Rob Saltiel: Yes. If you look at year-to-date, we’re basically flat in ’23 versus ’22. We’re obviously modeling a weaker fourth quarter than what we had last year. And unequivocally, without the destocking, we would — we believe we would be seeing growth in the gas utility space. This is a business that’s grown more than 20%, two years running. Obviously, we knew we would come off the boil a little bit on that growth rate. But we certainly didn’t see the business being down this year relative to last year. And again, the discussions that we’ve had with customers indicate that they got a bit over their skis to be really safe. Again, I’ve said before, this is a conservative customer set. They provide a public service. They have to have their products when they need them in order to modernize and update their facilities to make sure that they’re safe and reliable.
So it’s not really a big surprise that if one sector was going to get over its skis in terms of making sure they had what they needed, it would be the gas utility space. That’s where we are today without the destocking, we absolutely expect the business would have grown this year.
Nathan Jones : Yes, everybody built too much inventory when they didn’t know when they could get any inventory. Just a last quick one on the meter side of it. I was a bit surprised to hear that they’re slowing down the deployment of smart meters. I would have thought the ROI on that kind of deployment would have been there to maintain that as a higher priority for Gas Utilities. Just any commentary on why you think that’s slowing down, and I’ll pass it on.
Rob Saltiel: Yes. Some of that is still down to supply chain challenges actually on the meters. And in particular, without getting too technical, some of the telecommunications capabilities of those smart meters. The folks who manufacture those have been limited in their production and also the meter industry is a fairly concentrated industry. It doesn’t have necessarily all of the production volume that meets demand. And so that’s also been a factor. But like any projects, you clearly have to focus on safety and reliability even before you focus on, let’s say, how we can make more money. Those projects are going to happen. In some cases, we’ve got inventory of these meters, these smart meters so that they can be installed over the next few months.
But like everything, the utilities are having to just take a close look at what is absolutely critical and then the things that they can defer, they’re moving to the right. But again, on the meter side, there has been some production bottlenecks that have also moved some of those projects into ’24 that would have happened in ’23.
Operator: Our next question comes from the line of Chris Dankert with Loop Capital Markets.
Chris Dankert : I guess I guess given all the destocking going on, that does suggest you bought to carry some — a lower amount of inventory kind of an opportunity on the working capital side is given what the capital needs are here. I guess, any comments on just cash generation, maybe in the shorter term, I know it’s difficult without guiding ’24, but maybe the next in 3, 6, 9 months, how do we think about cash generation or kind of where inventory levels can come down to?
Rob Saltiel: Yes. Well, thanks for bringing up the silver lining here because we seem to be focusing on all the negatives around destocking and how it’s impacting our revenue on the gas utility side. I mean, clearly, as the supply chains have debottlenecked and become more normalized, this has given us an opportunity to manage our own inventory more efficiently. And the fact that we’re able to produce the same amount of revenue with a lower amount of inventory and lower amount of working capital in addition to the strong margins that we’ve been able to generate has really allowed us to generate so much cash, and we’re very excited about that. I mean if you think about what’s the role of a corporation, ultimately it’s to generate cash.
