Ana Maria Chadwick: Yes. Let me take that. We’ve been working very hard preparing for peak. And I’ll start by saying it’s been very humbling for the entire team, what we’ve gone through the past few holiday seasons here. The second thing I’ll say is we’re very much of a learning theme. So we’re absolutely taking all those learnings and we have the same people, so we make sure we’re more prepared. I’ll share with you an example. In the past, and we continue to do is we get the forecast from our clients. And we always staff towards those forecasts. We have now developed in the network, our ability to flex up easier than to flex down. So now we’re planning slightly below, and we will flex up if we see the volumes. So our ability in our — inside of our processes to flex for volumes is much greater and we’ve developed that again throughout the years, and we’ll be putting all of that in practice now.
So one never knows, peak season is always so careful, but the team is as prepared as they’ve ever been.
Matthew Swope: That’s helpful. And as far as getting labor to flex up, is that labor force readily available?
Ana Maria Chadwick: Actually, we have a much better mix of our temp to perm, temporary to permanent ratio in our labor force. And when you distribute that across the sites and the current market conditions of the labor market, which are not the same as they were over the past two peak holiday seasons, we feel very strongly and very well prepared.
Matthew Swope: Got it. And then on SendTech, Ana, you have some language in the release about fewer new lease opportunities but you expect that to be generally offset by an increase in fixed term lease extensions. Can you help us understand how that works from a revenue perspective? And maybe if you could work in what the interest rate environment does to help you on that front?
Ana Maria Chadwick: Sure. It’s a great question. So let me start with where we are in our product life cycle. As you know, about 5 years ago was when the Send-Pre [ph] and some of the new technology that we started rolling out for the compliance that we need to meet for our United States Postal Service started rolling out. So those — that was the bulk of our start of our new product launches and the new capabilities we’re offering to our clients. With that, our lease terms tend to be somewhere in that 4- to 5-year range. So as those start to come off, that product is still very good, still meets the market demand. So that product does not require a new equipment sale. That client is going to come in and we’re going to say, let’s renew at a fixed term.
So what happens in the revenue recognition is when you have an equipment sale, that’s a lot of upfront revenue and cost — it’s very — it’s a good margin, but you have higher revenue and higher costs. When you actually renew this new lease term for another four to five years, you’re going to have better cash flow because you’re going to have more of that margin come through, but over time. So that’s what we mean by having less of the upfront new lease being a new equipment sale and more of the overtime, which is that renewal with the new term.
Matthew Swope: I see. And with the financing portion of that, is there an interest rate associated with that, that fluctuates or how is that part of it set?
Ana Maria Chadwick: Actually, that’s a great question. Our sales force really tends to sell the value based on the payment. So as you can imagine, the profitability shift stronger, in the renewal than in the upfront from a margin perspective.
Matthew Swope: Right, I see. Okay, great. And then just a last question from me. On the capital structure front, now that you’ve dealt with your 2024’s, where is your next focus at this point? Would you consider being back in the market buying bonds or how do you think about the next steps with your capital structure?
