We had to build a lot of inventory and over the course of ’21 and ’22, and our working capital really exploded. Now we have, by and large, slowed our inventory purchases. And so it’s kind of ironic. What we’re talking about broadly in the market is these inventory destocking headwinds are hitting us, but we’re doing the same thing, and we’re monetizing our inventory and hitting our vendors with the same type of destocking, right? So it is going to — I mean I’m sure you guys are hearing this from most of the companies that you’re talking to, but we will be kind of monetizing a bunch of our inventory. Now the problem is when you go through something like this, we’ve had inventory that’s flowing in. We have inventory that took a while to get through the port.
We saw our inventory, and the first thing that happens is we pay off some of our payables. And our accrued expenses come down, so working capital actually rises in the beginning. But then we expect to have a flood of cash as we monetize inventory, and we get through that cash conversion cycle. And eventually, when we normal — get back to a normal buying, we’ll get our AP and accrues back up. And I know it might be a little bit too granular, but it’s how the cash conversion cycle works. And so right now, I would say we’re at peak working capital, and we expect to have a significant amount of liquidity come in as a result of free cash flow from operations based on our ’23 plan, plus what we expect from working capital monetization. So we have what we think is kind of all the ingredients for deleveraging in place.
And as a result of that, if there were to be an acquisition that was incredibly interesting, we feel that we would be able to act on it. But as you opened up with your statement, the market is so weak right now. It’s not an issue that we really have to even deal with.
Larry Solow: Got it. And then just on the guidance. You shared with us six weeks ago, I think about six weeks ago, that the supply concerns, the inventory concerns in the front half. And you also, I think included in your outlook, you kind of built in continued sort of slowdown in the economy, maybe even a recession in the back half of the year, a shallow one, I think you kind of were hoping or was hoping for. It feels now like that could still happen, but it feels like perhaps you guys don’t — maybe are not as concerned about the economic impact on your company. So maybe it’s just more of that supply inventory issue in the front half and then more of a rebound in the back half. I’m just trying to get a little more clarity on that.
And then also normally, BOA and more PrimaLoft are much more front-end loaded, but they’re kind of facing a little bit more challenges in that front end. Would they be a little bit less front-end loaded this year because of that? So it’s kind of a two-pronged question.
Elias Sabo: Yes, so I’ll answer the first and I’ll ask Pat to answer the BOA and PrimaLoft question on seasonality. In terms of – really it’s sort of a macroeconomic kind of outlook I think in terms of is it a recession that’s coming and what do we look at? We don’t see any signs of it. And I think we’re in conditions that we’ve largely never seen before. We have an employment market where demand for labor dramatically exceeds supply of labor. And every month that we go through thinking these kind of rapid increases in monetary policy is going to push inflation down significantly while it has on the good side. But if you pull inflation apart, it’s not doing a lot on the surface side because labor inflation is continuing to run at a pretty high level.
