Tim FitzGerald: So we never talk about what’s been trialed out there, obviously, sometimes you can walk into a restaurant and see a brand of equipment. But I would just say that we’ve talked about a lot of our leading automation that we’ve come out with over the last number of years that are helping drive throughput, labor, small footprint, efficiency, et cetera, Taylor has been certainly one of those products that James has spotlighted some of the past calls, and it is part of a great example amongst others, such as ICE that James covered on this call that I think are going to be. We’ve got differentiated products that are going to be growth drivers going forward. So I’ll just comment that, that is one of those exciting products.
Brian McNamara: Fair enough. Thanks, guys.
Tim FitzGerald: Yeah. Thank you.
Operator: The next question is from Mircea Dobre of Baird. Please go ahead.
Mircea Dobre: Good morning. Thank you for taking the question. Just a quick clarification here on residential your intro comments mentioned that revenue is going to be up sequentially in Q4 versus Q3. And I’m curious as to what exactly is giving you confidence that that’s going to be the case? And then as you look into 2024, recognizing that some of the macro concerns are still with us, do you expect revenue in residential to continue to build sequentially relative to Q4 or not?
Bryan Mittelman: This is Bryan. I’ll start with the second part. Q4 for residential usually is a bigger quarter. There is some seasonality in some of the businesses where Q4 tends to be higher. We’ll have to see a little bit how it plays out because while those will go away, it does start to pick up typically on the outdoor side of things across all our outdoor businesses. But obviously, there’s the stocking issue. So we have not specifically mapped out a quarterly trajectory for next year. But I do put out there that Q4 tends to be stronger than Q1. But then thinking about Q4 versus Q3, really, I think your question was across the segments. Food Processing, there I say always has a strong Q4. There’s a lot of deliveries that get made to customers.
They want to get things in their plants. And so say, we have very high confidence there. We noted that Q4 is going to be similar to Q3 on the commercial side of things. There’s just been enough I’ll call it, volatility in ordering, while destocking is mitigating, there’s also, I’ll say, a little bit of slowness in maybe the restocking, given everyone’s focus on working capital. So that makes that one a little bit harder to precisely predict. And I’d say in residential, we also feel fairly comfortable that Q4 is above Q3 as we look how order patterns have, I’ll say, stabilized, steady some recently. And then again, there’s some seasonal benefits in a couple of the businesses. So that’s kind of the quick perspective on how we view things coming together.
Tim FitzGerald: Yes. But Mircea just — maybe this is repetitive, but your question is on residential. I think to go into next year if the headwinds neutralize that starts to equal growth for us, right? And right, because I think the destocking starts to go away. There’s not inventory. The typical load-ins that you would have at least on, let’s say, outdoor business that are not happening because people are also tepid on that. You’re going to start to see better sell-through during the grill season and then orders, albeit lower, they’re kind of troughed, so we’re starting to see them flick back up. So it doesn’t need to be a great market to start seeing things, improving and growing. And if housing and remodel starts to pick up, then that ends up kind of being at or on top of that. So I think that’s kind of how we think about it as you play out multiple quarters going through next year.
Mircea Dobre: Yes. And that was really the nature of my question. I was wondering, if we could take a look at Q3 and sort of say, this is the trough point for both revenue and margin because if you’re right about destocking being at an end and at least in theory, sequentially, if you should start to see some incremental benefit from the channel normalizing and maybe even potentially some restock as you go into the selling season in the spring. That’s kind of what I’m getting at.
Tim FitzGerald: Yes. I think that’s how we’re thinking about it is how you are also thinking about it.
Mircea Dobre: Okay. And then my last question, again, in your prepared remarks, you talked about backlog still being elevated in Commercial Foodservice. And that providing some level of support to 2024. Can you put a finer point on that? Can you comment at all as to where backlog currently is where you expect it exiting 2023 and how that expect for 2024.
Tim FitzGerald: Elevated at this point. I mean, I would say that we’re largely back to normal. We’ve got a lot of brands. So as you kind of pick through it, there are still a few that we’ve got a larger backlog, given either level of orders along with supply chain being able to keep up with us. But I mean, I think that’s more the exception to the rule, I would say, probably 90% of our companies are back to a normal lead time and backlog.
Mircea Dobre: Okay. Thank you.
Operator: The next question is from Walter Liptak of Seaport. Please go ahead.
Walter Liptak: Hey, thanks. Good morning, guys. Wanted to ask sort of a follow-on from the last one on resi. And so if in the resi business, the margins are pretty low at this point. I wonder if you could talk about the cost out and operational excellence that you’ve done? And then if we do start to see growth in 2024, what does the volume leverage look like?
Bryan Mittelman: Yes. This is Bryan. We have taken restructuring charges, as you can see on our P&L and probably over half of them are in the residential area. And it — and we do have, I’ll call it, savings that are certainly a multiple of the charges we have taken. And again, those have been necessary based on the volumes we have and driving those margins. We do think things recover nicely here. Our incremental margins tend to be pretty healthy. And I think if you go back and look at where our revenue levels were, I’ll call it, prior to these challenging times, if we get a couple of $100 million of revenue back, you’ll start to see our margins — getting to the upper teens again. So there’s no reason they won’t expand back to where they were before.
And actually, we’ve done a variety of things, which you can’t see right now to improve the businesses, improve processes, improve manufacturing, rationalize and make more efficient the distribution processes, again, you’re not seeing those benefits now because we don’t have the benefits of volume, right? So those are all the reasons why we still think we will drive back to 20% and above and on the path to 2025. And then, yes, on top of that, there’s a variety of international market expansion opportunities, I’ll say, on both sides of the pond. We’ve talked extensively about bringing European products into the North American market, and there’s that has started and there’s more to come. We’ve talked about grills expanding internationally, lots of international opportunities of expansion across all our all our brands as well in a variety of other initiatives.
