Christopher Kapsch: Got it. And just one quick follow-up on the PM segment. The pricing entitlement or maybe not a good word, but the price increases that you referenced for calendar January 1, are those balanced in North American China? Can you just provide any color on your approach — your strategic approach to push those price increases through?
Ed Woodcock: Chris, it’s Ed. We typically try to have global pricing. And so, it makes it a little easier for us to manage the business that way. If we have South America, Brazil, Europe, China, all working on the same price levels. And so that’s our target. And we’re pretty close to achieving that this year.
John Fortson: These are global customers, Chris, by enlarge, right?
Operator: The next question comes from Ian Zaffino from Oppenheimer. Please go ahead. Your line is now open.
Ian Zaffino: Hi. Great. Thank you, very much. On the auto side, you cover in auto production, what are you looking at? And sort of U.S. versus China versus kind of the rest of the world and then that’s the biggest piece of it. But by market, where are you looking at it recovering and kind of what you view confidence on that recovery? Thanks.
Ed Woodcock: Yes. Ian, this is Ed. We’re expecting — there’s a significant amount of — depending on the regions, right, there’s a significant amount of pent-up demand in the U.S. If you think of the average age of the vehicle in the U.S. is 12.2 years, and COVID has really pushed out that cycle. But I do think there’s some more positive trends going on as well in North America. We’ve had six months in a row of increasing inventories in the U.S. To me, that indicates that supply chains are getting better and recovering. Chip issues are also recovering. And so, we’re looking at good first half, but a lot of expectation for the back half of the year.
Ian Zaffino: Okay. Thanks. And then just on the TPO side, just one more question. How much of that is now market-based versus commodity-based? And how much is long-term contracts still versus spot?
John Fortson: Well, the answer — I will do that. So, under long-term contract, about 70% to 80% of our CTO is under long-term contractual agreements, right? Now right? It’s hard to define market versus commodity based, right? What I would say is there’s kind of a repricing going on from what would be sort of traditional fuel purposes as the alternative into the new fuel biodiesel alternative, right? So, it is changing the way everyone in the market is looking at the value of CTO. But again, as I tried to allude to, it’s an opportunity on a lot of levels, right, because the biodiesel market is very, very large and going to only grow. And so that pricing relationship is not necessarily a bad thing over the long haul.
Ian Zaffino: Okay. Thank you, very much.
Operator: Your next question is from Daniel Rizzo from Jefferies. Please go ahead. Daniel your line is now open.
Daniel Rizzo: Hi, everyone. Thanks for taking my question. You mentioned that we talked a lot about CTO pricing and energy, but I was wondering if logistical and production costs are also continuing to trend higher.
John Fortson: Actually, I would argue that they are somewhat trending to abate, right? I think certainly on the freight side of things, we’re seeing some relief. I mean I do — like everyone, I mean I think we have some personnel or manpower costs that continue to increase, but we’re fortunate in that most of our production is not terribly manpower intensive, right? I mean, this stuff is pretty heavily automated. So, it’s not the driver that you would see. For us, Dan, the things that we pay most attention to really our natural gas and freight, right? And both of those things seem to be sitting in a pretty decent position right now.
Daniel Rizzo: Okay. And how should we think about working capital in 2023, just given kind of the puts and takes that we described here? I mean, is it going to continue to be somewhat of an outflow? Or is it going to improve or spend any color?
