Unidentified Analyst: Hi, good morning, it’s actually on for Steven. Thank you for taking my questions. I think the — on the guidance, I think it implies EBITDA margins hold roughly flat. Can you just kind of touch on how much that implies for gross margins, if that’s flattish or if it’s more on reduced OpEx or reduced marketing spend? I guess, are there additional levers you can pull throughout the year as the year progresses for the different outlooks?
Paul Joachimczyk: Yes, Brian. Thanks for the question. Really, it does account for — there will be some gross margin expansion in fiscal year 2023. Some of that increased spend is going to come into the SG&A levers that are out there. There could be, I’ll call it, additional facets that we could do and adjust if the market demands change out there to really help overall drive and meet our expectations of the EBITDA that’s out there.
Unidentified Analyst: Got it. Thank you. And a follow-up, I guess, is on — in the slower demand environment here, I think you touched on the prepared remarks a little bit. But can you talk again about plans for rolling out automation capabilities? And if that’s being accelerated or decelerated in the slower demand environment, any more additional color that would be helpful and impactful quantity impact.
Scott Culbreth: So we continue to focus on automation. That’s not a new topic for us. I think what’s different is we’ve made a bit more of a declaration around the investments that we’re targeting in that. So again, we’re shooting for $75 million over the next five year cycle. That’s substantially more than what we would have spent in the prior five years. So we’ve got a whole host of initiatives that I already mentioned in the prepared remarks that we’re focused on specifically inside fiscal year ’24.
Unidentified Analyst: Thank you.
Operator: The next question is from Collin Verron of Jefferies. Please go ahead.
Collin Verron: Hi guys. Thanks for taking my question. And a great quarter. Maybe a little bit more longer term. I guess you’re expecting that low double-digit decline in sales in fiscal ’24. But can you just talk about how you’re thinking about the timing and the pace of recovery baked into your five year sales target of $2.6 billion? I mean at least $350 million in EBITDA. Do you see things bottoming out here in fiscal year ’24 before returning to growth? Or could this sort of decline kind of linger into fiscal year ’25? Just any color on how you’re thinking about the recovery would be great.
Scott Culbreth: Yes. Thanks for the question, and I’ll start by saying whatever assumption I have or statement I make, I know I’ll be wrong. So let’s lead with that as a factor. When we gave our five year projection back in January at that particular point in time, we had always assumed a recessionary impact. We weren’t exactly sure when that was going to happen, would it be ’24, ’25, but we modeled a down case and then we would grow back up off of that. So at this point in time, we see most of that impact happening in ’24. My crystal ball says that we would recover and start to see growth again in ’25. But there’s a lot of question marks that go into that analysis.
Collin Verron: Great. That’s helpful. And I guess more near term, you talked about some de-stocking in the stock remodeling business. Any sense of the magnitude of what that de-stocking was and your expectations for any further de-stocking going forward in that channel?
Scott Culbreth: I think we’ve gotten through the de-stocking efforts, and we’re starting to see a little bit better uptick on incoming orders inside our fiscal Q1 for fiscal year ’24. So I think we’re somewhat past that. I don’t have an exact value to be able to assign to that over the last quarter.
Collin Verron: Great. I appreciate the color. And good luck going forward.
Scott Culbreth: Okay Thank you.
Operator: The next question is from Tim Wojs of Baird. Please go ahead.
