Andy Cheung: Thanks, Joe.
Operator: Thank you. Next question is follow-up from John Franzreb at Sidoti & Company. Please go ahead.
John Franzreb: Great, thanks guys. I might have missed this in the presentation, Harold, but what are your thoughts about debt repayment in 2023?
Harold Bevis: Yes, it’s probably not going to be as strong as last year. We had some low hanging fruit coming out of COVID and the, all the ocean freight stuff, but we do have a free cash flow plan. You should target it modestly. Right now, $20 million to $25 million is what we’re aiming. We do have upside plans, but right now the growth that we’re incurring, we do €“ we are contemplating a growth here, and we do use, we do consume working capital, so we’re going to have a use of cash here back into working capital somewhat, but net-net we will be generating cash. That’s similar to last year, the first quarter we use cash because of the truck building starts out hot and heavy and it’s doing that this year too. So our AR goes up.
And if you look at the source of our cash last year and the components of it was AR, it was AR so we got really good about managing accounts receivable, going after customers that were overdue. And we had a big customer in industrial automation that had extended terms plus didn’t pay on time, and they blended out of the profile as well. We have an explicit improvement plan this year and Andy, I think is going to be in that range.
Andy Cheung: That that’s why John and we’ll be looking at a more steady pay down both for the next couple of years. I think we are approaching, a better level that we’re starting to feel comfortable with. So that’s where we are right now and that’s Harold mentioned. So the company going to grow for the next couple of years and we’ll be funding, all this growth with our own cash. So that’s what we are thinking at this point.
John Franzreb: Got it. And the cost takeouts of $30 million this year, how much cash is going to be requiring the cost takeout? And if I heard you correctly, you’re calling it a neutral impact to operating income. Why is that the case?
Harold Bevis: I’m just suggesting let’s not add to the EBITDA outlook for the year. We’re trying to underpin our steady growth that’s out there with expectations of us and, we want to increase our ability to deliver. And the plans are underway now, and in first quarter we’re on track. We initiated a pretty significant headcount cut in Europe that’s underway with regards to the cash use of the programs course severance. Our severance is salary continuation, so there’s no additional use of cash. We don’t pay lump sum. They’re on the payroll today, they’re on severance tomorrow and they blend off. We do have some CapEx associated with the cost out programs and our CapEx this year will be similar to last year. So no net incremental use of cash John to accomplish that.
It’s more of a business focus where we’re not going to try to grow everything with the same gusto where we’re going to be very focused, where we grow, and then other areas where we’re cutting the cost down and optimizing our ongoing profits. Andy, would you add to that?
