Chris Pappas: I think it is more just getting to the full year guidance. It’s probably what 10 basis points or 20 basis points gap there. So I don’t think there’s anything significant there. I would say, we generally have a little bit stronger gross profit margins versus the prior three quarters in fourth quarter. I don’t think there’s much different. I think if you look at our implied guidance, our full year, what we expect right now, our full year gross profit margins will be very similar to last year. And last year was a very strong year for us, especially the back half of the year. So I don’t think there’s anything specific to call out there.
Kelly Bania : Okay. Thank you.
Chris Pappas: Thank you.
Operator: The next question we have is from Ben Klieve of Lake Street Capital. Please go ahead.
Ben Klieve : All right, thanks for taking my questions. I have a couple on your capital allocation outlook. First, regarding CapEx, I’m wondering if you can characterize some of the CapEx-related projects that you were considering that may no longer be on the table given the lower targeted spend.
Chris Pappas: I don’t think it’s a matter of we removed projects from the future spend. It’s a combination of we’re kind of at the peak of the recent spend. The projects that are coming online next year we’re already spending money on are in our current guidance. We expect to have obviously higher revenue. And so as a percent of revenue we feel pretty good about, I think, this year we’re probably going to come in somewhere around 1.5% of revenue. We had originally forecast closer to 2%. So we expect to just kind of gradually bring that down towards 1% and then maybe even slightly lower than 1% beyond that in 2025 and 2026. And that’ll help us level up free cash flow conversion so we can allocate more cash towards the balance sheet and potential share repurchase.
Ben Klieve : Got you. That makes sense. Perfect. And one other, you talked about classy problems, one of your classy problems historically has been investment into working capital to fund the, just the exceptional growth rates you’ve had. I’m wondering, as you consider the various levers to boost your free cash flow, do you think there’s any kind of material operational changes that can be made to extract cash out of your working capital balance or are you running that about as lean as you can at this point?
Chris Pappas: I think there’s always opportunity. I mean, our teams always work on reducing shrink and inventory management. That’s a continual process. And then we’ve added some talent in the organization to really help us with that. Obviously, we’ve brought our DSOs down from pre-pandemic levels. We’re kind of in the low 30s. So we continue to work on that. I would say the working capital will be driven by our growth. And so we don’t expect to grow 30% in 2024 and 2025, like we’re going to grow this year over 2022, or an average of 25% since the pandemic. That’s kind of above average growth. And even what we’ve guided to long-term is nowhere near that. So, obviously, our working capital was a tailwind during the pandemic, and it’s been a headwind since we’ve grown significantly coming out of the pandemic, but we expect that to normalize as we go forward, and that’s part of the free cash flow conversion bump that we’ll expect over the next two years.
Ben Klieve : Got you. That makes sense as well. Very good. Well, I appreciate you guys taking my questions. I’ll get back in queue.
Chris Pappas: Thanks, Ben.
Operator: There are no further questions at this time. I would like to turn the floor back over to Chris Pappas for closing comments.
Chris Pappas: Yes. Well, we thank everybody for joining us on our earnings call. I think the Chefs’ team did a phenomenal job managing through the summertime and into the fall. We don’t expect less. So we do thank everybody for all their hard efforts and we thank everybody for listening in and we look forward to our next earnings call. Thank you, have a great day.
Operator: This concludes today’s teleconference. Thank you for joining us. You may now disconnect your lines.
