So, we are always expecting to improve our operations year-over-year, and that’s an exercise that we do bottom up from all the operations at all the plants and we some – and add up all the way through our total P&L.
Peter Galbo: Got it. No, that’s helpful. And then just, Matt, on the SG&A front, I think – you obviously mentioned it’s down about 9% for the year in 2023. Just trying to either get a sense on 2024, either dollar growth rate in SG&A or rough range. I think you’ve been between $125 million, $135 million a quarter, if that’s still a fair range to use. Thanks very much.
Matt Galvanoni: Yes, no, I think it’s good. That’s a decent range. I think what I would also – when you think about it, Peter, is, this year we really did see a significant decrease from 2022 in legal defense costs. I certainly don’t anticipate us moving up to the 2022 levels. Certainly, we’ll have some level of increase in 2024 versus 2023, because we’ll get ourselves back in more of a – we believe hopefully in more of a stable incentive compensation cost that will kind of true back up to more of a normalized level for the US business. But I think if you kind of think about this, thinking 2024 being somewhat between 2023 and 2022, is a reasonable way of thinking about it.
Fabio Sandri: I think in the total SG&A, we’re also benefiting from the consolidation of the back office in Europe, although there’s a little bit of exchange rate impact there as well.
Peter Galbo: Got it. Thanks guys.
Operator: And our next question comes from Adam Samuelson from Goldman Sachs. Please go ahead with your question.
Adam Samuelson: Yes, thank you. Good morning, everyone. So, I guess first question, just on Mexico, obviously that business it’s short cycle, given the nature of that market. You alluded to a challenging October, which I think impacted the overall fourth quarter. Can you talk about the supply demand trends as you look in first quarter into the second as we sit here today? And is there anything that would kind of have Mexico off the normal – a more normal seasonal cadence that you would’ve seen in prior years where typically the second quarter is the high point?
Fabio Sandri: Yes, sure. Thank you, Adam. Yes, Mexico was a little bit weaker than expected in Q4, although better than the prior year. I think the major drivers were very cheap imports coming from Brazil and also from the United States during Q4. And I think that, combined with an increase in production in the overall industry during Q4, put some pressure, especially on the live bird market. And we know, as I mentioned, the short cycle and how that market is really volatile. As we started Q1, as we always mention, Mexico can be very volatile quarter-over-quarter, but very, very strong and consistent year-over-year. We saw already an improvement from those levels. We’re seeing the improvements right now. I think the year still started a little bit weaker than we expected, but we’re seeing the improvements right now as we see the strengthening in the pricing in the US, which will prevent export going there.
I think there’s a lot of work production also flowing from United States to Mexico, but we are seeing already an improvement in the market right now. And as you mentioned, we expect the Q2 market to be really strong.
Adam Samuelson: Okay, that’s helpful. And I guess as a follow up in the US business on your prepared business in the US and I know there’s been a lot of growth in the Just Bare brand. Can you maybe just talk about the profitability of the Prepared Foods business at this point? I know historically that was a more challenging piece because of scale. Are we getting to a point now where prepared can be a more material earnings contributor? And if so, is there a thought about incremental capital and capacity needs in that unit?
Fabio Sandri: Sure. And that’s exactly the strategy, right Adam, to have a portfolio that can capture the upsides in the market and protect the downsides. And I think Prepared Foods play a significant role there. As we have an exposure to the Big Bird market, we want to have the counter that volatility with a more stable prepared business that can benefit from cheaper inputs in the commodity. As 2022 and 2023 move along, we saw that strong growth on our brand. I think not only we are benefiting from lower commodity prices, but we’re also capturing upside because it’s a differentiated product that really resonated with the consumers. And that’s what we are seeing, that strong demand, and we are helping our key customers with driving not only profits, but also driving traffic.
As we see the commodity market improving, we can see a little bit of a reduction and on a squeeze on the margins on that business, again, we expect it to be more stable, but we are seeing double-digit profitability in that business in 2023, and we don’t expect that to be different in 2024. As for growth, you are correct. We talk about the growth with our key customers and we are reaching the 100% capacity, especially on the fully-cooked business, with Just Bare brand also with the Pilgrim’s brand where we do a relaunch during Q2.
Adam Samuelson: I really, I appreciate that color. I’ll pass it on. Thanks.
Operator: And ladies and gentlemen, our next question comes from Priya Ohri Gupta from Barclays. Please go ahead with your question.
Priya Ohri Gupta: Great. Thank you so much for taking the question. Andy, maybe just one to start with for you, or sorry, excuse me, Matt. Can we talk a little bit about working capital, just with some of the relief that you’re seeing on the green side, is there scope for working capital to potentially be even a benefit this year as we think about your free cash flow composition?
