Thomas Szlosek: Yes, Tejas. And just to answer the question on working capital. I mean I think the important backdrop here is that business continues to generate a strong amount of cash and has since the IPO. We’re a low CapEx model and our conversion relative to our net income is generally pretty strong relative to our peers. 2022 was a unique year in many ways, and I think our supply chain was probably the most impacted by the events that we’ve seen unfold over the course of the last couple of years. We’ve made a fair amount of investment in our inventory to cushion and manage the availability of inventory and also to protect our customers, their supply chains. So no secret when you look at our statement of cash flows that inventory has been an area of build for us in both ’21 and ’22.
Michael referenced lead times when he’s talking about open orders, that certainly has an impact on inventory levels as well. And we are starting to see significant improvements as a result of the actions that our supply chain teams have taken on reducing lead times, both from our suppliers as well as within our own four walls of our distribution manufacturing. So we’re encouraged by that. We think we can take a few days out of inventory over the course of 2023. The other aspect is that ’22 was unique for the pricing environment that we’re in as well. They were probably an unprecedented level of number of pricing changes. And that makes it challenging to stay synchronized with your customers on individual invoices and at times, there can be confusion.
We’ve worked through most of that. I think on the receivables side, we’re pretty confident that we’ll be able to take a couple of days out of that as well over the course of the year. So things are looking up. And I think the working capital investments we’ve made have paid off, but I think we do see some opportunity there, and that’s reflected in our free cash flow guidance. Thank you.
Operator: The next question comes from Dan Leonard of Credit Suisse. Please go ahead, Dan.
Dan Leonard: Thank you. Tom, you mentioned that customer contract renewals pressured free cash flow in the quarter. Could you circle back to that? What types of investments are associated with a contract renewal? And was there anything abnormal in the fourth quarter? Or was this just normal course of business?
Thomas Szlosek: Yes. The business model with most of our customers is to drive volumes and to drive growth. And you typically enter into long-term agreements with the customers, could be anywhere from 3 to 7 years, and they’re often extended. And so it’s a natural part of the business that either you have a contract coming up that you extend or in the case of some of the ones that Michael has mentioned, we actually can expand the services in those. But embedded in the business model are incentives to drive volume growth for the customers. And it’s pretty formula in terms of the milestones that they achieve on growth – cumulative growth relative in particular product categories and whatnot. And so when you enter into new agreements or extended agreements, there typically is an upfront type of pre-date as well that gets factored into the equation.
And we deal with those all the time. It’s just the size and magnitude of the customers we’ve talked about in the fourth quarter, took more out of our free cash flow than is normal. But we’re quite excited by the investments we think they’re going to drive – continue to drive really strong growth for us, as we go forward in those customers, so that’s the mark.
Operator: The next question comes from Brandon Couillard with Jefferies. Please go ahead, Brandon.
Brandon Couillard: Thanks, good morning. Mike just on the Service and Specialty segment was down low single digits in the fourth quarter. Can you unpack that a bit? And Tom, are there any selling day variances to be aware of that you’d like to call out for this year looking forward?
Michael Stubblefield: Yes. Thanks for the question, Brandon. Overall, the Services and Specialty procurement part of our offering is an important aspect of kind of the customer intimacy model that we do have and gives us a pretty privileged position with our customers. I would say a couple of factors that drove kind of the underperformance in that part of the offering in the fourth quarter. Certainly, the specialty procurement nature of that reflects, I would say, just the overall macro environment and the level of activity in our customers labs, as well as probably a muted year-end budget flush. Part of the offering there is to support procurement of materials that aren’t necessarily a core part of our portfolio. And we saw a somewhat muted finish to the year, particularly in the Americas.
So I don’t think anything that particularly caught our attention there other than just a reflection of the environment activity levels. Here in the early days of the first quarter have been strong, and we’re certainly encouraged by the trajectory that we’ve got here out of the gates, but really just related to, I would say, the overall macro environment and destocking and a more muted year-end budget flush.
Thomas Szlosek: Thanks, Brandon. On the selling days, I assume you mean going forward. And for 2023, overall for the full year, the number of selling days is the same as 2022, roughly. You’ll have a little bit of favorability in the first quarter, and we end up giving that back in the third quarter. I think the second and fourth quarters selling days are roughly equal year-over-year. Thank you.
Operator: Our next question comes from Josh Waldman of Cleveland Research. Please go ahead, Josh.
Josh Waldman: Good morning. Thanks for taking my questions. A two-parter for you. First, would be helpful to hear your thoughts on just how prudent you view the flat to up to organic guide to be. When you consider moving pieces like inventory destocking price, and I guess, underlying demand do you think the 2% assumes a base case scenario for these variables? Do you think the first quarter guide, for example, captures the base case?
