Good morning, ladies and gentlemen and welcome to Newell Brands Third Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference is being recorded. A live webcast of this call is available at ir.newellbrands.com. I will now turn the call over to Sofya Tsinis, Vice President of Investor Relations. Mr. Tsinis, you may begin.

Thank you. Good morning, everyone. Welcome to Newell Brands’ third quarter earnings call. On the call with me today are Ravi Saligram, our CEO; and Chris Peterson, our President and CFO. Before we begin, I would like to inform you that during the course of today’s call, we will be making forward-looking statements that involve risks and uncertainties. Actual results and outcomes may differ materially and we undertake no obligation to update forward-looking statements. I refer you to the cautionary language and risk factors available in our earnings release, our Form 10-K, Forms 10-Q and other SEC filings available on our Investor Relations website for a further discussion of the factors affecting forward-looking statements. Please also recognize that today’s remarks will refer to certain non-GAAP financial measures, including those referred to as normalized measures. We believe these non-GAAP measures are useful to investors, although they should not be considered superior to the measures presented in accordance with GAAP. Explanations of these non-GAAP measures and available reconciliations between GAAP and non-GAAP measures can be found in today’s earnings release and tables as well as in other materials on Newell’s Investor Relations website. Thank you. And now, I will turn the call over to Ravi.

Thank you, Sofya. Good morning, everyone and thank you for joining us on our third quarter call. Following strong performance over the first half of the year, the company’s results decelerated in the third quarter, reflecting a tough operating environment as many retailers right-size their inventory positions, inflationary pressure on both the consumer and our business as well as the impact of a stronger dollar. Additionally, Q3 performance was unfavorably impacted by customers shifting orders into the first half. As a result of these factors, core sales turned negative in the quarter, declining 10.8% on top of 3.2% growth last year. This had a corresponding deleveraging impact on normalized operating margin, which contracted 120 basis points year-over-year, despite strong progress on productivity and cost containment actions. Core sales declined year-over-year in all business units, except the commercial business as the pullback in customer orders was a significant headwind. International markets outpaced North America as we did not experience the same level of retailer inventory reductions there. Core sales outside North America declined 1.4% as 4.8% growth in Latin America was offset by declines in EMEA and Asia-Pacific. Weak consumer confidence due to record inflation and concerns surrounding the war in Ukraine continue to weigh on the EMEA region, with APAC region impacted by COVID-related restrictions and lockdowns in certain markets. Year-to-date, Newell’s core sales declined 1.3% on top of a challenging 15.2% growth comparison a year ago as normalized operating margin expanded 10 basis points year-over-year despite significant inflationary and foreign exchange headwinds. Many of our key brands continued to show strength year-to-date, including Rubbermaid Commercial Products, Sharpie, Paper Mate, EXPO, Elmer’s, Ball, Rubbermaid and Contigo. While domestic consumption moderated year-over-year, it continues to exceed 2019 levels, both during the third quarter and year-to-date. Going forward, we expect demand patterns…

Thank you, Ravi and good morning everyone. Third quarter results were generally in line with our updated outlook. During Q3, we enhanced Newell’s financial flexibility and maintained strong cost discipline as we took decisive action to lessen the effect on our business from retailer inventory rebalancing, softer consumer demand, inflation and a stronger dollar. Results were impacted by top line deleveraging as well as the actions we took to manage the company’s supply plan. Net sales for the quarter decreased 19.2% year-over-year to $2.3 billion driven by lower core sales, the impact of the sale of the CH&S business at the end of Q1, unfavorable foreign exchange and certain category and retail store exits. Core sales declined 10.8% as lower volume more than offset higher pricing. Core sales were negatively impacted by a significant pullback in orders from major customers as they right-size their inventory. The previously disclosed timing shift of customer orders from Q3 to the first half lowered core sales this quarter by a couple of points. Normalized gross margin declined 120 basis points to 29.4% and versus the same period last year. Fixed cost deleveraging and significant headwinds from foreign exchange and inflation more than offset benefits from pricing and fuel productivity savings. Normalized operating margin contracted 120 basis points versus last year to 10.2% as an increase in advertising and promotion expense as a percent of sales and gross margin contraction more than offset the benefit from lower overhead costs. Net interest expense declined $8 million from the year ago period to $57 million. The normalized tax benefit was $58 million, largely reflecting a significant benefit from discrete tax items during the quarter. This resulted in normalized diluted earnings per share of $0.53, close to $0.54 a year ago. Turning to segment results. Core sales for…

Thank you. [Operator Instructions] Our first question coming from the line of Bill Chappell from Truist. Your line is open.

Thank you. Good morning.

Good morning, Bill.

Good morning, Bill.

Wanted a little more color on kind of the inventory reductions at retail as you go into seasonal categories, I mean, in particular, like appliances, where you’re gearing up and shipping to make sure all the shelves are stocked. I mean how is that working? And do you feel like we’re kind of done with the process or you’re aware of where all the reductions will come? Or are there still other categories that have yet to hit peak season where this could happen again?

Yes. So I think what we’re seeing is retailers continue to pull back on inventory levels, particularly at many of our top retailers in the U.S. And so what we’ve contemplated in our guidance is very much a continuation of that dynamic in Q4 that we saw starting in Q3. We are trying to navigate it as best as possible. Our inventory positions at retail continue to be in good shape. It’s more that we’re getting caught up with broader actions that retailers are taking. And in some cases, as we’re heading into the holiday season, we’re concerned that retailers are operating with lower than what we would like inventory levels on our items. But we expect that retailers are continue because they are overstocked and general merchandise broadly, we think the environment remains challenging through at least the end of this year, and that’s what’s contemplated in our guidance.

And Bill, just what I’d add there is, unfortunately, for us, a lot of the buildup of inventories that some of our key customers is either private label or competitive product or other categories not related to us, but they have got to work that down before they consider us. And even though our inventory levels are in good shape or as Chris mentioned, some places where we are actually a little concerned that it is approaching lower levels I think this could – I think that reduction, even though we’re hearing things where they are beginning to get a hold of this, it could continue all the way through like first quarter of next year. So we’re taking a prudent view of it. And that’s also affecting our own views on how we’re managing inventories and our supply plans where we’re taking very strong action to make sure that we are not overbuilding.

Got it. Thanks for the color. And then just one follow-up. Maybe just looking at baby since you have so many price points from kind of popular price to super premium, are you seeing consumer trade down happening in that category or as a kind of a proxy for others or is it – is that more of a recession-resistant type area where people want to – the super premium holds up extremely well?

Yes. I wouldn’t call us super premium. We’re probably premium with Graco and then and really appealing to a very broad segment with Graco and maybe Baby Jogger a little bit more on the higher end. I think our brands are really – despite you’re looking at Q3 results. So if you look at year-to-date and if you look at how baby business has done versus ‘19 and even versus is continuing to show positive POS. Our brands on Graco and Baby Jogger are quite really strong. this new innovation that we introduced, which is the turn to me for infants, which has been a big pain point from parents. I think is really doing extremely well. We just introduced in one of the club merchants, another innovation, and that is just selling extremely well with an online retailer. On their Prime Day, we saw a strong baby business. So we’re not seeing the phenomenon now recognize being the leaders. We took price increases first. And so some of the Other competitors have taken their time because we are the leader and some of them may not quite follow. But I think our brand strength speaks for itself. Now there are a few items where we’ve been quite focused on margins as well, and the baby business interestingly has held up gross margins this year. So overall, we feel pretty good about the operational health of the baby business.

Great. Thanks so much.

Thank you. And our next question coming from the line of Kevin Grundy with Jefferies, your line is open.

Great. Thanks, good morning, everyone. First question for you on debt leverage and free cash flow, so you finished the quarter at 3.9x the business is under pressure for all the reasons discussed as well as this drag from working cap. A few questions with it. One, if you could just perhaps discuss the cadence around the improvement that you’re expecting in working capital, maybe some parameters around what we should expect with free cash flow and free cash flow conversion. And then relatedly, maybe just touch on your covenants and then how you’re thinking about sort of stress testing the model given the difficulty of the environment as well as the stronger dollar? So your thoughts there would be helpful. And then I have a quick follow-up.

Yes, sure. So clearly, this year is going to be under pressure due to working capital. If you look at the inventory level that we are operating at, at the end of September were probably about $500 million higher than a typical level. And because we’ve made an intervention to pull back on the supply plan, that’s having a negative impact on our payables. And so the combination of that has working capital being a significant use of cash in the short-term. We expect inventory levels to go down at the end of Q4 versus Q3 and but we don’t expect them to get to sort of a going level until we get into the first half of next year. Payables will lag that a little bit because of the supply plan pullback, but we do expect to right-size working capital in the first half of next year. The net result of that is that we’re likely to have free cash flow for this year to be negative for the company, which will result in a temporary phenomenon of leverage being higher than what we would like, but we expect very much to recover during next year as we right-size the company’s working capital. So I would expect that we will see a below – a low free cash flow year this year because of this working capital phenomenon and a bounce back in 2023. From a covenant standpoint, we’re in great shape. And we’ve looked at a number of different scenarios, both for the current year and for next year, and we have no concerns over covenants going forward. Last thing I will say is that we continue to be committed over the midterm to get the leverage ratio down to 2.5x. Because of the free cash flow dynamic this year, we will likely end this year with short-term debt on the balance sheet. And I expect next year, we will pay that short-term debt down.

Okay. Very good. Thanks for the color. Just a quick follow-up on Ovid. That clearly is going to unlock a lot of value for shareholders longer-term. The worry, of course, is sort of the near-term and the macro environment. So related to that, how does the environment change the pace or the scope of Ovid? And then two, as we just sort of think about our models for next year. Can you quantify the potential benefit from Ovid as we’re thinking about the likelihood of top line deleverage and currency? Thanks, with that. I’ll pass it on.

Yes, sure. So first of all, on the timing question on Ovid, we are very excited about the implementation that we went through in July. I think I commented on this earlier on the last call that the execution of that first wave went very well. And everything we’re seeing today would suggest that it went, if anything, better than we expected. And so that has given us a lot of confidence in the overall model. We are not changing the timing of the initiative, and we plan to do the second and final wave early in 2023, and we’re very much on track to do that. We – two of the new mixing centers, I think I talked previously about the new build distribution center being up and running last spring, the Gastonia or new distribution center outside of Charlotte will go live next month. And so we’re a few weeks away from that coming online. And we feel very good about the progress. The net result of Project Ovid going, the second wave happening in the first part of next year is that we expect higher than typical fuel productivity savings next year as a result of Project Ovid. It’s too early to quantify the exact amounts of overall productivity savings. But certainly, with Project Ovid being a major contributor, we’re expecting productivity savings to be a higher-than-normal contributor next year than what it’s been this year.

Very good. Thank you.

Thank you. And our next question coming from the line of Andrea Teixeira with JPMorgan. Your line is open.

Thank you. So can you please speak on the cadence of the retail destocking ahead? And if you could – I understand from your comments that this is going to linger, but if you could potentially lap it by Q1 next year? And to your point about the low single-digit shipment decline for the full year as you’re tracking. What is your estimate of the volume consumption decline compared to that low single digit? I’m assuming it’s lower, but I just want to reconfirm given the destocking.

Yes. I think let me take a shot at it and then maybe Chris can add to it. I’ll try to parse the question in a few things. Look, one is that we did take significant price increases. So as I’ve said, we’ve had a bounce up from price increase, but obviously, unit volume has declined. And so – and there is sort of a wash, if you will. And so that trend, I think you are going to see that, and that’s what’s embedded in our overall revenues see that because there is other headwinds as well that come into play. Volume is that – the unit volume has definitely been negatively affected, but we’re glad we took the price increases when we did. And we will continue next year to drive the price increases internationally. From a cadence standpoint, I think it’s tough for us to really predict how the retailers will react. What we are trying to do is work at all levels of our retailers given our strong relationships brand by brand, SKU by SKU to see where have safety stocks are really coming down and where there are very good high-velocity items where maybe they have gone too low to work with them to try and work on improving because we don’t have the problem that we’re overstocked. Our issue is really to make sure that we get to appropriate levels. So – and when I said first quarter of next year that this could continue, that’s just a based on everything we’re seeing, saying it could happen earlier, but that’s our sort of best guess. I don’t think there is a specific cadence to it because we can’t predict where they are.

And just to quantify what Ravi is saying, our guidance for the full year is for core sales to be down 3% to 4%. That includes a high single-digit contribution from pricing and a low double-digit decline in volume for the year.

Okay. So that – just one clarification on that low double digits like what are the categories, again, that obviously, the ones that were benefiting the most from consumption, rider home fragrances and food storage and small appliances. Can you talk to the ones that are not being as impacted?

Well, the ones that – look, where the unit declines is occurring the most is, obviously, I think appliances is really where one because the stimulus and where I think – and given that there are long purchase cycles, that’s why that business is the most severely affected. Second, the unit volumes are also negatively affected in home fragrances because we’ve lost a ton of low-income consumers, who came in due to the stimulus. So those would be some of the two businesses. And then third would probably be outdoor in certain categories, where we’re continuing to do well. As we’ve said, the commercial business continues to do well in our writing business year-to-date, we’re up low single digits in terms of growth in writing. So those would be the two businesses that are still doing well. And then on food, pockets of food, like the Ball brand has continued to do extremely well. For us as well as Rubbermaid, and Rubbermaid Brilliance is doing extremely well. So those would be a quick snapshot of where we are.

That’s very helpful. Thank you.

Thank you. One moment for our next question. And our next question is coming from the line of Stephen Powers with Deutsche Bank. Your line is open.

Hey. Great. Thanks and good morning. As part of your preparations for the environment you foresee ahead, you talked about further prioritization of SKU simplification and obviously inventory reduction. I guess I am left wondering are there charges, obsolescence charges or outside promotions that you foresee as part of accomplishing that simplification or clearing that inventory? I guess that’s question number one. And then I am also curious as to how your preparations for the year ahead, impact your new product agenda for ‘23. In terms of the innovation you are going to bring to market, is that likely a reduced agenda, a more focused agenda, just how you are thinking about innovation into a much more difficult environment for the consumer?

So, Stephen, I will answer the innovation piece. I will let Chris talk about inventory reductions. And one of the things to understand is our obsolete is really not the greatest sense more excess that there are no expiration date. But Chris, lying to amplify on that piece and then I will pick up on the innovation side.

Yes. As Ravi said, it’s unlikely that we are going to have significant obsolescence charges. We don’t see that as an issue. And the background for that is the way that we are planning to right size our inventory is predominantly through reducing the supply plan. And we think that’s the better way to do it because that avoids disrupting the marketplace by trying to liquidate product in the market at excessive discounts. Most of the higher than going level of inventory that we have, as Ravi said, is good inventory that doesn’t have an expiration date that’s excess rather than things that have been discontinued. And so the one thing that, that will impact in terms of the P&L that we are seeing and is embedded in our Q4 guidance is that as we pull back on the supply plan, there is manufacturing fixed cost absorption issue. And that’s probably affecting the Q4 gross margin by maybe 100 basis points or so because of the actions we are taking. That’s a temporary phenomenon. But we think it’s the right thing to do for the long-term.

So, let me tackle the second part of your question. And let me start with a little bit on just SKU reduction, we are continuing to be aggressive in the sense of we started with over 100,000 SKUs. We were down to 37,000. Hopefully, by the end of this year, it will be more like 30,000. And long-term, our goal is to get to 15,000, 20,000 SKUs. So, what that means is we have got to be very focused on not just SKU reduction, but new SKU generation. And that’s where we are putting a lot of attention is to make sure our marketers are not spending a lot of time generating just refreshes and use SKUs and generating activity, which then further creates proliferation. So, one of the evolutions of our innovation operating model is really on innovations that are bigger, better and more consumer, which are meaningful, and also prioritizing the businesses which have the higher gross margins. So, actually we are investing even more innovation on the writing side, on the writing business and totality and creating in addition to your normal line extensions and to really create a group within the writing group that is looking at breakthrough innovations, whether it’s digital or with the whole new world of the metaverse, etcetera. So, because I think innovation is still is the heartbeat of this company and part of the DNA. But it has to be very much gross margin accretive. So, we are very – feel very strongly. Also, second that they are meaningful sizes. So, take for instance, the ones that I just talked about, the Graco and Baby Jogger Turn to Me. They are real meaningful innovations. They are now rapidly – have very good consumer velocity since they have been introduced. So, a lot more focus on not only consumer insight-driven and foresight-driven, but also customer acceptance. And also another plan just to make sure it’s not just at the premium end, but we have the right, good, better, best offerings because in recessionary environments, that value focus becomes very important. So, we are putting a lot of emphasis on price pack architecture and making sure we have got the right sort of pack sizes and where – and hitting the right types of price points. So, on – yes, we have said, “Hey, next year, we are being prudent on soft top line.” That doesn’t mean that we are in any way back hiding on innovation because when this macro improves, we want to be the strongest company that emerges because of all the investments we have made in capabilities, which we have done a lot and that our execution that really products comes to play.

Okay. Thanks for that Ravi and thanks Chris as well.

Thank you. One moment for our next question. And our next question is coming from the line of Olivia Tong with Raymond James. Your line is open.

Great. Thank you. My first question is on cash, and it’s just around given all the pressures that we are seeing that are now extending into next year. It creates a bit of a tough spot with respect to the dividend. So, just wondering if you could update us on your priorities with respect to cash in light of the challenges and clearly, your desire to continue to rain in your debt levels. And then just one quick clarification. I think you said that you expect advertising to increase in Q4. Just if you could give a little bit more detail around that, that would be great. Thank you.

Yes. So, let me tackle the cash question. Our focus remains consistent that we believe we have got an opportunity to generate significant operating cash flow, and that’s our first priority with regard to capital allocation. With that cash flow, we continue to invest in the business where we see strong return on investment projects. And typically, we are looking for 30% plus rates of return on that capital investment. Beyond that, we pay a dividend that I think we have been relatively clear that we expect to maintain as flat. We continue to expect that. There has been no change in our outlook on the dividend. In the short-term, because of the increase in working capital that I mentioned that’s putting pressure on cash flow this year, we will wind up with short-term debt at the end of this year and a higher leverage ratio than typical, but we view that as a temporary phenomenon. And we believe that we are going to right-size our working capital in the first half of next year. With that right-sized working capital in the first half of next year, we will use that to pay down the short-term debt is the current plan. The ultimate goal of getting to a 2.5 leverage ratio in the mid-to long-term remains the same.

Yes. On the A&P question, really, it’s the ratio because with the top line coming down, obviously, the ratio looks higher. But I think look, we have got two things there when we talk A&P. You have got also lot of the displays and stuff that you need with holiday. And second, as we have new product launches, etcetera, that are supporting them. But we have right-sized our A&P spending, making sure that it is against the businesses with the higher margins and where it makes the most sense.

Got it. Thanks. And then just on the cost savings, if I remember it correctly, I was supposed to help out quite a bit in fiscal ‘23. So, just thinking through how, if at all, be – ability to extract savings from Ovid changes given perhaps a little bit of a change in terms of expectations for ‘23?

Yes. I don’t think – I think if anything, on the savings from Ovid, we are seeing more opportunity today than we saw when we started the project and for a variety of reasons. As we have gotten into the project and modeled our transportation, as we have shifted the company from collect freight to prepaid freight. And as we have diversified our port exposure, we now have a lot more levers to pull to navigate the external environment. When we started off it, transportation costs were lower than where they are today, even though today, transportation costs are starting to get a little better from peak levels, they are still well above where we were when we started Ovid. And if you recall, Ovid was in part about reducing the miles driven, shifting our business to be – have more port diversification, better service for our retail customers and take 40% of the miles driven out. And the benefits in terms of transportation savings from that remain higher than when we first initiated the project.

Thank you. One moment for our next question. And our next question is coming from the line of Lauren Lieberman with Barclays. Your line is open.

Great. Thanks. Good morning. I think it was great. You gave a little bit of kind of guardrails or thinking around 23. But one of my questions is that as you work through excess inventory. How should we think about the negative operating leverage that comes out of that, because I know you talked about both bounce back in operating cash flow and expectation to recover gross margins. So, yes, let’s just start with that. If you can help us, how do we think about the negative operating leverage that occurs with working through excess inventory?

Yes. Good point, Lauren. And you are right. Because we are working through excess inventory by pulling back on the supply plan, that does create fixed cost deleveraging. And that’s reflected where you are seeing that is in our Q4 guidance. I think I mentioned in a response to a previous question. It’s about 100 basis points of pressure in Q4 from that fixed price cost deleveraging associated with pulling back on the supply plan. The interesting thing is we believe we pulled back on the supply plan pretty aggressively across the whole portfolio. The self-manufactured businesses, where we have the majority of the fixed cost deleveraging impact, we can pull back on the supply plan with about three months’ notice. The sourced businesses take about eight months of notice. So, those are tougher. And so a lot of the self-manufactured businesses, we believe we pulled back on the supply plan, and we are going to be in a reasonably good shape by the end of this calendar year. The sourced businesses are going to take through the first half of next year, but the sourced businesses, we don’t have the same fixed cost deleveraging impact. And as a result, we may have a little bit of negative impact next year on fixed cost deleveraging. But I don’t think that’s going to be a material driver because of the timing of this pullback in the way it flows through on the sourced businesses versus the self-manufactured businesses.

Okay. That’s super helpful. So, the 100 basis points you specified in the fourth quarter. I know we shouldn’t do quarterly, but I do think cadence is important. So, something less than that in Q1. And then as we get into 2Q, there is just really – you shouldn’t – you think there shouldn’t be a fixed cost absorption – fixed cost absorption issue when you get into 2Q. Is that fair?

Yes. I think that’s a fair assumption.

Okay. Great. And then my second question was just on the cost-cutting productivity overhead, all the litany of things that, Ravi, you ran through on the priorities and the sort of actions you are taking. You are taking that in the context of how much progress the company has made in the last couple of years of reinvesting in capabilities and frankly, rebuilding culture. I mean how do you manage that dynamic, right, that this is we are right back, unfortunately, to the necessity to make sharp pullbacks. But you have been reinvesting to create a better platform. So, I just love to hear some color on how you are looking to manage that from an aggregate corporate standpoint? Thanks.

Yes. I think that’s a brilliant question. So, it is definitely we have to make choices. I think Lauren, for the very reason you mentioned, it gives us the ability to do this in the sense, the culture of the company is in a great place. Last year, the engagement levels, we have gone from 45% to 75%. We just got our engagement results last two weeks ago, and they were again 75%. So, despite everything, we are keeping the morale up and the culture. So, I think what we want to do is the cost reductions to root them [ph] very intelligently and not cut muscle. And we are very focused on operating models and how we go to market, how we do business, where is their duplication. And so that we are actually improving how we work. And there has always been a little tension between central-led functions and the BUs and how do you optimize that. We have been continually working on that. And I think we want to provide even greater clarity on role clarity, so that we don’t have duplication. International is a place where there is a lot of fragmentation and we have talked about that. So, now that’s something we are very heavily focused on. The first step we have already taken, we just announced, for the first time, a new Country General Manager for Canada, where all the BUs are there, and we had situations where 44 people in Canada reported to 44 people in the U.S. And we just think that’s a lot of duplication. And so we want that cleaned up so that there is a One Newell approach. And so we think that there are ways of doing this where you get very efficient. And just like we have done Ovid in the whole distribution side, we think there are a lot of manufacturing efficiencies from our factory side and looking at, hey, what are things that we can do there with the network, taking Ovid, moving Ovid now to international, given the success in the U.S. So, we still think that there is enough there for us to do to give us a real meaningful reduction in overheads and efficiencies. And I already mentioned the SKU side. Without damaging the culture and whatever we do, we are going to do it very thoughtfully and with the whole people-first mentality.

Thank you and I am showing we have time for one more question. One moment for our next question. And our last question is coming from the line of Peter Grom with UBS. Your line is open.

Hey. Good morning. Good afternoon. I hope you guys are doing well. So, Ravi, I just wanted to follow-up on the comments you made around a recessionary environment and preparing for a softer top line year. Can you maybe just provide some context around that, particularly in light of how the top line has progressed this year and into the fourth quarter? Is there any way to quantify what a softer top line environment looks like from a core sales perspective? Would you expect to see a similar rate of decline from what we are seeing right now? Should things kind of improve? Because I know a lot of the impact right now is being driven by retail inventory destocking, which should improve. But it also sounds like you expect consumption to become a much bigger drag from here as well. So, just any thoughts on how to think about that more broadly at this point in time would be helpful. Thanks.

Sure, Peter. And not to be cute, we will quantify that in February. But I will give you some qualitative views if I could. I think – look, the thing that we don’t want to be, it is the first and foremost. It’s almost impossible to quantify right now where the whole – where categories will be, where the macro will be because you just saw the GDP in Q3, it actually was a little surprising for the country that turned out better, but it’s a mixed message. So, it’s very tough our stands on it is more from a planning perspective. Don’t hope that there will be a very robust top line instead make sure our – we are laser-focused next year to deliver our number one priority, get those inventory reduction in cash, cash, cash. That’s number one. Number two, gross margin, gross margin. Number three, operating margin. That’s what we are day and night thinking about. And the less for us is, hey, how do you make sure of that and don’t get yourself love. Because during COVID, we had a big bump up of 12.5% growth. First half, we were up 4% this year. So, we want to make sure because it takes time for an organization to pivot. So, we think it will be very responsible to be prudent about the top line, which then allows us to take all the actions necessary. Look, if everything that we are going to control, we are going to do extremely well. The macro is something we don’t control. So, if we take all those actions, and we will continue to innovate, then the top line, if it does better, that will just be icing on the cake. We just want to make sure that the organization understands the pivot that is very important to be efficient, and we have got to get those operating margins up and got to get cash flow up. That’s how we are approaching it. So, I think look, we will have another quarter to see where we are, where we can guide appropriately. But our planning stance is plan for the worst, and then you can execute extremely well based on that. So, that’s our stance. It’s not being conservative. It’s not we just – it’s very tough to predict right now. End of Q&A:

Okay. Thank you all for joining.

Thank you very much.

Thank you. Ladies and gentlemen that concludes our conference for today. Thank you for your participation. You may now disconnect.