Derek Schmidt: Yes. It doesn’t change that meaningfully from what we’ve shared previously with you, Budd. If you look at the composition of the $4 million to $4.5 million savings from Dublin, a little less than $2 million of that is from structural cost reduction. The rest of it is efficiencies around variable costs.
Budd Bugatch: So looking at the – I think, and correct me if I’m wrong, my memory is – I’m old and my memory is faulty. But I do believe you told us a couple of years ago that I think that the target gross margin was in the low 20s. We seem to be there. What’s that look like going forward?
Derek Schmidt: Yes. From a gross margin perspective, certainly, we’re striving, we’re aspiring to 23% or more kind of in the mid -long term. And we’ve raised the…
Mike Ressler: There is mid long term have a…
Derek Schmidt: Three to five years.
Mike Ressler: Three to five years.
Derek Schmidt: Three to five years, yes, to get.
Budd Bugatch: All right. And if I – do I read the guidance right, that for 2025, you’re saying that you’re going to have no debt? Is that the way to read that? I was trying to make sure I understood the table.
Derek Schmidt: Yes, that’s correct.
Budd Bugatch: So you do want debt down to zero. And once debt to zero, what’s the use of cash look like? What’s your thought process?
Derek Schmidt: Yes. In terms of capital allocation, Budd, so I laid out earlier in the call these pursuits to expand our penetration in new markets. We would look for value enhancing acquisitions that would accelerate our penetration into one of those three areas. Either help us address the needs of younger consumers, expand our product category penetration beyond the living room, or expand our sales distribution beyond the independent retailer. So the areas that we’ve kind of talked about in terms of acquisition priorities would be potential outdoor company, a direct-to-consumer company, or a company with a modern mid-price lifestyle kind of brand. So we would expect to start to potentially accumulate some cash in the balance sheet and more proactively look for value enhancing acquisitions.
Budd Bugatch: And does that take you out of manufacturing or into retail or into or out of furniture or out of…
Derek Schmidt: No, we’re squarely focused on residential furniture. Certainly in the midterm, we do not desire to be in retail ourselves. So this is again, this is leveraging our core competence and bringing in new capabilities within furniture wholesaling for lack of a better term.
Budd Bugatch: Okay. All right. Thank you very much. Congratulations on the quarter, and best of luck for the balance of the fiscal year and beyond.
Derek Schmidt: Thanks, Budd.
Jerry Dittmer: Thanks.
Operator: [Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Jerry Dittmer for any closing remarks.
Jerry Dittmer: Great. Thank you. In closing, I’d like to thank all our Flexsteel employees for their dedication and outstanding performance during the quarter. And thanks to all of you for participating in today’s call. Please contact us if any additional questions. And we look forward to updating you on our next call. Everybody, have a great day. Thanks.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
