Brooks Mallard: Yeah. So first question first. I mean, typically, from an EBITDA perspective, from a sales perspective, we’re a little bit more front-end loaded. It tends to be kind of a 51-49 from a seasonality perspective first half versus second half. And then EBITDA is more 50-50 historically speaking. Those numbers kind of hold in terms of the comparison. I mean, we think from a sales perspective, it’s going to be more of a 50-50 split. So a little bit more back-end loaded because we do expect things to get progressively better throughout the year. And then from an EBITDA perspective, maybe kind of a 49-51 split, which follows kind of the 50-50 that we just — that I just talked about on the sales side. So not meaningfully divergent from what we see historically, but there is a little bit of a follow-on pattern where we’re going to see a little bit more sales in the second half than we would normally expect to see from a seasonality perspective.
From a price perspective, look, the kind of the inflation-based pricing is really rolling over as inflation normalizes on materials, and you actually start to see a little bit of deflation on the freight side. So we expect low single-digit pricing as we move through 2024. Having said that, a lot of the work that we’ve done around 80/20 is really around value pricing and strategic pricing in terms of our high-velocity items versus our low velocity items. And so we’ll continue to look at opportunities to drive margin improvement by value pricing, all the different SKUs that we make. Remember, we make hundreds of thousands of SKUs throughout our network. And we still will look at that as a lever to drive margin enhancement as we move through 2024, but it’s definitely going to be muted compared to what the last kind of eight to 10 quarters have been.
Julian Mitchell: Thanks very much. And then just my follow-up around the margin year-on-year. So you’ve — I think it’s up 60 bps at the midpoint in first quarter, up, I think, similar for the year as a whole in your guidance. So just wondering if you get that better volume leverage through the year as the destocking fades and so forth, why wouldn’t we see the margin expansion accelerate or increase as you go through the year as well?
Brooks Mallard: Well, look, we’ve taken a pragmatic view of volumes for 2024, right? I mean we’ve seen as we talked about, the volumes decline in the back half of the year, we’ve got these different models that kind of — that tell us what we think is going to happen in terms of volumes. And so we’ve taken a pragmatic view of that. Look, if volumes accelerate, if things get better, we expect to be able to stack that margin fall through on top of the enterprise initiatives, right? The enterprise initiatives we’re working on are largely volume agnostic. So we feel pretty good about that. And so the business will inflect and it will drive additional gross margin, additional profitability as volume comes back.
Operator: Your next question comes from the line of Deane Dray with RBC Capital Markets. Your line is open.
Deane Dray: Thank you. Good morning, everyone.
Ivo Jurek: Good morning, Deane.
Deane Dray: Hey. Maybe we can start with China. This quarter, there’s been such a mixed range of performance in the country. Everyone seems to want to paint it with the same brush, but it really depends on what end markets you’re exposed to and as long because it’s not real estate, but you all have definitely shown the best sequential improvement in China. And to kind of take us through that, what did you see it was still down modestly, but just some color there on how you think it plays out over the near term.
Ivo Jurek: Yeah. Thank you, Deane. Look, we’re pretty well connected in China. We have a great business in China, and we like our business in China, and we are optimistic about it for the long term. We have seen a gradual recovery in ’23, and we certainly are not forecasting that it’s going to go from a gradual recovery as to boom (ph) times. So we are quite sober about what we anticipate is going to happen there. And I think that the continuation of the gradual improvement is probably right. Auto is doing really well. Whether or not it is OE or auto replacement or auto replacement franchises terrific in China and continues to deliver really nice growth rate for us even with the challenges that you have seen there. We still delivering kind of a mid-single-digit growth in in Q4 and for the year.
So that remains quite robust. We are starting to see a steady recovery in On-Highway, which has been very much challenged in ’23. Construction equipment is stabilizing after two really terrible years of excavator output in China and diversified industrial is stabilizing. So again, some puts and takes in auto doing well, and we anticipate that we’re going to continue to see slow and steady performance out of our team in China, which is a great theme.
Deane Dray: Yeah. That’s great to see. And then the second question, just — it’s a broader question regarding CapEx. And you’ve demonstrated the ability consistently strong free cash flow. You’ve done the debt pay down and you’re making some more CapEx investments here. And I know you’re going to talk more about it at the Analyst Day, but just broadly, at a high level, this enterprise footprint optimization project. Just as you just kind of share with us some of the key inputs when you look at where and how you may deploy our resources for these facilities. Is there an IRR analysis on each project? What are kind of the inputs that you have and the assumptions that you’re making? Again, I know you got — it’s going to be more detail at the Analyst Day, but just broadly, if you could share some of that thinking here this morning.
