Marshall Witt: Shannon, if we think about ’23 and the comments we made around cash flow being at $1 billion plus, we certainly understand that earnings itself will be a big component of that. We certainly expect that the inventory decline due to supply chain constraints will be a benefit. And then the last piece is we do also expect us to become more efficient in our working capital management. One of the things just to remind everyone is that in many parts of the U.S., we still have duplicative warehouse systems. And so with that comes some inefficiencies that as we integrate into one ERP, some of that goodness will be felt in these working capital efficiency comments I made.
Rich Hume: Yes, Shannon, the way I think about it is the inventory is — if you want to use the 80-20 or the 90-10 rule kind of think of it in the context of that. There are some other working capital efficiencies to be gained. But by far and away, the inventory is the big one.
Shannon Cross: Okay. Thank you very much.
Rich Hume: Thank you.
Operator: Our next question comes from Keith Housum with Northcoast Research.
Keith Housum: Good morning, guys. Just circling back to Hyve, I just want to make sure I understand the margin benefit you got in the fourth quarter. Is this really just more of a timing difference, that recovery from the third quarter, which had probably a lower margin on Hyve business than we expected, just kind of offsetting, but for the full year, you’re exactly where you’d expect it to be?
Marshall Witt: Yes, Keith, it’s more timing within the year. But the first piece was the strong outperformance on Hyve in Q4. So revenue was better than expected and from that came better expected margins.
Keith Housum: Great. Appreciate that.
Rich Hume: 360, both pieces.
Keith Housum: Got it. Got it. And then, Marshall, interest rates, I believe, obviously, are still continuing to go up, especially if you listen to the Fed. How are you thinking in terms of the interest rate for the entire year? I’m assuming your guidance here is based on where interest rates are today. But assuming they go up, does that change, I guess, your target for your leverage and how you think about prioritizing the payment down of debt?
Marshall Witt: Yes, Keith, near in, we are modeling another 50 bps in Q1. So we’ll see if that — hopefully, that’s inaccurate, and it’s lower than that, but we modeled that in to get to our guide of $73 million for Q1. And then I think that will stay around that range for Q2. And then given the cash flow benefits, working capital efficiencies we spoke to, I think it starts to come down a little bit in the second half of the year. But it will be elevated, and it will be a headwind year-on-year.
Keith Housum: Okay. I appreciate that. And then if I can sneak one more in here. Obviously, the — working down the backlog has been a benefit here for you. But as you’re thinking about the first quarter, it sounds like order flow is exactly where you’d expect it to be for where we’re at today and that gives you confidence you have in your guidance?
Rich Hume: Yes. There’s nothing that’s materially different than the order flow than what we were anticipating with the guidance. Obviously, it’s early in the quarter, but that’s sort of our view.
Keith Housum: Great. Thanks. Good luck.
Rich Hume: Thank you.
