Jeff Hammond: Okay. And just on the commercial business, maybe just update us on how you’re doing to kind of close that margin gap. I think that was kind of the target to eventually pull those up. Maybe just give us a sense of progress there?
Anselm Wong: Yes, I’ll say it will still be a bit north of the business model, it is different. It’s a distribution model versus the full solution model on storage side. But what we’ve been working on is actually consolidating the build of a lot of our commercial products as well as opening up our West Coast commercial operations so that we don’t have to ship from, say, our North Carolina or Georgia area sites to get commercial out there. So, I think that will show some improvements in terms of margin as that gets ramped up. But just as a minor longer term, it still will be lower because it’s not — it’s a distribution type of business versus a full solution business.
Jeff Hammond: Okay, great. Thanks guys.
Anselm Wong: Thanks.
Operator: Next question, Brad Hewitt with Wolfe Research. Please go ahead.
Brad Hewitt: Hey, good morning guys. Thanks for taking my question.
Ramey Jackson: Hey Brad.
Brad Hewitt: Wondering if you could provide any additional color on what drove the Q4 revenue shortfall versus the prior guidance? It looks like self-storage revenue was down about 3% sequentially. And we saw another step-down in commercial. You talked about the headwinds in carport and shed, but just curious if there were any other moving pieces in the quarter relative to the guidance?
Anselm Wong: Yes, commercial was the — corporate and shizzle [ph], was a little worse than we thought it was going to be in terms of how much the normalization would be. I think you saw that piece of it when it printed. And in the — on the storage side, I think what we saw is a little bit more delays in projects there. The backlog is still looking good, like Ramey said, but we saw some push outs. And again, it’s a construction business. So, when you look at some of the weather impacts to the country, you saw the flooding in the California region that does impact our sites to be able to deliver. So, we did see some of that. But hopefully, we’ll get through in Q1 when some of the weather related items get normalized, we’ll go back to kind of normal business in terms of construction.
Brad Hewitt: Okay, that’s helpful. And then switching to capital allocation. Given that leverage is now down to 1.6 times, how do you think about balancing of share buybacks versus M&A. Is M&A the priority with buybacks kind of filling the gap in the absence of M&A? Or do you see capital allocation is more balanced going forward?
Anselm Wong: No, I think you hit it the way we see it. We see M&A is the first thing. We are definitely looking at targets as we always do. And I think the market, at least, expectation in terms of pricing is actually normalizing to get back to a realistic level. So, we’re hopeful that we can execute on some of the ones that we’re looking at. And I think you’re exactly right, is that we’re glad we get the approval for the share buyback. So, we have another lever, in the meantime, if something slows up in terms of the M&A side to execute on.
Brad Hewitt: Thanks guys.
Operator: Next question, John Lovallo with UBS. Please go ahead.
John Lovallo: Good morning guys. Thank you for taking my questions as well and I apologize if you covered this, but my line dropped, so I apologize if you did cover this. But — in terms of the outlook, there’s a 4% increase in revenue expected at the midpoint, it looks like EBITDA is expected to go up by a little over 4%, maybe 4.3% at the midpoint. What’s driving sort of the lack of leverage on that to net revenue volume?
Anselm Wong: Yes, if you look at what we had talked about in 2023, as we became a public company and actually started adding the cost to what we needed, meaning in the back office, finance, HR, legal, et cetera, the functions to really support all the requirements, we only added most of those costs in the back half of the year. So, you’ll get an impact of the full year of cost there that impacts the ability to get savings there. I think longer term, once we have all that in place, which the last area that we’re focused on is IT, we should get normal fixed cost leverage improvement because, for example, I won’t need to hire another Chief Accounting Officer, another treasurer, et cetera. So it’s just a matter of timing of getting — adding all those costs and resources that we needed to support the business.
John Lovallo: Understood. And you guys have made some really nice progress on the commercial actions and productivity. Can you just help us kind of quantify the cost savings that are expected to come through in 2024 from the actions already taken? And then what is the sort of incremental opportunity as we move through 2024?
Anselm Wong: Yes, I think for 2024, I think we’ll start seeing — we haven’t disclosed, but we’ll start seeing some benefits from the new Poland factory that we put in place as well as some of the equipment buys that we had in some of our factories there, so I’m expecting without disclosing some decent benefits from that as well. I think longer term, what we’re looking at is actually further improvements in consolidation like we always do. So, we’re always looking at the footprint. We’re looking at where we make things. So, one of the things that we had guided to that, that is coming is a new West Coast operations for us. The volume there and demand has improved there. And we’re looking to actually add some more capacity out there as well. So, I think that will further help us improve and be a bit more efficient out there. So, we don’t have to ship things into that area of the country.
Ramey Jackson: Yes. And one more thing that I’ll add is we’ll be opportunistic on our steel volumes. As that kind of commodity fluctuates, we’ll be keenly focused on being opportunistic there.
John Lovallo: Understood. Thank you guys.
Anselm Wong: Thanks.
Operator: Thank you. We have a follow-up from Daniel Moore with CJS Securities. Please go ahead.
