Jerald Dittmer: The other thing, too, Budd and there are two things is the inventory will continue to come down. We don’t feel that there’ll be growth during this fiscal year in inventory even as our revenue goes up. And probably the only thing we really, that’s kind of an uncontrolled one right now, is obviously the peso versus the dollar is having a negative effect on us here in the short term and maybe even longer term. We saw about $1 million last year, and we’ll see probably a good $400,000 this year in this first quarter as the peso and the dollar aren’t really moving in the best direction for us.
Budd Bugatch: I see. And you did talk about inventory as a source of cash and is it, what, $122 million at the end of the year? Do you think — what’s the goal for the end of fiscal ‘24? Is it $100 million back to where it was maybe before pandemic time frame?
Jerald Dittmer: Yes, I think in that range. Our goal would even be a little bit better than that but that would — definitely our goal.
Budd Bugatch: And so that would get your funded debt down to just about zero, if not at zero?
Jerald Dittmer: Correct. I mean we stated it’s $0 million to $15 million, but our ultimate goal, obviously, is to get that down to zero.
Budd Bugatch: Got it. Thank you very much. I’ll let others ask questions and come back in the queue, if possible.
Jerald Dittmer: Thanks, Budd.
Operator: [Operator Instructions] The next question comes from Anthony Lebiedzinski of Sidoti & Co. Please go ahead.
Anthony Lebiedzinski: Good morning and thank you for taking the questions.
Jerald Dittmer: Good morning, Anthony.
Anthony Lebiedzinski: Yes, good morning. So just curious as far as the revenue impact from the growth initiatives. I know, Derek, you talked about the big-box impact for the quarter. But just overall, when we look at collectively big-box expansion as well as Zecliner and flex and others, how much of that you think contributed to the fourth quarter sales? And then the kind of — how should we think about that as far as outlook for fiscal ’24?
Derek Schmidt: Yes. In terms of the fourth quarter, a little less than $10 million was derived from kind of growth initiatives. So going into certainly fiscal year ’24, we feel good about the momentum there. As it relates to fiscal year ’24, we would estimate that our growth initiatives would contribute probably another — on an annual basis, another at least $30 million to $40 million over and above what we delivered here in fiscal year ’23.
Jerald Dittmer: We’re hoping, Anthony, that the plan is for that to be maybe the rise of somewhere in that 15% range going forward on an annual basis.
Anthony Lebiedzinski: Got it. Yes, thanks for that. And then certainly, a terrific job with gross margin expansion. I know for the upcoming quarter here, it looks like there will be a little bit of a sequential decrease because of, I guess, lower revenue. But overall, do you think you can get above 20% at some point later this fiscal year? Or is that not doable just yet?
Jerald Dittmer: If we do it sequentially, I think the answer would be yes. I mean, obviously, our revenue will be down in that $10 million type range, so that does have an effect here in the first quarter. But historically, our second, third, fourth quarters are stronger quarters, and so the plan will be to continue to take that upward. And maybe for the year, it’ll average close to that 20%. But hopefully, by the end of the fiscal year, we will be above that 20%.
Anthony Lebiedzinski: Okay. Very good. And then as far as inventories at retail, I would like to hear your perspective. I know you talked about last year having a glut of inventory at the retail level. What’s your sense now as far as inventory levels to your customers?
Jerald Dittmer: From where we’re at or from where our retailers are at?
Anthony Lebiedzinski: As far as where the retailers are at. I mean so last year, obviously, there was this big glut of inventory just as demand started to slow down. But fast forward a year later, I mean, do you feel like your retail customers have, in general, appropriate inventory levels or built maybe too much? Or just wanted to get a better perspective from you?
Jerald Dittmer: Yes, it’s a good question. So our retailers for the most part, especially our strong retailers are in a good place. Of course, the everyone is a little bit cautious not sharing what’s going to happen from an economic standpoint. But most of our retailers are in a decent place. A lot of their caution comes from store traffic is what’s really down. Sales are hanging in there pretty well and most of the folks coming in are coming in to buy. But true retail traffic is down. And as that correlates into inventories, people are a little bit cautious. But for the most part, retailers are in good place, and we’re seeing a lot of good — they sell through, the orders come back our way, which is good.
Anthony Lebiedzinski: Okay. That’s good to hear. And then — so by fiscal — by the end of fiscal ’24, you could potentially be debt free. So as you move beyond that, what would you say would be your cash flow priorities as you look to be — it looks like debt free by the end of ’24.
Jerald Dittmer: Yes. The main one, of course, will be to continue with our growth initiatives because we plan on taking a lot of our growth initiatives and doing more with each one of them coming out with new products, enhancements, things like that. Obviously, we’ll continue to look at acquisitions if there’s things that are favorable there but those are really the main two.
Anthony Lebiedzinski: Got it. Well, thank you very much and best of luck.