Jian Guo: Yeah, I can take that question. So the biggest impact in terms of the €“ in terms of the margin in the fourth quarter, you’re right, it is the write-off. But the out of period which we talked about in the prepared remarks, the impact is $1.7 million for Q4 2022.
Michael Hoffman: Okay, all right. I can do the math on that. So what’s really important is if you would have pitched your margin target, even if the sales were down because of the pricing give backs related to freight, that’s the really important message, is margins are on track ex the write-off?
A – Alan Yu: Yes, margin is actually on track to grow.
Michael Hoffman: But I’m €“ specifically in the fourth quarter, margins were okay ex the write-off. You know I get the dollar amount is lower because of starting on a smaller sales base, because you had to get price back, but the margin actually was €“ you know margin trend ex your write-off for the fourth quarter was on budget or better?
Jian Guo: I can take €“ Michael, I can take that question. So it actually is going to be better. So without the impact of the $1.7 million out of period adjustment, our fourth quarter margins would have been 33.8%, so it would have been better. And then in Q1 we are seeing that operationally that some of the actions that we are taking to improve the margin is actually, we’re starting to see some of those translating into numbers, so we do expect margin to continue to expand from that number into Q1, 2023.
Michael Hoffman: Okay, that €“ I wanted to make sure we had that clarity, because I think that’s important for everybody to understand. You had a good margin quarter. You had to give back some price, but you had a good margin quarter. Okay, that’s Last question for me, capital spending you said was going to be down, but what’s the dollar amount you’re budgeting?
Alan Yu: Jian, can you take that question for the capital side? I know my understanding is that it will be much lower than the previous years. I believe the 2022 and 2021 where you spend over $15 million in capital expenditures, but in 2023 I think we’re looking to spend under $4 million for capital expenditures as we decrease manufacturing in California. So we will reduce the CapEx expenditure for the maintenance expenses. But in terms of €“ yeah…
Jian Guo: Yes, that’s absolutely right. So I would say our round rate CapEx is going to be significantly lower as Alan talked about. That number is excluding for example the continued investment that we are making into the joint venture or if we were to expand €“ continue to invest into the joint venture, but that’s absolutely right. The round rate CapEx is at a much lower level.
Michael Hoffman: Okay, so about $4 million is what I’m hearing?
Alan Yu: That is correct.
Michael Hoffman: Alright, great, thank you for taking the questions.
A – Alan Yu: Thank you, Michael.
Operator: The next question comes from Paul Dircks with William Blair. Please go ahead.
Paul Dircks: Hi! Good afternoon. Thanks for taking my questions. First one for me is, and forgive me if this was covered earlier, but on the destocking behavior, you know obviously I think the thinking was that it would end here in the fourth quarter. So obviously continuing into 2023, can you help us parse out if there are certain customer segments, certain product categories or any other certain you know labeling of what actually is being destocked, and how much confidence do you have that it will wean over the next quarter or two?