Elias Sabo: I mean, we’re going to – know that we grow working capital. I want to remind you that this working capital is not widgets that if you had to sell, you’d sell it cents on the dollar, right? We’re selling the closest – our inventory is made up of the closest thing to money that you have, right – in sort of gold and diamonds and other fine stones, right? The short answer is we’ll continue to build
Robert Dodd: No – it’s been really good. So that’s the question is it still going to be – still going to be heavily invested in because the return on the growth that Lugano has been let’s just say quite good?
Elias Sabo: Yes, Robert, yes, the answer is yes. I would tell you and I mentioned this earlier, we have planned for a much more conservative growth plan with Lugano and that has embedded in the overall guidance of the company. They’re currently running dramatically ahead of where our growth plan would be. So in what we’ve embedded in our guidance. That requires us to invest capital. What we’ve seen and what we experienced over the course of our ownership is that if we invest $1 dollars in inventory that yields about an additional $1 dollar of revenue. And that sort of incremental 40% margin, right EBITDA margin. And as long as that trend continues and we’re able to get a 40% pretax return on invested capital on that inventory, we’re going to continue to do it, because we can’t find opportunities like that very often to deploy our capital into.
So the question will – and what we look at on frankly a weekly and monthly basis is our inventory investment continuing to yield the sales growth and are the relationships remaining consistent and so far they are. And they have over the course of our ownership. So, we will continue to invest in the growth of Lugano. And so right now, our forecast is that we’re not going to put a lot of capital in and there’s not going to be kind of a huge amount of EBITDA growth I think we’ll all be happy if instead of having to invest $30 million or $40 million of inventory, we have to invest $100 million, because the incremental $60 million or $70 million probably generated another $20 million to $25 million of EBITDA. And that’s kind of how we look at it.
And I think to the extent we can continue to invest more in inventory, it will help us exceed our financial forecast and it could on a meaningful – at a meaningful level.
Robert Dodd: Right and so to nail that, don’t forget. I mean, the – embedded Lugano assumptions are subject to a greater number of the budget and revisions of the outputs during the course of the years and say the other businesses. Is that a way of putting it?
Elias Sabo: I think based on current trends, Lugano has the most probable – our highest probability of upward revisions going forward based on what we’ve seen in January and February to our current plan.
Robert Dodd: Got it, thank you.
Elias Sabo: Thank you.
Operator: Your next question comes from the line of Matthew Howlett from B. Riley. Matthew Howlett, your line is now open.
Matthew Howlett: Oh thanks. Good afternoon. Thanks for taking my question. First, just disrupt on the $1 billion 2028 long-term target that still contemplates about a 10% long-term growth rate of the company. You’re still good with that, that’s – going forward still with long-term growth trajectory of the subsidiaries?
