Dave Naemura: Yeah, look, I think more to come, obviously when we get to year end, Brandon. But underlying the performance we saw — look we participate in these food safety markets, and you saw the legacy business grow solid mid-single digits on a core basis in these markets. And that’s where we also participate with the acquired businesses as well. So we think that as we get through these near term challenges that we’ve gotten underlying good market, even with some production volume headwinds, in some of our customer base. So it’s really that underlying market that we think supports, kind of as you’re implying the bridge from where we see ’23 coming in to ’25. The shape and pace of that, I think, is what John’s referring to. He says, we need to see some momentum coming out of ’23 into ’24. And that’ll give us a little better frame on that. So I’d say more to come on that when we get to a quarter or so from now.
Brandon Vasquez: Okay, great. Thank you very much.
John Adent: Thanks, Brandon.
Operator: Thank you. And our next question today comes from David Westenberg with Piper Sandler. Please go ahead.
David Westenberg : Hi, guys. Thank you for taking the question. So I want to talk about kind of the debt and free cash flow in the quarter? I think you kind of gave a little bit here when you said it was just kind of maybe timing of interest payments. And I think you said some additional CapEx, obviously for that. So I mean, I noticed it does look like net debt went higher in the quarter. So can you maybe explain some of the things that maybe in addition to that? And then how we should think about the EBITDA — EV to EBITDA — sorry, debt to EBITDA, the leverage ratio, the debt to leverage ratio, as we go further in the year, just given that, interest rates are on the rise. And man, I cannot ask a question today.
John Adent: That’s okay. We know what you mean. Hey, Dave. So a couple of thoughts. Yes, leverage is a little bit elevated on a net basis here, where we would have typically expected to see it flat, come down a little bit. I would say that, aside from funding our integration CapEx deleveraging remains a top priority for us. But we can’t always predict the timing of everything. We are a serial bolt-on acquirer. We’ve changed that focus now to deleveraging. But the Corvium deal that we completed in the quarter, the timing was such that it needed to be transacted and that’s a very strategic deal for us for I think the — all the reasons that John outlined In his prepared remarks. So obviously, cash utilization of that of $24-ish million was a headwind to, to net debt in the quarter.
In addition, you noted the timing of interest payments, which I think had about an extra $12 million kind of increase to what you would think of as a normal underlying quarterly cash outflows. And then our integration CapEx, which is elevated and will be elevated, not the same quarter-on-quarter, might be linear. But as we work through more of the factory side, but also the system side over the next couple of years, and that’s always been a known item. So we knew that would be a headwind to free cash conversion over time. And it is. But underlying, all of that is a pretty strong, historically free cash flow conversion business that we think we can make even more robust in the future with some opportunities of the working capital side of the balance sheet.
So that’s what’s going on. And our priorities remain the same. Having said that, like in many cases, you might see that bounce around a little bit quarter to quarter, but our objective remains the same.
