Gary Prestopino: Okay. Thank you. And then versus the EPS bridge that you put in Q2 to Q3, it looks like, operationally, you were looking for a $0.05 positive in Q2. It’s now slipped to $0.05 negative in – with the Q3 guidance. Is that all specialty that is making that shift?
Rick Galloway: It’s primarily actually self-serve. So Nick talked about some of the changes that we’re making within self-serve, it’s self-serve and specialty that makes up that $0.05, Gary, but it’s over weighted on the self-serve side. So think of the car cost that need to come down. What Nick did and the team did is put some new leadership in, that he talked about in his prepared remarks, to drive down that overall procurement and enhance the overall margins. The good news is that early in the quarter, we actually saw negative performance, negative EBITDA. That flipped to a decent-sized profitable September as we’re going into Q4. So we’re seeing the trends in the right direction, but it’s still that squeeze between the car cost and what the commodities have done.
So think over weighted on self-serve versus what’s going on in specialty. Specialty, what I talked about if you think about especially in Q4, we’ve tightened up the margins. What we’ve done is we’ve tightened up both the revenue side and the margin side as we’ve gone through the year, when you think year-over-year. And we think Q4 – we believe Q4 will be pretty much on par on a margin basis versus what Q4 was last year.
Gary Prestopino: Thank you.
Operator: [Operator Instructions] Our next question comes from Brian Butler from Stifel. Your line is now open.
Brian Butler: Hey good morning. Thanks for taking my questions.
Nick Zarcone: Good morning, Brian.
Rick Galloway: Good morning, Brian.
Brian Butler: Just on the first one back to Specialty there. Can you maybe break it down, how much of this is macro driven higher interest cost and buying cars, versus just tough compares from what was a stronger 2022?
Nick Zarcone: Yes. It’s a little bit of both, Brian, to tell you the truth. As you know, our North American and European businesses largely sell nondiscretionary parts that are used to repair vehicles, while Specialty primarily sells parts to accessorize the vehicles. As had Specialty is going to be more directly impacted by the broader macroeconomic environment, things related to economic growth, interest rates, consumer balance sheets and the like. The sale of light trucks, jeeps and SUVs has been reasonably okay, while the sale of new RV units has been very depressed, as you know. So with that, it shouldn’t be a surprise that the sale of RV accessories and related products like hitches and other towing equipment have been much softer than the traditional SEMA product.
We believe that retail sales of RV units is probably a better leading indicator for the potential demand for our RV accessories than wholesale shipments from the OEs to the dealers, because unsold units sitting on a dealer lot doesn’t do anything to generate demand for the types of parts that we sell. And so with interest rates going higher and the financial health of the consumers eroding, that’s why I said we don’t see a near-term catalyst for a quick rebound in the RV marketplace. Now as we get into next year, we obviously have an easier set of comps because 2023 has been very soft. And so we wouldn’t anticipate the same kind of negative growth in 2024 than – as compared to what we have here in 2023.
Brian Butler: On the free cash flow side, working capital as year-to-date kind of $150-plus million benefit. When you look at that $25 million increase in the free cash flow outlook for the full year, can we go back to that and just – and what kind of – is that just working capital, all of that benefit? Or is there some other pieces within there that’s driving that slightly higher free cash flow outlook?
