Phil Gibbs: Hey. Good morning.
Karla Lewis: Good morning.
Steve Koch: Good morning, Phil.
Arthur Ajemyan: Hey, Phil.
Phil Gibbs: So firstly I wanted a clarification on the buyback. I had read it as you had about $1.5 billion on a fresh authorization. And then Arthur I think you made some comment about almost $150 million purchased in October. Is that part of that $1.5 billion new buyback authorization, or was that — is this new one after that one? I’m trying to understand the comments.
Arthur Ajemyan: Good question, Phil. No the $150 million in October going against the previous authorization. The $1.5 billion starts fresh that — the clock on that starts now.
Phil Gibbs: Okay. Perfect. And secondly, at least in my model I had $425 million of cash CapEx for this year. I think at the midpoint you said about $465 million. Did some CapEx get pulled into 2023 from 2024, or are you adding new growth and capability projects?
Karla Lewis: Yes, Phil. So we do an annual budget that we approved many, many projects for our many different companies. And that 2023 budget has remained consistent at $520 million. However, timing of some of those projects can slip — the cash outlay can slip into a different year. We know some of those $520 million projects will extend and some of the cash will go out into 2024. And with the extended lead times we’ve experienced for equipment construction, et cetera, over the last couple of years it has been more pronounced than historically. We’ve tried to give you guys a better idea of the cash outlay. So yes, earlier in the year, I think we maybe said $400 million to $450 million to $475 million. Again it’s timing and we’re giving you our best estimate at different points in time on the cash outlay.
Phil Gibbs: Thank you.
Karla Lewis: Your welcome. Thanks.
Operator: Thank you. Our next question comes from Katja Jancic with BMO Capital Markets. Please proceed with your question.
Katja Jancic: Hi. Thank you for taking my question. First, can you talk about what percent of orders right now includes value-added processing?
Arthur Ajemyan: Hi, Katja, this is Arthur. We don’t normally update that disclosure throughout the year. But I mean last time we provided an update we said, it was little over 50% and we expect to be in that range. But we don’t normally put out quarterly updates on that.
Katja Jancic: Okay. And is there expectation that with you continuously investing in value-added processing equipment that that could grow over the next few years?
Karla Lewis: Hi, Katja. Yeah, we certainly do anticipate with the investments we’re making that will grow. We’ve been a little over 50% I think for the last couple of years but with certain acquisitions including an acquisition we made in late 2021 that’s more of a wholesale distribution model that does not perform value-added processing that maybe slowed a bit the incremental growth in orders with value-added processing. But we certainly anticipate that we will continue to grow. We continue to see good opportunity from our customers and even from our suppliers on opportunities to do more and more for them and expand our value-added processing capabilities and we’re very happy to invest in those opportunities to help better support our customers.
Arthur Ajemyan: And Katja the only thing I would add to that is our value-added processing capabilities provide tremendous amount of stability to our gross profit margins and especially at times like this when you have consecutive months of declining prices and when you’re providing service you have orders with value-added processing those you tend to do much better on those than on the straight distribution orders. Just wanted to highlight that.
