Jeff Osborne: Hey, good morning. Just, Neil, you mentioned several times, expanding geographically and control planes on the ISG side. Do you have any organic efforts there? You alluded to potentially meaningful M&A activity there. I was just curious how to balance those two comments.
Neil Ashe: So that is basically all organic. So Distech continues to grow. We’ve called out the UK where we’ve had some success in that market, and we’ll continue to expand in Asia over the course in Australia over the course of this year and beyond. So that is primarily organic growth. The acquisition that added to that would be KE2 Therm, which added refrigeration controls. So those are added. So we’re confident in the organic cash, I mean, the organic growth at ISG. Any acquisitions we make would then be in addition to that, and we see some interesting opportunities there as well.
Jeff Osborne: Perfect. And then either for you, Neil, or Karen, what are the assumptions around price and volume mix as it relates to the revenue guidance for the year?
Neil Ashe: Yeah. I’ll take that one, Jeff. So, as Karen has explained through the course of this year, volume was — we had a healthy mix in fiscal 2023 first half of both volume and price. That was, again, as we were burning through the backlog. Through the back half of this year, we have delivered performance largely through price as volumes have moderated. So, on a sequential basis, we feel pretty decent on the relationship between volume and price. So we think we’re in a healthy balance of both of those for — in our lighting guidance for 2024. They are — the volume is impacting and we’re comfortable with where we are in price.
Jeff Osborne: Got it. Thank you. That’s all I had.
Neil Ashe: Thanks, Jeff.
Operator: Our next question comes from the line of Jeffrey Sprague with Vertical Research Partners.
Jeffrey Sprague: Thanks. Good morning, everyone. If we just follow up a little bit back to what you just said on price. So if I understand, you’re saying most of the revenue decline that we see in the quarter is price. Is that what you meant? Could you just kind of clarify what you said?
Neil Ashe: Yeah. Sorry, if I left with that impression, that was not what I intended to say. So I was talking about fiscal ’24 in response to other Jeff’s question, which was — and so how we how we got the — how we got to our net sales assumptions for the lighting business next year.
Jeffrey Sprague: Got it. And then if I recall, you haven’t actually made a major pricing move for the better part of the year. Is that correct? And do you have additional pricing actions in the market at this point in time?
Neil Ashe: So as we’ve mentioned consistently, Jeff, we have — our strategy, the underlying strategy of product vitality, service, technology and productivity has afforded us the opportunity to more strategically manage price. So while there were a number of broad pricing actions through kind of ’22 and ’23, we’ve become significantly more targeted in those actions now. So for example, we’re in the market now. We just recently announced a price increase around certain controls products this quarter. The — we’re also strategic about where we choose to invest in price. That’s generally in the Contractor Select portfolio, and it’s generally to expand our market share in the electrical distribution channel. And it’s highly targeted.
So it’s very low dollars comparative investment on a percentage basis. So the strategy has empowered us to more strategically manage price. And so we are no longer really going after broad-based pricing changes like that up and down, but more strategically managing on different categories and for different reasons.
Jeffrey Sprague: And then maybe just one last one. So the cash flow was solid in ’23. But by my math, the inventory days are actually now a fair amount below normal. Can you do more on inventory or working capital at this point? Maybe just a little — some thought on cash outlook for 2024.
