are expecting and we are not seeing any impact in both the order book or the development pipeline that we are working on. But it’s certainly having an impact on the valuation of medtech, that’s clear.
Phillip Dantoin: That’s an understatement. But thanks so much. And I have that one.
Operator: Thank you. Your next question comes from the line of Nathan Treybeck with Wells Fargo. Your line is open.
Nathan Treybeck: Hi guys. Dziedzic, great quarter and Diron, congrats, I look forward to working with you. So just starting, we calculate your guidance implies Q4 growth of 7% to 8% reported, this includes InNeuroCo. One is this about right? And then in light of the strong growth in Q1 to Q3, is there conservatism built into the Q4 guidance?
Joe Dziedzic: Great. Thanks Nathan for the questions. So, you are right that it does imply 7% and about 8% at midpoint growth on year-over-year basis InNeuroCo is $5 million of that. So, it’s 100 basis points year-over-year. I would highlight if you look at the quarter splits for 2022. The fourth quarter of ‘22 was about 11% higher than the average of the first three quarters. So, we are just thinking about comps on a year-over-year basis. The fourth quarter last year was the highest. Year-to-date, we have got 18% growth. For the third quarter year-to-date, we are going to be fifth, we are estimating 15% of midpoint for the year. And we think that’s an incredibly strong year. I wish everything in life were linear. And we could just have the exact state same steady growth rate every quarter year-over-year, but life doesn’t work that way.
And so I think you are right in terms of the midpoint interpretation. We feel like we have got pretty good handle on the fourth quarter given that we are sitting here at the end of October. We have got a much more stable supply chain environment, still some pockets of disruption that we are working on. So, we feel pretty good about our 400ish midpoint of guidance sales for the fourth quarter. The demand remains very strong from customers. Again, I highlighted that we are seeing customers make their – what we think are historically normal year-end inventory adjustments, and we have got that baked into our fourth quarter. We still think it’s a strong year-over-year fourth quarter at high-single digits. It’s just not as strong as the first three quarters, but 15% for the year on the top line and 25% on the operating profit we feel is a pretty strong year of outperformance.
Nathan Treybeck: Okay. Thanks for that. And just in terms of so you have noted that the supply chain has continued to improve, I guess how would you characterize the supply chain and maybe the inflation environment relative to the first half and maybe your expectations for one and normalizes that could happen in 2024. Thanks.
Joe Dziedzic: Yes, great question on supply chain. So, third quarter average supply chain impact versus to do was probably marginally better, only because the second quarter was a meaningful improvement, so we entered the second quarter in a tougher environment, exited in a better environment. And the third quarter average was about – was better than second quarter. But there are still pockets of supply chain, we think this is probably the new normal, and we are getting better and better every day on how we manage that. And the mitigation actions that we started a 1.5 years ago, or some of those are starting to move into the execution phase and bring some of those benefits. So, we do think we are getting better at managing supply chain.
We think going forward we will continue to improve on that, but we are operating as though this is the supply chain environment going forward from a supply chain standpoint. Our focus is on making sure that as our direct labor turnover has improved that we continue to train our associates and become more proficient in what we do. And we think there is significant opportunity to gain greater efficiencies as we move into 2024 with current supply chain levels as well as improving execution in our manufacturing facilities and better trained associates that can drive the efficiencies that we expect to grow our margins.
Nathan Treybeck: Thanks guys.
Operator: Nathan, do you have any follow-up questions at this time?
Nathan Treybeck: No, I am all good. Thank you.
Operator: [Operator Instructions] Your next question comes from the line of Joanne Wuensch of Citi. Your line is open.
Felipe Lamar: Hi, this is Felipe Lamar on for Joanne. Thanks for taking the question and congrats on the quarter. Just quickly as it relates to the use of cash, congrats on the acquisition of InNeuroCo. But I am just curious moving forward, how are you thinking about cash allocation as you think about M&A, or debt pay down? And then looking forward, are there any age segments that you think are particularly attractive for as tuck-in M&A opportunities? Thank you.
