Andy Wittmann: Yeah. Okay. Just wanted to make sure I understood that and now we do. And then just on the, I guess the ELEVATE program here. So you said it’s taking about a year longer. The new number is what, $215 million, I think I heard $200 million to $215 million, I think previously the high end of the total ELEVATE spend was $175 million. So that’s the delta. It looks like — I guess you were always planning for around, I think, $15 million of spend in ’24. So am I doing the math here? Like, the extra $30 million with the extra year is the delta that takes you from that $175 million number into the low 2’s. Earl, am I thinking about that correctly? Is that what you’re saying here today?
Earl Ellis: Yeah, you are. So it’s a spillover. We’ll have an extra year, you remember, for FY ’24, we were actually planning on that being a bit higher as it tails down throughout the — so you could almost think of rough numbers, probably about $35 million in ’24, followed by $25 million for the next two years.
Andy Wittmann: Okay. And then, Scott, can you just talk a little bit about kind of what you’ve learned along the way that’s causing the extra year and the extra cost here? What are some of the technical challenges or maybe operational challenges that go along with the extension of the program?
Scott Salmirs: Sure, Andy. And you know, these things are so complex, right? And the way I would think about it is, when you think about deploying an ERP, like the easiest part of it is putting your financial system in. It’s all the other systems that talk to it, right? Whether it’s your payroll system, your T&E system, your procurement system. And the data has to flow in and out through a pipe. It’s almost like a — I look at it like a Lego, where you got the middle of the Lego is the ERP, and then you have all these systems coming around it creating a wheel. And as part of that, what we learned with education is it’s just going to take longer to get that data flow right and clean, and to set up all the processes to go in and out of the ERP.
And then once you launch the system, all the — we call it hypercare internally, which is basically all the training, all the answering of questions of the field as they start using the new system. And it’s just — it’s taking longer than we originally expected because we had no frame of reference, right? So I think the strong point here, Andy, more than anything, is this is — it’s not a system that’s off the rails. It’s not like, hey, we were going with Oracle and we ditched that and now we’re going to SAP. It’s not like we had a specific consulting group that was helping us through some process work, and we had to change them and scrap it and start over again. So none of this is about really missteps, it’s really about the fact that risk mitigation is the most important thing to us internally and to our shareholders, right.
So we just have to make sure we do everything we can so that our invoices are right, our payables are right, and our payroll is right, and it’s just going to take a year longer, but it’s all for like good reason.
Andy Wittmann: Okay. Great. Thank you for that context. Have a good day, guys.
Scott Salmirs: Thanks, Andy.
Operator: Thank you. Our next questions come from the line of Josh Chan with UBS. Please proceed with your questions.
Josh Chan: Hi, good morning, Scott, Earl, and Paul.
Scott Salmirs: Good morning.
Josh Chan: Good morning. So, you mentioned the margin guidance for ’24. I appreciate the drivers behind that. So I guess as you think about going beyond 2024, how should we think about the trajectory of margins and what are some of the factors that will drive it up or down beyond this year?
Earl Ellis: Sure. Thanks. Look, we think there is going to be a cadence up to our 7.2%. I think ’25 will be one of the more challenging years for us to predict, right, because so much of kind of the — I don’t want to say setback, but the stall in our trajectory is because of commercial real estate. And we kind of think that’s a two-year overhang, ’24 and ’25. So I think once we get out of that trough, it’ll be a normal cadence up. But at the same time, we’re not sitting around and just admiring the problem, right? We’ve made some changes to our cost structure, and then the ELEVATE benefits start kicking in as we start lighting up these industry segments and put our new financial system in, and overlay the tools that I talked about in my prepared remarks, like workforce management and this app that’s going to be game changer, because we’re going to be able to communicate with all of our frontline employees and ultimately help them manage labor during the day and night.
It’s just going to be phenomenal. So I think, again, it won’t be a straight lineup, but the key thing will be, when do we think we’re going to get past the commercial real estate trough. And we’re suggesting that it’s probably just another year or two.
Josh Chan: Okay. Thank you for the color there, Scott. And then I want to follow up on the repurchase. I guess, could you just talk to the amount of repurchase? And it — it’s obviously a lot higher than what you normally do. And so I just wonder if there’s any change in philosophy in terms of how you think about the stock versus other means of deployment mainly M&A, I suppose?
