Rick Olson: Yeah, thanks for the question. We have seen a really significant improvement in supply chain, especially if you’re looking at a year-over-year basis, it’s been a steady improvement. The categories we’ve talked about over the last several quarters, wiring harnesses, hydraulic components, chips, et cetera, there’s still — we’re still having periodic issues with those, but the frequency and the duration of those issues impacting our plants is much less. So, we’re back closer to production levels before the pandemic in many cases. We’ve also been able to shift production of our products to plants that have lesser demand for some of the reasons we just talked about. And in fact, some of those abilities were really developed during the pandemic.
So, we’ve become a little bit more flexible that way. And I would just say, having been out to a number of our plants within the last 30 days, there is a different sense than we had just a short time ago that the products are running down the lines consistently. The plants are busy and producing products very consistently, and just it’s physically noticeable that we’re back in a much better position. We still have ways to go in some areas and especially in some particular facilities and lines. But in general, a much different situation than we were in 12 months ago.
Tom Hayes: Okay. And then maybe as a follow-up on the residential side. I’m just wondering if you’re seeing the broad-based decline in activity in the quarter, was that spread across both the traditional gas-powered engines and the battery products, or is — there was maybe one a little bit better than the other?
Rick Olson: It was spread across both, yeah, pretty similar response.
Tom Hayes: Okay. I appreciate the color. Thank you.
Rick Olson: Okay, thank you.
Operator: Thank you. One moment for our next question. Our next question comes from the line of David MacGregor from Longbow Research.
David Macgregor: Yeah. Good morning, everyone, and thanks for taking my questions.
Rick Olson: Good morning, David.
David Macgregor: Maybe I — good morning, Rick. Can we just start by, for context sake, what percentage of this — of the LCE business today do you think is the residential customer buying up and versus what percentage is the professional landscape contractor? I’m just trying to get some context for what’s going on here.
Rick Olson: Yeah. In the landscape contractor category in general across the three brands, the residential, what we would call — I think you said residential, while we would say a homeowner, because it’s typically a homeowner that has acreage that would justify a machine like that from a capacity standpoint or just the desire to get a professional product, but it is an appreciable portion of those businesses and it ranges a little bit differently across the brands. The x mark is a higher percentage of pure professionals and larger contractors, but still has an element of homeowners. On the other end of the spectrum, a higher percentage of it is homeowners and the Spartan brand, and then Toro is kind of in between. We don’t break out the specific numbers because most of our competitors are private companies in these areas, and we know they look for information when we talk about it publicly, but it’s an appreciable portion.
David Macgregor: Okay. I guess, is there any way to just talk about — where you are seeing some strength here in golf and in construction equipment, obviously, you’ve got a very substantial backlog that you continue to ship against. But could you speak to what you’re seeing in order patterns in terms of incoming orders? And are you seeing any inflection or slowing or cancellation in orders, specifically maybe smaller courses or smaller dealers?
Rick Olson: Yeah. The order flow continues to be very strong across those backorder categories, again, golf and grounds, underground construction and just as a — thinking of the same kinds of questions, we just recently went through a kind of an aging review in our backorders and the majority by far of the backorders are actually in the current year, so that’s something that’s changed. It really speaks to the idea, although the overall backorder number has only come down slightly, it’s been refreshed as we’ve been able to fulfill orders. New orders have been coming in. Lead times have been improving. So, those kind of multiyear orders that we’re trying to fulfill are much smaller than they were a couple of years ago.
David Macgregor: So, when you say that the backorders, the majority of those backorders are in the current year, are you saying 4Q, we’re going to work down a very large portion of your current backlog in 4Q?
Rick Olson: I would just say the composition of what we refer to as backorders or open orders were generated this year as opposed to last year or the year before.
David Macgregor: You mean the incoming order as opposed to when you expect to ship?
Rick Olson: When — exactly. Yeah, when the order was placed. So, it speaks to the aging of those orders.
Angie Drake: Right. As we still work out kind of the COVID era, it still takes some time to do that. So we’re still working through orders that had come in, in ’21 and ’22.
David Macgregor: Okay. I got it. Thank you for that distinction. And then, is there any way to isolate within the margins the impact of manufacturing curtailments versus everything else that’s going on?
Angie Drake: No. We are seeing manufacturing variances affect us, but we don’t break it out specifically.
Rick Olson: And to that point, obviously, when we see a decline in demand, the first thing we do is make adjustments within our plants to make sure we’re not producing products that we don’t need and making any expense adjustments that we need to make sure we’re right-sized relative kind of to the market opportunity. But in Q3 and Q4, manufacturing variance is a factor, definitely, as you can imagine, with the reduction in volume.
David Macgregor: Sure. That makes sense. Last question from me. During the quarter, you had kind of a short two-week period where you did not have any retail promotions, and that was kind of a gap between one sales event and the other. What did you see in the way of POS elasticity during that period? I’m just trying to get a sense of how impactful incentives might ultimately be in terms of helping you kind of elevate demand here and clear inventory, or whether the market has just become maybe a little more insensitive to incentives. But just maybe what did you see during that period that would inform that thought?
