Tim Trenary: Sure. The pricing, Gary, is SOFR, which today is about 450 basis points, plus (ph) basis points. So, that’s 12.5%. Now, importantly, a year ago, we had the foresight to enter into $250 million of interest rate swaps at 300 — SOFR 300. So, we are getting some benefit directionally today about $4 million a year benefit from those swaps, 150 basis points on $250 million of — $250 million. So, the — $250 million of swaps. So, I would say if you wanted to take a number, setting aside future Fed rate increases, I’d use 20 — 12%.
Gary Prestopino: On the — 12% on — I mean, on the total debt? I mean, that’s a lot there. I mean, all I’m really looking for is, what are we looking at year-over-year?
Tim Trenary: All right. So, it would be absent the swaps on the term loan about $25 million, but because the swaps are in place at current SOFR, you can think of about $20 million, two-zero.
Gary Prestopino: Okay. So, that’s not incremental. That’s just a total amount of — well, that would be kind of an increase in interest expense year-over-year?
Tim Trenary: $20 million incremental. Now, it assumes no further — it assumes Jerome Powell doesn’t raise the Fed funds rate, which probably is a little bit of an element of assumption. But again, the good news is any increase in the Fed fund rate, which ends up manifesting itself in SOFR, $250 million of the $400 million is insulated from the swaps that would only impact $150 million of debt.
Gary Prestopino: Okay. And then, a couple of more questions here. You’ve got kind of a very sanguine outlook for this year, and I understand fully the puts and takes and the challenges. But everybody I speak to in the industry is saying that they’re seeing a betterment or improvement, at least on the retail side, inventories are moving up, sales are still pretty good. I mean, is your — so far in Q1, is your sanguine outlook coming up to play in what you’re generating in terms of units and sales?
Majdi Abulaban: Gary, it’s a tough call. It’s really — I do understand your pull. There’s a lot of noise actually, Gary, right? There is variation in the — the impact of what we just talked about with affordability and vehicles and vehicle production, there’s variation in customers. You look at Ford schedules, what they’re facing. You’ve heard Nissan announce shutdown of a plant in Mexico, so public. GM shutdown their Fort Wayne plant. GM shutdown their Corvette plant because of supply chain issues. The Fort Wayne plant shutdown, but presumably because of inventory. Ford got issues that are very public. So, you talk to everybody and I said, I talked to my colleagues in the industry and at the very highest level, there is no conviction about how this will play out, it’s great.
It’s very fun. So, we’re taking a conservative approach. We’re seeing a lot of choppiness in the schedule. It’s not that the same level as it was 12 months ago, but it’s still problematic. And what’s unique about it is the variation between customers. So, it very much depends on our customer base, on a specific supplier customer base. But again, the guide is showing growth and I’m hopeful that this is the year we are wrong.
Gary Prestopino: Well, I mean, we hope so, too. I mean, you’re not really looking at any kind of betterment in your financials that — based on the guidance you’re giving and it just appears that the industry probably bottomed in 2022 and starting a slow movement higher. All right. So, let me just ask another thing. I’m trying to get a handle on these cost recoveries here. You’re saying these negotiations are ongoing, but again, it would appear that the peak levels of inflation and input costs and whatever are in the rear-view mirror. And as you’re going into 2023 or in 2023, could you just help us out there with this whole issue where you’re trying to get cost recoveries from the client, your end users? And it’s obviously going to affect your margins, and then, I guess, to-date, how well has that been going?
