A – Alan Yu: I believe the destocking part for most of our client that we service has ended in the end of last year. We continue to emphasize to our customers, do not overstock, we will bring product in. There’s no shortages, there’s no supply chain issue in most cases. Ocean freight are better than last year in terms of the arrival time. The more clear, the easier to get a container out of the port. It’s less congested, and the domestic local carriers are actually faster than before. So there’s less of an issue of supply chain disruption. Only in certain cases that some of the containers might get delayed, but in most cases it’s not going to be delayed, and also as well as the price, we actually kind of alerted most of our customer that price has started to come down since last August, September and October, and they continue to come down, and we will continue to let them know what is the market price on that part.
So our client has been educated and advised on that part. So I don’t see any more of destocking. That’s where I said and mentioned earlier that everything should be normalized in 2023.
Paul Dircks: Okay, so just to be clear, no more to destocking here in the first quarter?
A – Alan Yu: Correct.
Paul Dircks: Okay, got it. Next question for me, in 2022 price was up about 12% for the company. Can you let us know, what was price up for the Karat earth products or maybe if you have it in this way, how much did Karat Earth products contribute to your overall price increase?
Alan Yu: Jian, do you have the numbers?
Jian Guo: Karat Earth in itself in terms of the percentage of the overall price increase is actually not a super significant percent. It should be below 10%.
Paul Dircks: Okay, so you know then maybe into 2023, are we seeing any price deflation on Karat Earth products or are those somewhat saved given the fact that there’s so much of a push globally into eco-friendly products?
Alan Yu: Yes Paul, I am seeing some deflationary pricing on the €“ including the Karat Earth. They are brought in from overseas. When they €“ when the price increased in the ocean freight, it was also added to the Karat Earth. Basically all category lines were added on the ocean freight lines. So we also have announced a price decrease on the Karat Earth product in the fourth quarter and also January of this year as well.
Paul Dircks: Got it, that’s helpful. And then last one for me, you know into 2023, what are your expectations for being able to leverage your SG&A. Do you expect that you’ll be able to do that for the full year or is this something that we should think about only when revenue is growing in the back half of the year?
Alan Yu: I do believe €“ I’m sure Jian can elaborate more, but my understanding is that SG&A is coming down. In the second part of last year SG&A were up sharply. Facility costs, labor costs and also production manufacturing expenses, but SG&A should be starting to come down in terms of 2023 as we reduced manufacturing in California. Mainly the SG&A increase was due to manufacturing in California and trying to repair the equipments and also the hiring the people and skilled labor to maintain these equipment. That was one of the biggest challenge for the past three quarters. We do see that moving into the Texas, that will give us some of a leverage in terms of balancing out and reducing the expenditure and the SG&A on that part.
Paul Dircks: Okay, very well. Thank you for your help.
Alan Yu: Thank you, Paul.
Operator: The next question is a follow-up from Jake Bartlett with Truist Securities. Please go ahead.