Cyrus Madon: Yes, for the first time in a long time, we are seeing a bifurcation of investors’ view of companies between high quality companies and credits and lower quality companies and credits. And including, I would also say highly leveraged companies which have pretty good assets. And for the first time in the long time, what that means is there are haves and havenots, which is the way it used to be. And the haves have access to capital like Clarios has tremendous access to capital. And the havenots are struggling, and we’re seeing bond yields and debt yields for those companies at levels I haven’t seen in many, many years. So the short answer is yes. There are definitely going to be some really interesting opportunities coming out of this.
We are seeing larger – I’ll call them multi-asset companies that have elevated levels of debt, starting to contemplate selling some pretty good businesses. I think that’s an opportunity and we see companies that simply need to deleverage, so there might be some recapitalization opportunities for us too. So all of the above.
Gary Ho: Okay. That’s helpful. That’s it for me. Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Devin Dodge with BMO Capital Markets.
Devin Dodge: Thanks. Good morning. So I wanted to start with a question on DexKo. Look, we saw profitability, I think it stepped up pretty materially from what we saw in the back half of last year. I think there has been some M&A activity that may distort the picture of it. Is there much seasonality in this business, or is the Q1 performance we’ll say a reasonable proxy for baseline earnings going forward?
Cyrus Madon: We’ll let Denis answer that one.
Denis Turcotte: Denis Turcotte here. Yes, I think it’s a reasonable proxy given, the dynamic we’ve just been through i.e., inflation rolling through the business, but the management team there, it’s a very strong team and they’ve done a lot to get costs down and maintain and even expand margins. So I think it’s a good proxy. Having said that, there is a little bit of seasonality, but more, it’s really more around certain segments as you can imagine, as interest rates go up and people in general I think are getting a little more nervous on the retail side, RV sales, for example have come off. You’re getting some of that more, I think it’s more in anticipation of recessionary actions moving forward.
Devin Dodge: Okay. Okay. Good. And then maybe switching over to CDK, I’m just wondering, we saw the sale of that heavy equipment dealer business. I just wanted to understand if that was a meaningful contributor to earnings to the overall business. And can you help us understand the rationale for monetizing it and if there’s other parts of the business that you would want to trim going forward?
Cyrus Madon: Yes, there are a few, I’m going to say non-core smaller businesses within CDK, which in the longer-term probably don’t fit the business. The one that was sold was very small, less than 5% of EBITDA. We sold it for around, I think around 20 times EBITDA. So we thought for the business and our investment, it was a pretty accretive transaction and that’s why we did it.
Devin Dodge: Okay. Now all sales, do you expect to kind of dividend that up to the corporate? Or are you going to keep that the business maybe delever?
Cyrus Madon: We’ll keep it in the business.
Devin Dodge: Okay, makes sense. I’ll turn it over. Thank you.
Operator: Thank you. Our next question comes from the line of Jaeme Gloyn with National Bank Financial.
Jaeme Gloyn: Yes. Thanks. A question for Clarios. Just maybe a little bit of a clarification question. The target date to exceed the $2 billion in EBITDA, what year would that be in or time frame? And then linked with that, given the $500 million of free cash flow each year, what would you expect leverage to be once you hit that sort of $2 billion target?
