But let me talk a little bit about the headwinds and tailwinds as we see it going into 2024 and some things have modestly changed. First, I’ll start with the headwinds. One, we do see a higher tax rate into next year because of the OECD’s Pillar Two. Secondly, based on where FX rates are today, we’d see some additional pressure from a foreign currency perspective into next year. Again, both of these are more macro versus execution, right? They’re things that are outside of our control, but we’re going to contend with them and we’re going to deal with them. And I’ll tell you a little bit about how. On the tailwind side, I would say, yes, we are more confident in our outlook for revenue next year. Our end markets are stronger than they’ve ever been.
Our portfolio and new product launches have been executing extremely well in some areas above our expectation. Our performance relative to market has been very strong, and that’s consistent and durable. And quite frankly, we’re seeing a more moderated pricing environment still erosion, but much more moderated than what we’ve see in historically. All of those elements give us confidence that we’re going to be able to post a mid-single digit growth top line ex-FX into 2024. And then, despite those sort of P&L headwinds I talked about, we do believe that we’re going to be able to grow earnings faster than revenue. I talked about gross margin next year, stepping down because of the FX hedge gains from this year, not repeating at the same level.
That will still happen, but we’re going to be able to offset some of that. The operations and manufacturing team has been working really hard at efficiency. And so we feel more optimistic about where gross margin is going into next year. Secondly, as I said, we’ve already got a running start on a lot of SG&A efficiency programs in the back half of this year that are going to run into next year. So when you combine those two elements together again, we feel really confident that we’re going to be able to do that mid-single digit top line growth next year, as well as earnings growing faster than revenue. So, thanks again, Robbie, for the question.
Robbie Marcus: Appreciate the color. Thanks a lot.
Keri Mattox: Thanks, Robbie.
Operator: Thank you. We’ll go next to Drew Ranieri…
Keri Mattox: Thanks, Robbie.
Operator: …with Morgan Stanley.
Drew Ranieri: Hi Ivan and Suky. Thanks for taking the questions. Just maybe on 2024 also you haven’t talked about backlog much recent conferences. You kind of pointed out that you think it’s going to carry through 2024, but just maybe help us a bit more of how you’re factoring that into your mid-single digit directional guide for next year? I know it’s not, I know your growth is not all dependent on backlog but just how do you think about that helping to support the orthopedic market growth? And maybe just talk to us about your ability to capture a disproportional amount of share of that backlog? Thank you.
Ivan Tornos: Yes, Drew, thank you very much. And first things first, you should be in your honeymoon considering that you got married recently. So I’m disappointed you here. Look, I’m going to keep this short and sweet. We don’t see backlog as a major driver, growth profile for the next year. So when Suky and I said on mid-single digit, we’re not assuming any real meaningful backlog. So not a key driver. We believe and we spend a lot of time going back and forth on backlog that is going to remain here throughout the end of 2024 at least. But we are not a backlog depending – backlog dependent type of a company. So we don’t have – we don’t focus on that. What we’re tracking is innovation, the pipeline that we have, but we’re tracking is the investments we made in the ASC we’re tracking is commercial execution and in the background, just sustainable pricing dynamics. So no backlog. Thank you.
Drew Ranieri: Thanks. And just a second as a follow-up. Your commentary was very strong that you’re expecting mid-single digit S.E.T. growth into next year. But just remind us about what’s it going to take to really accelerate S.E.T.? And maybe just talk a little bit more about the lift on the organic side and maybe what you’re thinking about in terms of M&A to get that growth rate higher and more sustainable? Thanks for taking the questions.
Ivan Tornos: Yes, absolutely. Great question. First things first. Q3 S.E.T. was in line. As we move into Q4, we’re actually going to be a mid-single digit grower. I’m not going to talk about S.E.T dynamics for 2024. We’ll do that coming guidance, but very excited in terms of where we are. We integrated a couple of companies we have seen SportsMed. Those are performing very well. Our upper extremities, our shoulder business is growing in the mid to upper single digits in most regions. When you look at our CMFT, craniomaxillofacial thoracic, which is part of S.E.T. It has been performing very well. It continues to perform very well. So, again, lots of reasons to believe that as we getting 2024, you should expect a sustainable performance in S.E.T. In terms of M&A, again, we’re coming more on that later, but it remains the number one recipient of capital allocation.
We haven’t changed in that regard. And yet, S.E.T. is one category that is very attractive, given the higher market growth dynamics or position in the space. So you should assume that this is one area where we’re going to be focusing from an M&A standpoint. But again, native M&A already delivering mid-single digit growth entering Q4 strongly, and we are excited about 2024. Thank you.
Keri Mattox: Thanks, Drew. Katie, can we go to the next question in the queue, please?
