And if you think about the amount of change with an old model redesign, the amount of people that got – we talked about rewired. But really know when I come in, who do I report to, what’s my job, did my quota change, did my sales territory change, all those things were tremendous disruption, in how to get settled down in the first couple of weeks of the quarter, and all of that’s behind us. So about 50% into what we’re trying to implement. And obviously, over the next 18 to 24 months, we will implement the balance of the reinvention.
Erik Woodring: Got it. Okay. That is very clear. Thank you both for that color.
Steve Bandrowczak: Welcome.
Erik Woodring: Maybe just switching gears. I think, Steve, maybe this is for you, but anyone feel free. The $49 million of R&D spend this year, I think, was the lowest quarterly total I’ve seen from you guys. And in your presentation, you obviously talked about investing in higher ROIC projects, or acquisitions. But with such a pullback in R&D, like is there a risk that, you’re maybe taking a too kind of near-term approach to margins, at the at the risk of not pulling forward investment, to stabilize top line trends? Can you just help us understand, how you think about the actions needed on the R&D, and kind of innovation front to stabilize top line, versus your prioritization of maybe taking some costs out of the model, again to get that margin expansion? How do you think about balancing those?
Steve Bandrowczak: Yes. Look, we – when we talk about the reinvention, it’s a balanced execution between what we’re doing to drive operational efficiencies and investing in our growth businesses, whether it’s organic or inorganic growth. The new Board coming in, you saw the names of the nominees, and we are all looking at how do we invest in the right areas of this business, whether it’s organic or inorganically. And we absolutely are investing for the long-term in the business, and we’ll accelerate that. As we free up more cash, as we free up more of the balance sheet and the actions that we’ve already taken, and will take, will absolutely drive more headroom that will allow us, to take those dollars to reinvest back in our business.
John Bruno: I also think it’s important to look at R&D as we normalize it, because there’s a lot in the R&D line year-over-year, with some of the exits that we had in park and some of the divestitures and things like that, that have an impact on what you’re viewing. But you are 100% correct that as you do a mix shift, and a realignment of your R&D spend from the type of spend it is. We will continue to make investments in the areas in, which we see profitable growth capabilities. We just have to do it responsibly, and we want to make sure that we can self-fund our innovation, and capacity both organically and strengthen the balance sheet, as Xavier talked about, through our capital structure enhancements to do it inorganically, but that’s all part of our execution journey.
So we’re very mindful of that. We’re not cutting our way to prosperity. We’re trying to rebalance the company and reinvest in the right categories that, we can grow and sustainably grow where our brand has a right to play, our field distribution has a right to deliver, and we can be successful in those spaces. And that’s why it’s a rebalancing, and that’s why it’s an OD driven, not just the cost cutting. It’s an organizational redesign of who we are, how we go to market and strengthen our core print, and then invest in the adjacencies that can protect our core print business, as much as grow within that same customer set.
Erik Woodring: Okay. Very clear. And then just one last clarification from my end, which just congrats on the kind of maturity extension that you guys talked about. As we think about capital allocation priorities this year, debt repayment was number two. What other actions do you anticipate taking for the rest of the year that, we should be considering on the debt side? And that’s it for me? Thank you.
Xavier Heiss: Yes. So Erik, you know the maturities that we have for this year is quite limited. So, we are still – so in May, we will pay down the remaining part of the $300 million debt that we have for this. So this is already in plan on that, we already partially paid some of this year. We have as well our – secured debt repayment, which is going as planned this quarter, quarter-over-quarter. So, we are more like $100 million of debt reduction on the secure side there. And we are also looking at our term loan B, on how we can improve the condition of the deal currently here. Nothing material. The vast majority of what we are planning to do, is in the line of what we have seen, and we have communicated here.
Erik Woodring: Perfect. Thank you so much, guys.
Xavier Heiss: Thank you.
Operator: Thank you. One moment for our next question. And our next question is a follow-up from the line of Ananda Baruah from Loop Capital. Your question, please.
Ananda Baruah: Yes, guys, thanks for the follow-up. Just on GBS, it sounded like GBS is sort of putting its arms around a number of functions there. Could you just sort of go back through that and let us know – what the gist goal of GBS is? It almost sounded to me like it was a coordination, of all things kind of like back office administrative, and sort of certain lower level business processes. But I guess, could you just go back and put some additional context around that?
John Bruno: Sure. And whether you got two shots, two bites at the apple, I love it. So what GBS is called Global Business Services not shared services for a reason. It’s a business service function, is what our vision is. And both Steve and I have, a long track record in history of implementing these types of organization in our previous lives, and we understand the potential for them. And we know we absolutely have the right leader, and the right team across GBS to drive our vision for it. It is not a back office only function, but it absolutely will evolve from more of the core administrations in its first part. So you always start with the administrative activities, around these key areas of record to report, or order to cash, hire to retire, these administrative functions.
But as we get consolidation of not only systems and platforms in both our tech stack, and our BPO and business process operational stacks, we’re going to continue to push that up into ways in, which we can improve our go-to-market capabilities, with more services and things that we can have, better inside sales force type tools and enablement. And we want to drive better platform things into our areas. So, we want our finance, our HR, our legal teams to really focus on policy and strategy initially, and have GBS focus on the consolidated operations and platforms. And then we’ll continue to do the same, in cross order management and inventory controls, and service management anywhere, where we can get tech stack efficiency and business process, operational efficiency through the, not necessarily centralization.
But the central coordination of activities initially, is what we’re driving through this team. So it does go broader than administratively, but we absolutely are starting initially in the areas, where we would through the shared services functions in those G&A areas.
Steve Bandrowczak: Yes. This is Steve. I’ll add one more thing. And that is as we simplify and get to single end-to-end processes, we then look at how do you apply technology, to both elimination and driving more operational efficiencies, whether it’s around RPA, whether it’s around AI, whether it’s around how do we think about ChatGPT going forward. So think of as we centralize, and as we standardize on processes. We then have an enabling capabilities to drive more operational efficiencies, through technology. We’ve been talking about the journey of RPA for a long time here, over the last couple of years. We’ve been talking about how we’re implementing AI, and investing more in AI into our processes. And so, GBS will be the function that we look at to really drive leading-edge technology on our end-to-end processes. And some of those, we may actually take to market, like we do RPA, like we’re doing with some of the other functions that we’re building internally.
Ananda Baruah: Got it. That’s super helpful. Thank you.
Operator: Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Steve Bandrowczak for any further remarks.
Steve Bandrowczak: On Earth Day, I’d be remiss not to mention our ongoing commitments, to providing clients with sustainable products and services. I am proud to say, we are recently named an Energy Star Partner of the Year in 2024. For a fourth year in a row, a Global 100 most Sustainable Corporation from Corporate Knights, and we are included in CDP’s A List for climate change transparency and performance. Recapping today’s call. Q1 marked an important milestone in our ongoing reinvention, with the implementation of comprehensive, and strategic operating model changes that more closely aligns our businesses with the needs of our clients. The magnitude and speed of changes caused some disruption during the quarter. But the new operating model, has already delivered intended results and as evidenced, by momentum in equipment orders, and continued strength in our service signings.
We look forward to updating you on the reinvention progress in future quarters. Have a great day.
Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.
