So we feel very good about it. It is a major driver And, you know, we haven’t differentiated in terms of how much, you know, how much of the driver of share gain that is other than I would say it’s a big piece of it. And then I would comment on our Investor Day that we plan on getting 1% to 2% growth from the markets based on long term megatrends. We used about 2% growth from price and that’s pretty consistent with what we have done historically and then the share gain again driven as one of the big levers on innovation that’s also 1% to 2% over long term.
Steve Barger: Great. Very helpful. Thanks for that color. If I could just follow-up on that, I guess which markets do your innovation wins allow you to take share in or I guess do they enable upside to the range that your margins seem like they’ve been in for the past few years?
Christopher Rossi: Yes, I think they maybe the example that I gave in my prepared remarks, if you notice that had a broad range of applications. So, we do customize some tools that are specific for example maybe more on titanium machining that happens in Aerospace more than anywhere else. But for the most part a lot of these products while they may be designed with a specific application for example in Aerospace in mind, they have broad application across many industries. So that’s a good thing about our products as they have broad application. There was another part to your question Christian, but I forgot what it was. Can you repeat it?
Steve Barger: Just on the if the product innovation wins enable upside to the range that your margin seem like they’ve been in over the past few years? Thank you. Appreciate the time.
Christopher Rossi: Yes, I think that the innovations apply to sort of higher end challenging applications. And in those applications we price for value anyway. So, as long as we’ve now been focused on that element of commercial excellence, I don’t know that they’re going to drive necessarily improve margins to that process, but they are an enabler to winning new business and have the opportunity to make the higher margins on those type of products anyway. And then they also apply our fit for — more fit for purpose type applications and those help to improve our competitiveness. Not sure that there’s necessarily a specific group that is going to necessarily drive more margin improvement specifically, because they’re used over such a broad application of across our end markets.
Operator: The next question will come from Michael Feniger with Bank of America. Please go ahead.
Michael Feniger: Hey, gentlemen. Thanks for taking my question. I’m just curious, I appreciate obviously the guide for the fourth quarter. Just seasonally when you head into your next fiscal year, I think sales are typically down a certain range quarter-over-quarter. Just based on the current environment today, should we expect that normal seasonality heading into next year? Could we see better than normal seasonality or are there still kind of headwinds that would make us feel like that normal seasonality might have a little bit more pressure than we look at in prior years?
Pat Watson: Yes, obviously I’ll start off by saying, Mike, that we’re in the planning process right now for FY25, right. But just a couple of things to think about. I’ll say, to answer your question from a sales perspective going into Q1, as well as just some cost structure items to think about relative to ‘25 as well. First off, we would see our expectations on normal seasonality going from Q4 to Q1 would be down about 8% to 10%, right. And so that would be our normal expectations. Beyond that as we just think about the framework I’ll say for FY25, there’s a couple of things just to touch on. Number one is, and we talked about this a little bit earlier on the call, would be raw material costs. Where tungsten sits today, slightly up from the lows.
Again, as we continue to have stability in that tungsten price, that would be a favorable thing as we think about price raw phenomena going into the first half of FY25. And I said the second thing in terms of just the overall cost structure of things we’ve been working on is obviously we’ve got our existing restructuring program that’s out there that we intend to hit a run rate here of $35 million on an annual basis at the end of the year. You’ll see some I’ll call it rollover benefit as we move from ‘24 to ‘25, as we achieve that full rate throughout FY25. But again, we’re right in the planning process now. Management team is digging into all the market and cost phenomena and we’ll report back to you with a holistic outlook on FY25 in about 90 days.
Michael Feniger: Great. And just on Metal Cutting, the flow through in the quarter, the 230 bps of margin degradation, I believe there was a one-time gain though in the prior year. Just wanted to flush it out. Was the decremental margin on your — I think it was flat organic growth there, was that in line with kind of what you guys were thinking? Just trying to understand what you guys kind of saw in that quarter? How you kind of think about it in terms of your sensitivity to volumes?
Pat Watson: Yes, I think the first thing certainly there was about $1 million gain in the prior year in the Metal Cutting business that was related to a property sale that did not repeat. So, you got to factor that in. I think the other thing as we think about margins and decrementals in terms of the quarter, right. Two things. Number one is, you know, yes, your comments in terms of the total sales change is accurate but don’t forget in there there’s positive price embedded in the quarter as well and if you think about the price realization in the quarter that would imply volumes obviously being negative. I would say that, the other piece of that volume being negative in terms of what’s happening in Q3 in particular from a decremental perspective is going into Q3.
We saw a slowdown in markets in December timeframe and that’s just simply causes us to react to what that demand is in the quarter and reset production and adjust the cost structure. Those things just simply don’t happen instantaneously. They happen over time as we put the access in place to constrain the cost relative to where volume demand is from an end market perspective and production as well.
Michael Feniger: Great. And I’ll just if I could have one more excuse more in there just the stable the commentary in General Engineering and the stable at softer levels, I’m just curious do you are you guys — is your inventory levels with your customers, your customer inventory levels, are they reflective of that stable or softer levels? Do they have a little bit more progress to go? Any color on that would be helpful. Thanks everyone.
Christopher Rossi: Yes, I would say that the customers have in terms of destocking, they were already very cautious about how much inventory they were holding anyway and I think they still maintain that. So, I would say that their current stocking levels reflect that forecast that I provided that outlook on the conditions. So, no more — no significant destocking that we’re looking to be ahead of us. And then I think they’re also cautious on the restocking and they’ll probably need to see some demand signals before they get into that mode.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Christopher Rossi for any closing remarks.
Christopher Rossi: Thanks, operator, and thanks everyone for joining the call today. As always, I appreciate your interest and support and please don’t hesitate to reach out to Mike if you have any questions. Have a great day. Thanks.
Operator: A replay of this event will be available approximately 1 hour after its conclusion. To access the replay, you may dial toll-free within the United States (877) 344-7529. Outside of the United States, you may dial 412 317-0088. You will be prompted to enter the conference ID 10186947. [Operator Closing Remarks].
