R&D expenses are expected to be between $17 million and $18 million, and selling and administrative expenses are expected to be within the range of $30 million to $32 million, up from prior year due to the Cornell acquisition. We’re projecting adjusted EBIT margin for the quarter to be within a range of 12% to 14%. We’re forecasting interest expense in Q1 to be between $5 million and $7 million, which includes approximately $2 million of noncash imputed interest. For full year 2024, we expect interest expense of $22 million. And we expect an effective tax rate of 14% to 16% for both the quarter and full year 2024. We’re projecting EPS to be within a range of $0.16 to $0.20 per share, up $0.13 (sic) [$0.14] from the year-ago period. This assumes weighted average shares outstanding during the quarter of 94 million on a fully diluted basis.
Lastly, we’re projecting cash from operations to be within a range of $0 to $10 million, and capital spending is expected to be $5 million. I’ll now turn the call back over to the operator for the questions and answers portion of our call. Operator?
Operator: [Operator Instructions] We’ll go first to Christopher Rolland at Susquehanna.
Christopher Rolland: So I guess you talked about some excess channel inventory in some of your end markets. I was wondering if you could perhaps flesh that out for us, and maybe discuss how this might affect kind of future revenues or areas as we look through 2024?
Jeffrey Niew: Yes. Thanks, Chris, for the question. So what I would say is the primary area that we see a lot of inventories, what we call it in the industrial/distribution channels. And we’ve listened to some of the big distributors calls, and they’re seeing a fair amount of channel inventory. And it is impacting our business, no doubt, specifically in the PD segment, both in the Cornell portion as well as the traditional PD portion. Now we’re hearing a lot that there may be — again, people are projecting a recovery in the back half of the year. But I think what we’re focused on in the first half is, number one, we do have strong organic growth in the first quarter, and it’s being driven primarily by our MSA business as well as our CMM business.
And of course, the additional revenue we get from Cornell through the acquisition, that’s the inorganic portion. And to that end, again, I think we’re really focused in on cost here in the short term, making sure we’re optimizing our factory utilization, getting value creation in our factories, as well as cost control in our factories. And so those are things that we’re going to be focused on until we see the recovery. But in the meantime, in a number of our businesses, we are seeing very little channel inventory problem at this point, but primarily industrial and distribution.
Christopher Rolland: Excellent. And sorry for this all-encompassing question, but would love to know for March, you guys gave top line and bottom line, but would kind of love to know the moving parts on the kind of sequential changes by segment. And then also to get to your EPS guidance. And any clues on the balance between gross margin and OpEx, how those trend? And then lastly, John, I had a little bit of a question mark getting to your cash from operations. I assume there’s some working capital adjustments, but would love to know what those were.
Jeffrey Niew: Okay. So just — I’ll handle the revenue portion by segment. I think as I kind of said, in the microphone business, we do expect strong year-over-year growth in the CMM business year-over-year. It is down sequentially, but probably a little less significantly than we normally see. We’re still seeing quite good demand in Q1. So it’s not as seasonally down as we would normally expect in a normal year. And then in our MSA business, it is seasonally down. Q4 typically is our strongest quarter in our Hearing Health market, where we have a big hearing aid show where products are launched in early Q4. A lot of building goes on in Q4. So seasonally, Q1 is usually lower. But again, our Hearing Health business is up pretty significantly year-over-year.
And then if you go to the Precision Device segment, you would sit there and you’d look in total, it’s up pretty significantly sequentially, but it’s being — or sorry, it’s up marginally sequentially, a lot being driven by the Cornell acquisition. Now I’ll turn it over to John to talk more about on the EPS and the cash flow numbers.
John Anderson: Yes, sure. So Chris, in my prepared remarks, I provided for Q1 revenue guidance, I provided OpEx, both R&D and SG&A as well as EBIT margins. The only thing I really didn’t specifically talk about is gross margins, but you can kind of think of the gross margins being very similar to Q4 levels in Q1. And then, we expect sequential increases over the remainder of 2024. I think that was the first piece. I also provided the interest expense and taxes. So I think you have all the mechanics to get to that EPS guidance we have. I think your other question was on free cash flow.
Christopher Rolland: Yes, cash from operations specifically. And I apologize, I joined the call a little late.
John Anderson: Yes. So cash from operations very strong in both Q4 and for the full year, and I would say, a lot of this is sustainable. We did have a benefit in 2023 for a reduction of inventory, about $14 million. When you look at the balance sheet, it’s a little camouflaged, because you have the inventory related to the Cornell acquisition. But if you strip that out, the inventory, I’ll call the legacy business, down about $15 million, which created some tailwind. I’d also say from a free cash flow standpoint, CapEx were lower than normal. They were extremely low for full year ’23. I think we’ve pushed out some projects and really focused on investments with highest ROI. So I would say that could tick up a little bit going into 2024, more to like a 3% to 5% of revenue range.
Christopher Rolland: Okay. I was specifically talking about the guide for cash from operations at 1 to 10. I was wondering if there was some working capital adjustments in there to get there?
