Operator: The next question will come from Mitra Ramgopal with Sidoti. Please go ahead. Please go ahead.
Mitra Ramgopal: Yes, good afternoon. And thanks for taking the questions. First, I was wondering if maybe you can help us in terms of CapEx of ’23. And you mentioned the elevated net capital leverage ratio. Would that impact your ability or willingness to spend this year, whether it’s on technology, headcount, et cetera, and also maybe even on consolidation opportunities?
Mike Koempel: Hi, Mitra. It’s Mike. Nice to hear from you. From a CapEx perspective, we had a significant capital investment year in 2021. It was over $17 million and as a company we typically will have a heavier investment year every four or five years. The capital you can see in 2022 was down to $11 million. And as we look and forward to 2023 and the projects to continue to support the business, we actually are budgeting capital expenditures for ’23 to be down about 30% from 2022. That still enables us to make what we believe are the appropriate investments to support the growth of the business. But at the same time also recognizes our needs to generate cash and bring our debt levels down. So, we feel good about our capital budget for this year.
And we have also thought very carefully about the timing of that spend. So, as we talked about before, as our financial forecast is more back end loaded, we’ve also been careful to plan our capital expenditures more toward the latter half of the year, so that we can react appropriately if conditions are better or if they happen to be unfavorable. We have the agility to adjust that if necessary. Does that answer your question Mitra?
Mitra Ramgopal: And actually, just curious in terms of capital allocation. And obviously, M&A is going to be a source for that. But how should we think in terms of priorities as relates to debt repayment, dividends, share by potential share repurchase?
Mike Koempel: Mitra, our focus in terms of just first of all, you again driving an improvement in our free cash flow, and then the priority really being to bring our debt levels down. Obviously, we recognize the importance of the dividend to our shareholders and that will be evaluated every quarter with our capital committee of the board going forward, but our first priority will be to manage the debt levels. And maybe I’ll pass it to Michael from a mergers and acquisitions standpoint.
Michael Benstock: As we said on the last call Mitra merger and acquisitions are not on the table right now. Obviously, with our debt levels, we don’t think it’s prudent to do so. Will it be opportunities, what to pass up on possibly, or what’s put on the backburner for another time, perhaps later in the year or next year. But right now, we’re really focused on creating efficiencies within the business and turning more of our balance sheet into cash. And that is our main focus. If you go out to our website we’ll have out there soon, our new investor deck and you could see we’ve taken M&A off, one of the things that we’re looking at as a driver for the business for the at least for this coming year. There will be opportunities later on.
And we think that we are a good acquirer. But it’s time for us to really focus on driving efficiencies. And we’ve been doing that since mid-last year, looking for opportunities to right size, the business to automate to create all kinds of efficiencies, whether it’s from a gross margin standpoint, or from an SG&A standpoint. And we think our success in that light depends on largely on how much we’re focused on it. So, we will be 100% focused on that.
