David Wilson: Yes, Steve, we think we can continue to drive accretive margins in the business over the mid to long-term. We have this issue that Greg just referred to in the period which is driven by the shipment of this very large volume of legacy orders that are — that we need to get through the system. But we anticipate that the volume increases we would expect to see continuing to come from those faster growing segments as well as our own work around 80-20 productivity improvements driven by a more stable and an improving supply chain will allow us to drive expanding margins.
Steve Ferazani: Thanks, David. Thanks, Greg.
David Wilson: Great. Thanks, Steve.
Greg Rustowicz: Thanks, Steve.
Operator: Thank you. The next question is coming from Jon Tanwanteng of CJS Securities. Please go ahead.
Jon Tanwanteng: Hi, good morning. Thanks for taking my questions. David, I was wondering if there just comes a little bit more on the visibility now and in the rest of 2024? Are you actively planning for a soft landing at this point or something different you expect? Any significant weakening from here? Or does your crystal ball tell you that things are going to stay pretty healthy at this point?
David Wilson: Right. We have a pretty good deed on certain current activity. And as we look to the quotation and customer discussion activity, we see no signs of an industrial recession as we were talking about earlier, in the prepared remarks. Obviously, our crystal ball doesn’t go out years and years, and obviously things can change. At this point, we’re planning on a relatively soft landing. And the way that we’re thinking about the way the year develops, and if there is an impact, it’s an impact that would come later in our period. But we’re anticipating that we can deliver low to mid single-digit growth next year. Given the current environment, the activity we’re seeing in the marketplace, our improvement initiatives around shared gains and customer additions as well as the backlog that we have, which is still pretty robust.
Greg Rustowicz: Yes, and just to add on, Jon, we typically lagged by a quarter or so. And as David mentioned, our backlog is very healthy currently. And that will, I think, buffer us, even if there is a bit of a slowdown or recession later in our fiscal year.
Jon Tanwanteng: Got it. That’s very helpful and encouraging to hear. Greg, I think I got the message on the longer term margins from what you said, expanding, but did you give me directional thoughts on gross margins in the current quarter? I know it’s usually a little bit better on volume, but are there any other plus and takes that we should ?
David Wilson: Yes. Hey — so, Jon, that was really what we talked about with Steve, a few minutes ago, where normally we’d expect roughly the 37% gross margins roughly in the fourth quarter, and they’d be expanded from our current levels, or we’re going to have this negative mix impact from a rail business that we think is roughly about an 80 basis point negative impact.
Jon Tanwanteng: that was the past quarter, I got it. Okay. And then last of all, just in terms of the cash flow that you’re expecting to in the near future, I assume that’s working capital improvement. Is supply improving to the point where you can do that, or is there something else that we should be thinking about?
Greg Rustowicz: Yes. No, it is largely going to be driven by working capital improvement. As you know we’re carrying almost $32 million more inventory than we started the year with. And we’ve been working on this and we expect to see meaningful improvement in our working capital utilization in the fourth quarter, and we’ll see a really strong free cash flow timeframe for us.
Jon Tanwanteng: Got it. Thank you very much, guys.
Greg Rustowicz: Thanks, Jon.
