Andy Cheung: Yes, so as I mentioned earlier, the ACT’s outlook for ’24 is that Q1 is still holding pretty strong and then we’ll start to see some drop-off from Q2 to Q4. But overall, they were suggesting the market will be down between 15% to 20%. So, the number is still changing every time they come up with new outlook, but that’s the range that they’ve been publishing.
Gary Prestopino: That’s 15% to 20% off of 2003 or 2004, on units?
Andy Cheung: Correct. That’s right.
Gary Prestopino: Okay. Thank you.
Operator: And your next question comes from Steven Martin from Slater. Please go ahead.
Steven Martin: Yes guys. Couple questions. The Electrical Systems margin was down a little, is that due to the startup of the new plants? And when would we expect those to not negatively impact margins?
Andy Cheung: Yes. Good morning, Steve. Yes, you’re absolutely right. So with bank a little bit here this quarter, the main reason is additional labor costs and overhead costs, because now we have two extra facilities. And as you can see, when the volume ramp back up, or we’ll gain some leverage there. I’ll call it maybe a couple of quarters, then we’ll see the full efficiency back. That’s what we are anticipating. The timing can be a little bit less predictable, depends on the customers’ schedules on when do they launch new products and things like that, but that’s what I would expect at this point.
Steven Martin: All right. And on the aftermarket, I guess we visited two years ago before your time, and there was a lot of emphasis on aftermarket. And last year, you talked – all this year, you’ve talked about building inventory and reorienting your plants for aftermarket. When should we expect to see aftermarket positive on a year-over-year basis?
Andy Cheung: So, you’re right. So, we have work to do in aftermarket. So, we’ll say that. I think the team working really hard, trying different channels, things [ph] with the e-commerce is not going as fast. You probably also seen that in our recent announcements, we have made some leadership change in that business. We brought in a seasoned leader. So, we’re going to be re-ramping the business. So, I’ll tell you that we’re looking at it really hard. And hopefully, our new leadership, is going to benefit the segments. I’ll come back maybe next quarter, with little bit more details about how we are going to address that and improve that business.
Steven Martin: Okay. The next question is on your debt level. Can you give – if all things were equal and interest rates didn’t change and your debt level net of cash, is where it is today, what your interest expense would look like if you didn’t reduce any more debt?
Andy Cheung: Well, if we don’t reduce more debt, we’re roughly flat. Our interest rate is actually pretty stable at this point. You probably remember we said that we have an interest rate swap for that we put in last year that helped us offset some of the rate increases. That’s where we are right now. And as you can see, we keep generating free cash flow here for the short-term, I would say you will continue to see us paying down debt and interest expense absolute dollar-wise, you’ll continue to see a decline.
Steven Martin: Okay. Are you now in the lowest pricing tier on your credit agreement?
Andy Cheung: Not yet. Not yet.
Steven Martin: So, if you were to cross into that lower pricing care, you might even see a little more change in spread?
Andy Cheung: Yes, it will. But as you see in our filing is not that significant, right. It’s 25 bps per tier so.
Steven Martin: Okay.
Andy Cheung: I would say our paying down debt is probably driving more of the benefit in expense.
Steven Martin: All right. Thank you very much.
Andy Cheung: Thank you, Steve.
Operator: Your next question comes from John Franzreb from Sidoti. Please go ahead.
John Franzreb: It looks like you eliminated the 2027 bridge slide. Are you backing off that expectation? Or what is the reason for not including it in this presentation?
Andy Cheung: No, we are not, John. So, we’ll continue to look at our alternatives certain target as our long-term goal. There’s no change to that. We just feel like it’s a long-term target. We didn’t need to do it every quarter in our earnings call. So, in other investor presentation, we’ll probably spend more time talking about long-term, but we want to spend more time talking about the quarter in the near term. So, with no change in our long-term target.
John Franzreb: Fair enough, Andy. Thanks for that clarification. Thank you.
Andy Cheung: Absolutely.
Operator: And there are no further questions at this time. I will turn the call back over to Mr. Griffin for closing remarks.
Bob Griffin: Thank you, operator, and thank you, everybody, for joining today’s call. I’m proud of our achievements and the performance for the quarter. However, I’m even more excited for the opportunities that lie ahead for CVG. We remain encouraged by our business outlook and we look forward to continuing to execute our long-term growth strategy. Have a great day.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines. Thank you.
