Nathan Jones: Good morning, everyone. I’d like to talk a little bit more about the business model and how that’s likely to protect the margins. I think most of us are probably used to more heavy manufacturing companies and your business model is a fair bit different here with the design source kind of business model. So could you talk about in the potential for a downturn, let’s say revenue is down more than expected in 2024? What kind of variable margins what kind of detrimental margins we should expect on that, just given that that business model is more flexible for you?
Todd Adams: Yes, I think. So in terms of as you point out, our model is highly variable. From an employee standpoint, we have 2441 employees, which is about, I think, $625,000 per employee, plus or minus, so very productive and efficient. We go to market through third party reps that are 100% commission based. So to the degree we see a sales decline the flex on our selling expensive is perfect. And, obviously, I think when we see capacity requirements on the growth side, we’re not spending a penny on capital. And the same is true on the downside, we’re not having to flex out a whole bunch of fixed costs. So I think by design, the agility that we’ve created and cultivated in the business model, is built for a little bit of uncertainty on the upside, and the downside, so I think, are detrimental margins.
And again, they’ll depend on the product category. We’ll be very, let’s just say efficient on the downside, we obviously have high margins, so that’s not something that we can avoid. But, I think it’ll be very efficient in the scenario where we see declines. And that’s, without question.
Nathan Jones: Yes, I think that’s important point to make. And then I’d like to follow up on the comment you made about supply chain savings of up to $10 million into 2025. Maybe there’s some moved to Mexico, some reshoring a supply chain. If you could provide some color on, on what you’re looking at doing there, and how those savings are to be generated?
Todd Adams: Yes, and we’ve been working at it now for probably six to nine months. And we’re in a position today to see the benefit in excess of $10 million from a runway perspective, beginning in ’25. That’s a combination of some incremental level of outsourcing and categories that we currently are more vertically integrated in, as well as some repositioning of certain suppliers, to regions that perhaps are a little bit closer from a lead time perspective, as well as favorable from a tariff perspective. So those are I think, relatively large digital things that we see. But again, just go into building more resilience into our business model. So those are things that we are well underway on there’s a chance we get some of it at the end of ’24. But I think the way to think about it is, we’ve got 25 million of synergies rolling through in 2024. And we’ve got an incremental 10 plus coming from this supply chain activity in 2025.
Nathan Jones: Great, thanks for taking my questions.
Operator: And your next question comes from the line of Joe Ritchie, with Goldman Sachs. Your line is open.
Joseph Ritchie : Thanks. Good morning, everyone. Can we maybe just touch on the SKU rationalization for a second, so it looks like it’s going to be about a 3 to 4-point impact in the fourth quarter? As you kind of think about 2024, what’s kind of the right framework for that piece impacting potential your organic growth in 2024?
Mark Peterson : Yes, Joe, it’s Mark. I think that the impact in next year will be modest. We said three to four this quarter, think about next year, it’s in that $9 to $12 million range next year. So think about it as sort of quarter of it hitting this year and three quarters of a next year. So, overall about under a point of growth impact next year.
