David Lee: This is David. So we can talk about the three items we called out during the prepared remarks. So the inflationary costs, that will be addressed by the price increases that are going in. The large price increases have already started at the beginning of this quarter. So that’s going to address the inflationary cost. The lower overhead absorption costs that we talked about due to lower production of volume with now higher sales and growing production volumes, that should also address the lower over absorption. Now we did also have product mix. So product mix, we do expect growth in all of our categories. That should help the product mix a little bit. Another item that Selwyn mentioned was the returns. So returns are constant with the lower sales volume in the December quarter.
Returns as a percentage of sales was higher. Now back to higher sales volumes, those returns as a percentage of sales will now turn back to normalized levels. Lastly, we do have one product line that, during the December quarter, was impacted by shortages of critical components. We’re already seeing that those sales are back up. So with those higher volume product lines, that will also benefit the gross margins.
Matthew Koranda: Okay. All right. And then just €“ you mentioned price, David, maybe someone or David on this one. Can you talk about the rounds of price increase? I think last time, you mentioned there was one in October. It sounds like that really didn’t benefit the third quarter at all really from a margin perspective. And so there was another round that you had mentioned in the last call that was supposed to take place in January. So I’m assuming you’re referring to that as kind of the last round of price increases. And that’s what we’re counting on to sort of improved gross margins in the fourth quarter, along with volume and then some of the lower return rates that you mentioned there. But just €“ am I understanding that correctly? And €“ or is there more price that you’re embedding beyond the January actions?
Selwyn Joffe: No. So, so far, I mean, that is correct, Matt. Those are all committed price increases that have gone into effect. We continue to evaluate our business and market conditions, and we’ll evaluate what we’ll do on price as we go forward. But as of now, that’s where we are. I mean that includes €“ the sort of the annualized leftover is $20 million, $20 million on our existing revenue base, about $20 million of price increase. And some of it just started maybe a little more there. But around that, that’s left to go into effect on an annual basis.
Matthew Koranda: Okay. Got it. And then in the press release, I think you mentioned brake pad and rotor product line, net sales is expected to double in fiscal 2024. That’s not overall brake products revenue as a whole, is it?
Selwyn Joffe: No.
Matthew Koranda: I mean, we should be taking the run rate around this year and doubling that for next year, but maybe just give a little color on what that implies for overall brake products growth as we head into fiscal 2024?
Selwyn Joffe: Yes. Well, I think you’re going to see overall brake products growth north of 30%, maybe even 40% for next fiscal year. We haven’t really given guidance yet on that, but the pads and rotors is fast becoming a big part of that. We’ve also got other brake-related products in there that are all growing. So we’re up to continue to be optimistic there. And margins are starting to unfold there, where we’re just getting through some of that start-up margin headwinds and starting to get to a more normalized level, but they’ll continue to improve as this volume continues to grow.
