Chris Moore : Got it. I appreciate it, guys. We’ll leave it there. Thank you very much.
Jennifer Sherman: Thank you very much, Chris.
Operator: Thank you. Our next question comes from the line of Walt Liptak with Seaport Research. Please proceed with your question.
Jennifer Sherman: Good morning, Walt.
Walt Liptak : Hey, good morning, guys. Congratulations, great into the year. I guess my first question is to Ian. Just thinking about the way that you’re looking at the guidance for 2024, and you made a comment that you’re going to be at the upper end of the EBITDA range. And so I guess the question is what determines where you are within that range? Is it the amount of revenue that ship and leverage? Or is it some of these productivity programs or capacity coming online? What helps you either plus or minus in the range?
Ian Hudson: Yes. I think firstly, well, I think just to correct what we said in the prepared comments is that we expect to be in the upper half of the new target range, so not necessarily at the upper end of that range. So just wanted to clarify that…
Walt Liptak : That’s important.
Ian Hudson: Yes. Yes. But in terms of what helps us get that margin improvement, I think — we think about what the expansion at the Vactor facility and being able to actually tap into that expansion from in the sense of increasing the build production rates of that facility that has some pretty attractive drop-through. So as we think about ramping up production in that facility, that should have some margin benefits there. The other thing that would be a consideration is just the continued growth in our aftermarket business. We’ve seen some nice growth there again this year. I think we were up north of 20% year-over-year in terms of our aftermarket business. So that should be margin accretive. I think the other things would be some of the acquisitions we’ve completed in recent years, some of the value-added M&A we’ve done that can have some margin benefits.
And then finally, Jennifer touched on it would be the Federal Signal Operating System and just our ability to execute and to drive some efficiencies in our production processes. So those would be the main drivers from a margin standpoint.
Walt Liptak : Okay. Great. Okay. Thanks for that. In the prepared comments, you guys called out warning systems as having a good quarter. And if memory serves, warning systems have been — might have been lagging for some time. I know that’s not the biggest part of the business, but if it’s picking up, does it tell you something about some of the larger municipal projects?
Jennifer Sherman: Yes. So what I spoke about is that the Warning Systems was up year-over-year. And we have seen — that’s an area where we have seen the benefits from the FEMA funds. And again, we live in a very uncertain world and the need for redundant warning is critical. And so we’ve seen applications of that equipment. The use cases continue to proliferate. And I’d be remiss if I didn’t add there that one of the encouraging things that occurred in ’23. And as we move into 2024, we just saw broad-based strength across all of our SSG brands.
Walt Liptak: Okay. Great. Okay. And kind of along those lines in SSG, you’re putting in the third production line. Can you tell us if this is because of market growth? Or is it market share gains? I know you were going after some international markets for some of the police lights and others?
Jennifer Sherman: Yes. The good news is that it’s in. And so the teams have done a really nice job in terms of the installation. It’s a major project. It’s a combination to support organic growth initiatives. We’re also bringing back. We previously, our supply chain was in Asia. And so we’re on-shoring some of that work, and it supports also approach that we have in terms of being the total supplier for certain pieces of equipment. So it was a hole in our product portfolio that we sourced from a third party. And now as the teams move strategically to supply more-and-more of that equipment, this fills one of those product holes, but overall, a very successful initiative.
Walt Liptak: Okay. Great. And then the last one for me is, you talked about the phased rollout of the operational excellence program that you talked about last year. What inning are we in? Obviously, SSG has done a great job with the lights, but are there other businesses that you could tell us that you’re going to be working on or are working on in M&A, it sounds like Trackless is doing great. Do they get operational excellence first, or do you let them grow?
Jennifer Sherman: Yes, great question. So as we talked about last year, we added resources to our 80:20 and lean initiative program. So we had a number of wins last year with our Ox Bodies [ph] Group, in particular, is a great example in Alabama. And as we roll out this particular system, we are focused, for example, Elgin, teams are out there already started in 2024, and that’s an area because we’re very focused on reducing lead times for that particular product line and increasing — obviously, increasing throughput. But Mark Weber and the teams have identified a number of different opportunities. Typically, with the acquisitions, we wait until kind of year 2 for that type of work. But put it this way, there’s more demand right now for the resources, which is fantastic. And we’re looking at how do we kind of increase demand in order to respond to what we think is meaningful opportunity going forward.
