Jule Smith: One of the things that we did in our prepared remarks is we gave sort of the first half and back half spread of EBITDA, which we really haven’t done before, but it’s really hard to look at this business quarterly. We look at it annually, we give annual guidance. But we do look at the first half and the second half. And we saw that this year was weighted more toward the second half and we wanted to communicate that clearly to you. So it’s a little different this year. And overall, we’re right on track with annual plan, it’s just weighted a little differently. And so just that’s the reason we gave that color.
Tyler Brown: It’s extremely helpful, believe me. Very helpful on the modeling side. So one other question, though, just kind of a final question is around cash flow. And you guys kind of addressed it up in the front. So I think you said 50% to 60% conversion, is that right? Is that free cash flow? I may have missed that
Jule Smith: Yes. Tyler — go ahead
Tyler Brown: Well, no, I was going to say — so that’s from a free cash flow basis, which has CapEx obviously in it. But when we think about cash from operations, because I’ve gotten this question a lot about the working capital consumption in the business. Is there something around acquisitions that require some of that working capital consumption? Just trying to understand how to think about particularly the cash from operations whether it’s as a percentage of EBITDA or just some kind of construct to think about going forward.
Jule Smith: Tyler, we wanted to share, from a big picture standpoint, and then I’ll let Alan give more of the details. But CPI throughout its history has generated strong cash from operations. And in past years where we haven’t done a lot of acquisitions or growth initiatives, cash builds up very quickly. And we thought it was important to communicate that, because if we have this cash building up and we have these growth opportunities that we think are good for the shareholders, we think it’s smart to invest in that, and we’ve done a lot of that in the last two years. But when you take — and you just say, what does it take to maintain the business. You take the EBITDA and you pay your taxes and interest. And then you just maintenance — you have maintenance CapEx, that creates about 50% to 60% of your cash flow from operations is free.
And we just, within the amount of opportunities we’ve had, we feel like it’s the smart thing to do to invest that for long term compounding of shareholder value. I’ll let Alan give more of the details, but that’s something we thought was important to start communicating.
Alan Palmer: I’d just point out, and I think this quarter of this year compared to the same quarter of last year, is a real good example of something that I’ve been saying before that the timing of when we get our revenue in the quarter, the first month and second month of the quarter versus the last month of the quarter, has a big impact on that because we bill 100% of our revenue after the end of the month. But if you look last year, we had better margins, as we’ve talked about. We had real strong revenue last year in December, less in October and real strong in November. This year, as we’ve said, the weather impacted us more in November and December. So what you look at is the cash flow from operations this year because December and even November are slower months in the quarter, it was $29 million.
