Josef Matosevic: Yes, David. Clearly, volume was the biggest driver and the headwinds on the margins coupled by finishing and tempering off those investments we have made. So that’s pretty much the two key reasons, David. I don’t know if you want to add something to the on that first of all. [Multiple Speakers]
Sean Bagan: David, I was just going to highlight again, as we’ve highlighted with that health and wellness segment coming back. It’s off a very low base. And so just from a mix perspective, the margins aren’t there that support the Electronics segment margin or even Hydraulics. And so just from an overall company mix perspective, that had a little bit of a headwind and all the capacity we’re bringing on certainly had some fixed costs that we historically haven’t had, but we’re going to need it as we get into the next year.
David Tarantino: Okay. Great. And maybe if I could sneak one more in, just on that, just — could you give us some color on the moving parts on the margin guide, just particularly how you balance kind of those longer-term investments we’ve been making versus kind of controlling costs as markets remain a little bit weaker?
Sean Bagan: Yes. So our expectation is we’re going to grow our gross profit margins. We also are — we talked a lot about our cost management efforts and measures we took throughout the second half of the year, when we saw some top line market weakness materializing. Certainly, we expect to continue to invest in the business. We will expand our R&D expenditures and just be very measured on layering in costs, so we don’t get ahead of ourselves.
David Tarantino: Great. Thanks guys.
Tania Almond: Thanks, David.
Operator: Our next question comes from the line of Nathan Jones with Stifel. Please proceed with your question.
Nathan Jones: Good morning, everyone.
Tania Almond: Hi, Nathan.
Josef Matosevic: Hi, Nathan.
Nathan Jones: I guess question on the guidance on the — I’ll start with the step-up from 4Q to 1Q. It’s a pretty nice sequential step-up, which I don’t think is really seasonally typical for you guys. Obviously, there’s a lot of disruption at the moment. So maybe you can provide a little more color on what’s driving that sequential step-up from 4Q to 1Q. And then, if you kind of run rate that through the rest of the year, it doesn’t seem like you’ve got a very heroic ramp up in revenue to get to the full year guidance, like 4 times $205 million would get you to $820 million and 4 times $210 million to get you to $840 million, which is only just below where the full year guidance is. So any commentary you can give us on what kind of underlying market demand improvement you’re baking into that full year guidance? Thanks.
Josef Matosevic: Yes, Nathan, so let me maybe start with your second question here. When we built out the budget here and having received significant feedback from pretty much all of you guys, we felt as it stands right now and what we see right now, we want to take a very realistic approach to our guidance. And so we feel comfortable with what we have guided The Street to this number one. And number two, in terms of your first question. I think Q4 step up to Q1 with the lower watermark and some improved visibility in the health and wellness drives the growth.
Sean Bagan: Yes. The only other color I’d add there, Nathan, is you’ve just referenced the low watermark. I would suggest that our fourth quarter was way lower than what you would previously have seen in other fourth quarters and so the step-up to Q1, most greater. But obviously, we’re almost two months into the quarter. So we have pretty good line of sight into that first quarter number. So we feel pretty good, and that’s why we try to be pretty specific on that range for the first quarter with our prepared remarks. But it’s not isolated to one segment. Both segments expect them to grow stepping up Q4 to Q1. And as you highlight, as we get into the other quarters, doing that kind of $210 million run rate math, that’s that $840 million. So not levels that the company hasn’t delivered in the past. And so we’ve got some confidence there that we can deliver those.
Nathan Jones: And then the EBITDA margin guidance you’ve got 17% to 18% for the first quarter and the full year at slightly over 20%. So we should be expecting to exit the year at something more like 22%, 23% EBITDA margins, and that’s the jumping off point as we go into 2025. And if there’s not a huge ramp up in volume as we go through 2024, what drives that margin expansion up 400, 500 basis points as we go through the year?
Sean Bagan: Yes. So you’re directionally, yes. I think we can exit in that 22-ish range as we get into 2025 by the end of 2024. I think what stepped it up over time. So couple of things. First is our pricing effect that we typically do in the fourth quarter. A lot of that doesn’t materialize until later in the first quarter and then into the second quarter. So that will help us. And then secondly, as we highlighted the volume and our — all the efforts we’ve done this year on the back-end investments that Josef referenced on our Centers of Excellence as we continue to push more volume through that, leveraging that fixed cost base will help. And then finally, that Balboa recovery cannot be underestimated how quickly that dropped. If you think about the cost structure that we have for that operation with our Tijuana facility, it’s lower cost than other places. And so as the volume increases, you get a bigger incremental drop than our other businesses.
Nathan Jones: And I’ll just sneak one more in on the ag machinery system sales expectation. Is it still your expectation that that’s going to go out on the 2025 model year and if so, when would those orders need to be placed in order for you to supply to customer?
