Ira Birns: Okay, so the cash flow first. We don’t often pat ourselves on the back, but in terms of the working capital story, our team should. And part of that, look – and its – for the first time in many, many years we all know we’re in a 7%, 8% funding environment versus one to two for many, many years, right. So our team has been – I mentioned returns. Mike mentioned returns already. Part of focusing on returns is trying to get some more margin, which isn’t that easy. We were very successful at that in aviation this summer, but that doesn’t completely mitigate the sharp rise in interest rates and the related increase in interest expense. So we’re also focused on where we do business, who we do business with and how we go-to-market in terms of customer terms and this compared to our terms on the supply side, how we drive more efficiencies and how much inventory we carry every day.
So a great point that you raised, despite the fact that prices are relatively high by bringing our trade cycle down. I mean, our trade cycle this quarter was less than two days. Over the long run, it’s been in the very high single digits, right? So by doing that, we’re able to generate a healthy amount of cash despite a pricing environment, which increased for most of the third quarter. And your next question will be, could you maintain that? So I’ll answer that question in advance. We’re trying really hard to maintain that in terms of the mix of business we have and the revision we have in terms of driving returns. Every salesperson has a hurdle rate that they have to hit when they are going to market, and they are going to achieve that by using a couple of levers.
One of them is margin, the other one is working capital. And we’ve done that very well. Aviation has improved most significantly. I mentioned $200 million reduction in their working capital year-over-year. Marine has been excelling at that for a long time. In marine, we’re generally match-funded, meaning we don’t really have much inventory and our receivable and payable days balance out almost perfectly even. So there’s no real working capital in marine. Land still has a lot of different pieces to the puzzle. But even there we’re seeing some improvement. So that’s put us in a better position to giving us a better shot to drive improved cash flow performance, even in a higher price environment. In terms of the operating margin target, we – I mentioned maybe it’s not the greatest thing to brag about that our expenses should be flat year-over-year, but we haven’t done that in many, many years, so it’s a start.
We’re focusing on every single line item on the P&L. I could probably go on, on this one for a half hour, because I’m passionate about it, but really looking at optimizing, reducing unnecessary costs in many G&A categories. For example, we’ve already seen some successes there. We have one of our best finance people that we’ve moved into our IT function to focus on every dollar we spend in a function that spends a lot of money, right, to be more effective there. And my finance team is focusing on being more effective. Our HR team is focusing on driving efficiencies as well. Part of how we get there is also land finally catching up to aviation and marine in terms of their operating efficiencies, where we’re still a bit behind. But post Flyers acquisition, we’re getting closer and closer to a fully integrated organization in North America, and that should also contribute over the next 12, 18 months to improve operating efficiencies.
So that’s a big accomplishment for us. So we didn’t make that much progress this year, but we think we’ll make more significant progress next year and then into ‘25 on that one.
Kenneth Hoexter: I want to hand it off to Ben, because he’s been patiently waiting, but I presume that the last thing there means you smoothed out some of that seasonality that you used to have to talk about with Europe in first quarter, fourth quarter or is that still there a little bit with the…
