The second one is connected to the restructuring plan, which is in part also may consider the strategic move. And this is multidimensional aspects. So it’s not only, of course, the closure of Sdot-Yam, but other stuff that Nahum mentioned, marketing and sales improvements that we are doing and of course, other savings mainly because of the shift to the strategic partners in the Far East. So just — this is a few clarifications.
Operator: Our next question comes from Mr. Stanley Elliott, Stifel.
StanleyElliott: You talked about kind of improved profitability as the year progresses. — just kind of help to kind of frame it out kind of given the starting point where we are in the first half. You did about roughly maybe, let’s call it, a 5% sort of margin last year in the second half. Do you think that you will be above that or below that.
NahumTrost: I think we should look we are starting the second half, as I mentioned earlier, and you should look at our first quarter margin — gross margin as a more indicative — as a more indicative number as this quarter reflects several temporary items. And during the second half, we expect to see a gradual improvement in our gross margin from several factors, the restructuring plan, the lower raw material prices, the lower shipping costs that will be, that are currently baked in our inventory balance in the balance sheet, but will become more significant as we will progress in Q3 and more and stronger during Q4, we expect a gradual improvement over there as well.
StanleyElliott: So it sounds like probably negative or kind of flattish sort of EBITDA for ’23 and then kind of really focus more on ’24 with some of the restructuring and some of the other initiatives that you have underway to kind of return to profitability?
YosefShiran: We are looking, that it’s from quarter-to-quarter because we are in the middle of a very big restructuring plan and we are starting to see the benefits of what we have already done, and there is a lot more to do. So we expect a gradual improvement, as we said, between Q3 to Q4, and we will have to refine the internal projection. And of course, the external projection during the call on Q4, but we definitely see a gradual improvement as Nahum said, bear in mind that we are suffering for a long period of time because of the high inventories level were that were produced during last year with a very high cost of raw material prices and shipping prices. So this is almost washed out. So we’ll see definitely an improvement in Q3. In addition to the other improvements that we will start to benefit from like and the big cost cutting that we are doing.
StanleyElliott: And with the inventory work down, is there a way to kind of size what we should think about from a dollar basis through the balance kind of on a year-over-year basis reduction in inventory? Or any ballpark on cash flow targets in either the second half or all of ’23.
NahumTrost: Yes. So as you said, the cash flow from operating and the net cash position is still our focus for this year. And as we mentioned also in the outlook, we expect to continue and to generate a positive cash flow from operating, not only on the basis of lower inventory, which came down nicely during the first half from the starting point of around 180 days, almost 180 days to the current level of 120 days. And we expect to continue and reduce the days of inventory as the year progresses and as we continue with our restructuring plan. So — but not only that, not only on the back of lower inventory, but also on tighter cost control, better prices on our raw material shipping cost. So we expect to continue to generate a positive cash flow also in the second half.
