But clearly, it was driven by the lower cash profits driven by, obviously, the sustained foreign exchange hit as well as the challenges that we saw moving through gross margin on the year. CapEx was the other one, a deliberate choice for us, obviously, the growth that we have made — the growth that we put into Hill’s, and the investment and the significant increase in capital expenditures there and some of the increases that John mentioned earlier around sustainability, which we think are extremely important to position us for where the markets are moving forward. And overall, I would say that we expect a very nice improvement in operating cash flow in 2023.
Stan Sutula: Yeah. Let me pick up there on the cash flow. So, as Noel said, we do expect improvement in 2023 and it’s really going to be two-fold. One, the improvement in cash profits, as we have guided to, and second, the improvement in working capital. We see opportunities there. We have been conservative on our working capital here in 2022 and particularly around inventory. We wanted to make sure that we could restore fill rates across the board that we had enough inventory to supply. And in particular towards the late in the fourth quarter as China had impacts from COVID on manufacturing, we prudently brought in additional inventory to make sure we could fulfill clients over the year end. On — so on cash flow, we expect improvement in both working capital and cash profits.
On interest expense, you see in fourth quarter a material increase on a year-on-year basis, and again, really comes from two components. First, the impact that it has on floating rate debt, in particular, CP, that’s up significantly, as you know. And then second, we are carrying a slightly higher debt level, though, quite comfortable within our range and our leverage metrics for heading into 2023. So as you think about that interest expense, it will be larger than the gap you saw in fourth quarter, simply because you get a full year of carrying the Red Collar of funding through the year. That said, we think we have highly competitive rates on our debt going through. We have great access to the markets that fund our overall model. So, on capital spending, as you saw from our press release, we spent just under $700 million.
I expect that could go up a little bit as we look at 2023 and that’s really in a couple of areas. First, we are going to complete Tonganoxie as that comes online in the second half. And that we talked already about the Red Collar facilities, we have great plans for those as we are going to significantly increase our overall capacity for our Hill’s business, which operates in a terrific segment and that investment obviously will have capital spending. In addition, we invest in sustainability type efforts like recyclable tube, which we think are important. We will continue to roll that out in a prudent manner and we continue to invest in IT capabilities, including our S/4HANA journey that we are well underway. So, overall, we are comfortable with the position heading into 2023 and that will expand cash flow at a material level on a year-on-year basis.
Noel Wallace: Yeah. The only thing I would add is strategically these investments are all around positioning us for long-term growth and success. A lot of discussion goes into the choices we make around our capital investments. And the supply chain, and certainly, the IT team are very focused on ensuring that the money is being put into areas that are going to give us improved capabilities moving forward and allow us to weather some of the storms that you have seen over the last three years where we have recognized the challenges and generated real opportunities coming out of those and that certainly has driven the topline of the company.
