Matthew Crawford: I will let Pat take the latter. I will take the former. We tend not to build acquisitions into our model. So, I think that always has some upside to it. We are not depending on future acquisitions to meet the goals we have laid in front of you hard stock. So, that is opportunistic. We have tended to do deals fairly often. So, I would not want you to leave the call thinking that we are not out there thinking what’s going to be beneficial for our long-term success, we always are. Having said that, we are also tuned into managing our cash flow, managing our debt levels, and so we are trying to do – trying to walk and shoot them at the same time. But to be clear, any acquisition that you would see us complete for the remainder of the year should be accretive to our goals and should be something that you should be awfully excited about or we would be awfully excited about, which means you too.
Operator: Thank you. Our next questions come from the line of Yilma Abebe with JPMorgan. Please proceed with your questions.
Yilma Abebe: Thank you. Good morning. I guess my first question is…
Matthew Crawford: Good morning.
Yilma Abebe: Good morning. You talked quite a bit about the operational improvements you put in place across the businesses over the last several years. Margins expanded quite nicely in a flat revenue environment. I guess when revenue increases, how should we be thinking about the operating leverage in the business over the longer term. Really, what I am trying to get at is what’s the margin opportunity set in a higher revenue environment?
Patrick Fogarty: Yilma this is Pat. Clearly, we focus on that flow through at a higher level of revenue. And we would like to believe that, that flow-through relative to our operating income margins would be north of 15%. But we have such a wide range of products and plants. And so often that sometimes could be higher, sometimes it can be lower. But in general, we expect a flow-through of at least 15% in each of the businesses as revenues expand. Because our – especially in our manufacturing businesses where there is a high level of fixed costs, we have positioned our self nicely around the world in our manufacturing plants to have the capacity to grow revenues without growing the fixed cost makeup of the business, so that will enhance the flow-through as revenues increase.
Yilma Abebe: Thank you. That’s helpful. I guess maybe a follow-up to that. I guess as it relates to costs, I think I think you talked about trying to make the business less capital intensive. From the capital-intensive perspective, are we thinking about more pure CapEx, or would we expect to see lower working capital in the system? And are there other layers of costs lower as we move forward here?
Patrick Fogarty: Clearly, on the CapEx side Yilma, we expect our capital to be spent in certain pockets of the business, especially where we are seeing growth. For the current year, we expect to approximate $25 million in CapEx, which is compared to historic levels, much less. Much of our capital being spent this year is on these growth opportunities and in technology. But going forward, I would expect our CapEx to be lower than $25 million. We continue to focus on reducing our working capital investment in each of our businesses and have initiatives to continue to pull inventory down, accelerate customer payments, manage our days to pay accordingly, which will help us drive an increase in our free cash flow this year. All of those things under the current model that we have built are less than historic levels.
So, when you think about working capital and you think about supplier lead times, over the last couple of years between freight issues and import issues and supplier delay, expanding lead times, we had an embedded level of inventory that exceeded $50 million. We haven’t worked that all out of the system. So, we continue to work hard on bringing those lead times with suppliers down to their most efficient levels. We try to figure out ways to push inventory back to the suppliers to reduce our level of inventory that we are carrying, all of those things will benefit our free cash flow going forward.
Yilma Abebe: Thank you very much. That’s all I had. I will pass it on.
Patrick Fogarty: Thanks Yilma.
Operator: Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Matthew Crawford for any closing remarks.
Matthew Crawford: Great. Thank you very much. Thanks for your time and attention and investment in our company. Again, we look forward to a year of improving results and also a year of stable outlook. So, we appreciate your time. Thanks.
Operator: Thank you so much. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
