Michael Benstock: Yes, I’ll jump on that too a little bit. We are laser-focused on gross margins, both at the factories that we manage in Haiti, creating better factory efficiency and looking at all kinds of means through process and improvement to gain more gross margin from what we produce ourselves. But outside of that, we’re also looking at shifting as much as we possibly can to countries that we have free trade agreements where goods can be brought without duty into the United States at all. And that’s a very important part of our strategy as well. Along — you know we have a redundant manufacturing strategy, Kevin. So, we still have to keep that in place because there are events in the world that we can’t necessarily control all the time. But we are laser-focused on gross margins and we would be very disciplined not to see some improvement in our gross margins.
Kevin Steinke: Okay. Thank you. If I could just sneak one last one in because you mentioned Haiti and I’ve read recently about some unsettled political conditions down there and just wondering if that’s having any impact on your production down there? What’s the state of that effort today?
Michael Benstock: Sure. As you know — it’s a good question. As you know, are the factories that we manage are on the border with the Dominican Republic and there were some earlier noise towards the end of last year with respect to the water rights and the water rights are being cut off to the Dominican by the Haitians and that all got settled pretty quickly. So, we lost a little bit of time. Typically, what happens in those situations where we lose a couple of days because of countrywide strikes or even some violence in different areas of Haiti, we’ll lose a couple of days where people will stay home. And then because they have to eat, they have to support generally 10 to 12 people in their families by working for us, they do come to work, and we’ll work weekends to make up for the days that they lose during the week.
So, we’ve been lucky and fortunate that we haven’t lost a lot of time yet. The situation in Port of [Indiscernible] is terrible and even other cities near the port. Fortunately, we’re far enough away from most of that noise that it doesn’t greatly affect us yet. And we’re watching it very carefully. The people who we operate in their industrial park where there are many people like us, even some of our competitors are watching it very carefully as well to ensure that there’s this least amount of disruption as possible. We do have always a Plan B and a Plan C, as you know, with our redundant manufacturing strategy. So, should there be any kind of disruption that actually affects our supply beyond we carry safety stocks, as you know, for all the different eventualities.
But we do have other places we can manufacture as well. And we’re obviously focused on that with the situation in Haiti. But I would say right now, we’ve been very fortunate for it not to have impacted us really greatly yet.
Kevin Steinke: Okay. I appreciate the insight. I will turn it over. Thank you.
Operator: Thank you. The next question comes from Jim Sidoti with Sidoti & Company. Please go ahead.
Jim Sidoti: Hi good afternoon and thanks for taking the question. It seems like you expect the operating margin to expand about 50 basis points next year to just over 4% from just below — just under 4% in 2023. Is that — do you think that’s more on the SG&A line you get the leverage or on the gross profit one?
Mike Koempel: I think, Jim, we would expect, again, a little bit more expansion on the gross margin line. And obviously, as we add sales, we’ll get a little bit of leverage in G&A, but I would attribute any operating income improvement largely through some expansion in margin.
Jim Sidoti: And how many sales folks do you think you’ll add in 2024?
Mike Koempel: How many sales folks–?
Jim Sidoti: Yes, you said that one of the reasons you’re not going to get the leverage on SG&A is because you’re adding salespeople so.
Mike Koempel: No, what I meant to say, Jim, just to clarify, I would expect, as we’re adding sales dollars, we’ll get a little bit of leverage in G&A. But again, I’d say it would be more driven by margin expansion, just to clarify.
Jim Sidoti: On the gross margin one?
Mike Koempel: Correct.
Jim Sidoti: Got it. Got it. And you seem to have really turned the corner in terms of cash generation and leverage ratio. What do you think the uses for cash will be in 2024? Is the first priority is going to be bolt-on acquisitions? Or do you think you could increase the dividend? Or are there other priorities?
