Melissa Fairbanks: Yes. Total debt came down really nicely on a sequential basis. I’m wondering what we should assume for interest expense going forward, assuming the new working capital investments that you talked about. And then longer term, maybe if you could explain how you’re thinking about balancing deploying cash between the buyback and paying down debt?
Pat Jermain: Sure, yes. And let me start with Q1. We do expect a usage of cash, so we would probably be a little higher in the revolver by the end of December. As we move through fiscal 2024, though, I think we’ve got real opportunity to bring down inventory dollars, continuing that trend from 2023. There will be some return of advanced payments that we’ll be doing as we dispose of that inventory, especially around excess and obsolete inventory. So net-net from a day’s perspective, Melissa, I think we can improve our cash cycle probably five to ten days from where we ended fiscal 2023. So under this new reclassification basis, we’re probably in the low 80s or high 70s. And every day we free up is about $10 million of free cash flow.
So that then can equate to bringing debt down through 2024. We’ve got about $6 million left under our current authorization for the share repurchase program. So we’ll definitely execute on that amount. And over the next month or two, we’ll meet with our Board just to look at where interest rate levels are. We want to commit excess cash to returning that to shareholders. But there could be an element of trying to delever a bit as well with the amount of free cash flow we’ll be generating in fiscal 2024.
Melissa Fairbanks: Okay, great. Maybe extending the interest expense conversation out to your customers. Outside of what you mentioned in healthcare, are you seeing any impact to deal closures or program ramps due to customer concerns about interest rates? And then I think Todd touched on this in his comments. Is there any change to the way your customers are thinking about building or holding inventory?
Steve Frisch: Yes. So, it’s Steve, maybe I’ll start. In terms of impact on deals, really no impact yet as it relates to where interest rates are at that we see flow through. I think from an inventory standpoint, yes, inventories are a big topic of conversation with virtually all customers. Everybody’s trying to figure out how to drive them down. I think some of the easing – if we can continue to see easing in the component markets that will help. That’s the biggest impact for us is the lead times are still extended. So if those free up, that’ll definitely make the conversations and the ability to drive inventory down with our customers much easier.
Todd Kelsey: I would say there’s a lot of mutual commitment to driving down inventory right now.
Melissa Fairbanks: That sounds about right. Sounds good. All right. Thanks very much. That’s all for me. Thanks.
Todd Kelsey: Okay. Thanks Melissa.
Operator: One moment for your next question. The next question comes from the line of Jim Ricchiuti of Needham & Company. Jim, please go ahead.
Chris Grenga: Hi, good morning. This is Chris Grenga on for Jim. Congrats on the solid results. And thank you for taking the questions. You mentioned that within the funnel, you’re seeing a greater number of larger opportunities. Just curious if you could elaborate. Is that a strategic or is that just a function of the market? And then is that across end markets? Are you seeing that concentrated in any particular end market in particular? Thank you.
Todd Kelsey: Yes. It’s across the markets, Chris, and they’re up kind of across the board, these larger opportunities. And I would say it’s a little bit of a both. It’s a bit of a sign of the market and the views of OEMs in that market. But it also has to do with our go-to-market strategy and the way our teams are approaching the markets and opportunities that are out there. So I suspect we’ll continue to increase those numbers of larger opportunities. And we typically think of something greater than $20 million as a larger opportunity. But I think we’ll continue to see that increase over time.
