So I mentioned in Wave 1 we’re sort of clustering our product lines, Dave. And we are right now in the midst of the negotiation process on Wave 1, our first cluster and we’ve kicked off Wave 2. I think in terms of benefits, certainly we mentioned gross margin will be the biggest financial beneficiary here. It’ll be modest. In this fiscal year, we’re looking at something in Q4, but we’ll call it modest. Obviously, that’ll become more significant as we get to FY 2024. I mean, just to sort of size it for you, the last time we went through something extensive like this, it was a year or two before COVID, Dave. We achieved, in dollar terms, profit improvement in the neighborhood of $20 million. I’d expect this effort to be at least as great, if not greater than that given — given that, number one, we’re a bigger company now for starters.
But number two, we haven’t done this in a few years and we perhaps will take a slightly more robust and more aggressive posture as we move through the line review. So that’s sort of the way — the one other color I’ll add Dave is, just as you think ahead beyond 2023, I wouldn’t take the $20 million plus and just overlay it on top of — there’ll be other puts and takes with gross margin. So we’re a little early to give sort of gross margin perspective, but absent this move, we probably turn negative price cost and so this is going to help us buffer that for sure. So hopefully that’s some helpful perspective.
David Manthey: Yeah, that does. And just to clarify, I think last quarter you were saying that you didn’t expect the typical seasonal fourth quarter downtick in gross margin. You’re still tracking that given this initiative and your outlook relative to that 41.5% to 41.8% gross margin guidance?
Ryan Merkel: Yeah, that’s correct, Dave. So for Q3, as we commented on the prepared remarks that, expect Q2 to Q3 step up to look pretty similar of what you had seen historically, so plus 30 bps to 40 bps. And then Q4, I would think about that being flat, maybe down 10 bps. And then for the year on the gross margin guidance range, yes, we still feel confident with that original range. Although, I think a little bit more pressure probably towards the bottom end, given the Buckeye acquisition.
David Manthey: Got it. Okay. Thank you very much.
Operator: Thank you. And our next question today comes from Chris Dankert with Loop Capital. Please go ahead.
Chris Dankert: Hey, good morning, guys. Thanks for taking my question.
Erik Gershwind: Good morning, Chris.
Chris Dankert: I guess, thinking about your Mission Critical, as we kind of move into the next phase here, should we be thinking about it more in terms of kind of offsetting some of the investment cost that you’re undertaking here or do we kind of stay tuned until you kind of really talk about longer-term targets?
Ryan Merkel: Yes, Chris. So, I would say stay tuned for more specific targets, which we’ll give at the end of the fourth quarter. But what I would say is, obviously, the spirit of what we’ve been doing here over the past two and a half years definitely continues on in the Mission Critical 2.0, but it does look a little bit different in terms of how we execute inside the company, sort of the size of the projects that we’re taking on and then where the benefit shows up. So largely the cost savings on Mission Critical has been very focused on the OpEx savings in this Mission Critical 1.0 round. But we see a lot of benefit to be gained by expanding that focus to cost of goods sold, to the balance sheet. I think there’s a lot of opportunity we can go after there.
