Mark Aslett: Sure. So I think it’s a good question. So it has been a few years and each year has been slightly different in terms of the impact and so bookings, bottomed out, I think in the third quarter of fiscal year ’21, organic growth actually bottomed out this quarter. We had 1%, organic growth in Q2 versus 13% decline. So we’ve got various metrics beginning to head in the right direction. If you look at the margin profile, it’s really I think, it’s a result of kind of what’s happened a little bit with respect to linearity. So over the course of the pandemic is lead times dramatically increased. And as we started to see just the perturbations in the supply chain in terms of supply decommits, it obviously created a push more of the business into H2 which obviously had an impact on margins in the first part and then you’ve got the general inefficiencies associated with just the impacts that we’ve been facing.
So the margin, pressure is pretty much all related to the pandemic and the effects associated with that. There is nothing underlying the business. And if anything, I think as we look forward as a result of the shift from development into production, build the mix, as well as the ongoing benefits of impact, we see substantial opportunities for margin growth. And then the cash flow, I think as you know, is very much tied up with the balance sheet again as the supply chain conditions became far more challenging as lead times actually increased we ended up leveraging the balance sheet to make sure that wherever possible, we could meet our customer commitments on an inventory side and then again on the unbilled side of things that’s where we saw the effects of part shortages which type working capital off in unbilled.
So ultimately cash collects everything. And that’s where we saw the greatest ball tilting. Mike, if you want to jump in there?
Michael Ruppert: No, I think that’s, I think Mark hit it. I mean, just given some numbers, if you look back, and just starting with adjusted EBITDA measuring profitability, a look back fiscal ’19, ’20, and ’21, were all around 22% became into fiscal ’22, we dropped down to 20%. I think we’ve talked about publicly that we had about 70 basis points or so as a result of supply chain inflation. You look at fiscal ’23 and were our guide is 20.3% at the midpoint and probably have a similar 70 basis point inflation impact. So those two would put you at 21%. And the reduction there from 22%, from ’19 to ’21, down to ’21, and ’22 and ’23 is really a result of the development programs that we’ve talked about. And so as Mark said, when we look at EBITDA margins going forward, and we’ll guide fiscal ’24 when we get to our Q4 but we do see the opportunity for EBITDA margin expansion.
So I don’t think anything’s fundamentally changed in the business from a profitability perspective. When you look at gross margins, there’s a lot more movements as you know. We had COVID expenses in fiscal ’21 running through our gross margins. We’ve had some movements between development programs and production on a quarterly basis. We’ve had the physical optics acquisition, which impacted gross margins and then again on a quarterly basis, things like this FMS sale, our program mix, makes, creates some volatility. But again, going to EBITDA, looking at over the long term, couple of key metrics and we think the profitability the business structurally is the same with opportunity for upside in fiscal ’24 and beyond.
